♪ francine: and upset victory in the republican primary in france as governments break into the opening. needs a deal? saudi arabia said demand and supply will stabilize without an opec cut. and, theresa may posts are polish counterpart today. she admits the protest is keeping her up at night.

this is "bloomberg urveillance." i am francine look. happy monday. we have a great show lined up. party and hadhe off the challenge from the national front? we get the latest from paris. plus, aberdeen asset management reports net outflows. we interview the ceo martin gilbert. into trump trades falters. some of the trades that have performed best sentencing election. taking the pulse. here is nara. nehra. nehra: ministers are flying in for talks to saudi arabia for the first time. delegates due to meet and be in

on wednesday. finalize the terms of the first production decrease and eight years. president-elect donald trump has claimed without evidence the u.s. evidence had fudge want voting. he said he won the popular vote if millions who voted illegally removed.ry are a push for recounts and three battleground states. cap said that was also budget went and called his critics cry babies the death of longtime leader fidel castro. cuban flag is flying at half mast. funeral will take place on saturday followed by a burial in a san diego cemetery. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries, this is bloomberg. this is bloomberg. francine? francine: these are your markets. europe, unchanged. on the lower side.

down to 0.9 percent. dollar dropping. i want to show you the price of oil. overall, it is because we have opec meeting on wednesday. this is the picture for yen. 111.97. and the candidate for the presidential elections in france. runoff creating about 60 some percent of votes andpledges to/taxes and propagate labor reform. now from paris. where does this leave next year's presidential election? is it too soon to know? >> if we believe the european we have to be careful. this victory downgrades the chances of becoming the next

president because some of those .ay have been tempted by votes some of her views on france leaving the eu or leaving the eurozone might be better now she is with the program of one who is considered a conservative right wing program, maybe less extreme views on some of the social issues or the issues with the european union. the victory as the republican nominee, the odds have been checked by bookmakers. according to them, the odds are five-two against the national france and in a related poll we had yesterday, the results of the primary actually shows that thate roughly on might --

fillon and 32% for marine le pen. for the candidates from the centers such as for example emanuel who was on tv last night. he said the viewer a french life is from the 1960 and his vision of the economy is from the 1980's. the era of course, of margaret archer. much.ne: take you so in paris. nell on today's show, managing member. innow you are quite bullish southern europe. what is your take on france. i know you have investments there. this political turmoil change

everything? >> thank you for having me. i think it is bullish for france. or once we have a common sense candidate. he has a wide mandate. as you saw, he won with 67% of the vote but more importantly 400 million plus people showed up at the primaries to vote for him. the french economy is gradually recovering. it has been a bit of a laggard in the past couple years. i think this would be the ideal boost to bring back investment, most notably to the victor. francine: i know it is extremely difficult to say because we don't really believe the polls at this point but when chance to get in? are you present? 50-50? chance.tty high again, the turnout yesterday was very high. i think there is perhaps some form of willingness from the for a to sort of go

no-nonsense candidate. we've had 30 years of strange economic policies and france. the 35-hour week which went pretty much against everything that was done in the rest of the world. time in age go down when it went up in most other countries. it has been going against the tide, if you will, so perhaps now at a time when everyone sees -- surgingrving everywhere else, perhaps the french will take the other side. francine: the problem is -- will you actually cut your stakes in france? >> yes. i think a marine le pen win would be disastrous not just for france but for the world. francine: does a marine le pen mean -- win when

mean -- if the eurozone were to break up, realistically, would have to break up with the hard currency countries at leaving. not the week currency countries at leaving. we saw that with grace. they went to the brink. they looked at it, studied it, valued at, and decided they could not. that was a marxist leninist government at the time led by people that were pretty extreme. francine: thank you so much. managing member. women be back in a couple minutes to get one grace as well. stay with surveillance. more coming up including aberdeen's outflows. rhyming the economic and political news for a further drop in funds under management. we interviewed the ceo martin gilbert.

plus, can the challenge for marine le pen be staved off. and, trump trades falter. the dollars drop and bonds gain. take a pause. we will bring you all the news you need to know. this is bloomberg. ♪

♪ francine: aberdeen asset management shares are a little bit lower. let's get the chart up so we can doing.t it is reported earnings gaining 1.6%. outflows of 7.2 billion pounds in the fiscal fourth quarter. ceo martin gilbert said the political news flow had weighed

on sentiment. live from his offices in london. welcome aberdeen asset martin gilbert. always a pleasure because you insight into the market. martin: it is looking better in the fourth order. we saw inflows into our emerging market products. while president-elect trump might be good news for the u.s. market, it certainly has not been good for emerging markets. people thinking he might be a protectionist president. so, it could be a buying opportunity. buy ane: is it a opportunity for you, martin? martin: i hope so. i tend to think if he lowers taxes people will feel good, and inevitably that will benefit emerging markets. francine: right. over time are you going to see huge outflows in emerging

markets of the fed hikes and december? that is pretty much priced in 100 percent. re-inflatingind of of america. marketspens to emerging in the next six month/mark martin: i don't think we would expect to see massive outflows from the funds. we would expect to see inflows as people wait and see. some of our clients who work positive on emerging markets have gone back to neutral, a lot of the private banks. that is where i think we will see the change. francine: martin, how important is it to stick to your dividend in these times? martin: i think we're obviously very pleased to pay unchanged dividend but i think the industry and by that i may the asset management industry has a lot of headwinds. capital, feery

--ome pressure, the rise of the rites of passage. all of this points to a more difficult time for the industry. i will not give any prediction that we will pay an unchanged dividend next year but we will see how things go. you never know, emerging markets may recover usually. francine: you never know but they could recover on the back of what, exactly? martin: i think they have had five horrible years. i think there is a lot of catching up to do. they are growing well. i mean, india is still doing very well. china is growing reasonably. but of course there are the as e.on countries. -- of course there are the asean countries. they are doing pretty well in terms.

francine: you said you would like a similar deal to janice henderson. are you looking to merge? martin: if we could find something like that. i actually said i thought it was a very clever deal at henderson because we all want more access to the u.s. market and the u.s. firm manages such as janet's are keen to go more global. i think it is a trend we will really we have nothing planned, sadly, in the near future. francine: are you looking? and actually, martin, british were ideal deal? would you be a acquiring someone or would it be a merger? martin: acquisitions are always easier to integrate dan mergers. but at this -- then merges. at this stage, we have to look at what is good for the business and there is great opportunity.

i've always said to you, in america it has got more than one half of the world's wealth. it is an area where we want to involved. francine: you would look for an opportunity that gives you exposure to the united states, is that right? martin: yes. i think so. especially distribution in the u.s. we have always been keen to sell. seller is the wrong word, but for more of our capabilities to be bought by u.s. investors. so something that gives is that is really where we are. but really the rest of the asset management industry is looking as well so we are not unique here. henderson's been a sold to it. francine: martin, jubilee is it president-elect donald trump will deregulate asset management in the u.s., therefore making it even more attractive? departmenthink these

of labor roles are certainly causing a lot of consternation with the u.s. as a managers and i must admit i am not fully ok with the actual detail of the regulation but i would think that for us as ana independent asset manager, any real change is going to be beneficial. i think he will probably deregulate the banks more. just make the usa more business-friendly area for especially the european banks to work. but let us wait and see. francine: i ask every time, margin, and i have to apologize but you know you're one of the very few european businessmen who knows donald trump because you dealt with him in scotland when he was opening some golf courses. is there anything out of character in the last few weeks. i imagine you follow the tweety said or is an online with what

you are expecting from him? martin: i am thinking very much in line with what we would expect. we have to remember with any politician, what they say in an election or campaign or whatever is not what they will do after the event and i fully expect donald trump to fall into that category and i think the world thinks actually he could be quite a good president. he may surprise on the upside. that seems to be the general view. francine: do think he will surprise on the upside? what will he do? all the fiscal spending within hoping for for quite some time? push thee able to dollar through? martin: he is in an unprecedented position of strength. i think people say the strongest president since 1922 in terms of capability of pushing legislation through. firm view is and my hope

is that he does borrow more and borrow more long-term debt, issue long-term bonds and invest in infrastructure. i think that is the only way we are going to get these economies going again. hurtful would that be for the european economy? i am thinking deregulation and banking stocks. i know aberdeen holds a lot of these european banking stocks, especially the u.k. once. to they automatically suffer if he deregulate's wall street? martin: i think it depends. you have to look at that bank-by-bank. clearly, lloyds is very much a domestic bank now so it will be unaffected by brexit or president-elect drop. .o -- trump it is dependent on the u.s.

