you wouldn't pick a slow race car. then why settle for slow internet? comcast business. built for speed. built for business. ♪ francine: the contender, president-elect donald trump is said to meet with mitt romney. he is said to be considering him for secretary of state. the dollar looks set to hit a record. investors bet on policy divergence and inflationary trumpenomics. we bring you our weekly brexit show. this is bloomberg surveillance.

right here in london with another very busy show. facts been a busy week in with announcements and speculation from donald trump. the president-elect plans to meet with mitt romney. according to a transition official. mitt romney is a former critic of donald trump as being -- and is being considered as secretary of state. continue his.ge strengthening for a seventh time in eight days. that is my chart of the hour. nikkei 225 entering a bull market. up from its june lows. on that.eep you posted with a little more than two weeks until the referendum in italy, and the primary elections in france, we also bring you the best of our interview with the former italian prime minister. weekly brexit show, we have an exclusive interview for you, gina miller

found herself all over the worlds' newspapers. she took the u.k. government to court. ahead of the case reaching the supreme court next month, we speak to her about the brexit results, and what it is like to be thrust into the global media spotlight. let us get onto to world news. sebastian: as you were talking about, donald trump is considering mitt romney for the job for secretary of state and plans to meet with him tomorrow. mitt romney previously led the opposition for donald trump within the republican party. warning his election would mean trickle-down racism, bigotry, and misogyny. volkswagen has launched a landmark agreement with workers cutting 30,000 jobs worldwide with 23,000 being in germany. brandw head of the vw

says productivity at his plants will now rise by 25%. the move comes as the company tries to claw back from the emissions cheating scandal. the ceo for britain's largest -- second largest clothing retailer is warning the u.k. government against a hard-line brexit approach. lawmakers needid time to get negotiations correct and they should not be pressured into discussing all details and public. >> people are being unfair to the public -- to the government. unfair to talk about these things in public. we have to be patient. the government needs to spend time thinking these things through and talking to our partners in europe. the worst thing we could do is end up with a prenegotiation on television or in parliament. need toly, these things

be sorted out with your. sebastian: global news 24 hours a day powered by our 2600 journalists and analysts in more than 120 countries. this is bloomberg. francine: thank you. these are your markets. it has been quite a week for bonds. a bond rout. gotten back on. a little bit. it is all about currencies today. dollar is surging. we had commentary from janet yellen. metals are dropping. european stocks were advancing but now they are slightly on the downside. at 110.54.e yen, let us roundup what we have learned this week about date from white house. -- about the donald trump white house. we have two guests this morning.

stephanie, let us start with you. what have we learned in the last week about the transition? donald trump is talking to one of his fiercest critics, mitt romney. stephanie: it sounds like it depends on how the conversation goes and whether or not mitt romney will put aside his criticisms and serve in donald trump's administration. what you are seeing is critics of donald trump, and try to bury the hatchet and consider working with him. there are talks that that needs to happen. he needs to recruit heavy hitters. reassuring both to markets and to diplomatic circles in order to give his administration some credibility. we have had only two appointments so far and one was a loyalist and one was more mainstream. >> overnight, we had michael

flynn appointed national security adviser and that tells you quite a bit of where he is going on that security front. aggressive one fighting islamic state. -- he has ruffled quite a few feathers in his time. he was head of defense intelligence, the defense department version of the cia. islam not ad religion but a political movement which it will give you a flavor of what you can expect from him. with "russiassia today" as a speaker so he views russia as an ally. francine: when you look at the appointments we have had so far, three so far, what does that tell us about who donald trump wants to put in power? we had a political analyst saying he wants to keep it real. he wants to make sure that he is

not out of touch with what people want him to do. >> the cabinet members are not going to be that important under donald trump. nice brand names. the people that run everything will be the undersecretaries. that is what we want to watch for and that will be more his people. i think he will not sway from what he said on the campaign. do not expect them to come up with some moderate compromise. that is not what he is likely to do. thecine: you were when of few that predicted brexit and said donald trump had a chance of getting in. your book is called signals. what everyday science have we seen from donald trump that helps us navigate what his white house will look like? >> the polls -- we know what they were saying but every photograph of a donald trump rally showed it was full while

the clinton rallies had empty seats. it sounds childlike to say that the photo gave you more information than numbers. we are so wedded to numbers that we sometimes miss the obvious things. one thing we are seeing is how donald trump is holding court at his headquarters in new york. i think he will move that same mentality into the oval office. the fact is that he does come from a reality tv background and outfact is that twitter won over mainstream media. we should not be surprised to see -- i would not be shocked to see him not have press conferences but to release a statement over twitter as an example. francine: you may be right. stephanie, yesterday, we were talking about the japanese prime minister. we caught up with the former italian prime minister and the former commission president.

this is what he had to say. a similar experience. berlusconi was like trump. no political experience. in politics. you must be predicted otherwise everything will always be uneasy. my problem is -- who will be the collaborator? and will he shut up more than he did before in order to give more business to other people francine:. francine:we do not know if it will be the more tame donald trump. we see the same donald trump we have seen so far. comparison asoni heard before. the way people say that he ran his business is that he

delegated and was bored with details. i think you can expect more of that in his administration and the way he runs it. he will delegate. there is a lot of nitty-gritty come bureaucratic, photo ops. very boring things. things that he will find doll -- dull that he will have to do that you will find as a shock to his system. francine: if he surrounds himself with a team that likes details, does he have a chance of making a good presidency? >> i worked with torch bush and ronald reagan. they took the approach that they did not want to get involved with the details. they turned out to do reasonably well in their time. francine: were they tweeting? >> it did not exist at that time. the opposite spectrum is the jimmy carter, barack obama

approach. my experience is that all presidents have the same error rate. the style difference is not materially so important. there is no reason that donald trump cannot be a success taking this centralized -- that is why i say that he may delegate but who will he delegate to? it will not be the traditional individuals. i am not sure that he views it unifying the country as his highest priority. he views moving the country in the right direction as his highest priority. -- he willport pursue a supreme court that many will view as divisive. he will pursue a legal case against of the clintons that many will be as divisive. he will not cooperate with mainstream media which some

people will find divisive. and i don't think he has any problem with that. >> i was going to say that because he will delegate quite a bit and he looks like he is getting quite a mix of people, i would expect there to be a degree of conflict within his administration. with mitt romney and michael flynn -- i don't think that they entirely see i too high -- eye to eye on every issue. francine: stay with us. plenty coming up including as the french republican party start parliament elections this weekend, and the make or great -- make or break referendum. 30,000lkswagen shedding jobs worldwide, we will bring you the latest in cutting jobs. in our weekly brexit show, we have an exclusive interview with you -- for you with gina miller. she took the u.k. government to

court. we speak with you -- we speak with her. this is bloomberg. ♪

this is bloomberg surveillance. welcome back. european equity markets down this morning but fx is making the headlines. and donald trump meeting yesterday. chart this is.l rising 7.3% on reflation. foreign exchange analysts have boosted their dollar-yen

forecast to the fastest pace in more than a year. the projection has increased four yen this month. set for the biggest gain since january 2015. this is francine's favorite chart of the day. nikkei, bull market. very simple. yellow line is where we have come from. 20% since june. the nikkei was in a bear market in january. since donald trump was elected president, only to developed stock markets have fared better than they nikkei 225. ireland and the s&p 500. more stunning charts today. bonds are around the world headed for their deepest two-week loss in at least 26 years. donald trump's victory sending inflation expectations surging. this is the global aggregate

index. following 4% through yesterday. biggest two-week route in the data going back to 1990. to finish off. gold slumping, lowest level since march. down at 1.6% this week. fell 5.9% last week, the most in five years. look at the white line. the 30 year yield which is risen from the day before donald trump was elected from 2.61%. yield is up, gold is down. there withark barton your asset check to the dollar has been surging. the big market driver around which a global markets are shaking out. we welcome our guest. we were talking before about eom economics -- about trump

conomics. a percentage of gdp. it brings us back to 1969. how long it takes. for thisecession percentage of gdp to spike up. eight months for obama. the pink one it was 29 months for george w. bush. the orange one was 13 months for hillary clinton. depending on how much he spends, this spikes up in the dollar goes up or down. how much will he be able to spend and how much blowout will there be? >> we are somewhat skeptical that he will be able to deliver on may be 40% of what he promised on the campaign trail. the fiscal deficit in the u.s. is still very close to multiyear lows.

