yousef: the hike before christmas. janet yellen signals an interest rate rise could be imminent. the dollar extends its weekly search. in trump we trust. if shinzo abe expresses confidence in the president elect after the two meet in new york. what is next at the second-largest closing retailer? numeral ahead is a great unknown. >> the underlying problems of the british economy have been there a long time before the brexit vote.

in many ways, we are going into the woods. welcome to "bloomberg daybreak: europe," our flagship morning show in london. i am yousef gamal el-din. a storming ahead. we will continue the conversation around japan and a second. i want to get what to janet yellen has said she has spoken about the kind of grilling we are used to. 90 minutes. jpmorgan and driving that. this release -- jpmorgan transcribing that. dollaru have your u.s.

spot index. the white line is the probability of a rate hike increase in december. what is interesting is we are above 90% in terms of the probability of the increase happening, but the u.s. dollar has been getting stronger and ononger and that could weigh any future hike increase. increasehe steepest since the 1980's. 28 years, i'm thinking back to, those were the days of the walkman. that divergent happening, and we will keep a close eye on where the dollar goes from here. it is really built into the narrative in terms of implications for emerging markets, and we are seeing some currencies rattling with u.s. dollar strength. they are under pressure. let us take a look at the risk radar and show you that in more detail. the ringgit has been under to 51%.us pressure, up

of 1%. 2/5 of 1%. those were the highest levels we have seen in 2016. meanwhile, gold and now with the rate hike, pretty much factored in, pressure on gold down 0.8%. finally, a quick look at what is happening with iron ore. it down 3%. story still unfolding after this speculative enthusiasm that took the commodity space into uncharted territory, now clearly delaying a price. let us get the first word news withsophie, rudin -- sophie. is considering mitt romney for the job of secretary of state and plans to meet with him tomorrow according to a transition official.

opposition to trump within the republican party warning in a cnn interview that his election would mean triple down racism and bigotry and misogyny. shinzo abe has spoken positively about his talk yesterday with donald trump. at the japanese prime ministers comments came after he was a first world leader -- he and of the first world leader meet face-to-face. i can confirm that the president-elect trump is a leader i can trust. the ceo of versions of second-largest clothing that retailer has warned the u.k. government against a hard-line brexit approach, but in the exclusive interview, simon wilson also said lawmakers need time to get negotiations right and should not be pressured, discussing every detail in public. >> i don't think it is

impossible to sort of think about these things. it is not possible. we will have to be patient and what for the government and resort of time it needs to spend thinking these things through, talking to our partners in europe. i think the worst thing you can do is end up with some form of renegotiation on television or in parliament, because ultimately these things need to be sorted out with europe. >> the former italian prime minister, romano prodi has said the so start to the brexit process has created resentment in other european countries. >> brexit is not going well. they are saying we hope it would be a quick start of the negotiations. the negotiations restart later countries,r european there is some sort of resentment, so it is not positive. wayree it could be in some

-- >> malaysia's central bank said it is intervening in the currency markets as policymakers across the asian region content that exchange rate volatility dropped to it weakest level. assistant governor said fears of capital controls are "baseless." global news, powered by more than 2600 journalists and analysts in more than 100 20 countries. in can find more stories on the bloomberg at top . this is bloomberg. yousef: c what is happening with the markets in asia, with the nikkei just a storming into a bull market. julian zoe has all of the details. -- juliette saly has all of the details. it has risen 20% off those loads, up 8% six months and 20 percent from those lows back in june.

officially in bull market territory. it has closed slightly below that 18,000 point level. a pretty solid session that nonetheless, up 0.6% on the close. this is the seventh possession in a row we are seeing japanese equities move higher. all of this on dollar strength, holding at that nine-month high. the yen continuing to weaken. the attraction coming through from japanese equities. elsewhere, it is a little bit of a different pictures. we have seen weakness coming through in the shanghai composite, down by 0.3%. pretty flat in hong kong as well. we heard from hong kong exchange's's ceo charles lee, saying that long-awaited hong could bezhen link delayed by a few days. overall, a positive session in australia, new zealand, and the nikkei is the standout story of the day, in bull market territory.

yousef: just some break it -- breaking news. it is adjusting targets, saying it sees cash flow at 7.5 billion swiss francs to 2018. buybacks for the firm over the next two years. let us cross over to our main story. such are janet yellen has sent a strong signals the central bank may raise rates. she spoke during the testimony for the congress of joint economic committee. she said the u.s. economy is making good progress towards goals and a hike could be appropriate relatively soon. >> were the fomc to delay increases in the federal funds to long, it could end up having relativelypolicy appropriate to keep the economy

from significantly overshooting both of the committee's longer run the policy goals. moreover, holding the federal funds rate at its current level could alsog encourage excessive risk-taking and ultimately undermine financial stability. yousef: the market was of course waiting for details as well about her future. yellen said she plans to lay out her full term. the fed chair also touched on concerns over dodd-frank legislation, saying it should not be rolled back by the incoming administration of president-elect trump. later today, we'll be speaking with the st. louis said president. five minutes past noon, you can time. it let us give more on the story from david owen, the chief european economist. were probably tuned into a