which seems to be doing well. obviously if you're looking at or the credits leases, i think a liberalization or toning down of the u.s. regulatory environment will be beneficial to them. but at the end of the day, the wall street investment banks have really come through since 2008 very strongly. youcine: martin, where do expect the most volatility? currency? bonds? actually equities? martin: i think probably bonds and currency will be the two .olatile areas presumably equities will be. whatever is unexpected rarely happens. thinking, be my definitely currencies and bonds. francine: all right, martin gilbert. great as always. ceo there.

bringing the corporate news to watch out for this morning. this is bloomberg. music don't

♪ francine: this is "bloomberg surveillance.", i am francine lacqua right here in london. >> at lufthansa pilots went out on strikes tuesday and wednesday. the company says it is working on special flight plans for those days. about air has been fined

$1.2 million for paying undue profits to its owner-family. sent to the prosecutor for further consideration. korean air was not immediately available for comment. u.k. servicein the sector are increasingly pessimistic about the future a pricesosts slow and rise. survey say they were less confident about the business situation in the third quarter compared with the second quarter. businesshe bloomberg flash. francine? atncine: when you look brexit, what have we learned? i know you are bearish right after we spoke after brexit. are you even more bearish now? >> yes, i am still bearish. typical of macro adjustment next.you have the economy investment is coming to a halt. i would be worried about real

estate in the u.k., since we've had such a huge bubble for such a long time. going forward at some point it will hit the consumer and that is when you will really see the impact on the economy so yes i am the economy so yes i am still any negative unfortunately. francine causing you don't own anything? >> i don't own anything in the u.k. francine: so we will focus on what you do have. coming up with plenty coming your way including the presidential primary. his seed the man? we speak to the economic advisor. his is bloomberg. ♪

♪ bloombergthis is surveillance, i am francine lacqua london. we're at the bloomberg for your asset check.

nehra: is the trump factor losing a little bit of's way? trades have performed best in the three weeks since the election results. taking a breather today. the bloomberg dollar index is here. the technical rsi index underneath. the biggest drop since september 21. on its 2nd avenue decline. the relative strength index is not only it may be overbought, of course that is when he goes over 70, it has now dropped back through 70 suggesting it could be a cell signal. if we look at the dollar again, it is heading for its biggest decline in two months. this is the 10-year treasury yield coming down today as well. one trade that has performed well since the election of donald trump and which continues to perform well as the metal trade. metal mania if you want to call it. a strong rally today.

zinc headed for its strongest close in nine years. for its strongest close since 2013. the speed has left the 14-day relative strength in index. yes, i am loving that technical indicator at the moment. zinc, lead, and copper all above 80. perhaps overbought. commodity market of oil very much in focus today with the opec meeting happening in just two days. it is extending its decline. a euro.w $46 developments over the weekend, saudi arabia for the first time on sunday suggesting opec does not necessarily need to curb output. and out of a meeting with nonmembers including russian. a lot going on at the moment. opec holding an internal meeting today in guyana to resolve its differences and oil ministers from algeria and venezuela heading to moscow. with all of that, oil price extending declined to today.

impact elsewhere, multi-asset view looking at gmm. you can see here what is happening in equity markets in europe. the ftse down a must 2%. your stock down almost 1%. 1%.deck down almost same for the ftse 100. with a weaker dollar, the euro up again. 6/10 of a percent. you're seeing yield come down in europe. tracking this treasury yields. tenure german deals down three bases points. i talked about what is happening with the metal. if i sure you the imap on the stock, you can see what is happening. the stoxx 600 hit a one-month high on monday. coming up that now. energy stocks lagging. down 1.7% on the weaker energy price. francine? francine: thinks under pressure today because we are about six

days away from that all-important referendum. expected to possibly take political risk back at across the -- in europe. this is it today. down 4%. a little bit different because they are going through -- capital plan was approved last thursday and today down 12%. closed lower. 2.6 percent. to our guest. i want to show you the bank because i don't know if we are jumping at shadows. political risk around the corner. everybody concerned, investors assume the worst and hope for the best. it would be a case of the referendum come december 1. the conclusion because we've seen bad political

results or outcomes for markets this year with brexit and trump. they are assuming the italians, the french will also surprise on the downside. they've jumped to the conclusion renzi will lose his referendum next weekend and it is too close to call. good chance the yes winds. let's say it is no. what exactly is the issue? a movement which is an extreme. they would want italy to leave the euro. as an investor you are bullish. the two cannot really match. >> know, they can't. i just him believe he will come to power any time soon. i think there will be a change in the electoral law. modifications. go to elections. i am not sure. there will be a coalition.

referendum i see is a risk on the upside. the downside is already more than a standby markets. i think markets are looking at this -- if you look at the spread between bcp and don't it is blown out -- and that it suggest to media the market is taking significant chance that the -- no be no with wins with a resounding majority. i don't see that happening. that is not a scenario. i think the yes wins. that would not surprise anyone. i don't think anyone owns any italian assets as far as i can see. chunk of our portfolio, 50% of our portfolio. iancine: sovereign bonds? know you mentioned the german-italian. that i have the italy and france in your 10-year.

itself has widened against germany so it is completely blown out. right now.about 10% spain is 1.6. it gives you a sense of the damage we've gone through. i do not think bonds are particularly attractive in europe, sovereign bonds. the ecb has been buying with its program and as a result it has re-compressed bond yields across the board. i see a lot more value and the markets. banks, it is a complete disaster so i would go out and buy a number of the mystic -- francine: but how do you grow? the problem with the banks is it is very difficult for banks as they growth there is no yield growth. >> so, unemployment is going down in italy. i am always surprised when i talk to people, especially have the eurozone is a complete economic disaster.

francine: the levels are so high. they are close to what we are seeing. >> not that high, 11-12 percent. spain is a lot higher. employment in europe, in the eurozone, is at its highest since 2008. i don't think and love that in mind. granted, a big chunks comes from germany which was early in recovering from its economy. spain has been on fire of the last three years, employment growing very strongly. spain is now one of the fastest growing economies in europe. italy finally are starting to show signs of life and employment has been going up. jean -- gdp is going up. numbers,ok the consumer confidence numbers for the eurozone at the highest in the last three years. industrial production any good. there's nothing wrong with those economy so the bats i think on the periphery is a much safer bet now given the economic

back inent than it was 2012 than we were in the middle of a double-depth recession. francine: thank you so much. also an inflation divergence i want to show you. a big difference from france and italy now sing deflationary risk but we will get to that in a minute because we have to talk about french politics. an unexpected victory in the french republican presidential primaries, taking about 67% of the vote. it can he reunite the party? joining us now from paris deputy mayor and economic advisor to the defeated candidate. great to have in the program thank you for coming in. or you surprised? is he the right person to unite the right? >> yes we were a little bit surprised especially one week fantastict because a

week, as you said, fantastic figure. even one week ago and yesterday with 66%. i think we are very proud of this election because we had to very high-level candidates. there are programs are not so far from each other. one tried to speak to all while the other had a better target on me right side of feet people here in france. the right side of people here in france. francine: why did he win by such a large percentage? did people see a new face? what he project a different image? >> i think both, you know what time former prime minister. as had long policy life.

probably what makes the difference is that france will arrive to very late -- france francois arrived really late. fillon, francois appeared as a challenger and he won in the last limit of timing and also because he had a very focused program on right-side people. again, i think the other candidate addressed his message to all french citizens and maybe appealed for men be people a little -- for many people a little bit too close from last time in's right to enough. -- and not right enough.