and the fact that gdp is still fairly elevated. these are important constraints to whatever donald trump is planning to achieve. by implication, while we do see the market justify in doll -- in buying the dollar, but -- francine: do you expect the dollar to go up? >> we do expected to go up. expect it to go up. fx point of view, where will that dollar trend materialize. if you look at other metrics, the high yield currencies -- francine: what does that mean? it is not all about technical. it.s how he funds can he repatriate that money. not know if america will

be great again because of donald trump but he will encourage it to happen more than before. look at the negotiation with china. 35% tariff. a he will start negotiating. that theyalready said would like to finance american infrastructure. if that deal happens, the market will have a totally different view of what will the kospi because it will not be a u.s. cost but a foreign investment. they should not write a check for it especially if inflation is going up which i think it is and it is not -- and it is what the fed wants. it is the hard asset that foreign investors want. >> we are not sharing that enthusiasm. the u.s. is fairly late in the business cycle. if you look at the private sector and the households are

fairly leveraged as well. the marginal impact from the fiscal stimulus, we do not think it will be that great. we are more cautious. there is still scope for the dollar to rally further but there is still a significant imbalance in the u.s. constraining the impact of the fiscal stimulus down the road. youcine: ballantine, thank very much. volkswagen, cutting 30,000 jobs. we will bring you the latest on plans to rebuild europe's biggest carmaker. this is bloomberg. ♪

♪ francine: welcome back. this is bloomberg surveillance. volkswagen says it has reached an agreement with workers to cut 30,000 jobs worldwide through natural attrition. 23,000 of those will be in germany. we are joined by our analyst from berlin. 30,000 jobs. how much of a surprise was this? will they mostly be volunteers? >> all volunteers essentially. the package is typical of volkswagen. numbers,tty big 30,000. over the course of several years. they agreed that there will be no forced layoffs. they believe people will retire early or retire in the natural course of their career. or when people leave, and as

they do, they will not be replaced. program and anft easy thing to swallow for the employees. $2.9 billion in savings. will they be able to achieve that? >> they should be. there is a lot of room to cut at volkswagen. they have a huge organization. it is over 600,000 people altogether. they have a lot of capacity to cut. a7 billion euros should be achievable. they will make it. francine: chris, thank you. it is our weekly brexit show up next. we have an exclusive interview with gina miller who sued the u.k. government over its approach to brexit. this is bloomberg. ♪

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the news.to may called onresa british companies to help soften the resentment of those who feel left behind by globalization. that we believe like i do liberalism and globalization continue to offer the best future for our world, we must deal with the downside and show the we can make these 20 forces work for everyone. sebastian: they have canceled investments worth 65.5 billion pounds. that's according to a study. it says executives have been reluctant to follow through on spending plans because of a plunge in the pounds. interview, there

is an interesting conversation with the uk's boris johnson. is we want to have access to the market without giving you access in terms of .he stipulation of people i think this is wishful thinking. selling a was you are lot of -- which is true. us to do this because you don't want to lose. maybe we will lose some. you are going to lose some fish and chips exports. means we need to find a balance. sebastian: that is the former prime minister who said the slow start to the process is created

resentment in other european countries. he spoke exclusively to bloomberg. >> it is not going well. we hope to have a quick start of a negotiation. now, in all of the european countries there is some kind of resentment. the start is not positive. way.ee, it could in some sebastian: the vote and the collapse of the pound has been noticed by foreign workers. the number of nationals working in the u.k. climbed to a record of 2.2 6 million. that's according to data from the office for national statistics printed -- statistics. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries, this is bloomberg. thank you so much. on the 23rd of june at, 17.4

million people voted for the u.k. to loop the european union. my next guest made headlines around the world spearheading a challenge to not consulting parliament before leaving the eu. the high court ruled in her favor. it's, the appeal goes to the supreme court. to welcome gina miller. how has this affected your life? gina: it's not what i expected. i expected a backlash. i knew people would see this as a brexit case. this is about process. i knew there would be a backlash. i did not expect the incitement of violence and racism and sexism, every as him you could think of.

it really does worry me that particularly some elements of the press seem to be giving legitimacy to those. that's very negative. at the same time, i am delighted that the ruling went the way it did. i did not think we would lose. francine: do you think this is going to create more tension in a country that needs to come together? i'm speaking about the tabloids. in certain cases, it's giving rise to sentiments and people saying things they shouldn't. gina: i'm disappointed that the media and certain politicians are not talking about this as it should be talked about. the big cliff is not brexit. the clip is the government able to bypass parliament and using this ancient prerogative. this puts us in a different place. it sets us back hundreds of years.

it they should be talking about this in different terms and it's very disappointing that they are not. francine: you put this case because you thought you only wanted parliament to have a say. gina: you can't have it both ways. this is not about brexit. if you say we are parliamentary is about nohe case one being above the law, including the prime minister and her mp. francine: why do you think they chose not to go through with parliament? gina: it's because they don't have a plan. if you go to parliament, the process is to have primary legislation and have a proposed to build would be debated i both houses and go through parliament. that's something you have to put on the table, a plan and some sort of strategy. theiew, my teams you is

case is an appealable. let me turn around the other way. the case creates a legal certainty for her to trigger it in her timetable. why not take that opportunity? what is she afraid of? francine: it's right to appeal and go to the supreme court as well. do you believe the supreme court will keep the ruling as it is? gina: i do. it's based on the letter of the law. it's not a political case. i have no reason to believe the 11 judges will turn over the judgment in the high court. francine: the you see it going further? it gets very messy. constitutional law in britain. i would not be going to the supreme court. if i lose, i am not going to the

supreme court. that is not to say that the supreme court itself could not articlee are aspects of 50 that need to be debated at the international level. francine: some say this is an attempt to invalidate the voice of the people. gina: read the case. .he case is not about brexit this is about doing things the proper way. if you are selling your house and someone knocked on the door and said i am buying your house, have you just soldier house? there is a legal process. with article 50, there was no legal process because it was never believed anyone would use it. certaintycreate around the use of it. can you imagine triggering it and then someone popped up at that point and then said you not done it along the lines of our

constitutional requirements. to my mind, it's better to it do it before we trigger it than after. francine: what would it mean to you personally? gina: this is about doing what's right. what's right is the parliament has a job and they should do it. francine: doesn't affect the lives of ordinary people? gina: completely. wins, that means going forward any prime minister or government can decide it your rights, my rights, laws on the environment, paternity, disability. they can decide without consulting parliament and that is wrong in my view. francine: one of the concerns with people we have talked to say it may get messier as parliament gets involved. you're going to open up as a

public debate. do you fear that it may get more messy if it's out of the open? gina: if i could use that analogy, if you were selling your house you have somewhere to go. you have an idea where you are going and if you're going to rent or buy again. you have a plan. what is so wrong with us having a plan and discussing with that might be? that's better than having no plan and going blindly on the street. francine: what if people can't get along? then you showcase that to the world. ofa: brexit is a symptom where things have been for long time. they have to be responsible for the fact that they have not addressed legitimate concerns people have had. you need to start discussing this. this is a form that will bring people together to understand we

need to address the deep issues affecting society. plenty comingave up. it is less than three weeks before her case goes against the u.k. government. the dollar is heading for its steepest ascent and 28 years of expectations. we get behind that trend. this is bloomberg. ♪

francine: it's less than three weeks until the supreme court hears the ruling.