19 minute grilling, not the toughest we have seen in the last couple of years, but what was your key take away, any surprise at all? david: regardless of the election results of the u.s., janet yellen wants to raise interest rate. she will leave at some point and wants basically to further the process of normalizing rates in the u.s.. obviously, the trouble election victory implies a loose fiscal policy. it probably means more rate rises next year in 2017. so, no real surprise. the markets are geared up for rate rises in december. there should be more speculation through the course of next year and 2018. yousef: how many rate rises have you penciled in for next year? that is were the key diversions is going to be, right? david: are take away has been two rate rises. we will have to see if there are changes in this. itollar, as you were saying,

carries on the strengthening and that means they will not be raising interest rates so much that year. what we don't know it of course is actually going to go through the fiscal side. we do not know how quickly. that also matters for how fast the fed raises rates. yousef: the other court measure is inflation. -- core measure is inflation. the fed is moving closer to the target, but still has a little bit of leeway to go. where is the inflation going from here given that we are pretty much looking forward to a fiscal boost from trump. that is what the market is pricing an in other moment. david: always looking out over two to three years. inflation is not so relative to where they think it will be in two years time. one thing just to highlight is if you strip away certain elements of a certain sector of inflation in the u.s., inflation

is still very low and we see this in the u.k. as well and the ecb has the harder task with inflation very low, almost metrics. a themelation has been across the piece, but the u.s., we are entering a territory where the fed will continue raising rates. yousef: the other elements i am watching is u.s. treasury yield. thatut out a note saying the fed's fun rate is not screaming reassessment in it near term growth and the inflation backdrop is far from tocing in anything close fiscal policy perfection. is that something you can address? david: and treasury yields themselves. investors are very, obviously, backed off. yields backing off in other countries. there is a limit to how far we spread in terms of treasuries, so at the end of the day, i think we are still in this very

unusual environment where yields are going to be unusually low compared to what we knew precrisis. it has to reappraise where the new normal is. that includes treasury yields as well, not just the yields here in europe. yousef: help me out here with something. we keep talking about the investment scene and the markets are aggressively -- have aggressively repriced, but it seems to be that the amount of spending needed to make a dent in the market is not around 500 billion or 760 billion dollars or even $1 trillion. you need a lot more money than that to make an impact on the u.s. economy and turn things around in terms of real fiscal spending. that is the history of financial crises. if you look back over the history of the 1930's, you need a substantial fiscal spend. in the u k for example, we had a major building program in the 30's, we came off gold.

in the u.s., things are not going back to normal, what we knew precrisis. the narrative has clearly changed in terms of the need for fiscal responses. it is true in the u.s., in the u.k., and very clearly case in certain countries in europe, namely germany and the netherlands. inflation gets embedded in the system with low growth and it becomes self reinforcing. you have to escape the trap. we will take trump at his word. the economy will do better. yousef: we have to wait and see. i was more details from that fiscal response. david, you are staying with us. we have plenty more to get through and also coming up in the program. primese prize minister -- minister called trump a

"trustworthy leader." they exchanged words and rather strange gifts at trump tower. positive mindset, saudi arabia's energy minister joins the opec making ageneral in deal. we arelive in doha. in doha.ve more on the u.k. government against a hard-line budget approach. without exclusive interview is coming up. stay tuned. this is bloomberg. ♪

yousef: welcome back. you are looking at live shots of hong kong. this is supposed to be victoria harbour. currently 2:18 in the afternoon. it is almost the weekend, but not just yet.

plenty more happening across markets. let us get the tumor business flash with the juliette saly. ette: citing unidentified sources at the company. it says as many as 30,000 jobs would be affected. vw stakeholders will have a news conference later. the english premier league has signed a three-year television contract in china worth more than $650 million. that is according to a person familiar with the matter. they say the deal is with digital broadcaster pptv. the premier league declined to comment. ptv did not- p respond to a request for comment.

estimated 1.1 billion dollars in net outflows last month. moneyors continue to pour after losses. that is according to documents reviewed by bloomberg news. a spokesman for the jersey banks firm run by billionaire allen howard declined to comment. that is your bloomberg business flash. yousef. yousef: thanks, juliet. let us cross over and to tokyo. shinzo abe is of the story in he had talked with donald trump yesterday. trade and -- trump wanted america's allies to pay more for military protection. abe's comments came after he was the first world leader to meet the president face-to-face.