thinkne: you seem to fil will havel a littleon france. he will bei think obliged by the way to have a everybody around him because we need to have only one candidate to represent right side and center here in paris. otherwise, we will have difficulties. again, to win the battle against the extreme right and the left side. so he will now and i am sure work on a new program that will be not far from the one he was elected yesterday but taking into consideration also what the other candidate had in his program into taking into

consideration they have a mixed vote program to make the most powerful program for may 2017 because definitely our target nextis to win the election may. very muchthank you mayor. stay with surveillance. coming up, first oriole slide below $46 per barrel with signs of division in opec. will it disappoint the market? too far too fast, the dollar down as the three-week rally peters out. friday job numbers. theresa may brexit. and, political future in france takes on theillon far right. this is bloomberg. ♪

despite the political uncertainty, he is bullish about southern europe. talking about italy, saying look, the referendum when it problem. much of a heavily invested in greece. we are talking about greece and the fact are still in the eurozone. away.eek crisis seems far what about that-relieved though? will it come back to haunt is? >> that is a key question. there are two scenarios. one is they get their second onkage and reforms approved time and that sets aside the -- satisfies the lenders, the predators and in that case there

could be that relief and if there is that relief you could see the greek bonds, they are probably the only bonds that have rallied over the last month with the yield in gdp 10-years seven.own below eight to i think this government has changed radically. people are intent on getting reforms done. if you get them done, then you very-verysome positive surprises. francine: how masses to have in greece? >> we have 20% invested in greece. francine: and banks? >> banks are a great way to play that. we liked the national bank of greece in particular. so overcapitalize capitalized. 75% provision. francine: they are cheap? >> they are cheap. and they just recapitalized last december. after a very very onerous stress test from the acp. -- ecb.

francine: what is the probability of the euro breaking apart question mark what is the probability of italy or france are one of the major countries to decide they actually don't want to be part of the euro any longer? is that even possible? >> it is possible, i think it is very low. i think it is very low particularly coming from countries that are indebted. coming from countries like southern european countries that did not sustain macroeconomic shock and consequences of breaking apart from the euro. francine: what is the one thing you would like to be buying more of by the end of the year? is there something that you are waiting for the italian referendum or the french election? political risk richemont duet to your portfolio at the end of our beginning of the summer of next year? >> so i think fiscal risk is priced in the referendum. it is a unique opportunity for

anyone that is willing to take that risk to look at italian and southern european acids because i think the markets -- again on the back of trump. francine: why? do think investors are jumping at shadows in general or is it those that are less sophisticated about what is happening in the region? writes let's face it, the marginal buys , they look at their and market. they see the rise of populism of and usa and they sort reject then onto the confidence and imagine the marine le pen that anotherining could be in power in six-month, i can't imagine that. i'm not saying it is impossible, i am saying it is a risk. francine: thank you so much. stay with us. next, the top trade. european equity markets in the

red. we get a final take on the markets next. this is bloomberg. ♪

♪

francine: this is "bloomberg surveillance." francine lacqua here in london. forrancine, new strikes tuesday and wednesday. the company says it is working on special flight plans for those days. the past three days have affected 345,000 passengers on over 2000 canceled flights. the airline cannot survive if it caves in to the workers demands they say. and completed a 15 billion euro divestment plan ahead of its 2018 deadline. the ceo also said it may include cost cuts if the french utility seeks to weaken the road dented by falling gas prices. it had a record low and said 2016 earnings would be a the low end of its forecast range and citing falling natural gas prices. it aberdeen national management shares have risen the most and

said it would retain its dividend even though net output was high in the fourth quarter. aberdeen is focused and concern on donald trump policies would force the fed to become more aggressive been raising interest rates. korean air has been fined about 1.2 million dollars for paying undue profit to its owner family. the countries fair trade commission sent its report to prosecutors from further consideration. korean air was not immediately available for comment. the service sector in europe increasingly pessimistic. calling for the federation -- according to the federation of british industry, moore said they were less confident about the business situation in the fourth quarter compared with the second quarter. that is the lumber business flash. francine? francine: this is what your markets are doing. the donald trump doctor seems to be losing a little bit of its way of a global financial

markets and fact this is what the dolorous doing. you can see it at 101.7. overall, down point 08%. .he dollar actually dropping the yen gaining 1.23. i also wanted to show you oil because opec, we are not sure what they're doing. meeting are not meeting, russia going, so look just watch out for that all-important meeting on wednesday. $48.98.ly at >> we're talking, thank you for staying with us. you like southern europe, italy, greece, you are about 20% of your portfolio in greece. talk to me about spain. they have in a political government for quite some time. they may be a poster child for where the reforms have been happening in taking a strong hold. >> guess, very well.

the economy is growing this year very well at more than 3%. there is some form of political stability now. if a government which is good. is can see that there momentum accelerating the economy and you know, it is very healthy. a difference between the continental europe with the u.k. youthe u.s. is the growth have in europe, by the way is is not back, 1.5% in the eurozone is driven by internal demand but not by more leveraging. it is by unemployment going down, employment coming up. it is very strong. francine: my concern would be what happens when we start seeing risk? is that the kind of game-changer for your investments? >> it is and it is not. bonding yields have gone to ridiculously low levels in europe because people were imagining they were deflation. so if the market changes its

view on the european economy and actualooking at the numbers as opposed to -- and starts looking at the actual numbers as opposed to looking at different scenarios with politics than yes, we might see bond yields quite a bit higher for sovereigns. i will good and frankly, take that because the earnings rebound would be much stronger in the re-rating of the market would do most of the job on the equity side. francine: thank you so much for joining us. bloomberg surveillance continues for the next hour. thomas off today, michael joints me. this is bloomberg. ♪

♪ francine: and upset that there

in the republican primary, will this man be the one to take on france? saudi arabia demand that prices will stabilize. can they hear divisions ahead of next -- no sleep with the brexit. renewedmay has a offensive to smooth the transition. she says the process is keeping her up at night. this is "bloomberg surveillance." we have the most interesting day today, we're getting releases from the oc be. michael: the interesting thing is people are backing off the trump trade, looking for some better growth in the coming year. you have the numbers. better grip a revised up a little bit. overall at the moment going countries,ividual

gdp forecasts for the individual countries have been raised. is atll, the 2017 growth 3.3%. this is what they are expecting for next year. 1% higher, that is better than i expected. michael: we would talk with laterine mann earlier -- and asked how they figured these numbers are given that we don't know what donald trump is going to do. straight tot's get the bloomberg first world news with taylor riggs. taylor: president-elect donald trump claims that millions voted illegally in the election but did not offer any evidence. theaid he would have won popular vote if millions of illegal votes were excluded. he also said there wasn't

reporting of order fraud in virginia and california. hillary meets the popular foot by more than 200 vote -- 2 million votes. surprise victory in the republican presidential primary in france, winning the nomination for next year's election. of the vote.67% is likely to be challenged for the socialist nomination by former prime minister -- by the former prime minister. europeans living in the u.k. would be included, and a letters the eu president the lawmaker says citizen should not be used as bargaining chips. the lead negotiator has been anyalks to not start on

negotiations until the u.k. begins the official exiting. 24 hours a day by analysts in more than 120 countries. this is bloomberg. michael: let's get you set up for the trading day. we are seeing the trump trade fade a little bit. we are watching the 10 year note yield back off just a little bit on the day. everybody is keeping an eye on what is happening with opec. the real story of the day, look at europe right now. the italian stock market votes next sunday could be the next evidence of populism in europe. european banks are getting killed. down 17% this morning. we get the jobs report at the end of the week in the fed is 100% priced in. emerging markets have been up

for about 10 days. they have managed to price that in. francine: i like that you're mentioning the italian banks. they are under pressure today. they're carrying out the purchase securities which is why i think we are seeing that stock under so much pressure. overall, you can see the stoxx 600 down. dollar down, that means the donald trump factor is losing its sway over financial markets. the dollar is down. then, on opec, russia will meet with the nigerian oil minister. it is difficult to see if we will get a deal or not now when wednesday comes. are flying to moscow. officials in vienna launching another round of talks/. of confusion as

to who is talking to who. michael: let's take a deep dive into the bloomberg. i want to bring back the italian election as a major moment for the markets. but how big is it? there is talk about collapsing banks of the referendum loses. here's the spread of the italian 10-year note. it is nowhere near where we were in 2012 during the midst of the greek crisis. bailout, peak in the then the second when mario draghi said they would do would ever it took to save the euro zone. so we are long way from the systemic crisis we saw three or four years ago. francine: this is a clever way of looking at how we price risk. it depends on if investors are jumping at shadows.