it we are speaking exclusively with gina miller who is leading that case against the government. thank you so much for staying with us. we are talking about how it has affect you in the narrative that has come out of it, which has been extremely ugly. has this affected your business? gina: it has affected the charitable foundation more, which surprised me. everything brexit to do with brexit it so emotionally charged. that fear speaking out and speaking up is something that is deeply troubling. we should be able to have rational debates because if you have debates and different perspectives, you end up with better results in better reasoning. i am concerned that people are frightened. about?e: what was brexit was it anti-immigration? was it the divide between the

south and north? gina: i think it is all those things. it's not just the u.k. we are seated in america and europe. concern a global because it's coming at a time when there is economic uncertainty and modern technology. it's a repetitive job. people are suffering. people say they are feeling neglected and worried that politicians aren't listening to me. i have been talking about not just politicians but distances taking responsibility about this. governments on their own will not resolve these issues. francine: how can you fix the fear speaking out so people will feel comfortable expressing their views? gina: we have to have people

that are respected from all walks of life and the media say that when something is broken, they have to start fixing it. an example is when the judges were vilified in my judgment, the politicians should have immediately responded. without the rule of law, we have anarchy? they fear speaking out and being seen as lyrically tainted and going against the will of the people. gina: politicians have turned into celebrities or stars and they repeat a rhetoric and they learned their lines. they are not really that authentic. i would love to see politicians who are actually passionate about the people, not the power repeating those lines. i know it's uncomfortable. speaking the truth has got to be a better place than repeating lines. francine: are there parallels between brexit and donald trump?

gina: i believe there will be in europe. this is a global issue. we've got something going wrong and the divide will get worst. -- worse. on the other side of the coin, you have people wanting the cheaper products in the short term. they want to benefit from globalization, but they are worried about the economic impact. there is a paradox there for people themselves. these issues did not happen overnight. the politicians have ignored them. francine: i know you have been thinking about this. there has been so much hate and pointing fingers at politicians, which are partly responsible. there is also technology and we don't talk often enough about the fact that artificial intelligence and robots has displaced many workers.

gina: it will have a huge impact on women in the work pace because a lot of women have those jobs are in -- jobs area it's going to create a huge amount of idle hands if you like. comes at a time when medical advances means we have war people living longer and more people with special needs and more people with allergies or whatever their needs are. it's all coming together at the worst time possible. rethink: do we need to capitalism? what role do we play in this? capitalism itself, we have to take responsibility. no government will be able to solve these issues. we need to start thinking about how we do this. if you introduce the idea of a shared economy where you have an individual with three or four

employees, who's going to pay the pension? we need to start taking innovatively about portable benefits that go from one employer to the other and creative thinking. francine: do you see politicians going through extreme policies to please the voters that are angry? who can rethink this and make the world come together better? gina: it's got to be everyone. it's got to be cross party. inelieve more and more committees to resolve some of these issues and to tackle them. so we have longer-term policies. here in the u.k., you have two years when you are preparing for the next election. you're only looking at policies of three years and that's not good enough to tackle some of the fundamental issues we are facing. francine: thank you so much. hard brexit.s a

one of most prominent supporters will be here. this is bloomberg. ♪

francine: i am right here in london. but the most prominent brexit supporters says he is concerned about the hardline direction the process is taking. he defended theresa may's refusal to give a running commentary on the government's position. he spoke to us in an exclusive interview. it's not impossible to think about these things in public. it's just not possible. we are going to have to be patient and the time it needs to think the sting through and talk to our partners in your -- europe. the worst thing you could do is find up with some kind of pre-negotiation on television or parliament. these things do need to be

sorted out with europe. -- it's a bad the idea to conduct your negotiations through the media. media has beene transfixed by is the role of the central bank. bank doing what you would expect as a retailer? would you want to see something different? >> they have a very clear mandate and have stuck to that mandate or in a there are no rabbits that can be pulled out of the hat. i don't think there's anything more we can expect other than to make sure our money remains sound and interest rates don't cripple the economy or underprice money. i think they are doing a good job. >> i have witnessed a conversation recently where they talked about more range of skills at the central banks. would thinking you

would go down well? >> i'm not sure about that at all. i feel much more confident with mark carney setting interest rates. finalne: let's get some thoughts. reaction first of all. we touched on this earlier. if you open this up to parliament, does it mean that the markets will be nervous? gina: i think they want to see what sort of brexit we are going to get. our view on markets is the corrections we have seen specifically in the bond market is a good thing and long overdue. fromnflationary worries brexit are not going to be as bad as we think they are going to be. the best hedges equities. from our point of view, we think it's overhyped and there is some concern.

the problem is we have so many unknowns. there are so many now. it's very difficult and it's about holding your nerve and not touching your keyboard and waiting and see. francine: in 10 years, depending on what kind of brexit we get, will this be changed? it was never designed for financial services. the only example we have to date is something called the alternative investment directive. no products of actually been granted equivalents. that doesn't bode well. i think the marketplace will change usually. -- hugely. francine: thank you so much for joining us for this great explosive -- exclusive interview. we continue in the next hour. tom keene joins me right here from london.

he is very excited looking at the pound on the dollar. we will also talk to eric nielsen. financialeak to a services chairman. heard from mario draghi earlier. he said the recovery isn't strong enough to deliver. what a different story the markets are making in the u.s. level of monetary support to be a key ingredient for the economic outlook of the coming years. downan see assets are 0.2%. this is bloomberg. ♪

francine: president-elect trump

is going to meet with mitt romney.

will he healed the republican rift? the dollar looks back for a 1990's record. investors bet on the policy divergent. city, heads in the bankers are softening their warnings that brexit will force relocation from london. we continue our continuation with gina miller. this is bloomberg surveillance. tom keene is ready to pack his bags and leave. tom: the dollar is moving. i've got to go home. it's interesting to see, we are looking for white smoke emanating from the tower. we haven't seen it so far. governor romney of massachusetts is front and center. francine: talk to me about the

pageantry to get people to come to come tower. tom: i live right by there. it's a huge deal. one of the conversations of the week, there was a massive effect on retail sales in fifth avenue. mitt romney is a surprise. francine: you live so close. tom keene will be on trump watch. tom: team coverage. taylor: we are sticking with the transition team. donald trump is offered the position of national security advisor to michael flynn. that's according to a person involved with trumps transition team. he is the former head of the defense and intelligence agency. he has also been a vocal critic of president obama strategy to combat islamic state.

donald trump is planning to meet tomorrow with met romney. -- mitt romney. a transition official says trump is considering romney for secretary of state. other candidates include nikki haley, john bolton, rudy giuliani. presidententral bank mario draghi says the recovery is not yet strong enough to deliver sustained reflation. speaking today in germany he talked about signs of progress. robbery --omy is recovering at a steady rate. 4 million cents 2013. the recovery has become more broad-based with less difference in economic performance across countries.

taylor: he said the level of monetary support would be a key ingredient in the coming years. former french president is heading into a primary as the front runner that could determine the next leader of france. face her in the two-way runoff next may. sarkozy is attempting an unprecedented comeback after being defeated in 2012. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries, this is bloomberg. i am taylor riggs. tom: thank you so much. let's look at equities. usc nielsen will be with momentarily. futures are negative today.

we have a 105 and all of a sudden we are on very watch. oil is on par. clearly the vix shows those good equity markets. it's trying to catch up. the two year yield is 103. the blow through that. we have the week yen relative to the euro. that leaves me speechless. francine: the dollar is extending its advance after janet yellen signaled a interest-rate hike could be eminent area -- eminent. since juneen gaining or in it is still a significant move. you really wonder where sterling will be in six months time. i would like to come back. i was told four times yesterday that i am saving you money.

let's go to the terminal right now. this is the old dxy index. we can go back 40 years. that blue arrow in the middle is the dollar rally. i just pulled over to compare the recent move up. i could go to one of those weaknesses of 2010. we are catching up to a move equivalent to what we saw in the 1990's. francine: i also have something with dxy. is more currencies area they are weighted more frequently. this is what i have. this is the picture of what we are seeing there. tom: this is a wonderful chart. francine: hillary is the best.