>> we had a long and frank discussion on a number of issues in a warm atmosphere. i can confirm that the president-elect trump is a leader i can trust. more, bloomberg's brian fowler joins us from tokyo. what you read into trump's first for a injured international diplomacy and bearing in mind he is the first first world leader to go there and he visits trump at trump tower? >> i think this is a very big meeting for both men. japan has a lot of concerns after watching the campaign, seeing mr. trump talk about the yen, talking about the cost of maintaining u.s. troops in japan , and talking about tpp in a manner that sounded rather negative. there was a lot of concerns from japan and i think the fact that mr. trump made this much time for prime minister abe and vice versa is very important. i have the front page of the evening edition of the nikkei here. the two men smiling and they

seem to be smiling very broadly and looking at the body language, when prime minister abbe came out of the meeting, i think they genuinely had a very good meeting, which is really important for developing trust on both sides. does all of this mean for u.s. relations with japan and asia? i think it is a good thing, i mean we do not know exactly what they discussed. they have been quite cryptic. mr. abe said the alliance cannot function unless there is mutual trust. i think he really did get a sense that at least, you know, verbally, there would be a commitment they are from the west side and i think that means that perhaps, donald trump will be a little bit more constructive towards foreign policy then he sounded during the campaign period, which i think will settle a lot of nerves throughout the world, but certainly in japan, and we saw

investors looking for little bit, sounding a little bit more bullish after the meeting. yousef: all right, thank you very much. and that is bloomberg's brian fowler, joining us from tokyo. staying with the pan and after putting the bank of japan's mega-stimulus on a more sustainable footing, governor haruhiko kuroda has worked to do, according to watchers of the central bank who says 2017 could be the year of the taper. the boj's bond buying plan runs up against operational limits. it let us get a deeper discussion of the challenges the boj is going to be facing from tokyo with the chief economist of japan. thank you for joining us on daybreak. these get straight into operational limits that the boj might be facing. how does this change part of the policy direction of the bank? well, the bank of japan has basically reached the end of quantitative easing. as you mentioned, it will be

almost impossible for bank of japan to keep buying. inversing,hout the narratives hoping, and that would be significantly negative for banks. i think you would actually risk and financial help of the financial industry, so in that sense, i think it is more or less given that the bank of japan will be buying much less among those jgb in 2017. yousef: this victory of donald trump plays into the cards of the boj and the governor, doesn't it, now with a weaker yen. he has a lot more time to take it easy, doesn't he? does,: well, he certainly but then the question is how long will this continue. president-elect trump will play much nicer than what he talked about, but then i do have a few

questions on that, but for policy, itrong ballot do not know if it is good for u.s. economy to have a strong dollar. is made torison president reagan, but then the situation is completely different. when reagan came around, the u.s. was suffering from high inflation and weak dollar, so it was a good solution. strong dollar was a good solution for u.s. at the time. however now, u.s. is suffering no inflation. weak growth. in that respect, strong dollar would hurt the u.s. economy. it is just a matter of time the president-elect trump will realize the mistake of adopting strong dollar policy and that would be the time yet and start to appreciate again. yousef: fine, so you don't think the strong u.s. dollar is here to stay, that the yen it will strengthen again, and how does this tie back to the boj again? what does the boj do in that

situation? takuji: right, so boj can relax for now, but then, i would say, relaxing time would just be a matter of months, not a year or two. like i said, i think it will be just a month of time that president trump will decide job growth, weaker dollar, rather than stronger dollar. if you changes his policy, that would be the time bank of japan would have to step in. yousef: takuji, give me a number of dollar-yen by the end of the year. takuji: end of this year? say,f this year, i would 110. next year, i would say stronger yen. yousef: let us see whether that plays out. i will hold you to that. thank you kubo, -- for joining us. it will opec agreed to a deal? ministerbia is energy

thinks so. a manus cranny joins us. plenty to come on the program to make sure you stay tuned for all of it. this is. -- this is bloomberg. ♪

yousef: looking at a live shot of tokyo this morning at 3:30 in the afternoon. they appear to be getting ready for a weekend with the sunny weather, we have not ruled out the red carpet yet. 0.5%. letusp now get the new edition of daybreak for you. it is available on your bloomberg and mobile. let us take a- close look at because the top of stories for this addition. -- at the top stories for this edition. janet yellen signaled it an interest rate hike could --

yellen told lawmakers that the fed is close to boosting borrowing costs and the economy continues to gain traction. the next story is a look ahead to the ecb president mario speechs keynote at 8:30 u.k. time. finally, daybreak focuses on volkswagen. stakeholders will represent the outcome of the month-long negotiation later. the dollar extended its weekly service. we spoke about that and jodi a few charts. this sort -- and it showed you a few charts. let us get the perspective from mayor a change it -- nejra cehic. up for the third day in a row.

that bloomberg dollar index at a nine-month high. you can see it here in blue on the chart. of course, we saw that dollar rally building after trump's victory and it has just build even further than that, increasing odds of the fed rate hike coming in december. if we take a look at dollar-yen, the dollar is heading for the best two weeks versus the yen since the 1980's. we were talking about how it was struggling to push through 110. right now.t 110.55 you can see all of these moving in. we saw and eight basis point jump. it is up three basis points now now.2.33% global bonds affected by the treasury market. stronger dollar than weighing all commodities as well. we are seeing oil extending its losses for a third day.

copper resuming its slide, heading for its biggest weekly lost since august. gold tumbling to its lowest level in more than five months and heading for another weekly loss after its biggest weekly loss and more than three years. gold in particular being punished by rising bond yields, some saying it could be the biggest victim of the trump victory. take a look at currencies against the dollar. you can see real underperformance in the em currencies and particular. you can see the yen it down there, one of the worst performers. it has fed into the japanese stock market. entering a bull market today. it's longest winning strength sense august 2016. yousef: let us go over to go hot out. opec members continuing to cement the deal to reign in oversupply. saudi arabia's energy minister echoed comments. he remains optimistic over the

agreement reached in algiers. a manus cranny is our man on the ground from delhi. what is the latest? are they able to build enough diplomatic momentum to set the stage? manus: you certainly get the feeling in the hall that -- in doha that there is diplomacy late into the evening. algerians came in one by one. there were short, brief meetings. the algerian minister and the architect, protagonist, back in september, told us yesterday in the afternoon there is a potential for a new six-month deal on the table, but everybody has got to get behind it. thate problem today is every country has the right to forecast extra capacity. it is the right of every country . today, we are in a group that agreement. an every member country of this organization understands to

respect this agreement, including iran. iraq, too. every country, there will be 14 countries that signed an agreement in algeria. it is not one or two countries, it is 14 countries. each of these countries reaffirms its commitment to maintain the agreement on which they agreed in algeria. there is no going back. manus: there is two other issues and they are facing -- that are facing oil. it you have strength of the dollar and exemptions. everybody feels entitled to some sort of exemption. know, in the near term, is $52-oil? $52 high for oil? talk about exemptions, you have to break it down. iran, are they going to freeze at the .7 million and be allowed

to hit that 4 million barrels of oil a day? they have the exemption. you flip it around to iraq. he was vociferous. he came back on that. the issue there is this, "are you going to upset the entire deal of opec by maintaining your position that you want to continue to produce?" what is the position on iraq? we have to funnel down. will iraq affect the cut? and of course, what is not opec going to do to get the price is higher? fiscally, it is so important to the russians. think what that fiscal position would be with a kicker up to $55 or $60? yousef: much more coming. manus cranny joining us live

from delhi. switching over to u.s. president barack obama, wrapping up his final trip to europe, met with chancellor angela merkel, in a news conference. they focus on how donald's victory reflects opposition to globalization and the greater challenges facing the u.s. eu free-trade agreement. pres. obama: the negotiations on have been like -- challenging and obviously at a moment when there is concerns about globalization and the people, that retreated that's recruited people, it is and the benefits that aid people. yousef: obama continues to try to reassure his allies about his successor, who has not given much of an indication on any of the main policies that he will be in agreement with him. what is the feeling over there?

reassuring his allies here and continuing to reassure the people in america, right? who are not very sure about this. we are watching here are and europeans are watching here the protests going on in the u.s.. president obama said yesterday that while he thinks that donald trump needs to get a fair chance at running the country, he is not going to stop the protesters, saying every president gets protesters from home. matt: that will continue although the trump camp has asked it to stop. as far as the nato relationship and as far as the relationship with russia, president obama ate a few comments, saying donald trump needs to have the urge to stand up to vladimir putin if he indeed breaks the rules of foreign diplomacy and also said he should not really consider a realpolitik approach, a word

alluding to the german philosophy of trying to be pragmatic here. he also talks about angela merkel's possible chancellorship, fourth chancellor said. she has been elected three times. the next elections are not until september. everyone is asking her about it. he stopped just short of giving his endorsement for chancellor merkel, saying he might vote for her if you were -- if she were to run again. yousef: we will be hearing from mario draghi later this morning. what will investors be listening out for here? is really the key for today, going for politics yesterday and international relations to the european banking crisis today, and a central bank policy. mario draghi, you know, investors will be looking for any hint he gives about the ecb's outlook for inflation, the five-year forwards have taken

off, one of the measures that they look to the most. he is probably going to talk mostly about the european banking crisis and what can be done to stem the lenders losses. yousef: matt miller their joining us from frankfurt. of course, we will also be showing you the interview with the st. louis fed president, james colored, just afternoon. with us.in is still speak up on what matt was saying. wen is still with us. speak up on what matt was saying. you are shaking your head. david: it is something which the market things the ecb is focused on. in terms of, they were focused on when five-year forwards were anchored around the target. the important thing is getting inflation up. we had inflation data yesterday, strip it down. if you look at core inflation

and constant tax rates, it is angered. anchored. yousef: this is the highest level it has been since january. it you are saying this is not a data point you are watching? david: absolute not. this is what the market is pricing since the oil price has gone up. from the ecb's perspective, if you have a situation where five years go up, but the economy was over because real rage is getting squeezed, that means they have to do more. the market anchors on this. it is not something i think really enters into their reaction function. the minute yesterday from ecb work dovish. re dovish. they have to extend out qe. yousef: what do you expect to see? david: obviously, at this point,

yields have gone up which makes the job of the bullish bank easier because it is more bonds for the bundesbank. we have a situation where spread between italy and germany particularly is now back to and 2014.as in 2013 we have the referendum for the eu on the fourth. asian investors in particular as in the eurozone projects. what is worrying is french spreads away from the bonds. we have the french election coming through next year. 12 election victory in a sense is basically -- has basically opened up this pandora box in the eurozone. yousef: we have seen is all week that some of the yields are beginning to creep a little bit higher, again it reflecting the anxiety about the upcoming elections in different parts of europe. we have people on this set we said, you are making a big deal out of italy. they are going to go through one

way or another. the concern is -- you are saying no. italy is the crux, italy is what we should be paying attention to. david: france, it is not just the fact of the top election victory. election victory. renzi may resign purely to hope to come back at a later stage and not be a lame-duck leader. at that point, ecb may take along with the european commission a much tougher look at the italian banks. the banking system inside the eurozone is not resolved. we don't have a banking union or insurance backstop in the system overall. obviously, with the market would be focused on is what mario draghi set on this today. you have spread widening out. govvies willnk

widen out that much. ecb is not maxed out. it is the only game in town. yousef: should regulators push for the urine -- further euro integration? avid: while, you have got situation where you need a fiscal federal europe to move forward. in particular, he talked about the creation of the use quasi-european eurobonds. they were not called back, but something different. ecb wants to have a fiscal response in countries like germany. that is really clear. the concern with me is at some point, they will start tapering. it won't be probably next march, but they have to take it up at some point. and then, what happens? a much stronger euro zone economy. yousef: we pick up this

conversation shortly. still to come, what is next for brexit, the ceo of britain's second-largest clothing retailer warns against a hard brexit. that is next, and as always, plenty more. this is bloomberg. ♪

yousef: you are looking at new york early in the morning. it is 1:48 a.m. over there. , power center, taking meetings already with japanese prime minister shinzo abe. as it stands, futures slightly lower, about 0.1%. let us get the bloomberg business flash with the lovely juliette saly. juliette: stakeholders will present the outcome of their

month-long negotiations at a news conference. the german business says as many as 30,000 jobs could be affected as the firm looks to cut costs like 3.7 billion euros each year through 2020. football's richest league, the english premier league has signed a three-year television contract in china, worth more than $650 million, according to a person familiar with the matter. the deal is with pptv, the company that acquired a majority stake into milan. they declined to comment. pptv did not respond to requests for comment. an asset management main hedge fund had an estimated 1.1 million dollars in acid net flows last month. that is according to documents reviewed by bloomberg news. a spokesman for a firm run by alan howard declined to comment. the company's suffering

withdrawals after its main hedge fund lost money for two successive years. use of, that is your bloomberg business flash. yousef: thanks. the ceo of britain's second-largest clothing retailer has warned of the u.k. government against a hard-line brexit approach. an exclusive interview with bloomberg. time tolawmakers need get negotiations right and should not be pressured into discussing every little detail in public. he spoke to anna edwards. >> i don't think it is about numbers but about the quality of people. if people are coming here and they work hard, they pay their taxes, kobe our laws, learn our language, those people are actively contribute into our economy and it would be an enormous mistake for us to cut them off from some of the worlds best and brightest. equally, we have got to make sure that people who are not working, are not paying taxes,

.enefits, they are a burden it is reasonable for people to say we should not welcome them. anna: one of the interpretations is that we need to get into the rest of the world and do more trade. conversely, when you look at the election of donald trump and the anti-globalization messages coming through there, it seems maybe we are going against that sort of anti-globalization zeitgeist coming from his camp. has the u.k. government misread what the brexit vote was about? yet is theon't know honest answer. certainly when you lose to the trade secretary talking and the brexit secretariat talking, they are in favor of free trade. i think there is an a norm is opportunity for free trade, but the interesting thing about free trade was one of the first great pioneers of free-trade around the world. it sort of was the foundations

of our industrial revolution. the argument for free trade needs to be made in every generation because it is a choice. we are getting a benefit from them and of course selling things to them as well. with trump, one of his big beefs is about the manipulation of the chinese currency. he made it unfair free-trade not necessarily anti-free-trade. anna: the juicy parallels between the brexit vote and donald trump make it a phenomenon. simon: i think there are a huge number of people in britain who voted to leave not for populist reasons that the media would have us believe. certainly, i did not. athink the only connection is mistrust of the establishment and i think the establishment has not been honest enough for the people for too long and it is time we had more frank talking. david: theresa may has talked about global business going out

and selling. how can business do that? simon: i think ultimately, it is very difficult. what we do is sell the stop. when you look at the quality clothing people get, it is infinitely better than they would have got 20 to 40 years ago. and much cheaper. that is because of globalization. at the same time, unemployment in britain is at a record low, thoseis clearly not that clothing jobs going overseas is a result of unemployment. people have moved in to more enjoyable jobs and globalization is behind that. yousef: david owen of jeffries is still with us. i saw some of your reactions as this played out. i will let you response rate up. david: -- respond straight up. david: basically, presented themselves about what people want from brexit. even the best majority of people

who voted to leave basically want free trade. at the same time, the people who voted to remain want to some controls on migration and customs checks. what curtis' point is that -- we know the timeline will be very long. two years before we exit and then transitional arrangements have to be in play and then we have to have new arrangements with not just india but the euia, itself. it will be really messy. break, youing the pointed out this drawnout process will lead a permanent and lasting damage when it comes to u.k. economic growth. this is not an election where the president gets changed. brexit will be permanent. no going backs

but it is difficult to have another referendum on the issue. moreover, the other point john curtis made is that let's say the eu went into recession because of brexit. people's views will not change about whether the u.k. should remain on leave. i think, you know, effectively, the narrative is given. it would be very difficult for theresa may to negotiate a deal that satisfies everyone and she may have to go along with her own party, which is in favor of generally, more of a harder exit. if you look at the people who vote conservative. that may mean that we do not have to deal, we get a harder brexit. yousef: what is the impact of all of this on doe policy? to raisefeds about rates, there could be further divergence. apart from the domestic

mess that is already there? david: this is good news. it carries on. the boe is in neutral mode. we have the statements of next weekend everyone is expecting them to unveil some sort of infrastructure spending. with trump as well, corporation tax rate in the u.k. coming down and maybe be an ounce a cut, eventually 15. that would again mean the boe is on hold. they will keep rates low for a very long period to come. yousef: we'll keep a close eye on all of it. david owen, jeffries chief economist. that is look at what is coming later in the day. bloomberg speaks to the woman who took the government to court over it brexit plan and won. that is at 9:30 a.m. london time. still to come, janet yellen

signals the fed may raise rates soon. we look at what that means for markets. we have been talking about it a little bit but we bill get into more of that conversation. stay tuned. this is bloomberg. ♪

>> an interest rate rise could be imminent. in trump we trust. japan's prime minister shinzo abethmeet in new york. car maker cuts. worker representatives prepare to lay out their plans for the company. the german newspaper said 30,000 jobs could be affected. and what's next, the c.e.o. of britain's second largest clothing retailer warns against a hard brexit saying

the road ahead is a great unknown. >> it has been a long time before the brexit vote. it is not -- in many ways, we're just sort of on our journey just going into the woods. >> welcome to bloomberg day break. let's take a look at the futures but before we do, some additional lines coming in from volkswagen saying that it is to cut 23,000 jobs by attrition in a 3.7 billion euro -- 23,000 jobs to be cut. the ongoing fallout from the scandal. the company making

adjustments. let's now switch to the futures as promised. this is what we're looking at. you can pull up the function easily on your beautiful bloomberg. as you can see we are higher. yes, we are. just barely. not really by much and not much conviction there as it stands. let's cross over and again weigh on the impact that the stronger dollar is having across some of those asset classes. that has been the theme after janet yellen spoke yesterday in front of the joint economic committee of congress. he ringgit currently up. they have denied any capital controls that could be introduced. the u.s. treasury 10 jori yields still at some of the highest level wes have seen in 2016.

downside pressure on gold of course. of course that is a five-month low. iron orestill playing out. down at $67. of course we are watching what's happening in the broader bond space and we put together a bond board for you to illustrate that. you can see we spoke about the 10 jori yield. where that is going to go. e i.s.i. was saying they on't anywhere to go. let's get the bloomberg first word news now. president elect donald trump is considering mitt romney for the job of secretary of state and plans to meet with him tomorrow according to ra transition official. romney previously led opposition to trump. in an interview in june, he

said his election would mean trickle down racism, trickle down misogyny. shinzo abe was the first world leader to meet the president elect face-to-face. >> we had a long and frank discussion on a number of issues in a warm atmosphere. i can confirm that the president elect trump is a leader i can trust. yousef: the chief executive officer of britain's second largest clothing retailer has warned the u.k. government against a hard line brexit approach simon said lawmakers need time to get negotiations right and should not be pressured into discussing every detail in public. >> i don't think it is impossible to sort of think about these things in public. it is not possible.

we're going to have to be a little bit patient. we're going to have to wait for the government to spend the time it needs to spend thinking these things through, talking to our partners in europe. the worst thing you can do is end up with some prenegotiation on television or in parliament. ultimately these things need to be sorted out. yousef: the central bank said it is intervening in the currency market. the ringgit has dropped to its weakest level since october last year on that news. the bank's assistant governor said capital controls are baseless. global knees 24 hours a day powered by more than 2600 analysts and journalists. now time to check back in and see what's going on over there in asia with the markets. >> we are just seeing the

shanghai composite close out the session. retreating over the last couple of sessions from that 10-month high. japanese shares have closed higher for a second consecutive session led by that stronger dollar-weaker yen pushing nikkei up just below the crucial 18,000 point level on the close but it means the nikkei is now in bull market territory as well, up 20% from its lows reached in june. the hong kong market is looking pretty positive. it has been a flubting day of trade on the hang seng index. a little bit of mixed movement coming through through in those southeast asian markets. there is an interesting story on the bloomberg saying it is friday for asian central banks

are back in currency markets. they announced they had intervened in that currency market. ringgit down. we had another weak -- from the pboc. he 11th in ra row. yousef: thanks. fed chair janet yellen has sent strong nall signals that the central bank may raise rates at the meeting next month. she was speaking before congress' joint economic committee. she said the u.s. economy is making good progress towards its goals and that a hike could be appropriate relatively soon. >> to delay increases in the federal funds rate for too long could end up having to tighten policy relatively

abruptly from keeping the economy from significantly overshooting. more over holing the federal funds rate at its current level for too long could encourage excessive risk taking and ultimately undermine financial stability. yousef: discussing her future, yellen says she plans to serve out her full term which ends in january, 2018. she said the dodd frank reforms should not be rolled back by the incoming administration. we will be speaking with the st. louis fed president james fuller. make sure you make time for that coming to you five minutes past noon u.k. time. let's bring in the c. oimbings from london and capital group.

great to have you know the program. the statement from yellen and the q & a. what were your takeaways? >> she is in a difficult position. yousef: when has she not been? >> the uncertainty trump brings combined with the fact that everybody has now discounted they will have to be pursuing a running away -- higher inflation and growth in an environment where the capacity is still quite low. you could have wage inlayne in nation coming up quite season. puts her in a position where one side -- she is well aware of the fact that there is still a lot of risks and that donald trump's appointment has done nothing but extending the possibility of risk and anticipating the potential for a recession for down the line. at the same time, she knows in the very short-term, you

certainly will see shortened stimulus. there is nothing worse than a central bank being behind the curtain. yousef: the narrative here, investing in infrastructure, whatever number you choose to pick, a lot of people saying that is not doing with to be enough to make a difference in the market. i put up this chart here which tips reflects on the option. $11 billion. bear in mind the usuals over the last 10 we were looking at, 2.35. there has been a lot of appetite. the direct bids the highest since january. what is going to happen to inflation from this point onwards? is this a bit of a knee-jerk reaction? where does it go? it depends on the fiscal stimulus which we don't know anything about. >> you're exactly right.

i'm sure investors like us need to take it into can it. the big thing is the fiscal cuts. to what extent tax cuts will be allowed to happen. you will see the possibility of inflation further down the line. let us not forget though this is an economy that might see the possibility of wage inflation becoming the problem. in the moment that wage private sector compensation, the 4% year-on-year growth rate that you might see a situation where the low productivity enable to complement and make up for the choking that high wages will provoke. if that is the case, then we have a problem. yousef: what are you telling your clients at the moment in terms of how to position themselvess with the ongoing volatility and uncertainty that goes beyond u.s.

borders? >> what is going on in the market the last two weeks is very much taking a glass half full situation. we're giving the trump administration and policy makers the benefit of the doubt in an extreme case. that is always a problem. >> you're saying that is the risk that seven betting on now. aggressive reactions of the market is all based on the tail risk. >> correct. if trump begins to take action, that will mean that the -- will be taken away. let's not forget we still have certainties in the u.s. economy. low productivity and still a private sector which is very leveraged. the moment we begin to see long-term rates going up, then we might see the possibility of higher defaults and that would of course be the

beginning of the end for the u.s. economy. the main message is focus on what you know. stock that is have vibblet visibility on the earnings opposed to trying and hoping for best and expect that there is going to be high inflying stimulate spending but not high enough so that rates don't go up too much. yousef: still to come on program, finance week's final day. matt miller joibs us from frankfurt with the latest. stay tuned for all of that and plenty more. this is bloomberg. ♪

yousef: good morning beautiful london. it is 7:16 in the morning.

lear skies as it stands, the 12390 at the moment. matt miller is standing by. matt? >> yeah, i'm here with thomas. the working with the euro group, the president of the economic and international finance committee. economic financial committee and we're going to talk really quickly about what you do at your next meeting you're getting back together in december and going to focus i guess, really greece will be part of the focus. has anything changed in that? we heard president obama in athens givings a plea maybe to the euro group saying as we see growth, maybe it is time to give them a little bit more room. >> as what was said in athens you need to do the reforms and

that will bring back growth and unlock those measures which we agreed on back in may. short-term measures which would kick in this fall already and medium term measures at the end over the program if they become necessary. colleagues are in athens right now as we're talking. they are negotiating with the greek colleagues. there are significant reforms ahead of us. fiscal plans and the like. the 19 ministers over the eurozone will convene on december 5, take stock and see have we reached agreement on policies? if yes, then all of these discussions around depths can be i hope finalized and a precondition for that is that it is not only european programs but an i.m.f. program

as well. at least their colleagues are ready to go to their executive board and suggest having another program with greece. matt: are you optimistic that we can get past having meetings to decide the fate of the greeks every six months or every year or is the i.m.f. too pessimistic that that is not going to happen? >> i think the times are past where we said we decide somebody's fate every couple of months or so. greece has turned the corner. i think there is a significant buy in of the greek administration, the greek politicians into this program. they know it is not good for investment. it is not good for growth if they don't come to a conclusion now with the european institutions. i'm very positive by the end of this year, it will be there and then it should be smooth sailing for the rest of the program which is not until mid

2018. that should unlock consumer investment, consumer confidence. matt: bring a deeper economic union for all of europe, right? is that on the forefront of your priorities in 2017 for the euro group? >> it is not the euro group itself strictly speaking. two years back, we took a look at what is needed to further deepen an economic and monetary union. there were reports that we produced and since then, times have changed. we've had the migration crisis, the brexit votes, recent elections on other continents, let's put it that way. and therefore what i believe that we need is a wider look at things. i don't think that voters who

are concerned about the future of their jobs and the future of their kids, they don't want to hear something highly scientific about fiscal backstops and deposit insurance schemes. i think what they want to hear realmt can we do in the of security, internal security, external security, job security. of course economic policies. it needs to be probably a much broader debate. matt: we're going to hear from mario draghi later. how has the uncertainty of things like migration, brexit, donald trump changed your outlook? >> as you said, uncertainty , significantly increased

old certainties are at least being questioned. will the western world be more inward looking or will it continue as outward looking as it has been. will the function of multinational institutions be as it has been for the past decades. what are the implications for trade? therefore what are the implications for monetary policies. very many uncertainties and what investors built like and the economy doesn't like is uncertainty. we will never get to certainty. anything we can do over the next half year over 2017 to increase certainty is growth positive. matt champion thanks so much for your time. appreciate it. head of economic finance for the euro group.

yousef: let's get straight into that conversation as well here on the set. how concerned are you about the fragility of the eurozone? we have a quite a few elections coming up. political risks. political uncertainty. are they doing enough to keep everything together? >> the signals are positive and for the very first time in many years you're hearing them talk about getting closer to where there is an underwriting of liabilities potentially for the weaker links. that has been good news and we have begun to hear that from germany. the problem that we have is that it might be a little bit too late. we're at the very last stages of a situation where monetary policy has created these location. the national economy, the real economy is saying i've had enough and i want to go for

maybe the unknown. the problem is that we now have a sequence of mainly two main events in italy and in france that will dernl what -- determine whether they are willing to give the benefit of the doubt and say this is your last chance. you cast the ability to do so if we see either italy or france deciding to go out of the mainstream opinion and go down populist root, of course the beginning of the end. yousef: serious back lack. this is your 10 jori sovereign bond yield, right? you can see where it starts ith the sell off here. this is a narrow time rage range. it stops about 3% higher. if we had a bigger time range, you'd see much more of that

rally. is the market pricing in populism and taking charge in italy? >> this has huge implications for the banking sector in italy and for the cost of financing for a treasury especially in italy which is already overstretched. it is really showing that the markets for the first time that this is a seminal moment. we don't want the status quo and the status quo is not like it is in brexit or in trump. you really are in an environment where rejection of status quo means rejection of the european sperm which means rejection of weaker banking systems which means rejections of weaker soverpbes. this graph is very much a warning signal to what can be he next story for -- yousef: clearly you're more bearish that bull ir.

-- bullish. >> in europe, we navigate and teer ourselves toward higher income stocks. the euro has held up very nicely, even against sterling in the next -- in the last few months but of course as we see more evidence that italy decides to potentially go down that road and the french -- begins to tell us that it will make it to the second round and maybe win the election then of course the euro -- yousef: are you just as worried about france as you as italy? >> i think it is a little bit of a pressing point. france on paper looks a little bit of a -- >> we'll leave it there. that's it for this edition of

"day break europe." stay tuned. this is bloomberg. ♪

>> happy friday. welcome to bloomberg markets. we have got the european open for you. this is the first trade of the kay day. it is going to be a busy, busy morning. i'm guy johnson who alongside matt miller who is today in frankfurt. in trump we trust. the dollar index surges to a 2003 high. is a december hike from the fed a done deal? japanese sharesta