december 4,dum on this coming sunday. i wanted to focus on the french elections. this is very clearly a yield curve that is steepening in very clearly a yield curve that is steepening in france. france is the purple one. the u.s. is the right one. in blue, you have germany. i wish i had also put in italy. you can see that the steepening curve for the u.s. and germany actually diverging quite a lot. joining us now is bny mellon's chief strategist. simon, if you go back to my chart it is clear that the ecb has a blanket of safety. you see them trying to break up because they are pricing in political risk. are you worried? simon: nowhere near as much as if this were happening two years ago. the reason for that is quite clearly the ecb since 2015 has

done an astonishingly good job at the sovereign market. i remember they managed to isolate greece away from everything last year. that stood in sharp contrast to what you saw between 2010-2012. should we be worried about the possibilities of what could happen in the italian banking system and the uncertainty if mr. rensy steps down after the referendum? perhaops, but in terms of sovereign risk -- francine: that could do what? technocratic government, that they could shy away from these exercises? simon: the concern is that would lead us through to a state sector, and a resolution story

and potential billings -- bailings which would be politically unacceptable. n italiano have a general election by 2018. talkingthink we are about any of the true extremes thathe italian system people might have assumed 18 months ago. i don't think this would lead to a referendum on eu membership. francine: legally, you can't. simon: i think these things don't feed through. is it concerning? yes,. does this look like an existential issue for the eurozone? no. has the ecb done a good job of managing those risks? yes, absolutely. michael: you look at my chart, it all starts with and whatever

it takes comment by mario draghi. bondshey bought as many in some countries as they can. whatare they going to do, still can they do it they have to go back to the whatever it takes mode? simon: the first thing is thankfully from the perspective the fact that the yields are backed up does make it easier for them to continue buying. there was that concern they would have to move out to lower yields. highnk there is a likelihood they will extend out the program. abouts the great debate buy, whether they change the rules and regulations a little bit. i think they will possibly have to look at that. otherwise, the risk they will have if the market reacts negatively to the meeting. been one of the biggest

stories over the last two years, the market risk. go back to this time last year and look at the response you saw to the euro on the back of the disappointment of how the ecb did. we were up three or four big figures in fairly short order. look at the negative response back in march. you end up with a strengthening euro that goes back to the one term. michael: let's leave the idea of a black swan out of the italian referendum. have this point a new president of the united states promising significant change. yet the brexit vote -- you have vote hanging over everything. you have france. the market seems to -- we seem to have turned the corner in trade. what is it going to be like in 2017? how do you trade? how is it different from what

we've done coming out of the financial crisis? simon: something you mentioned earlier, we don't yet have any strong ideas of what a donald trump presidency will actually look like. i think that is absolutely right . there is been an awful lot of assumptions within the market about what it could be. i think that for me right now, i am thinking about the next two months, not the next 12. it is astonishingly similar to the end of last year and the beginning of this year. dy completelybo built into the fed rate hike. we have the ecb meeting coming up. we have an opec meeting that was about to fall apart in december of last year. we had a rising tensions in china about the currency. all of that fed through into a and risk-off in december january. let's look at what happens this

month and next month and how the fed response to that before we start thinking about how it could play out beyond that. francine: thank you got we're back with simon derrick. we will speak with catherine mann at the oc be. -- ecb. we will be talking about the new forecast and talk about italy, france, this is bloomberg. ♪

francine: this is bloomberg surveillance, let's get straight

to the bloomberg visit -- business flash. is making a last-minute push on oil production cuts. they're asking for help from nonmembers. so far, all the russians have agreed to do is freeze production. saudi arabia, iran, and iraq are not on board. they say it will recover next year without cuts. opec meets wednesday in vienna. shares and asset management is rising most of the firm is maintaining its dividend. fled.ors have aberdeen's ceo spoke with francine. >> i tell you it is looking better in the fourth quarter. we saw inflows into our emerging markets. president-elect trump might be good news for the u.s. market but it certainly hasn't been good news for emerging markets.

people think he might be a protectionist. so, it could be a buying opportunity. aberdeen's management increased 10% on this year. that is the bloomberg business flash. the french republican party's candidate for the presidential election, the former prime minister defeated his rival in a second-round runoff. taxes. is to slash >> the victory is mine and it a victory based on beliefs. withn to the french people a project and my values. i felt this wave with only foreseen scenarios. francine: we're joined from paris now. first of all, how much of a

surprise or the polls? to its ago there are completely wrong. can we even trust the polls on the back of this. >> it seems like it is very hard to trust the polls these days. very underestimated in the was the front runner for all of this month and the past six monthss of these campaigns. he managed to come back in the last debate. he had a very poor performance during the last debate. of course, francois fillon has been elected as the republican nominee. tohas called for the right band together to win this election. all of the people who voted for

nicolas sarkozy to go behind him now, behind his campaign for republicans that is what he is calling on. francine: what does it tell us of who he is going to face? >> again, it is all back to whether or not we trust in the opinion polls. it seems like francois fillon could become the next president of france. he could face the national front tier le pen next year in the runoff. according to the latest polls, fillon would beat him in both rounds of the presidential elections next year. that all could change. he hasn't declared himself quite yet. that could move forward this morning, or in the next two days.

we will see if that changes anything in the campaign. michael: can you explain fillon's appeal? he wants to do things like andy 35 hour work week -- like end the 35 hour work week and raise the retirement age. he seems to be the favorite for the presidency. how does that square? >> this is very interesting issue. i was talking earlier to the head of the biggest -- he said is the bests fillon republican candidate for business. you are mentioning he wants to cut corporate taxes from 34% at the moment to around 25%. he also wants to make the 35 work week up to 39 hours. this is going to be the challenge, how he will avoid the unions protesting against extending the 35 hour workweek.

francine: thank you so much from paris. thisyou look at all of political risk with the french election and the italian referendum, are we jumping at shadows? is all the bad news price already because we are so scared following brexit and trump? think it is all priced and across europe over all. i think in italy it is. that is been what the move in .preads has been about if you look at the french a bond the spread, the deal curves have sharpened but only in line with what you have seen elsewhere. the haven't seen the massive blooming out of the german spread. the thing that worries me about this is the french polling has been far more accurate than comparable polling in the u.k. or in the u.s.. pollsry thafact that the

me.n't done well concerns women far morest skeptical view over all about the polling within france? in which case, how do we reasonably call what happened in the presidential election? it seems, perhaps, given what just happened, maybe this great uncertainty than what you previously might've seen. michael: simon derrick, some very good questions. coming up next hour, geo politics continues with the editor of foreign affairs magazine. he has a lot to write about these days. this is bloomberg. ♪

♪ michael: good morning, in new an interesting equity sector to watch is banks. everybody is saying if there is on that goes wrong with the italian referendum it will be in the financial system. you can see a many of these banks are getting hammered right now. i think this is very technical. today they start to swap 4.3 billion euros cost of this is

the first of many crucial stages in the turnaround. that is multitasking, when you look at unicredit the thinking is if there is no referendum in december than it is going to hurt investor appetite. they're not likely to invest so much in this capital raising exercise. up with whyo end this stock is under so much pressure. michael: coming up, the head north american economics has a fed meeting coming up this month. this is bloomberg. ♪

a ♪ good morning, that is a shot at the big apple firs. fifth avenuedown

today. donald trump is back and trump tower. that means 5th avenue will be a nightmare. francine: isn't he always back at trump tower? want to go back there every week and once he is president -- won't he go back there every weekend once he is president? michael: people are hoping not. let's get to the bloomberg first world news. i'm sure taylor riggs will be talking about donald trump. the donaldhave seen trump effect on stocks, now one economic forecasts. organization says it will expand 3.3% this year. that is the fastest pace in five years. trump plans fiscal stimulus to provide a boost to the world economy.

theresa may is launching the latest phase of her brexit charm offensive. they will host her opponent from poland. she prepares for brexit negotiations to start in march. she wants to hold one-on-one talks with all of the 27 eu leaders. castro hasf fidel raised questions about what president-elect donald trump will do with u.s. policy towards cuba. he did not repeat his campaign promise to reverse president obama's normalization process. global news 24 hours a day powered by more than 2600 journalists in more than 120 countries. this is bloomberg. francine: thank you so much. now let's talk about what the fiscal policies mean for the u.s. economy.