this gets moved. tom: look at the equity markets with the dxy. francine: i will get somebody who doesn't get moved by the market. economist and global head of research. gina miller is still with us. gina spoke to us and we will keep her on. tom: she already spoke exclusively. todayne: this is the day banter. there has been a huge shift in the market. were they justified? i think the market is completely crazy. be as crazy ast you would conclude from what i thought was going to happen.

to think he could come in and reflate the economy, that was the story. you have already heard it from congress. there will be some, this takes at least two years before there is any affect on inflation. is all the other things we don't know. that waiting for this to happen is strange. francine: it's it's strange and we are expecting inflation to pick up and -- significantly. how many rate hikes are you expecting next year. erik: we have three between now and the end of next year. we decided to put all of these in a specific forecast until we know a little but more about what the policies will be like.

i do think that's going to to anythe fed hikes measurable extent. i am more worried about the speed with which this has moved upwards. equities, there is a story about if this could be good for the u.s.. tom: we've got the butterflies flapping. we will talk about that later. now towards parity, does mr. trump become overcome by international events? erik: i don't know how he reacts. with the romney story, the external story is not quite as dramatic as i feared. in a sense, that is good news. he may be messing around with the u.s. economy, week is message of our the markets are adapting and adjusting.

i would suggest there is a time where the politicians have to pay attention. i -- the americans of never paid a lot of attention to the exchange rate. it's only in the last you the fetish started to move this. i would be surprised if mr. trump is on top of the exchange rate. francine: we need to have it to brexit. challengehas a legal not to consult parliament. a couple of weeks ago, high court ruled in your favor. democracy to the global audience, why should we have gone through parliament? gina: any first-year law student will tell you because we don't have a written constitution,

it's made up from different strands. one is parliamentary sovereignty. only parliament can establish rights and only through acts of parliament can they be taken away. tom: i thought the best summary was in the telegraph and the will of parliament. the rebuttal to you and what he was writing about is the idea that 2016 and lead to shift parliament away from the great traditions of the united kingdom over to a more democratic voice. can you do both? gina: not in the constraints of the constitution we have at the moment. there is a much wider debate about shifting democracy and the use of referenda. this is done in a legal way with the rule of law. at the moment, we don't have those structures in place. ishave a constitution that parliamentary.

parliament should be upholding the will of the people. is it like the 18th-century in the movies i've seen where they really don't listen to the people. gina: one of the reasons we have is the uproar with brexit you get accused of not listening to the constituents. my hope very much is that we will win in the supreme court and this will be kicked to parliament and they will go to their constituents and talk to them. leading up to brexit, they need to do the job they are paid for. go it's been to their constituents. francine: that means if there was a vote in parliament today, hey would vote for brexit. gina: that's what we want to see. some sort of strategy that they

can then debate. francine: you think parliament would bring a case, forced the government to outline their plan a little bit more clearly. gina: you would never go into anything not knowing what you were getting into. it's just not the way we operate and we can't do that to the whole country. how are you going to go down it? it's madness. francine: i know a lot of people have disagreed and we have seen the fallout that we have covered on some of the press that has been a quite ugly. thank you very much. them in aack with little with. michael mckee will sit down with the imf manager from peru. look for that at 3:00 in new york. this is bloomberg. ♪

tom: maybe it's a quiet washington, d.c. we're moving it to the inauguration of president donald trump. it is on his date calendar. , thank you so much for joining us. what an interesting surprise to see the governor of massachusetts that it as secretary of state. after you pick yourself up off the floor, what did you think? marty: there was a gasp in the newsroom. our sources say he is really serious about this. we are not ready to call him the

front runner, a pick of romney would be quite extraordinary and change the narrative. tom: it's amazing how the collective memory disappears. francine: we looked at some of the things that mitt romney has said during the campaign. let's ring up this speech. romney on twitter. donald trump is a phony, a fraud. explain first of all why donald would want him on his team or why mitt romney would accept. marty: not only the tweets, he had a very public press conference and made the round to the new shows to buttress his opposition. if he were to pick romney, he is trying to establish a narrative

about what kind of government he is going to form. politics is over and governing has begun. that would be viewed extremely positively throughout gop establishment. before we move on to other transition news, is a consideration of ever romney because nobody else will take the job to mark marty: i don't think that's the case at all. i think rudy giuliani clearly wants the job. maybe that's working against him. there is a sense that he is not happy with people who are outwardly lobbying for the job. it's very interesting. we could get him into the front runner status after he meets on saturday. we talked about conflict within the party and there seems to be some chaos. what have we learned about people he wants to be putting in the top positions?

marty: it's interesting to me that we have the report that he has offered the national security job to mike flynn, colin powell has called him a right wing nutty. he is a very strong opposition to obama's policy in the middle east. the people close to him like bannon are almost extreme where as the people like romney would be a more establishment governing type of personality. tom: this is why we love to have you on. what is the history of success of an early in an astray should where you coalesce establishment types with mr. flynn? what is the history that this works out constructively 24 months on? marty: there is no history.

the one thing you have to understand is many members of the trump cabinet will not have a personal relationship with him. he doesn't know that many people that well who are establishment. it will be a very interesting nine amick. tom: absolutely. we could talk to you every half hour just to keep up on the friday transition. 5:00, they move forward with all due respect. they get you ready for your weekend considerations. stay with us. this is bloomberg. ♪

>> changing the incentives or the risk return way in which companies manage their balance sheets, we have gone through a long time here where there hasn't been any real investment going on in many industries. a lot of companies spend so much time behaving like tanks so they will manage the balance sheet like shared buybacks become a huge part of life. treasury former u.k. minister says companies must invest more to counter populism. does that feel like a long time ago?

erik: i worked with him in the research department. for 15 years, it was a wonderful time. francine: he talks about inclusive capitalism. to think about wealth distribution. would that help with the wave of populism we see? erik: maybe. everyone should show responsibility to society and the communities they live in. it comes back to the policymakers. they need to change the structures so you are encouraging employment and investment. that can be done through regulatory changes. tom: i think of michael porter from harvard with a wonderful cover article in the harvard business review saying the same and. we have heard this on and on and on. you have to diminish the shared buybacks or two accentuate

investment to create jobs. can mr. trump and a republican congress, can they provide those incentives to create investment? erik: they could. that het seen anything has said that makes me sure they would it. they talk about doing tax incentive for investment. were that to deliver to the rust belt, i don't see it. tom: you can jump in here. francine: i know there is a lot of copy and even hate against politicians. what role will technology play in all this. workers has been displaced. people have not been retrained properly. we to focus on education and training. erik: absolutely.

you don't want to stop technological developments or globalization. you want to management. -- manage it. you want to educate people so they know. that's easier said than done. either atrnment has best keep education spending constant or produced it. that makes no sense to me in this world. francine: coming up, we speak financial chairman. also talkpolitics we europe. this is bloomberg. ♪

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tourists around. the president-elect is in transition. we are in transition to new york. it here is taylor riggs. taylor: the japanese prime minister offered some kind words for donald trump. they gathered yesterday at trump tower in new york. this is the first head of state to meet the incoming president. we have a long and frank discussion on a number of issues. i can confirm that the president-elect is a leader i can trust. taylor: he did not talk about the substance of the talk. russian president vitamin putin is making sure he will remain a force to be reckoned with.

according to people close to the process, he is setting up a team to make sure he wins a fourth term. his approval rating is more than 80%. nearly two thirds want to see him continue after 2018. saudi arabia's energy minister says opec will reach a deal. is 32 million barrels a day. his algerian counterpart says they are near consensus on cap production. opec is finalizing the deal in bolstering prices. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries, this is bloomberg. i am taylor riggs. let's shed some light on a shadow banking with the report analyzing how central

bank policy may affect shadow banking activity. is the research from the report. thank you so much for joining us. when we talk about shadow banking, this is one of the main concerns with central bankers. if you look at the summary, some of the old risks have been reduced. is there a danger there are new risks we're not seen yet? if you look at what shadow banking was before the 2008 incrediblyse complicated things, that has really declined in the financial system. it hasn't come back. we shouldn't be overconfident that it isn't there. specific problems before 2008 have not emerged. while there has been a shift to

capital market credit, most of that has been in a reassuring form. corporategood form of finance. they are bought by pension funds and institutions. that's the sort of finance we want. there are other risks emerging in the economy. the large increase of emerging market that, much of it is denominated in dollars and the chinese situation where we would have had an enormous increase in leverage associated china specifically with some complex structures reminiscent of what happened before 2008. concern is the market has been ignored since january. francine: what do we know about the fed?