the north american head of economics and timothy o'brien the executive editor of bloomberg gadfly, and the uathor -- author of "trump nation" and was sued by trump. off with what we from thened president-elect. has anything is done surprise do so far? i am thinking of the tweets. this is bizarre. he will become president. he said without series photo front he would've won the popular vote. >> i think donald trump uses twitter and social media very effectively. have to assume he will use it with the republican congress if there is legislation coming through he is not happy with. hink what he did over the

weekend was par for the course for him. we will see this day in and day out for the next four years. francine: i don't understand the rationale for this. he has won the election, so what is the purpose? >> this is in the context that there might be a recount and a few of the states that were closely contested. he doesn't want to see that happen, apparently. although it will be in his interest simply to stay away from this debate. are seeing is that trump cannot help himself. he is undisciplined intellectually and emotionally. this spills out into his twitter timeline. francine: what should we worry about the most? that isthe country, probably not doing it, competent interest which if tried to see

that. where is he the weakest? >> he is not a policy person in any capacity. policy, fiscal policy, foreign policy, that is not his strong suit. he has a short attention span. what is it administration will look like is he will be the messenger and populate it with people that will focus on policy for him. the real issue is what of the quality of people he will bring into his administration. the headbill lee now, of north american economics for city research. the back of fiscal stimulus in the united states, the market up to today have been buying into that scenario. how do you justify that when you ideaea, when we have no

what is going to make it through congress? is amazing people are so optimistic about what fiscal policy could do. inhaven't seen fiscal policy gear for decades now. for the first time we have a government that may be unified. everyone is suddenly shifting. we should go back to our textbooks and remember this is anticipated fiscal policy in 2018. by the time this passes, whether it is tax cuts and spending, that means markets are reacting now. exchange rates are higher, that 2017.drag on the u.s. and -- in 2017. we will see any stimulus hit until 2018. michael: we have a tax cut plan that according to every analyst with mostly cut taxes on the upper 1% who tend to save more

than spend. we have an and could -- infrastructure program coming in. what kind of multiplier can we get out of this? [laughter] is exactly what we have been struggling with an putting together our sense of where these forecasts will be. let's take fiscal spending, they want to finance $500 billion in private sector money. that means that you are displacing a lot of money that could have gone elsewhere. taking savings and putting it to work rather than putting it into asset notcations that are not productive. that is a big "if." then the tax cuts, you are right. right now people are looking at most tax cut of temporary boosts. convince everybody this is a permanent increase in income that gives people confidence to overcome the uncertainty.

that is a high hurdle. i don't see anything trump is doing that lets people have more confidence these are going to be permanent. as far as i am concerned most of this will be saved in the dividends will be given and buybacks. i have yet to see good stimulus for investors outside of deregulation. that is where the market maybe clinging onto something that is real. francine: tim, do you agree with that? there is this fiscal spending, it is unclear if the house would do it. is it this repatriation? what is he going to point to first? tim: infrastructure spending his put out as one of the benchmarks of his presidency. that along with immigration reform. he will try to do something with immigration. the affordable care and

obamacare also something he campaigned against. i think he will try to do something there. he said in think he does to overturn it he will replace with another program. he is not given any details about that. those are three clear things he is going to do. the issue is the dynamic between trump and the republican-controlled congress. congress that has ever been in favor of big infrastructure spending. they stop it when obama tried it. it is not a hallmark of republican politics. whether he has enough leverage to force them to go along with some in this will be interesting to see. michael: his tweets always come when there was bad news. he started the whole storm when he had to settle the trump university case. the new york times can doubt that built on work that you'd already done about competent

interest that his business at -- conflicts of interest. he seems to be trying to distract people from that. how big of a problem is that going to be, that companies -- countries may, even without him asking, change policies to curry favor with the united states president? tim: this is a huge problem. it will be one of the central issues of his presidency. in the u.s. structure there are no conflict of interest laws that apply to the president. the president has enormous latitude to persue any businesses if he or she chooses to. never had as president with the kind of business holdings and financial baggage that donald trump has. looseself has a very understanding of the parameters of this. he is aware that the laws don't apply to him but he has defined that to be that therefore he

can't have conflict of interest. of course that isn't the case. he could have myriad competent interest. francine: if there is no law, which i am surprised about. you guys were much more serious about things. you're talking about leverage and political capital. will his house keep him in check? tim: generally, it is the chief executive himself who has provided his own checks and balances historically. we rely on the president to release his tax returns so that voters in the public know what the president's potential conflicts are. as we know, famously, trump did not release these during the election. his campaign advisers and his transition advisers have said he will not change course as president. the other piece is the blind trust. would involve them putting

all of his business holdings into the hands of an objective third-party manager. says he sees his children as objective but that is ridiculous. it defeats the whole notion of a blind trust. francine: is this something that is impeachable? could you see a situation where he lies about businesses and this -- could he be taken to court for this? tim: if he starts to flagrantly use the office to pursue policies that are in his interest but out of the public interest those could all a morelly be grounds for intense examination of his presidency. whether or not that rises to impeachment is a very serious matter. i think that would be a high hurdle. michael: we will be back, coming up in the next hour we will speak with sheila former fdic chair, now president of washington college. this is bloomberg.

♪

this is bloomberg surveillance, michael mckee is in new york. we have to talk about opec. flying toters are moscow, others are meeting in vienna. they to finalize the terms of their first production decrease in eight years. the group remains divided on how to share the cuts. we go to bloomberg's editor for energy. o'brien h intim lund -- here in london. in vienna, willg

be get a deal or not? untilwill not know wednesday evening. they are flown to try to convince moscow to join into in opec deal which is something that saudi arabia has insisted upon all along. we have some officials talking about how to share the quotas and the burden of cuts. the most important intervention in the last couple of days can from eastern saudi arabia where maybe weinister said don't even need a cut may the market can do it to work for us. that is a very significant thing to say two days after the meeting. [laughter] : saudi arabia thinks they will have to do all the work year. michael: what are reluctant to end up with? what -- what are we likely to end up with? what will be the long-term

effect on prices? will: the ball is in saudi arabia's court. as it stands, they're been asked to do all the work and cut 500,000 barrels a day. are they willing to do that? will he say if you won't help, no deal, no opec, we see prices slump. we don't know. thingsy putting the they're saying today to help with the negotiations or do they really mean it? we will know that until they also together in a room and we make it something meaningful. we make it nothing at all. michael: what does it mean for the u.s. economy, and the global economy? the: i think we're missing point. the swing producer is the u.s. shall producer. whether or not that comes online is really the question. even if they manage to have these restrictions if the shell opens again we won't see much

increase in the oil prices. as for as our outlook is concerned, we anticipate a slightly upward bias. unknown is if the supply comes back online from u.s. producers. francine: i understand that the fracking is one thing, this is part of that. if russia were to freeze production, it would also help. have they lost complete control of the markets? but this has done has introduced a tremendous amount of uncertainty into the marketplace. whether or not the u.s. producers turn on is becoming the big question. that is driving up prices temporarily. i don't see it being a sustained rise. michael: we never donald trump wants to make it easier for u.s. companies to drill for oil around our country. giventhat really work,

that oil prices are so low? tim: also remember there's a huge inventory that has to get cleared to start or to the beginning of a price change. i do think long-term trump is a bullish factor for the energy sector. he is hostile to the epa in the united states for to buy don't think he can get rid of a federal agency, but he can seriously defunded on the regulatory side. he said he wants to deregulate shale and fracking and other segments of the u.s. energy market. i think you will see a big regulatory easing that will have a long-term effect on prices. the bigr us at citi, impact it on gas prices. many of the pipelines and the work that is going to be done lower gas prices.

that will try to get more of the production going including pipeline production. francine: and bill, i want to ask, this is the 55 dollar range we have been talking about. brent is in purple there. this is the chart of the year, this is the u.s. rig count. if donald trump deregulate this could go back to early 2015. will: it is really important. but the slump in oil prices has shale industryhe to medically cut costs. you can see that, their drilling more because more oil fields are profitable in this $45 range. if trump reduces recklessly burden that will only increase that trend -- that regulatory

burden that will only increase that trend. francine: thank you so much. coming up in the next hour we speak with catherine mann, chief economist at the oecd, after they increased their forecast for world gdp. this is bloomberg. ♪

michael: good morning, i michael -- i am michael mckee. let's get straight to the bloomberg business flash. lufthansa airline is calling for more airstrikes -- more work strikes. the lufthansa pilots will strike tomorrow. other paths will join in on wednesday. a lukewarm kickoff to the holiday shopping season in the u.s.. discountero didn on over the four-day weekend. the average amount they spend fell by more than 3% from a year ago. that includes buying in-store

and online. in the past this has been the biggest shopping day of the season in the west. that is your bloomberg business flash. francine: let's get to our morning must-read. with they got something from the times. the u.k.down with prime minister theresa may. this is what she said about brexit. moment of change and a hugely challenging time. we need to get on with the deal in terms of brexit. i want to make sure everything we do ensures that britain is a country that works for everyone. we are back with bill lee and tim o'brien. tim, i picked up this out because she was quite introspective. she said she loses sleep over it. at the economic implications of known? is it more about foreign policy? it is a very uncertain world with brexit and trump.

tim: and fillon in france. this is clearly a global phenomenon. i think we are in an era now, long-term follow-up of the 2008 global financial crisis. there's a chunk of middle-class and working class voters who feel that the system has passed them by. that is now being expressed politically. what the politicians do with that moment is anyone's guess. you've a real wild card in donald trump lost him he was a views lined upn nicely with a historic economic moment. he is not somebody who has a program in mind. he is a messenger, not an administrator. francine: how do you quantify that anger tim was talking about in terms of economics? bill: the message of the election is that they were the

underestimated costs of globalization was a forward, the biggest benefit that trump gave to the market was the sense that we will not have a trade war but bringring tragedy -- china to the negotiating table as much as we can. him, getting employment and the jobs is critical for the u.s. that is what he will have to deliver. michael: we will stay with billy forwill thank tim o'brien joining us. coming up in the next hour, our conversation on geopolitics continues with the editor of foreign affairs magazine. this is bloomberg. ♪

♪ francine: uniting the right, francois fillon was an upset victory in france.

on this be the man to take france's le ben? club healec oil divisions to curb production curves? the president-elect takes to social media over potential recounts. good morning, this is bloomberg surveillance live from none -- from london and new york. it is monday, on sunday be up elections in austria. the markets are shying away from the trump story. a feeling hee was was going to get a lot done. many people are we thinking that as some of the reality sinks in about the difficulty of getting anything through congress. but, donald trump is trying to stay into the news.

let's that the first word update now with taylor riggs. taylor: you mentioned the twitter storm so we will start there. millions voted illegally in the election but isn't offering any evidence. the media wasn't reporting serious voter fraud in california, virginia, and new hampshire. hillary clinton leads trump by the popular vote by more than 2 million votes. castor hasf fidel raised questions about what donald trump will do with u.s. policy towards cuba. trump issued a statement saying that castro's legacy is one of firing squads. he did not repeat his campaign promise to reverse president obama's normalization process. in france, former prime minister francois fillon has wrapped up a surprising victory in the republican primary. he won the nomination. he had 67% of the vote.

is promising painful economic reform and a smaller government. president francois hall on will likely be challenged for the socialist nomination. europeans living in the u.k. could be included in talks. lawmakers say citizens should not be used as bargaining chips. the talks cannot start on any aspect of brexit until the u.k. begins the formal exiting process. global news 24 hours a day powered by more than 2600 journalists in more than 120 countries. this is bloomberg. thank you, let's get you set up for the trading day. as we mentioned we're seeing a markets from the

trump optimism. teachers haven't moved in the last hour. we are off the overnight lows. what is interesting with oil is in this down, and a lot of confusion about whether we will get some kind of opec deal. italian referendum coming up this sunday is having an effect on italian stocks. the ftse is down by 1.3%. that is having an effect on european banks. interestingly enough we have a fed meeting coming up later in december. 100% priced in, that should allay emerging markets but they seem to have accepted that. mike, this is what i have. it is great you are showing the banks in europe. overall, there is a lot of

concern about those banks. investors can be shying away from these plans. the stoxx 600 over all down 0.6%. the donald trump effect is losing a little bit of its sway over global markets today. 46.03.oikl we have no clue if opec will cut or not. michael: let's take a look at the italian referendum. the difference between 2012 and today in terms of overall market concern. spread between the german 10 year and the italian 10 year. worried about greece, when mario draghi had to come out and say whatever it takes, we are nowhere near that level of concern. even if we get a no vote in the

referendum, it is not affecting the markets the way we saw three years ago. thisine: because of program, however, that takes the question if it forces draghi's hand. that brings us to our charts. this is what i am seeing. i want to notice the 10 year. spread between france and some of the other countries is really quite wide and expects to get worse because of that risk. michael: we are joined now by gideo rn rose. the latest issue "the power of populism." still with us is bill lee. how do you explain that the power of populism is? towill have francois fillon, the extent that he is a

populist. hashis something that fundamentally changed in the world? housing crisis,usin that thee thought assets that were uncorrelated turned out to be correlated. we are seeing something like that in terms of domestic politics. we used to think country x this, then country z this, but we've seen a rise of populism and a desire to tell existing institutions to go jump in a lake. that has played out in country after country. the question we have in terms of evaluating trends now is, places we thought were immune to this have proven to be complete be volatile brexit, trump, now we don't know what we're missing in our view of the world. popular attitudes might be

correlated and in this giant antiestablishment note. michael: how does this play out in terms of policies? we'll see that populists are great and raising issues but not great at solving problems. gideon: this is the big question. you have this bizarre situation in which the people who were supposedly going to be running have stated plan that would cause economic catastrophe. so, the question is when will they back off some of those crazy ideas? before they try them, as they try them, or after the of caused the damage? we don't really know. how long theof socialization and education process will take before populist remedies get rejected as they always do, we don't know how long the process will take. francine: bill, when you look at this, we of been trying to figure this out. gideon seems to be certain this is a rise across the globe of populism.

can you see that as donald trump is popular because it is not -- he was a tv reality star for so many years and had appealing and spurred tyhhe crowd. brexit is after 15 years of bashing europe. could they not be isolated cases? bill: you can tell how the markets are playing this because there is a difference between good spread widening and a bad. in europe there is a lot of uncertainty right now. everyone ising to concerned. that widening represents uncertainty. given the u.s. that represents possibly fiscal policy coming online and spurring growth. that is good. the markets themselves are discriminating the stories. we need to interpret this carefully. the fiscal policy actions in europe are not likely to be unified. mp victory., the tru

means the possibility of unification of the actual unification. that is enough to spur the likelihood of future growth. gideon,: right, and can you make parallels between brexit and donald trump? asking greatre question. i would've said the same thing a few weeks ago. that to a certain extent these two stories are not correlated. thati think that the fact so many people of gotten so many things wrong and consistently in the same way, under estimate in the extent to which there is a populist emotion driving in number of people in a number of countries in ways that are not being captured adequately by polls or conventional analysts who are so hostile to the populists trends that they can't appreciate the strength. analysts who confidently

predicted that brexit wouldn't pass, or that trump wouldn't succeed or that he wouldn't succeed in the election need to be more humble about assessing what is going to happen next. the calls of most experts have been genetically wrong. to make they pay you prediction. how much confidence do you have in yourself as you look out over this world? ll: uncertainty dampens growth. i'm confident the weakest threat to the outlook now are downside risks. i am not confident at all of the particulars of the policies we anticipate or anywhere else in the world are going to come to fruition. i think that is what clouds everything. expertsns we ahvhave

being thrown out the door, including myself. i am trying to say that uncertainty is the catchword. francine: thank you so much for that. bill lee of citi research. coming up, we speak with catherine mann at 6:30 a.m. in new york. just over an hour ago the oecd raising their forecast for gdp worldwide in 2017. this is bloomberg. ♪

♪ good morning, i am michael mckee in new york with francine lacqua in london. let's get to the bloomberg business flash. taylor: opec is making a last-minute push on oil

reduction cuts. the cartel is asking for help from nonmembers, like russia. so far all the members have agreed to do is freeze production. the saudi's now say the oil market will recover next year without production cuts. wednesday in vienna. china's government is about to put the brakes on overseas dealmaking. regulators will generally prevent chinese coverings -- companies post a putting more pressure on the chinese currency to weaken. samsung is talking to investors about a proposal from paul singer to overhaul the company. shareholders are unhappy with the status quo at south korea's most valuable company. singer's management proposed adding an interim director and turning them into an operating and holding company. that is your bloomberg business flash. michael: let's bring the focus

back to president-elect donald trump was to marty is here, and gideon is still with us. , trump -- donald trump 's tweet storm was the story. tracing the question, he seems to do this every time a negative story comes out. there was a big story in the new york times about his potential business complex. the debate last night on social media was does he deliberately lie to change the subject, or does he really believe this was true? that there were 3 million people who voted illegally? ty: i think he believes it is true, even though it isn't. these things out over the campaign then just move on.