we assume they have a good handle on it here in the -- it. adair: the amount of debt in china has gone from $3 trillion to 14 or $15 trillion today. that is an enormous amount. most of this is owned by state owned enterprises and state owned bikes or other government vehicles of some sort. most is in local currencies. it is linked to the rest. you can have an optimistic and it says the chinese authorities can deal with any problems. the bigger it gets, the more we have to be cautious of that assumption. tom: i want to congratulate you on a terrific set of papers. exchangeiginal for an research years ago on the dynamics of the foreign exchange market and how would the

, how would that be different in 1998 when you folded in the balance sheets? adair: we now have a very large amount of emerging market debt, which has grown in many of these categories. there are various categories that people talk about. market, weemerging have had a growth of debt and there is a vulnerability in two respects. if the dollar goes up, the real value increases. there is a group of people who issued this debt. tom: help me with how much of this. they signed off on this for the group of 30. here brutal dollar dynamics that will upset the emerging market applecart? adair: i think there could be in

i would watch very carefully. turkey has been financing a lodge account deficit. we just don't know how big the event is going to be. stimulushas a physical switching from money to physical, if the response is to increase interest rates, it will only be a small amount. that can have a big effect. tom: i want to go to the chart if we could. this is malaysia. the 1970's.ack to 1998, i have extrapolated out a trend. of fearsck to the kind of 97 and 98?

are we smarter and more sophisticated than we used to be? i would never invest on being smarter than before. there are some things we have pointed out that we don't have a good handle on. there is a distinct possibility that donald trump will either do what we hope in the right way and not image other places. there is a risk off because he becomes erratic. china we can't get our head around either. there are these big spaces were we don't quite know how that's going to play out. it's unlikely it's going to be pretty. regulator,s a former what advice would you give to the regulators now? a lot of this debt is

outside the directly regulated area. in one way we are less vulnerable. it was often in dollars and against real estate. this time, there is less of that. rate are a lot of fixed regimes and there is a sudden crack trade those folder abilities are less extreme. we've got a different vulnerability. a lot of this is held somewhere in the capital market. we don't really know where it's held. francine: who is packaging this debt? adair: a lot of it is not closely packaged for structured in the way the precrisis securitized death. , oftenre large companies they are exposed to the commodity market.

this is the crucial thing. there could be a falling commodity market and a rise in the dollar and interest rates. that would cause the maximum stress. tom: we already have a sequel to your book. this is the new title for his next book. is he aware of the butterflies flapping? does he have a clue? would you serve in the trumpet ministration? adair: i think it's unlikely i would be asked. i think the answer is probably no. i hope they will be rational. this is an extraordinary piece of news that he is considering romney. that is a big signal about basic rationality, which is surprising. we just don't know what he's going to do. there is an erratic element to him.

a risk outere is there. we are going to come back and address these themes as we address the transition on fifth avenue. more conversation with our matthew miller in germany. there will be a few things to think about. from london, this is bloomberg. ♪

francine: these are live pictures from a very cold berlin. president obama will leave the on air and travel onward force one to peru where michael mckee is.

world leaders will this -- to send this weekend. about theking president-elect and how different his white house might be from president obama. we were just discussing that. he said that trump was erratic. we are also here with eric nielsen. we were joking and asking you what it would take for him to serve under president trump. adair: let me put it this way. if i could have a meeting with him and convince him of the undoubted truth that climate change is occurring, it's a threat across the world, we have the technology to deliver a low carbon economy and i could get him to say yes now i see the light and i will appoint you to a major role to drive america , iard a low carbon economy

would take a role in the administration. tom: this is science fiction. erik: it's going to be a beautiful thing. adair: there is solar, wind. on political risk here, let me ask you a question. one of the smartest essays was your will in the washington post talking about it being a last gasp for establishment conservatism. with all the elections coming up in europe, is this a last gasp of the conservative way before we change demographics? adair: we just don't know what donald trump is. i suspect he will be a conservative republican administration. i don't know if the long-term changes. ofarly, a sort of crisis

capitalism to fail to deliver to enough people that they want to support the establishment. at the moment, this is producing more votes for the radical right and the national right than the you ear it -- left amend free trade for those harmed? erik: it's tough. it starts with educating people that it gives you lower prices. there are a few pockets of people who are being hurt by it. , educateto help them them, help them to get other jobs. america has employment. the number of manufacturing people working has gone down just because of globalization. the income has not gone up. francine: in europe, if you were a politician nowadays, you are

facing referendum and euro and challenges, how'd you reconnect with the people russian mark erik: if i knew, i would try to be a politician. it is so important. it's not really a conservative or alt right ways. donald trump got less votes than a romney did and less than mccain. to threetion came out states and hillary clinton couldn't really hold the them a chronic votes. -- democratic votes. you look at austria and france, you've got to be a bit nervous. francine: is it about achieving growth? will this automatically solve the problem. erik: no. we got better than before. i think we under report the gdp

numbers. i argued. andas to be redistricted primarily through education and health care and probably through taxation and maybe we start to bring up the value. tom: how do we work out trade? what we heard from mr. trump was zero some neo-mercantilism. is that the great fear? speaking,hink broadly trade globalization has achieved a lot. i am afraid that the elite of 15bal trade negotiations years ago failed to realize that there was a diminishing marginal return. take a positive 15 years ago and say our biggest problems are not whether we drive to a new t pip.

there is a marginal upside. our biggest problem was dealing with the benefits we have bad distribution. people failed attention. tom: can prime minister may provide leadership. ? is this something else more of the united kingdom? adair: i think she is saying a lot of words. on a lot of different subjects, we really don't know what the substance is. we don't know what the substances. tom: he just said that about mr. trump. adair: it could go this way or that. i don't think there is an erratic schism about theresa may. we don't know what can greatly sits behind her general philosophical statements. francine: we will be back.

we will have more of this spirited conversation. we will react in a couple of minutes. this is bloomberg. michael mckee sits down with christine lagarde in peru. .hat is at 3:00 this is bloomberg. ♪

tom: good morning, everyone. we are thrilled you were with us. it is a dizzy friday morning. taylor: volkswagen has reached an agreement with workers to cut as many as 30,000 jobs globally. they are planning to save $3.9 billion in expenses as it tries to clawback from the emissions scandal. the company says the reduced headcount which represents 5% of the workforce will come through attrition. bloomberg business flash. tom: thank you so much. we greatly appreciate it. hisant to get right to latest essay.

this is something dear to all of us, on education. the skills the illusion. more people are receiving higher education does not mean they are better. that is controversial and that doesn't play well. adair: it is deliberately controversial because i think in the face of rising inequality across the world, the easiest nice richus to say as liberals is we don't want to redistribute. it's all about skills and if we give people enough skills, i think we have to think about that. we may be in a world in which

information and communications technology allows us to produce all the manufactured goods we need with a tiny fraction of the workforce. other people will get jobs. they will get jobs in personal care services. i am not convinced that if you give them the skills to the other they necessarily get higher paid in that job. there is something deeper than we understand. tom: is this an age of n age of too many people? adair: we have the productive capacity to produce all the things that are required for a good life with only a relatively small proportion of the working age population working full-time. take for instance the area of software.

the extraordinary thing about software is what you make one copy, the next billion copies are free. their only needs to be a relatively small number of smart people to create all the software. it still only going to be a small proportion of people. francine: the problem is you take a step back in this advancement to make sure everyone else is better off. how do you deal with this? this can't be the way forward. erik: i struggle when people have a hypothesis of supply and demand being out of whack. i think it comes down to income distribution. capital has taken such a big share compared to wages. redistribution in many different ways, the more practical indication is germany is doing

it quite well. downhave educated people the weight. high: you can maintain employment if you are a huge exporter. germany and the small number of other companies produce all the manufactured goods the world needs. we will probably produce all of them by employing 3% of global population. tom: we're going to have to leave it right there. thank you. we continue. ♪

call it the trump dollar. this morning, and the dollar

crushes the best laid plans of emerging-market nations. malaysia reacts to the new america. the euro weakens towards parity. transition is easy. there is no white smoke emanating from the trump tower. greetng by for a meet and . as certain markets get out front of chair yellen, there is no rate risef a mid-december. good morning, everyone. this is "bloomberg surveillance." we are live from london. with francine lacqua. these are images from germany where the president will move from germany to peru. michael mckee is in peru to speak with madame lagarde. francine: i guess some of president obama -- some of his legacy that he wants to do for security during a lot of folks talking about the transition team, the politics, and we have a great story about some of the

trials he is facing. i do not know whether it is secondary or we need to pay more attention to it. what you are flying back to new york tonight. tom: that is the rumor. francine: what time of -- what type of new york are you going back to? moving hisis transition team from trump tower out to his golf course. on fromow two fridays the election, and you say it is a time to pause and think forward to december. by now we are going to get a transition update from taylor riggs. president-elect donald trump has offered the position of national security advisor to retired lieutenant general michael flynn. he is the former head of the defense intelligence agency and a key military surrogate throughout trump's campaign. he has also been a vocal critic of president barack obama's

strategy to come back islamic state. trump is planning to meet with mitt romney tomorrow. a vocal trump critic earlier this year. a transition official says trump is considering romney for secretary of state. sent tondidates are include nikki haley, former u.s. ambassador john bolton, and rudyr new york mayor giuliani. in france, former president nicolas sarkozy is heading into a weekend presidential primary as a front runner in a race that could determine the country's her. if sarkozy defeats jup in the republican -- if sarkozy defeats -- e in the republican sarkozy's attempting an unprecedented come back after being defeated by francois hollande in 2012. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries, i am taylor riggs. this is bloomberg. tom?

francine? tom: right to the data here, and it is dollar, dollar, dollar. equities, bonds, currencies, euro-dollar, 106 .20 1.0623. 623 -- now 1.03.1.05, that is the big news now for chair yellen. the yen weaker, a solid 110 handle. a stronger dollar earlier this morning. francine: this is what i am looking at, the dollar extending its weekly surge. the european stocks i was a little perplexed by because they started higher, now they are down. at the vix slightly up 13.65. tom: putting it in perspective, part of that is a plaza accord of 30 years ago.

then you go on to the rubin dollar and you see the recent dollar strength. this is dxy, the major trading partner index. the arrow in the middle is weakness,re than the pulling the arrow over to the right. you can see that the percentage moves so far at dollar strength -- i would say we are really getting out there from the 1990's. are looking at dxy, i am looking at the bloomberg dollar index. the blue line is the bloomberg spot index, the rate increase in december. just so you know, the red line is the brexit vote, the three-month low on dollar is the circle. and then we go on to the u.s. election. there is a clear correlation, but there is probability priced in now with a possible hike in

december. this forfrey yu does ubs, a strategist, particularly making things with foreign exchange as well. thrilled to have you here on a day of the dollar rally. it is a -- is it a brutal dollar move yet? ffrey: can you ever in the context of u.s. inflation president-elect trump saved we do not want a strong dollar? that is just unfathomable for his personality, the evidence that has presented at this point. it is a search for sure. francine: we are extrapolating, but you could see him saying that the dollar's too high and other nations are cheating america.

tom: i think as lord turner said in the last hour, we do not know what the rhetoric will be. francine: so how much do we know about dollar strength from now on? we do not know if the grade inflation experiment will work. geoffrey: if the fed comes back in, and you look at asian currencies -- you mentioned malaysia, dollar strength right now, and i'm looking at the cuny and what is going on right now. there are the key dynamics here. tom: u.n. barry eichengreen of greeney, professor i can making clear that we cannot predict the dollar. i see a trend. do you presume this to be a strong dollar trend, or is it a one off election move? this one offhink election move has compounded what has been a trend affecting u.s. reflation, stronger than

anywhere else in the world. but up ahead, whether the euro is trading -- of 1999, 2000, 2001, every en nation said we cannot trust those guys anymore and we are going to rebuild our reserves. is that where we are heading now? building reserves so we can protect them from the new responsibilities perceived by the new president? they are in no position to build reserves. francine: what does it mean for the china-u.s. relationship? how much they own in terms of treasuries? geoffrey: we need to take reserves out of the political equation with china. it will hurt china much more than it could do to the u.s. if anything, china needs the managed capital outflows, irrespective of what the u.s.

administration says. francine: we have talked about dollar dynamics. it is unclear at the moment, a mishap in foreign policy by donald trump, what that would mean for dollar moves. easy thing for trump to do would be to label china a currency manipulator. paying -- xi jinping, herein lies the risk of something that could have the results of escalating something more dramatic. we are watching the reaction it did more than what could be launched immediately. francine: do we need a plaza accord, and will we ever get one without china? geoffrey: i do nothing we are there yet. currency is less dependent on the current conditions. payments fornce of

now. but arguing for a stronger dollar helps the u.s. reflate. tom: and of course one of the bigger differences is that we ,re in such a floating world more so than we were for the plaza accord. an important paper this week looked at dollar strength and how it folded into the given leverages that are out there, and how that fulton to trust and ultimately that and how that folds into trust and ultimately the liquidity in the system. are the ghosts that we need to pay attention to, stabilizing the bank financial system? geoffrey: the dollar is the funding currency of choice. we have to go back to the emerging-market debt. they could resurface, and it folds right back into oil in the engine, if you will. geoffrey: definitely.

the u.s. is less dependent on external conditions now. this is important. this is really important. every time in history we have had this conversation, you get a reversal and the politicians say, enough, we cannot take anymore dollar strength. donaldbelieve that trump will say enough to dollar strength? we have to take our lead from the fed. if the fed says dollar strength will fall to mentally -- will fundamentally alter things -- francine: it has so far. we know that janet yellen has been in the back quietly worrying. geoffrey: but now we get this big infrastructure piece, domestically driven. it could get interesting.

talk aboute have to funding. geoffrey yu from ubs stays with us for the hour. later, michael mcgee sits down with madame lagarde. this is bloomberg. ♪

words delicately stated that he is the federal reserve president from st. louis, an important smaller paper about four months ago on regime change. a different methodology for central banks, important as well. at this meeting, what is important is that bullard sits

with john cryan at deutsche bank. that will be most interesting, to see if they go back and forth. we welcome all of you to london, francine lacqua and tom keene. mr. trump is in the news as well. let's go to a business flash. here is taylor riggs. taylor: unicredit will announce the result of a strategic review on december 13. report, the a press lender is considering raising as much as $13.8 billion. its ceo is under pressure to reduce capital buffers. the price eroded more than half the company's market value this year. volkswagen will cut as many as 30,000 jobs globally. the automaker is planning to save $3.9 billion in expenses as it tries to clawback from the emissions cheating scandal. the company says the reduce

headcount, which represents nearly 5% of its workforce, will come through attrition. bw agreed to know forced layoffs vw agreed to know forced layoffs until 2020. tom: there are 14 things to speak with marty schencker about this morning. he has been watching the u.s. festivities from washington. guess it is not cap david. maybe it is cap donald. , the camps to new jersey and takes the transition team with him. are we expecting any announcements today? are not expecting announcements today, and it will be a big relief to folks in manhattan that donald trump's entourage is moving to new

jersey, given the gridlock it has created here . he is meeting with mitt romney. looking at him for secretary of state means probably no announcements today. but over the weekend is a possibility. tom: explained to our global audience why this is such a big deal. will they be out on the golf course with governor romney and mr. trump? andfrey: kellyanne conway others have said they will have a traditional press pool received your set up for people who do not know. a press pool is an arrangement with the president to cover him and be with him 24 hours a day, seven days a week. the theory is that the american public needs to know the president is safe, and that is a way of doing it. his slipping out into the astaurant the other night was divergence from that plan. we will see how it goes.

francine: marty, if we do have the appointment of mitt romney, what kind of signal with that say? mitt romney has been highly critical of donald trump during his campaign. would it mean that he can actually unify the country, where is that a step too far? first he has unify the gop. if he were to pick mitt romney, it would send a strong signal that he is going to be a pragmatist, that no matter what you said during the campaign, this is government building. he is going to reach out to friends and enemies or opponents alike. it would send an unbelievably positive signal to the gop establishment and change the tenor of the whole transition process. look, marty, at the back and forth on michael flynn. he is out at the university of ,hode island, and general flynn of course, to get an important

position here. mr. flynn is controversial, to say the least, right? marty: he very much is. as i said earlier, colin powell once described him as a right-wing nutty, very aggressively against obama's process in the mideast. he has been with donald trump throughout the campaign, and even those in the defense establishment think he is sorted out there. so, yeah, there is a lot of controversy over him. tom: let's finish up with a broader, bigger view. this is david brooks out of "the new york times," speaking with the election -- -- speaking after the election --

tom: if we suggest the president-elect, like all of us, is a mansion with many rooms, who is going to give him the civic education in washington? marty: i think donald trump has a sense of that, and especially if he takes someone like mitt romney into a cabinet position. it shows that there is room in the mansion for everyone. so i think he has actually bought into that. marty schencker, thank you so much, from washington this morning. it will be a most interesting weekend. does the weekends on from this election. coming up, the conversation with james bullard and matthew miller in germany. we will do that in the 7:00 hour. from london, francine lacqua and tom keene. stay with us. this is bloomberg. ♪

francine: john cryan, the ceo of deutsche bank, in conversation in frank for it. the man everyone wants to hear from, deutsche bank under pressure. john cryan speaking, saying banks need to be stronger. he is also talking about the effects of monetary policy, and negative rates. at the same time, in germany, angela merkel saying goodbye for the last time to president obama. germany, flying from where he will go to peru to meet

with other world leaders in lima. there is the president. tom: this is a huge deal. all the literature says that the chancellor is the last one standing, with the seismic shifts we have seen with brexit and trump and the italian referendum. here she is saying goodbye to any year relationship. francine: right. she has been in charge of germany for 11 years. one of the things we have been trying to find out is whether she wants to stay on as chancellor. there are also elections in germany next year. you look at the trump transition team on to january 20, the inauguration, i wonder what barack obama up legacy will be. -- i wonder what barack obama's legacy will be. s and historic moment. is it a hub and

spoke system? is it every nation for itself? geoffrey: i think clients are worried that it is going to be the latter. they have to force the run relationship. i still think the risk that europe faces right now is an isolationist u.s. that is certainly not in their interest. outpe needs to sort itself first. john cryan immediately goes to negative rates. this chart is extraordinary, folks. this is something geoffrey yu , underfrom jackson hole duress, professor goodfriend and others feel sharply negative rates that box down below is where we need to be. we have not had the courage yet to test that thesis, have we? geoffrey: you have to look at which individual economy needs negative rates or needs -- tom: does john cryan need

negative rates? geoffrey: i think european banks, a good portion, negative rates can be contracted as well. he is probably pushing back. tom: francine, this is going to be a huge debate at the end of the year, to see where the negative rate debate goes. francine: when you look at negative rates and you look at the massive movement in yield prices, the cuts of trump, maybe let's lookm: -- tom: at some data now. yen, 110.40. dollar index, a stronger dollar overnight. good morning. ♪

tom: on a jet plane -- leaving on a jet plane back to new york. that is what i will do this evening. it is a new york city, a second weekend after an historic trunk

election. the news this morning from "the washington times," the president-elect will migrate to new jersey, west of new york city, to his golf club, maybe to get some relief to midtown manhattan as well. we need a transition update. here is taylor riggs. taylor: japanese prime minister shinzo abe offered kind words for president-elect donald trump . the two gathered yesterday at trump tower in new york, making him the first head of state to meet with the incoming u.s. president. abe later spoke with reporters. >> we had a long and frank discussion on a number of issues in a warm atmosphere. i can confirm that the president-elect is a leader i can trust. he declined to discuss the substance of the talks. trump's earlier statements about trade and security have sparked concern in japan. russian president vladimir putin

is making sure he will remain a force to be reckoned with for the next tenant of the white house. he is setting up a team to in 2018.wide margin vladimir putin's approval rating is 80%, and one report says two thirds of russians want to see him continue after 2018. saudi arabia's energy minister 2030oil production exceeds 2 million barrels per day. -- opec members are in doha today for talks on finalizing a deal to rein in -- to bolster prices. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries, i am taylor riggs. this is bloomberg. francine? tom? tom: it is a conversation we could have this morning from somewhere between two and three

hours. we have a set number of minutes with craig fuller. you may not know the name, but he is the senior vice president of transition for the 20th century, serving president reagan, serving on the transition for george herbert walker bush. experienced is more in transition than most any other person in 2016, and he joins us now. we are thrilled to have you on the program. 's biggest. trump transition headache this friday morning? craig: good morning. it is great to be here. -- this process starts the day after the with 73 days to put a cabinet in place, to put your top advisers in place. i always looked at it, when i cochaired toward herbert walker bush's edition, you had to find the top people for the top 100 jobs, get them cleared, get them confirmed.

that is what looms large, and that is why he is reaching out and talking to so many people to determine whether they fit in his organization, or whether there are other people that he might consider for the new administration. tom: there is great polarization, as there is with official, with the core group and the centrist group. it was governor reagan of california and george herbert walker bush, exceptionally experienced with washington politics. mr. trump is not. will he fall on his old guard group, or will he go for the centrists, including secretary of state romney? craig: i do not think in my comeime the president has to the white house with no voting record, and he seems to be free of sticking to some

things that he said in the campaign. i think he will put a cross-section together and balance both the white house and cabinet to avoid falling in either of the two camps. we have seen that with the chief of staff, but then he offset it with mr. banyan -- with mr. opinionated, strong-willed individual. i do not know how it is going to work, but he will combine these different personalities in his administration. francine: does this work in building a team if you have people that are vastly different, or do you need to have 100 people working in the right direction? craig: a very good question. if you want a range of views coming to you, this is a good way to get it. inside the white house, the white house is a pressure cooker. the people there are there to support the president. if the debates continue too

long, you never get to the execution of a set of initiatives. so i think it puts more pressure on president elect and soon-to-be to be president trump when this diversity exists, if it continues to exist, but that seems to be the way he likes to run things. francine: greg, there has been a lot -- craig, there has been questions about a conflict of interest, concerns about nepotism. are there a set of laws that you can view to determine who to appoint? bitg: that story has been a overblown in the absence of other news. for the president and the vice president, really the conflicts do not apply. the conflict of interest laws do not apply. he is taking steps to be president elect. trump seems to be taking steps to try to avoid that. there are very strict rules laid out for everyone else. so people coming into his

cabinet, or people coming into the white house have to free themselves of not only real conflicts, but a phrase that is used is, the perception of the conflict. the perception of a conflict presents a pretty high bar to meet, so you have to extract yourself from current engagements. this does not apply to the president and the vice president. we had never seen a president elected with the kind of portfolio mr. trump has. so we are in kind of uncharted territory. tom: craig fuller, president obama will get on air force one and fly to peru here. you are the guy who has to tell people they are not going to fly on air force one. you are the guy who has to tell somebody they are not going to the ambassador, but they want to be ambassador to france. you have to say you are going to be the ambassador of whatever nation i do not want to insult this morning. how do you do that, mr. fuller? craig: it is safe to say a

number of people coming off a campaign have very high expectations of what they should be asked to do. reality sets in pretty fast, and i will say that one of the great things about president-elect george herbert walker bush -- we really pleaded with him to always have a minimum of three candidates for each position so that we could say to people, you really are on the short list, or you really are going to get consideration. and then for the two that do not get it, they are disappointed but at least they felt they were considered. it is a challenge and you have to work through a lot of good some of theirh expectations quickly. tom: this is a delicate question. -- we herbert walker bush all can agree he had a certain more tooming out of his

experience and his work out of the 1950's and the 1960's. can mr. trump be taught grace on the job? craig: well, it is a delicate question. i think we are in for a different approach. i think the american people saw very clearly that mr. trump can be tough and he can be very direct, and he is going to push back if he gets pushed. they voted for him. i, however, do believe that the job does change people. responsibility, the place in the world in which you set when you are in the oval office does tend to have an effect on anybody that i have ever known who has been there. i think you will see somebody who takes account of that and maybe is a little bit more

circumspect, shall we say, when different views are expressed or come into him. we will have to wait and see. tom: craig fuller, thank you so much. mr. fuller, with service to president reagan and to george herbert walker bush. coming up, a conversation with james bullard, with matthew miller in germany. looking forward to that. president obama travels right now from germany to lima, peru. michael mckee is in lima, peru. much more to come from london. francine lacqua and tom keene. this is bloomberg. ♪

francine: this is "bloomberg surveillance." i am francine lacqua in london. tom keene is here for the week, but he is off to new york. coming up shortly, "bloomberg daybreak: americas." jon, there's bullard on your show. that dot. jon: the story so far, king dollar back. we will talk about the implications of it. how destabilizing could it be to the financial system tackle and the on that, what it could mean for the risk rally. really looking forward to that interview with the st. louis fed president. coming up in about 30 minutes. toming forward to having

keene back, who keeps sending me photos of every single restaurant he visits in london, every single evening. with photos of cigars. francine: i do not get told anything. cannot wait to get back to jon, and we will transition there. jon ferro coming up with "bloomberg daybreak." he has transitioned to lima, peru, michael mckee with christine lagarde. somehow, mike, i think he will speak to her of the american transition going on right now. mike: that is absolutely true, tom. we are going to have 21 liters that rim the pacific here. -- we are going to have 21 world leaders that rim the pacific here. donald trump's anti-globalization policies kind of scare the leaders here.

we do have a kind of divide. you have the big countries, the developed economies. they are really nervous. president obama, you can understand why he will be one of the last ones here. this is his last for an engagement, and he has to tell states isthe united not going to pass the transpacific. the smaller economies, the developing world are all still in favor of it. xi jinping is here, pushing a free trade agreement of his own, putting the chinese in the center of drawing the rules of trade in the 21st century. it will be interesting to see how that plays out. of theght now, images president traveling from germany to lima, peru, to meet with michael mckee and madame lagarde. for those of you on bloomberg radio in london, good morning. thrilled you are with us. it is air force one with the red carpet rolled out, and of course the staircase up. of course, the president

arriving now at the airport for the travel to peru. we will watch this. michael mckee, while we look at these images of the president, madame lagarde has been way out front on slow economic growth. would you suggest because of the election of mr. trump, that the imf will be raising their u.s. growth forecasts? one would assume that that would be in the next. the problem is they do not yet have the numbers to plug into their models. we will hear from them again in march or april, around the time of the spring meetings for the imf in terms of global growth. but it is an interesting dilemma for her because she has been calling for years for fiscal stimulus around the world. now she may get a big-time in the united states, and at the expense of the other side of the equation, free trade. francine: i wonder if she was --

i wonder what she will say about free trade and if there is any advice that she can give, given that she has seen the process of , told trump being elected european politicians, to bridge the barriers we are having between the people that vote who are angry and our politicians. directhe has been very with european politicians for a couple of years now, telling them they need to focus on stimulating growth or they are going to have political problems. i am going to ask her about that because, as you know, we have the french elections coming up. a lot of people are talking about the possibility of a donald trump-like result there. never beenen has broadly popular, but we did not think donald trump could be anywhere. she may have some advice for people in her own cone country -- in her own home country. tom: michael mckee, we greatly appreciate it this morning.

the president, really some of the final duties that he has. i cannot say enough about the transition from the second tuesday in november -- from the .econd tuesday in november francine: when you look at this lame-duck president, i know that the term is, as you say, a term full of respect. it is amazing to think what barack obama's legacy can actually be. there is the president getting out of his car on his way to air force one. you could almost not have two more different presidents. barack obama, what he stands ,or, what he has tried, failed or delivered -- we do not want to judge -- over the last eight years, and what donald trump represents. tom: certainly he and barack obama's philosophy has been

shaken with what we have seen in the senate. geoffrey yu with us from ubs. i think one of the hallmarks of michael mckee's conversation with madame lagarde will be the imf view of italy that francine mentioned earlier. that has been the focal part of our discussions in london. how critical is italy right now? geoffrey: people are looking at italy as another signpost of, is populism on the rise in europe? and what is going to happen in france and germany. tom: is italy and emerging-market? geoffrey: italy's debt is quite interesting. of demand, i lack do not see that as an issue. a lot of it is self-funded. but we do not want to get into a position where politics gets people to question. francine: as we look at president obama climbing the steps and getting on his flight to lima, peru, where michael

mckee is, we reflect on the trade deals that he has put into place. voters should love tpp, some of the trans-pacific partnership spiris. if you look at the benefits, they should. is that right? geoffrey: the consensus is that globalization benefits the economies involved. .his was brought up earlier something that china is trying to push right now. is this the alternative? huge differences between something like a pack and tpp -- like apec and tpp. here is where there needs to be a key distinction. geoffrey yu, thank you. we just saw president obama getting on air force one, waving

goodbye to europe. i believe this is his last trip as head of state. tom: waving goodbye to europe. francine: we do need to reflect on what he stood for. tom: think of his berlin speech eight years ago. francine: and how the world has changed since then. this is bloomberg. ♪

tom: good worldwide, everyone. "bloomberg surveillance" from london. michael mckee, in conversation with madame lagarde, later today from lima, peru. a huge night for the dollar. 110.23. euro-yen is what the pros watch. it is strong euro versus weaker yen, and there is the dollar 100.96. this is synthetic euro, back 40 years, and the idea of coming out, the blue circle. 1.40, 1.50 the

memory. once again, we are on parity watch. every 16, 17 months we are on parity watch, and last year it never made it and people forgot about it. this seems to be back in a lot of houses. not something that you think will happen, euro-dollar parity? if a martian came and understood economics, they would 1.21, 1.25?t europe the markets have to decide right if it is excessive. we think it absolutely is. nobody is paying attention to the policy differentials right now. francine: what kind of facts would you need? we would need new

facts saying that the political part for the european union or the euro as a whole is going to be further deterioration. let's look at the geoffrey yu outlier bet right now. ring up the chart. this is xyz axis, the currency that on euro. the bright red is that weak euro one-way bet. you are going against the one-way that. how exposed is the market to being wrong? you look at how dollar-yen has done, it feels like the dollar-yen low was a bit of a one-way that. people are saying they have let go of the yen, they are going to let the yen strength and? no one has that view, and we are coming back that way. francine: what is your favorite pairing? geoffrey: if you want to insulate yourself from all of the g3 risk, we have europe

market currencies with the real and the ruble. and we bounce them against the benchmark currencies. that kind of diversion see -- most people agree right now that there is devaluing right now. so with brexit -- grrr. francine: very churchillian of you. londonam not leaving until they build a third runway at heathrow. it is not happening. to our technical team in london, best espresso on the planet. michael mckee with madame lagarde today. stay with us. ♪

jonathan: good morning and a warm welcome to "bloomberg

daybreak." alix steel is on assignment. i'm jonathan ferro alongside david weston. futures are little bit softer ahead of the open. the bond market earlier on, we did print a year today high on treasury yields. king dollar back in the driving seat, david. david: ok, we are going to start with the king dollar. the dollar rising against the euro. the greenback is getting a further boost after fed chair janet yellen's comments that a december rate hike is likely. coming up, an exclusive interview with st. louis fed president james bullard. bonds are poised for the biggest two-week loss in a quarter-century. president-elect trump continues his marathon of