he is talking directly to his followers. he thinks that is fine to do. michael: now he is president. he asked to talk to the world. if you can't believe what he he is gone on many of he foreign-policy that raised during the campaign. how does a foreign leader deal with that? l, he is not president yet. president yet. maybe he will behave differently once he takes the oval office. even as president-elect you would expect a level of restraint and dignity and accuracy to his statements that we have not seen. we just don't know is the short answer to your question. the number of people who actually know what donald trump is thinking and how and why on areas like foreign policy and economic policy where he is never had a deal or comment on any actual details. we are incomplete lack of

knowledge about what is going to happen. there are different models. some people argue that trump is a con man who said things during the campaign that will back away from them later. other people say he is a budding andoritarian in training you take what he says seriously because that will be the plan for what happens next. others say he is like a child anarch, and it is all question of which advisers he listens to next. we just don't know. marty raises the question of who is the grand vizier. le debating who should be secretary of state. doesn't matter, will policy come out of the oval office? wholearty: i do, but the secretary of state to dance is fascinating with kellyanne conway making very strong appeal

for donald trump not to pick mitt romney. we are reporting that says that donald trump is in favor of mitt romney. it becomes very bizarre. will be critically important to figure where he is going. francine: on the back of what you're talking about with kellyanne conway publicly airing her opposition to mitt romney, what worries you the most? that the gop can't get a handle on donald trump or vice versa? has given his he team a wide birth to speak their views both publicly and probably inside the trump compound. ultimately, donald trump is going to make this decision. if he wants mitt romney it will be mitt romney. francine: right, and gideon, when you look at the opposition and tweets, does this hurt

domestic demand? i know he wants to spur the u.s. consumer to go out there. does it have economic consequences? : i think it does. right now we are in this time of uncertainty. everyone is trying to figure out what happens next with them is clear nobody, including the trump camp expected his win. ,hey woke up the next morning what do we do now? they are picking people but all the rules they are taking -- picking are completely different. competencengs like or distinction are qualities you want. they seem to be picking people on the opposite of that. people in some cases who are deliberately fired by previous administrations. the idea that being fired from a

job makes you qualified candidate for a job in the next administration, we've never seen anything like that before. we have no idea. some of the candidate picks seem to be less disruptive than others. michael: we will continue the conversation come our thanks to bloomberg's marty. later we talk about all this with sheila bair. this is bloomberg. ♪

francine: we are focusing on energy. this week, what we're doing is trying to figure out where new energy and renewables comes and apply. wednesday in vienna to finalize terms on its first production decrease in eight years. the group remains divided on how to share the cuts. we're back with gideon. we talk about oil in a second. donald trump, when he becomes president has a huge impact on the price of oil through deregulation of fracking and his involvement in the middle east. thatn: i would say

production is likely to rise. it is not likely to rise in a very coordinated way. in other words, this is not somebody who has shown a great measured do things in steps in court nation with others. we don't know exactly what he is going to do. likeld suggest it seems boosting production domestically is one of the major things he wants to do. i don't see any reason why that would not happen. how that lays into middle eastern geopolitics we don't know. clear if it out to the national versus international impacts of their policies. manyel: trump aside, factors are going into this opec deal. if it doesn't happen, do we see a real fracturing in the middle east? gideon: i don't see where the consensus comes from for actions that are coordinated and the

spread the burden around in a fair way. at this point, the danger is that everybody is trying to do their own thing. they don'to do that have a coordinated policy. i find it hard to believe they will be spread around in the responsible fashion. francine: thank you so much. coming up, we speak with catherine mann, chief economist at the oecd. they released ago a new forecast with higher gdp growth around the globe. they had predicted a smaller increase. this is bloomberg. ♪

mike: good morning, i michael mckee in new york, with francine lacqua in london. we get to taylor riggs. taylor: a top advisor to donald

naming mittthat romney as secretary of state would be seen as a betrayal by many supporters. kellyanne conway spoke on cnn. >> i am not sure that we have to pay for that with the secretary of state position. let me repeat -- what donald decides, kellyanne conway and everyone else will respect. we do not even know if mitt romney voted for donald trump. i think there are concerns that those of us who are loyal have, and you want someone as secretary of state to be loyal to the president and his vision of the world. during theway said campaign romney went out of his way to question trump's character and to blast his integrity. the death of fidel castro has raised questions about what donald trump's policy will be toward cuba. not repeat a promise to

reverse president obama's normalization process. we have seen the donald trump effect on stocks. now it is having up impact on -- now it is having an impact on economic forecasts. the oecd has raised its global forecast for next year. saying that the global organization would raise by 3.3%. his fiscal stimulus is planned to provide a boost to major economies. 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. michael? francine, you have more on the oecd report. francine: we certainly do. we are joined by catherine mann, who joins us from paris. always great to have you on. your outlook for 2017 and 2018 -- how much are you expecting influence?p to

catherine: we impose our global growth forecast based on fiscal stimulus not only in the united thees, or expected in united states for 2017 and 2018, but also ongoing fiscal stimulus in china and a little bit in europe as well. it is not this donald trump, it is, more broadly speaking, other economies. dr. mann, you seem to suggest that in the aftermath of the u.s. election there will be a significant change in direction for macroeconomic policy. do you expect more fiscal stimulus across the world? catherine: both candidates in the united states had fiscal stimulus and infrastructure as part of your infrastructure, so that was easy to incorporate. around the world we are seeing more fiscal stability in our economic outlook today.

we focus on europe as having more fiscal space than is currently -- then it is currently tapped into using. part of our economic outlook is to examine how much fiscal space they have, what kind of instruments they used to deploy it, and what the implication will be on global growth. mike: i have to ask how you plug in numbers without knowing what there will be in the united states? catherine: both candidates had infrastructure as part of their platform, so that gave us something to work with. there were issues with regard to taxes in addition that are further out in the forecast it was, but we thought important to incorporate what kind of fiscal stimulus might be the case. because what we find is, in the

absence of fiscal stimulus around the world, by the u.s., china, and the european union, the global economy will stay stuck in a slow-growth trap of 3%. so the fiscal stimulus and the structural reforms that are part interwoven reforms, these are key ingredients to get us out of the low growth cap we have been in for the past five years. mike: let me bring in my "morning must-read" from the "financial times." it talks about the marie antoinette situation around the world, that in france people are revolting against the leadership . he says --

solutiont is the best on the economic side, dr. mann? catherine: as i said, we have been in a low growth trap in a global economy at 3%, less than 2% for the oecd. for the past two years we have emphasized the need to have the structural factors be confined and underpinactors what has been ongoing in terms of monetary policy. the three legs of the policy stool equally deployed. monetary policy has been in place for quite some time, and that has led to overburdening of monetary policy, low interest rates soon asset price increases. we are saying those low interest rates should be turned around and create a window of opportunity for sovereign are weighing to deploy the fiscal love -- for sovereign borrowing. that will get the global economy

back on track. it is not perfect but he gets as part way to solving these economic problems. francine: what do you need to do. what do you need to happen for ceo's to spend? if they start spending and reinvesting, that would go a long way. sure.ine: what we have talked about -- we have called it a low growth trap because there are no signals coming from consumer demand or aggregate demand in general around the world. there are no market signals to generate new business investment in equipment, innovation, and so forth. equipment, innovation, and so forth. the objective of a fiscal stimulus combined with structural reforms is to create a demand side and the structural part is to create the environment in which business gets the signals to invest and has the capability to do so. in the longer term, that creates the underpinnings for higher productivity growth and the long-term capacity of economies

to deliver for their citizens. mike: let me bring in gideon rose, the editor of foreign affairs in the latest issue. you look at the wolfgang much uut -- the wolfgang muncha column, and his believes that the liberal elite can guide everybody in the proper direction have failed at this point. would you agree with that? there has got to be a rethink among the elites about how they do things and what they do. gideon: clearly we have a situation in which large portions of the population especially of invest -- especially of advanced industrial countries feel like they are left out of the good times, that globalization has benefited the elites in the advanced industrial world, large world, of the developing but the rest feel like the outsiders. it is important not just to get

growth going again but to make sure that the growth is perceived as being appropriately and fairly distributed across the societies as a whole, not just accruing to the elite at the top. it is not just growth, it is also the distribution of growth, and the feeling of ordinary individuals, that they are benefiting from growth. we just do not know, unfortunately, how to solve some of these problems. we have to address them. it is not like there are easy answers to the displacement of jobs to technology. these are things that need to be addressed. unfortunately, the populist remedies that are often suggested 10 to be worse than the existing policies. francine: how would you address them? "elite" makes it sound like their days this -- like there is this 1% that keeps getting

richer, but in the broader sense, especially with the donald trump presidency, the also academics, people who are not necessarily rich, but who are thinkers. period of are in this radical uncertainty. iss point so -- this period a little like the post-9/11 weeks. we knew things were different but we did not know in what ways, but after several weeks med months things had cal down a little bit. we are still in that period right now of not knowing which of the things that trump came to power espousing he is actually going to do. and those things he chooses to do whatever huge effect on the international economy, the mystic politics, growth. we do not know yet. is one ofd uncertainty which will hopefully

reduce a bit in the coming weeks. it is possible this could be a reality tv show for the next four years, and every day we will wake up saying, what happens next? mike: catherine, and put together the most recent forecasts, how did you weigh fiscal stimulus and growth around the world against the populist view that we should pull back, put up barriers to trade, and the world should become more focused on its own countries? in our economic outlook, we examined the consequences of trade policies. there are two main themes in the economic outlook. one is the fiscal initiative, and the other is consequences for trade. we examined a positive trade scenario where we implement the trade facilitation agreement, which reduces trade costs around the world. but then we look at a downside scenario. it is anchored in rolling back trade liberalization that has been done since the start of the doha development agenda. it has rolled back to 2001.

-- we look at the consequences of that for growth and protectionism being put on by europe, china, and the united states. it is mostly being in the countries that undertake the protectionism. so protectionism is bad. we also note that 360 million jobs in the advanced countries come from foreign demand, either directly through trade across borders, or by companies that trade with the companies that send the stuff across the border. so it is a large percentage of the workforce, the number of countries that depend on foreign demand, so we cannot forget that when we are thinking about the consequences of undertaking trade protectionist policies. mike: maybe that is the statistic of the day -- 360 million jobs depend on trade. catherine mann, thanks for being with us today. coming up, we speak with sheila

fdic chair, now president of washington college. this is bloomberg. ♪

mike: good morning, everybody. i michael mckee in new york, sitting in for tom keene today. francine lacqua is in london. interesting column in "the financial times," looking at barack obama was world and the world we knew, saying it would be hard to overstate the ethical chalificance -- the epo

significance. we are joined by sheila bair, the president of washington college, the former chair of the fdic. still with us, gideon rose, the editor of foreign affairs magazine. change is this going to be? you have dealt with a lot of regulation, and that is one of the things donald trump particularly ran against. -- is itethical change an ethical change for the united states? sheila: he is not really a big fan of the big banks, at least during the campaign. some of the people he is talking about bringing into his administration, even though they delete regulations in

certain areas, they want to increase it in areas like capital, which i think is important. glass-steagall -- i think the markets are getting ahead of themselves in terms of assuming that the regulatory policies under mr. trump are going to be big bank friendly. the big banks, i am not sure what is going to happen yet. mike: when you look back, did we over regulate without thinking about the cost-benefit analysis? the old jamie dimon argument he made a few years ago? are smartthink there regulations that have been highly complex. benefit is not always apparently significant. i do think in certain areas we need to have smart regulation. we do not need a policy of no regulation, though. we need oversight of the financial market and financial institutions, but they need to be smart, elegant, and simple

regulations that are easy to understand and enforce. always not gotten that without frank implementation. francine: do you think greed is back, and is it back with a vengeance? sheila: i'm sorry, i am getting very bad audio. i apologize. could you repeat that question? mike: the question was, is greed back, as you postulated in your book "the police of wall street "? is that going to come back? sheila: i think so. greed always drives wall street. i do not think we are going to change that. that regulators can change culture, that is not realistic. they are always driven by profit making. that is not bad as long as you have common sense oversight. like strongi capital requirements. it forces shareholders to put more skin in the game, more of

their own money at risk. if you let them use a lot of leverage, dealing with other people's money, and incentivize risk-taking, wall street is always going to be greedy. it is not necessarily bad, so long as you have proper oversight. we did not have that prior to the crisis. you do not want to go back to that. it would be very ironic. i would argue that one of the reasons mr. trump got elected was the populist backlash against the financial crisis and the bailouts that followed, and the perceived lack of accountability. for him to return to that kind of environment where the big banks can take risk in an unbridled way to give us another crisis, that would be truly ironic and i hope he does not pursue that path. mike: let me ask you about your world now, higher education. what do you anticipate going , that maybe we should have free college education or at least some debt forgiveness,

plus the whole idea that the liberal academic elite is in retreat? i would be very surprised if we do free college now. he was against that during the campaign. he gave a speech in columbus, ohio, where he seemed to embrace the concept of income shared replacement of the debt right higher education with income share, students pay what they are able to finance by paying a percentage of your income. when theya percentage graduate over a longer show of time. period a longer of time. over 50% of student borrowers a long original

contact terms. -- original contract terms. mike: thank you. as we go to the break, we are keeping our eye of what is going on in europe. up italian referendum coming this sunday driving a lot of trade. the stock market in italy is significantly lower this morning, and we are watching banks in italy and europe fall. this is bloomberg. ♪

mike: taking a quick look at currencies. the dollar index is down a little bit. that is having an impact on the yen. a couple of things to keep an eye on, we are seeing the new zealand kiwi fade a little bit, thehe carry trade's on backing of the trump optimism. at the south african rand really getting hit, down 1.5 percent. three members of south africa's cabinet have called on president jacob zuma to set down -- to step down, or for him to be removed. francine: something we need to

keep a close eye on, as there is possibly more political turmoil in the u.s. and europe, but also in south africa. coming up, "bloomberg daybreak: americas." david, what are you excited about today echo david: opec. willem buiter will be here to talk about opec and oil. , hereo have bob kimmitt to talk about president elect donald trump, what he is doing with his cabinet, looking at that process. here,tail sales very big black friday and now cyber monday. we have the ceo of ups, what they are shipping so far and what they expect for the rest of the season. francine: i am looking forward to the program. david westin there. more foreign

policy and what donald trump can do for foreign policy. we're back with gideon rose, .oreign affairs editor if the u.s. retrench us from foreign policy or the pivot to asia, can china fill in the gap? we heard the chinese premier talk about free trade, climate change. is he positioning himself to be the one that takes advantage of a u.s. retreat? gideon: this will be fascinating to watch one of the things about uncertainty, you cannot be sure that anything will work out. you cannot rush to assume that everything will go to hell in a handbasket. the british and that this is the end of the platform order and we are back into an era of great power and politics, that the u.s. is fundamentally walking away from its leadership role economically, politically, and so forth -- this is overdone. if we were ago having these talks, we would have been thinking about we are in a financial crisis, there is a recession, there is a chance

of depression and that is scaring us, but we are not sure it is going to go there. i would say the collapse of the liberal postwar order has the same role a depression had eight years ago. it is the bogeyman, worst case scenario that we are freaked out about because it is now a possibility and it should not even be that. but there is still a very low probability. i think although china will profit from the u.s. abdication of his role with things like tpp, and people are going to bandwagon with china, in the short-term it is not clear that they will replace us. francine: nothing clear, but certainly ideas. gideon rose, thank you so much. "bloomberg daybreak: americas" is next. ♪

"daybreak:ome to

americas." i'm david westin. and alec still are both off today, but julie hyman will get us started with the markets. seeing recent trends postelection. we are seeing a selloff in stocks this morning. the doubt and s&p futures each down about a third of 1%. the dax off by almost .9%. a process -- we are watching weakness in the japanese yen -- i should say weakness in the dollar versus the japanese yen. a little bit of strength in europe. crude oil has been all over the place on each headline that comes out from this impending opec meeting. to 45.69 it is down per barrel. the 10-year yield is up about three basis points this morning. david: