daybreak," it is jobs day. julie will get us started with the markets. are not seeing a lot of strength in the equity markets especially when you look at the ftse 100 and the dax. it is a commodity led selloff and some caution and of the u.s. jobs report. patternook at the trend , it is consistent to other asset classes. a little bit of a thirst for safety this morning. the euro is falling versus the dollar. 1.2%,oil prices down the 10 year yield is actually going lower. david: thank you so much. friday, economists a they think 180,000 jobs were created.

you will find that whether they are right at 8:30 a.m. eastern. will the report lose some market heft, because they already say a rate hike is a sure thing? an italian election and in ecb policy decision, european bonds are looking vulnerable. possible bad news including ecb tapering talk. rain on the trump parade? equities and bonds yields all rallying from the surprise election some on wall street are questioning whether it is all real or that of a fairytale. the first softens for time since candidate trump became president-elect. that is what you need to know at this hour. julie: you need to know what jobs are going to be. we look at today's jobs report from washington dc is michael mckee, in economics and policy correspondent. great to see you. so, given that the fed rate

increase in december is a virtual certain the -- certainty, what is the most important thing to look for? michael: almost every research this week started with the words "who cares?" that is because the fed is already priced in. oress you have a really weak strong report you won't see a lot of market movement. people will probably focus on average hourly earnings. they want to know if we're seeing inflationary pressures build. as unemployment goes down we should see wages go up. that is what the fed is expecting. ford: pursue that question a moment of inflationary possibilities. the last time we had a jobs report we didn't have the likelihood of a fiscal stimulus. we have that now. could a good jobs report be bad

news in a sense that it will make people nervous that you can put fiscal stimulus towards a fully employed economy? michael: you will. especially if we see a very strong jobs report with more people higher than forecast. there will be a feeling that -- hired than forecast. they will be a feeling that it will accelerate faster than the fed has been forecasting. that brings into the gradual move being sped up. you could to the reflected in the yield curve and the inflation going forward. that is something to keep an eye on today. it will be a while before we get any kind of stimulus package. as details roll out watch the impact on the markets. david: michael mckee, thank you very much. he will bring us those numbers in about an hour and 30 minutes.

month after month we have have poured over the u.s. job numbers. are telling uss they already know that the fed will raise in december. what import will markets attached to those numbers -- importance will markets attached to those numbers? welcome back to the program, stephen, good to have you. we were just talking with michael mckee about this. what is the potential importance of these jobs numbers today? not thatthey are important. the big story is what is going to go on next year with the new policies that may or may not be rolled out. one year ago, the market was certain there would be four rate hikes in 2016. we are waiting for the first one. isn't it amazing how things change? now, i ame year from

amazed people are thinking in such benign terms. like it is going to be an easy path for the fed here. whatever happens, it will be different from anything in the past. either yields will shoot up quickly and the fed will hike more than expecting, or much le ss. i think it is going to be either both of those outcomes at some time in 2017. the idea of a steady, easy path is the one we should watch out for as being the most unlikely. how do you formulate your strategy when it is such a binary outcome? well, you put it very well. there is an article i read this morning talking about the crushing consensus on the equity forecasts. everyone has the same view. there are a few

outliers. i am one of them. i think bond yields will be lower by the end of 2017. before they get there, they have to go up. we have to realize that the process of building in higher bond yields is a bit of a drag on the economy. as the refinancing of the debt servicing side of this, can the economy take higher yield? we will see this all play out in the course of the next 12 months. it is not a simple case of just forecasting straight up and the straight down. in my opinion, we have to forecast a changing circumstance, so an increased risk premium. we honestly do not know. this is unprecedented. we have to price in some more risk premium. that justifies for me a higher yield profile at the beginning of 2017. david: you said it is a

different world. i will do something here. you're with us in october. back then, your call at the 10 35,r u.s. treasury was 1. now it is over. i will play you what you said. steve: the structural story has not changed. we talk of a demographics and excess savings. yields willar out be lower. five years out i doubt they will be higher than this. david: now we're up over 2.4, you were saying the structural issues are still there. is that where you are today? steven: i'm quite glad you because it tape, saves me repeating myself. none of those factors have changed. does mr. trump have a solution for demographics?

can he make old people young? is there an instant cure for the lack of productivity? what about the debt overhang? this debt away? no, all we can do is hope for higher growth to service this debt. there is a bit of a challenge here. it is not something that mainstream economics, or the consensus forecast is able to capture. actually, this idea we could see yields go up and down is not out of the question. david: that is terrific, so good to have you here. i am glad to say stephen will be staying with us. let's get an update on what is making headlines around the world. president-elect donald trump is taking a victory lap. trump spoke to thousands of

people in cincinnati on the first stop of what is called his tour.-you" >> we want to compete in the world. we will compete where does it to railroad -- where it is a two way road, not a one way road. emma: meanwhile, donald trump has picked retired marine general james mattis for secretary of defense. accusing foreign spy agencies for getting ready to launch attacks on banks. the successes of the soviet era in says the attack is based the netherlands and belongs to a ukrainian company. that company says it hasn't been contacted by law enforcement. the least popular leader in

france in modern history has had enough. the president france while whole hollande will not run for a second term. global news 24 hours a day powered by more than 2600 journalists in 130 countries -- 120 countries. this is bloomberg. julie: let's take a look at europe, where we see big declines in the ftse in the dax. on the order aside, bp and shell are trading lower. brent has risen 12.5%. even with the decline today, selling off along with metals. gold is somewhat changed. some of the base metals are extending their losses.

both of the s&p energy index and the european energy index are up on the week. this weakness coming on the heels of that strength. starbucks has news. howard schultz is stepping down. the chief operating officer will take his place there. he has been at the company and is a tech industry veteran. he may take the company in that direction. shares are off by nearly 4% as the founder is stepping down. we are looking at german semiconductor agencies. aesident obama is proposing merger. they can make this kind of ajection because aixtron has subsidiary. , and ofre is siltronic a semiconductor maker. it is said to be the target of another chinese investment company. they may be some similar

concerns about a deal that getting done. david: coming up, raining on the trump trade parade. as the president-elect fills out his cabinet, some of wall street's elite are sounding the alarm. plus, the dow heads for its first weekly decline in a month. we are counting down to that november jobs report. this is bloomberg. ♪

hours we the past 24 heard from both the bill gross and jeffrey good luck. is so-called trump trade getting a little ahead of itself. with us is a another gentleman who perhaps feels the same way. stephen major, global head of

research. before the break you are saying questioninge whether the economic recovery in the u.s. will be strong enough to service increasing debt costs. i am curious to bring it back to the trump administration policies. is it because you think those policies will not be enough to boost the u.s. economy, or are the underlying forces not just wrong enough? there are quite a few forces. there is the deposition we are starting from. across the public and private sector, it is 250% of gdp if you exclude the banks. there is a what of debt already the needs to be serviced. at this point in the cycle, it could be risky. some people have taken the plans veryxtrapolated optimistic scenario without

looking at the risks. if we go back to what was said the election, the fiscal loosening was going to be 2.8 percent of gdp if the entire program was implemented immediately. %ur forecasts are nearer to 1 in terms of the deficit impact. in terms of gdp, it doesn't move the dial very much. when it comes to bonds, a rigorous approach to the bond market will be trying to generate a growth forecast for five years out. we are struggling to see how we gdp up the path to aggressively. we have more questions than answers. david: let's pursue how you lift up the path of gdp. inflation is one thing, growth is another.

growth?get real is it possible through fiscal stimulus and reforms to get real growth and overcome the demographic issues and productivity issues? sure therem pretty will be some stimulus coming very soon. the tax cuts are probably the low hanging fruit. boost of sentiment and inflation israelite glee. as you said yourself, real gdp will be reflected in real yields. that is a big ask. none of those structural impediments to growth have been taken away. the best hope the new president raise nominals to gdp for a few years to make the debt stock more sustainable. quick fix to these problems. that is why i am skeptical as to how far this exuberance will follow through in 2017.

julie: back to strategy, it the world right now is short long-duration. is that something you are all following? in the short-term you think that might be the right way to go. dynamicthe more investors have been the right way round on this. ande's been short bonds playing the steepening of curves. probably need to cover at some point. that means buying back the bonds they sold previously. insurance companies may find the longer end yields too attractive to miss. in at someart fading point. i think most people will look at and realizefor 2017 that a lot has been priced in already. there has been a few comments about the equity market. also, already you can see the

wobbler ability emerging markets. this might play into treasuries -- bo julie: steven major is the head of mixed global research. starbucks ceo howard schultz will hand the reings over to a 33 year veteran of the tech industry. what it means for the future of starbucks, next. we are counting down to the november jobs report. this is bloomberg. ♪

julie: starbucks is turning to tech, seemingly. howard schultz announced he handing over the reins to a 33 year veteran of the tech industry. wisevin has been a

resource for me following the company's transformation. for years, he has provided invaluable insights into how we scale the company around the world and best integrate customer facing technology into our experience and operations. julie: shares of starbucks are down on that news by about 3.5%. -- is ans now has a analyst to lessen outperform rating and is been covering starbucks for quite a while tracking the company. this, what do you make of howard schultz stepping down to become executive chairman? think this, i move was pretty well telegraphed weef july when there was a organization at the top and a

more of an executive team reporting directly up to kevin johnson. his appointment back in january was the start of this iansition, internally, suspect this was the path they hope to follow all along. thei think what has been case is that starbucks has clearly pursued a technology strategy around mobile order and pay," wording the loyalty theram -- incorporating loyalty program. that is given a sustainable advantage. surprises as less of a they would tap somebody with tech industry backgrounds. julie: what more do you think starbucks can be doing in this area? what might it do under this new ceo? sarah: the strategy they talk about is the stars as currency. you can earn stars outside of

starbucks stores and redeem them inside. they have done some of this with partnerships with spotify, or lyft. what we expect is a major expansion of that, potentially. that is also in conjunction with a debit card they have announced they will issue. ,n expansion of that ecosystem it is also including integration in the back of the house in terms of the technology that supports the loyalty program. it is probably as well just a continued enhancement of that engagement, that digital marketing. again, the loyalty programs have been such a driver of their

business. julie: i will turn to the bloomberg, looking at starbucks stock prices, which has been an outperform up. the yellow bars here are the number of stores. starbucks has been an incredibly consistent performer. seen something of a slowing down over the past couple of years. do you think the strategy will be enough for another leg of growth? will we continue to see steady performance? i can't see the chart, but i would not characterize the last two years as a deceleration. slowede-store sales have atm where they were running a pretty explosive pace in 2015. if you go back a couple of years that is pretty typical to see some cyclicality in that.

still very strong in terms of the size of the system. a where they have been consistent. for a mature company we are not seeing any sharp deceleration. to your question, yes, we have been saying we think the digital initiative and engagement really is what is going to sustain the same store sales. julie: thank you so much for your time. renzi's gamble in italy. ♪ seeing is believing, and that's why

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last month in the united states. we will find out if they are right just one hour from now. markets already say a december rate hike is a sure thing. triple threat with an italian referendum, austrian presidential elections and an ecb policy decision, european bonds are looking vulnerable anticipating possible bad news. alk.ecb could taper to yields rallying dramatically. some are questioning whether it is all real since the election of donald trump. as the dollar softened for the first time since donald trump became president-elect. julie: let's take a look at the markets. you hear that questioning that david was eluding to. we are seeing a bit of a reversal of the trump trade this morning. we have stocks selling off in

terms of the futures. s&p futures both off but much.oby we are seeing some weakness in the u.s. dollar versus the japanese yen. a bit of a desire for safety this morning. crude oil selling off after a big week, about a 12.5% increase. we are seeing a decrease in the oil. a little bit of buying coming into the bond market this morning. david: this sunday, italians go to the polls to find out if the prime minister renzi will get those reforms he stakes his career on. our collie, francine lacqua spoke with the former prime minister about the referendum and what is at stake which gives us our morning must watch. >> it may be where he has been a bit reckless has been in putting

his own political future on the line. now, he has put a lot of water in his pure tuscan wine. but still, there has been a perception that it might levaav. it should be clear that in case the "no" wins and mr. renzi leaves -- which i believe he will not do -- it will be his own responsibility. i do not expect political instability, or sustained market turmoil. david: francine lacqua joins us now from rome where she is covering the referendum vote. this is fascinating if you he suggestsr. monti, there is not much at stake. the city may not leave or there won't be a lot of market turmoil. francine: right, absolutely.

remember he is probably the most famous politician here in europe that actually wants a "no" outcome. this is five years ago to the day that he was talking to various coalitions when he was tasked to form a caretaker government. italians onis that sunday go to the vote which is a clear yes or no for this constitutional reform. what does that mean? it means you must choose with what the government is proposing, giving less power to the senate and less power to the local authorities in favor of what the government things will bring more stability to politics in italy. had 63t 70 years we have government. they said this is not just the right what they say is that although renzi said he will

resign, he probably won't and they will find some kind of agreement. we will not to the kind of turmoil the markets are expecting. thed: so, explain from italian individual voter's part of you, what is at stake? he needs more consolidation of power. others say they aren't in the mood for consolidation of power pretty much anywhere in the western world. how does the voter sort through this? printing: -- francine: as a vo ter, do you want to be burdened with a constitutional change? do people really care about the senate and the other house? the problem is, he must put the to referendum because he didn't get the majority to push this through. i would say what is at stake is political stability. go to the resign or

president to talk about his political future because he gets a resounding "no." we don't know if he will. if he does, the president can either decide that he wants a caretaker government, or fresh elections, or if renzi stays on. if you have a new government, let's say it is sidetracked by this. they may not focused enough on the banks for them i would say it is a risk at the banks, because you have these recapitalization needs. if you are an international investor, t wants to -- do you want to buy into a recapitalization plan? this could distract the government from helping those little banks. david: thank you very much, we are watching you all week long. i must say, that shot will

looking at is beautiful. julie: let's talk more about this political risk potentially in italy in the eu. the chiefned by economist for deutsche bank. i want to dive straight into the bloomberg and talk about the bond spreads here in europe. we look at the german spread in white, the italian spread in blue. we have seen it kick off after the u.s. election and is come down to little bit. if you look at the six month chart of the same thing, we have seen some whitening. if you look at a five-year chart it looks quite different. -- what islook at risk goinglevel of into the italian referendum? longer-term perspective is important. this chart shows over the last several years the ecb has not quite guaranteed that the

european project would hang together. but they would say -- they made sure that spreads would not widen too much. what we've seen looks relatively innocent in the bigger picture. the problem is that the political populism that is bloo moreare becomong more and worrisome to financial markets. in 2017 there a quite a few political event risks. julie: so, do those spreads not give a very accurate picture? has the ecb artificially suppressed of them? >> you can definitely say the ecb has artificially suppressed of them. that doesn't mean that they don't get some credit. very active, they are buying government bonds. the central banks into the whole idea of this is to keep spreads down and try to help the

business cycle along. it has the side effect of putting spreads narrow. david: how much can we expect of the ecb? there are underlying fundamental economic factors that have europe diverging. are verytterns different. you sent around a map, the average people work in the different countries in europe. there is a substantial range between germany and england, more than 38 years down to less than 33 in some other countries. can the ecb still knit that together? headache is that they were all trained about macroeconomics. now there are so many other things, there are structural issues that remain unchanged. there are a number of political issues. what is the willingness of different countries to stay around? it will hang together because there are many good reasons for

investors to believe that. when we have these political events, that is when investors what is thestion cohesiveness of the european project. want to switch gears from the duration of the working life of people in the european union to the duration of the job recovery in the u.s. focusing on wage growth specifically, considering we are seeing what looks like a tight job market at this point, what is your trajectory for wage growth here? torsten: the fed has a mandate of full in place -- employment and inflation. of saying that is if you cannot find the right workers there is a number of indicators that suggested is getting harder and harder to find the right workers. also there are questions about what is the biggest problem. that suggests we have a leading indicator coming from the inside

labor market of more wage pressure. we saw average earnings of 2.8 last month, we expect the same. the trending wages over the last 18 months has definitely been higher. why some members are now saying it is time to move because we are getting closer to a mandate. david: you had that before donald trump was elected president. overlay those two things. torsten: most of the data we have is really pre-election. organic recovery now we add the potential of the fiscal boost. that has business getting excited. and maybe some inconsistency about the front and meaning short rates have not gone up as much as long rates. now have the prospect of additional lift coming because of the top administration. julie: i want to get your take on what steven said earlier

in the program for stem he said as we see yields climb, that one will put pressure on the economy. in other words, debt servicing will start to be an issue and that can provide a cap to economic growth. what is your take? torsten: this is been a problem for quite some time. gdp growth back. what is the transition making? if i have hired debt, why with that lower my consumption? my debt servicing costs would go up. debt servicing costs are not that high yet. the consumers, basically everyone who borrows included in the government is still borrowing at very low levels. we still love relatively good prospects because the gdp growth is processed through debt servicing costs which are still low. david: the percentage has been dramatic.

bank pressprich of a chief economists, you're going to stay with us. oil oil produced for its biggest gain after the first supply cut in eight years. that is next. we're counting down to the november jobs report. instant analysis from some of the biggest names on the street. ♪

emma: this is bloomberg daybreak. coming up in the next hour, a guggenheim partner joins us for

the entire 8:00 hour. ♪ this is bloomberg. i am david westin first of the big news was that the opec agreement reached at the 11th hour in vienna sent oil prices shortly upward. it was historic. the first time in eight years members had agreed to curb production. and in non-opec members like russia agree to pitch in as well. but what does it mean? torsten is still with us to help answer that question. we will pull up a chart now that shows brent prices over the last four years which came from a very high level, crashing down. now that come up somewhat. what does this mean for the world economy? this is fascinating. the timing of this decision is peculiar. you would've expected then he should've cut back when prices were really far down.

foras taken quite a wild this decision to come around. that being said, it was clear the big disruption was the drop we saw in 2014. a significant impact on positions in the u.s. and anyone who was exporting energy. overall, this move is worrying in the sense that this could be something that could have an impact on the u.s. still, the move so far looks relatively modest. david: one of the things that happened was u.s. shale production. u.s. became a major oil producer in a way that it had not. torsten: the main issue becomes can opec control prices completely? the answer is no. that is very important. a coordinated cut in production across the board? will the other producer start to

ramp up production even more? julie: where does the press become concerning for you? we were talking about interest rate. we are seeing some low rates. oil prices are still relatively modest. where do you get concerned? say a twohe fed would say years ago it is 100. now it is 55-ish, so we are not near the levels we were at the time. maybe it would hold down gdp growth ever so slightly. but that is been holding inflation down for quite some time. then the fed would begin to say they already had an organic recovery. more of thethe risk fed being behind the curve. julie: how about oil related jobs as well? seenis where we have

cutbacks. theten: it is fair to say drop in energy prices was surprising was that they really cut back on hiring and cap physicians. we will see a dramatic unleashing of new hiring. they got burned substantially. it would take more on the upside before they would feel encouraged to save now is the time to do a big spending. david: thank you so much, always good to have you here. bank chief georgia economist. now time for other stories making news this hour. here is emma. emma: president obama's first event a chinese company from aixtron, which's makes semiconductor equipment that could of military application. the company employs about 100 people in the u.s. where it generates 20% of its sales. mercedes-benz is on the verge of

becoming the best-selling luxury car brand in the u.s. c sport-utility vehicle more than tripled. is bringing christmas gloom for a number of britons. their holiday spending will be affected. the survey found that they will spend slightly less on christmas gifts this year. that is your bloomberg business flash. this is bloomberg. julie: thank you, coming up online sales dominated this year's black friday shopping spree. i would next to guest says brick and mortar stores are not going anywhere. next, her read on the u.s. consumer. this is bloomberg. ♪

more than a half hour away from the latest jobs numbers. we will get a feel for where wages stand as well. consumer confidence shows u.s. consumers are becoming more comfortable with their finances. consumers are still spending but those trends have fundamentally changed. sarah quinlan joins us now. sarah, i want to take a look at a chart. an economist and renaissance renaissance macro pointed this out. if you look at this chart, the purple line being consumer confidence would imply that the jobs market still has some ways to go. i am curious from your respective on spending patterns. i would agree with that. the consumer has been confident

for quite a while. investment has been lagging. the consumer has been spending. the consumer is spending differently. this is really post the recession. it has been talked about. the fact that if we look at this past november. the strongest sectors were airlines, lodging, restaurants. it is an experiential spending. david: how is the u.s. dollar affecting spending? the dollar is way up? a 9.2 percenteen increase of americans flying over broad. we are taking advantage of that and traveling. there has been challenges in terms of incoming spending into the united states. some of that can be attributed -- attributedes to certain economies slowing down. what has been interesting as we watched the american consumer take-up for that.

we see no difference in spending the entire year. thus, continual growth each month year over year. the consumer has made up for the fact that there might be some decrease in spending. julie: at the same time, the savings rate has remained relatively elevated poster recession. that implies there are still some locked up spending -- post- recession. that implies there is a some locked up spending. what would unlock that? could be permanent change. i think higher interest rates would help. i also think the issue is we just don't want as much goods anymore. look at housing, they are 200 square feet smaller than before. you don't have as much goods to put things in.

they're buying replacement goods as opposed to additional goods. david: you have data right up to the minute at your job. tell us about the holiday season. what are you seeing so far? sarah: it is a good start to the holiday season. i want to point out we buy throughout the whole time including the week after christmas. time is the most valuable thing to the american consumer. that week after christmas is an important part of the retail season. we saw good numbers in online and brick and mortar. david: up by how much? sarah: around 2.4%. david: thank you very much, she is an expert on this was the coming up, we're counting down to the november jobs report. we will break the result and go through the numbers with bill minard.d scott this is bloomberg. ♪

♪ david: "bloomberg daybreak ."lcome to "bloomberg daybreak

it is jobs today. i'm david westin with julie hyman, alive from bloomberg said quarters in new york city. jonathan ferro and alix steel are off and julia will start is with markets. julie: the caveat that things can change, probably after the snp on, but the dow and the futures -- s&p 500 index comparing on the futures market and pointing lower. we have crude oil prices, down about 1.25% after seeing the big gain from the opec agreement. off from the yen, and the euro down versus the u.s. dollar into the china brendan gaughan the weekend and ecb meeting next week and the 10 year yield a little lower -- into the china referendum this weekend and ecb meeting next week and 10 year yield a little lower. 180,000 jobs were created last month in the u.s.

we will find out if they are butt at 8:30 a.m. eastern, the market's sake the december rate hike is a sure thing. triple-threat man threat with the tying referendum and austrian presidential election and ecb policy decision in the next six days. bonds are looking vulnerable and possible bad news, including tapering talks. raining on the trump. with dollar, equity and bond yields changing dramatically since the election. some questioning whether it is real or fairy tale. as the dollar soft and for the first time since donald trump became president-elect donald trump. david: we will get the jobs numbers in 30 minutes from now. we are going to know how many jobs the u.s. created last month of 100 estimation 80,000. the markets or should the fed will raise rates later this

month, pretty much no matter what. what could job numbers tell us about what happens next? we have two experts with us to take us through the numbers, scott minard, chief investment assetr guggenheim, and management coming to us today from boston, so welcome to both. scott, let's start with jobs numbers. we know what they are. what will you look for them and what significance do they have? scott: i think the important thing will be more forward-looking, things like how many hours were worked, what do we see in the way trend. i think the headline numbers are less important right now. i think we know that it is likely to be strong and if it disappoints, that will be a different story, but i think right now, we want to stay focused on what is the long-term trend and what will happen with the participation? things like this to guide policy in the early years of the trump

administration. david: vincent, one of the biggest differences from the last jobs numbers is we have president-elect trump and there is suspicion about fiscal stimulus. white does that to -- what does that doing times of possible inflation uptick? vincent: it is not just what president trump will be doing about fiscal stimulus but will he be doing things to raise business cost? we are getting indications that he is more willing to step into conversations with industry and reno his views on trade, so we may have both parts cutting toward higher cost as pressures on resources because slack is diminishing and less resources if the government is more interventionist. julie: one of the things president-elect trump has talked about is the unemployment rate is artificially suppressed and we don't use the right number. if you look at other measures of

unemployment, of people who want the job but have stopped looking, we have a chart on the bloomberg. individuals who want a job with the white line has remained elevated. since the financial crisis and recession. the total unemployment has come down. do you think some of the measures are looking that will bring those people who stopped looking back into the work horse? -- workforce? >> general thesis is the harder you run the labor market, the more likely you will bring people on the margins back in. i think that is important why janet yellen has been waiting to raise interest rates. that is her experiment to see how many of those people can come back. she is probably right about that. however, often when people are discouraged, particularly if they go on disability, they do not come back. importantly, they lose some , human capital

depreciates, and when they come back, it is less attractive opportunities. david: scott, vince raises an interesting question off of the appearance of the vice president-elect and president-elect, indiana, the 1000 carrier jobs retained, it appears this president may be more interventionist and to persuade people to keep jobs here. could that make a difference in terms of jobs? scott: i think so. hard for the president to be a micromanager and if he continues this one off intervention in individual cases, that looks a lot like the carter administration. the carter administration was very micro oriented and we know the outcomes of that. i think the bigger question is, will there be a broad-based shift in trade policy, especially with nafta and other parts of the world? threat id be a major think to the success of the

trump economic plan. david: does far, the markets seem to like the prospect of a trump presidency. is that an overreaction from what you have seen? scott: i don't think so. i think the market discounts the trump presidency with an expectation that we will not go down the more dangerous path. when you look at fiscal policy that he has discussed and you talk about the reduction in regulation and energy policy, all of these things are progrowth. the president has been quiet or president-elect has been quiet about the deportations, about ,rade wars, so the market because of the president-elect's lack of comments in these areas, is presuming these issues are fading. if we were to get that back to center stage, i think we would have some serious questions about the success of the programs. julie: vince, i will invoke bill gross. we mentioned him this morning and we will hear from him later in the morning. and flagseally rates

about the term administration are expected policies and their effect on growth. do you agree with scott that most of the policies are going to end up being progrowth in the long term? vincent: i agree with scott for the general principle. campaigning is different from governing, governing is more conventional. we have already seen president-elect trump move more toward establishment republican policies and establishment republican colleagues to work with. to theng moving closer folks in the house and senate. while it will be more conventional been campaigning, it is probably going to be covered with a veneer that will be out unconventional perjury may have a president who continues to tweet, one more interventionist in the way he with a-- unconventional

president who continues to tweet, and one more interventionist in the way he speaks. david: talk to us about the u.s. dollar. you anticipate that to continue and what are the effects on u.s. companies, particularly in the u.s. economy? vincent: there are two reasons we strengthen the dollar, first, we have talked about the next administration's policy. in has been things to increase pressures on resources, more stimulus, perhaps interventionist policies with regard to aggregate supply, and the future benefits to potential output are exactly that, in the future. in the near term, more pressure and resources because of the election. second part, what are we also talking about with the employment report for? in two weeks, the federal reserve will raise interest rates, and they will be raising interest rates as their withagues central banks

president draghi at the ecb and governor kuroda at the boj are looking for any reason to provide more policy accommodation, so the fed is going to be pulling away from other central banks. that will also put pressure on the dollar. what does it mean going forward? two things. one, less pressure on cost her dollar off appreciation is associated with slowing and import prices, commodity prices, and a little bit more dragged from the external sector, which will interact with what president trump does. isie: scott, whether it about the dollar or what is going on with fixed income market rates, what is the biggest bet you are making? scott: they longed end of the yield curve has discounted the rate increase for the cycle. our work shows that the terminal rate for fed funds based upon the debt load and the economy should be in the area of 2.5% to 3%. district with, the yield curve is flat at the end, so we would

think that the peak for the 10-year note in this cycle should be about 2.5% to the percent, which are close to. the more interesting piece is historically, the 30 year bond yields less than the 10 year, so it is 30 year bond above 3% and we think we have seen most of the damage along the long yield of the curve and that is the most attractive place to be. david: vincent reinert and scott mindererd are staying with us. in the meantime, an update from headlines outside. emma chandra has first word news. emma: president-elect donald trump picked mad dog to be the next secretary of defense. he left in 2013 after a 41 year career, began as a rifleman and left as a sergeant. mattis argues for the u.s. to play more assertive role over the seas.

a familiar position, once again shuffling between the u.s. and china to diffuse tensions. kissinger met with china's president today in beijing. they are trying to figure out whether president-elect donald trump china bashing on the campaign trail will become white house policy. kissinger met with him two weeks ago. and brush is accusing foreign spy agencies to launch attacks on the banks on monday. the federal security service says the attacker's plan to use service based in the netherlands that begun -- that belong to ukrainian company. the company says they have not been contacted by law-enforcement. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i am in the chandra. julie? julie: the movers in the u.s. withmorning, starting smith & wesson, shares down 4.5%. earnings and revenue beat estimates. its guidance is weaker than estimated, despite the fact that

there were a number of firearm background checks on black friday. a lot of people getting smith & wesson in stock and and outlook not so strong. other retailers include ulta beauty, a monster outperform or in terms of sales growth. last quarter, a reported sales of 16 point 7%, better than estimated and earnings-per-share beat estimates. meantime, five below, the discount retailer, came in with estimates that be -- came in with earnings that beat estimates. within retail, we are seeing some others falling back. andlemon is one, downgraded analysts say maybe now the trend is switching from act leisure towards done them, something not good for lulu. they cute watching g3,

their forecast for 2017, saying department stores are caring less of the cold weather inventory. coming up, political risk european-style. matteo renzi wants to reshape the senate but it could cost him his job. we will take a look at what is at stake and how it is likely to come out, next. countdown to the november jobs report in the united states. we will break the numbers as they cross and announcements from janus capital's bill gross. god is ahead. this is bloomberg. -- that is ahead. this is bloomberg. ♪

this is bloomberg. i am julie hyman. matteo renzi wants to reshape the senate there but it could cost him his job. italians go to the polls sunday to decide whether prime minister

renzi will get those political reforms he staked his future on. scott minerd is a new york and vincent reinhart coming to us from boston. vince, i want to start with you. what do you think the outcome of the tying up a random will be? to handicap hard these things and what to think the ripple effect will be? vincent: i do not know anymore what to put on polls because given the results all this year, but if you believe the polls, italian voters are most likely to say no and the question is, is it a small metal or a big no? allows the prime minister to step down and the caretaker government. perry baker n -- a big no could raise an earlier election. meanwhile, the next domino is

what will the ecb do in terms of its policy decision next week? later in the month, what will be stress test for the italian banking system? all those interact and all those are reasons for elevated risks. if we wanted a better sense that the world is a risky place, it is 15 minutes before the jobs report coming out and we are not going payrolls, payrolls, payrolls. julie: part of the reason we are not going payrolls is the cousin of the 100% chance the impressed futures, but scott, i come back to where you are putting your money. when you are looking at a bond in the eurozone at this point, are you guys staying away from peripheries? scott: i think so at this point. we see this as fairly vulnerable. ae ecb, or that they announce tapering of some form at this meeting, meaning they say, we

will extend the asset purchase program but we will not buy as much, or we are going to make it data dependent, or the extended for six months, we all know that the tapering will come behind that. the fundamentals underneath european bonds, longer-term, do not look that healthy. a lot of the discounting that we started to have in the united states, which is probably not over for the majority of the yield curve, where way ahead of europe, they have to consider the united states to be better than europe at this point. david: we had to events in the next six days, the italian referendum and ecb decision. if the markets have largely referendum, on the supposed they say yes, what does that do to the markets as opposed to the ecb and talking about tapering? what affects the markets more? scott: i think the yes vote would mean more because with the yes vote, renzi has the power to

step in and clean up the italian banking system. he has got a real consolidation of power, can get things done, and i think that would be more meaningful than what the ecb would say. julie: vince, even if you do get a no vote today, to your point, we had the brexit vote happen. there was this alarmed reaction of markets and then things came back. it seems as though if the effects are not going to be as bad as first opposed, they will be more delayed. to think that will be the situation with italy? vincent: i think you're right. i think there are two president's -- precedents, the u.s. election and the brexit vote. volatility spikes and reverts quickly. times.e saw both the other similarity between the italian referendum and the british one is that if the voters know, it is unspecific as

to what happens next. the people of the u.k. told us they wanted to leave and they did not specify where they were going to go to. the people of italy would say, no, they do not want the constitutional amendment, but they're not providing the alternative. that is an environment for elevated uncertainty of the medium and longer-term nature. david: scott, you said you are not enthusiastic about european bonds because of uncertainty. how big an overhang is political uncertainty in europe? if you could wave a magic wand and note europe will all come out together, how much more attractive with european investment bdo? scott: it would be meaningful but the problem then is that we have to get to structural reforms. , for instance, in italy, we have squandered the last 10 years in terms of getting something meaningful done. when you look at what is going

on in germany, where the economy is over seeding, there are a lot of issues in labor mobility, what are we going to do with the refugees, how do we do this? even if you could wave the wand and say, we are going to get all the political haggling to stop and start addressing the issues, there is still uncertainty about the issues and how they will be addressed. julie: there are. thank you, scott. vincent reinhart, chief economist, thank you. inerd, guggenheim or ceo, will stay with us. the greenback looks for first weekly loss since donald trump's election. does it support a further decline? the one chart to see, next. the countdown to the november jobs report. that is coming up, all ahead. this is bloomberg. ♪

julie: this is bloomberg daybreak. i am julie hyman. a check of the markets, looking at equities. almost unchanged for the u.s. in terms of futures. down 10, s&p 500 down one point five and ftse is lower but pared losses, down about two thirds of 1%. the dollar still down versus the japanese yen about .1 of 1% and the euro selling off versus the dollar by the same amount. crude is lower but pared some losses and we are seeing a little buying in the treasury market with the 10 year yield down to basis points. our morningll go to meeting, where we here at key banks are looking at now. the bloomberg dollar index had the best month on record after donald trump's upset the three. the index is poised for its first weekly loss in a month as traders shift focus to today's

u.s. job data and sunday's italian referendum. with thisrd is back and joining us from new york, brad bechtel, jeffries foreign-exchange strategist. welcome, brad. tell us about the dollar because it is softening today. is this temporary or is there a turnaround coming? brad: we have come a long way past in the dollar, particularly the dollar-yen. 14% move since trump's victory is impressive. we had a little correction on handle,back to 111 couple percent, connecting day. feeling soft today. we do feel a little bit overbought in terms of the dollar, generally, specifically, dollar-yen. i would not be surprised if we are setting up for a pullback, maybe a look at that 111.50 on monday or deeper. the trade is becoming quite consensus and fast and the move has been extremely fast read it

would not be surprised -- fast. not surprised to see a pullback. fede: is that pricing in raising rates in december, presumably? the what for the meetings next year? brad: great question. december is fully priced great i think it is done deal there. not too much to rock the boat. after december, when happens? two for next year, one for next year, for for next are? expectations are over the map and it will depend on what we get out of the white house and in policy that comes out of that. in terms of inflation expectations and the way rates are moving, there is a lot of variables in the mix. the fed is going to be a key component of that and fed expectations into next year. a tough call. david: we are over three minutes what from the job numbers. as members across at 8:30, what will you be watching the most?

brad: dollar-yen. it has always been sensitive to u.s. rates, u.s. equities, and the dollar a big driver of that pair. that is the one to look at. i am looking for potential rally that the market might sell into. the market has been selling it all morning. we got a big jump on a decent print on nsp, and you might see quick profit taking and that might set us up for that correction lower as we start next week. i am keeping an eye on dollar-yen today. avid: brad, take us into the tying referendum. what happens with the euro-dollar? brad: funny thing about the euro is everyone is looking to be short the euro. we look at 105 a couple of times but we cannot get through there, back above one of six, almost 107. same with the italian referendum, everyone expects a no vote great italian spreads have wound up quite a bit. i would not be surprised to get

the no vote and seek to tie in spreads coming a little bit. that might support the euro, so we could see an extension of this rally in the euro-dollar higher. jobd: brad, we talked about reports, go back to wednesday with opec. what about oil prices and what they are doing to the foreign currencies, example, the ruble? it is helping commodity currencies and the life of the ruble -- brad: it is helping commodity currencies and the life of the ruble, but also inflation expectations, so you see european expectations are u.s. inflation expectations rising. a lot of that is a too beatable to oil and other things, but the oil agreement was a big help to inflation expectations globally. david: thank you, brad bechtel, jeffries fx strategist, and scott minerd will stay with us. julie: moments away from that jobs report for november.

>> last check of the markets. little change,th the ftse and dax selling off. the dax lower by a think two thirds of 1% and the ftse as well. we have seen the little buying in the treasury market, pushing yields lower and we have got oil a little bit lower. a reminder of the change in non-foreign payrolls, the consent since -- the consensus estimate is 180000 and the unemployment rate survey with 4.9 percent, average hourly earnings at 0.2%. those are the key numbers to be looking for. note have discussed, it is just about what the federal due in december. there are indications for next year as well. david: exactly. wages -- accentuated wages and earning tech on that, there will be julie: other questions driving inflation. julie:yes, so that average hourly earnings number, which has gained importance, is going

to perhaps gain even more importance with these numbers coming out today. we will also pay attention to the manufacturing payrolls with the new trump administration policies. down to michael mckee outside the department of labor with the report. michael: the fed rate hike trade is on 178,000 jobs created, just under the consent since but the unemployment rate falls to 4.6%, the lowest since august 27 -- 2007, the u-6, including discouraged workers, falls to 9.2%, and that is the lowest since april of 2008. inflationary pressures? nah. , theourly earnings fall first time since the summer 2014. the year gain just 2.5%, up just same time thathe

year. no change in the workweek, 34 .4 hours. manufacturing our spell and we lost 4000 manufacturing jobs, so donald trump has something to talk about today. construction gained 19,000 jobs something that might be surprised to economists who are looking for a surge in retail hiring, that did not happen. retail hiring on a seasonally adjusted basis down by a thousand, a little more than a thousand. the unadjusted numbers did rise but not by much. there was no surge at all. at least not yet, so that may be folded into the december numbers. percent -- participation rate falls to 62.7, so bad news, but the unemployment rate is 4.6% as more people got jobs. there was a decline in the labor force and we saw fewer people lose jobs. all in all, it tells you that not a lot has changed in the economy, and it janet yellen

wants to raise rates december 14, this is the green light. david: thank you. how in markets reacting, julie? julie: decrease in yields. looks like people are looking at that average hourly earnings. mike mentioned it is down .1 of 1%, which is unexpected. while it may not change the trajectory for the fed in the short-term, given the fact that we saw yields climb so much, that presumed perhaps a better wage number. david? david: less incentive for the fed to raise, right? they're not as worried about inflation? julie: going forward, perhaps, but we might get data -- david: kind of confusing. percent and.6 employment rate and decline, those will be big topics that janet yellen focuses on because that really raises questions asked to, have we passed the point of full employment?

the fed has been estimated for the employment for 4.7%, so this is the first time we have dipped below. david: you keep adding jobs and prices do not go up as fast, cinelli go to tom keene and david gura on bloomberg radio who are speaking with bill gross. joining us, bill gross, wonderful to speak to you, welcome. gross, it is embedded with four point 6% unemployment rate but not all quit for the american labor economy, is it? bill: i do not think so. 4.6 is a headline grabbing number, getting close to the lowest numbers that we have seen in the early part of the century, so that will be the headline. we are certainly not out of the clear. when i saw the -.1 wage number or the revision and the why, oh why coming down to 2.5, it

indicates things are not as hunky-dory as the stock market thinks. tom: i went to fulton politics. you have been critical of some of the statements of the president-elect -- i want to fold in politics to read you have been critical of some statements of the president-elect. that or is there a riskier bad inflation with no real growth? bill: there is that. and productivity go together in terms of nominal gdp and there is a sense that nominal gdp will be elevated by many of the programs, whether it is corporate tax cuts or infrastructure programs, but future growth is primarily a function of productivity, as is information. if productivity is high, inflation is contained, but productivity outlined for the --t several years, and while

remember, that is remarkable for republicans, like the 180 degree turn. while looking at stimulus in the form of tax cuts, and deregulation promised a near-term boost for productivity in 2017-2018, they're likely to be temporary in my view. he counters to the view is that there is a strong dollar now, and continuing structural headwinds, including age and , equalization trade policies, and accelerating debt and leverage that we have seen in almost all countries, and that promises to contain productivity of perhaps 1% annual growth rates, so to me, gdp growth rate at 2% and perhaps inflation higher than that at 2.5% to 3%, so nominal at 5%, so the majority of it may be inflation. david: how much of the uncertainty was delayed this week when donald trump picked his treasury secretary?

i heard steve said he would be willing to explore selling bond with durations longer than 30 years. i wonder what you make of that and what it has dented certainty? importantink one of ideas that makes a lot of sense, and it made sense 50 basis points ago, and it still makes sense today in terms of selling 50 to 100 year bonds and the theory that you match the maturity of the bonds to the length of the asset that you are using liability against, and the length of the asset is the strength in the longevity of the u.s. economy, which hopefully is 50 years to 100 years cap of thing. it makes sense. i did not get makes sense in terms of policy of cutting corporate taxes from 35% to 15%. the effective corporate tax rate is already 44% and i see this as a grad bag of special interest

cutting corporate tax rates, raising corporate profits and doing nothing for mainstream america. tom: let's cut to the heart of the chase. a better joba of economy, labor participation a little bit off the markets this markets this month, floating back to where it was in june, we need incentives from washington. does that come from a good old 1960's tax credit or can we really trust the secretary designate and president-elect to affect a broader tax policy? bill: to me, tom, tax credits, while they have been effectively used 20 to 40 years ago, these days, they do not make as much sense. they do not have the multiplier effect they used to have. the reason is that given corporations have an ample use of money. they have been able to borrow at nearly 0% interest rates for

several years. if they were going or wanted to invest in a thriving economy, then certainly they would have by now. the tax credit would do little in my thinking to generate economic growth, far and above what we see now, which is a 2% or 1.5% type of growth rate. i think the government has to get more involved and has to be more jobsy and oriented themselves as opposed to the private sector. tom: david, i went to mention we have minimal market reaction to the jobs report. yields in slightly. not enough to make bill gross scared. david: bill, let me ask you about the international space. if we take this coming administration that it will currencyna as a manipulator, i named her back and the consequences. we can see china that stops buying bonds, and how likely do think that will happen?

bill: china has been liquidating 12 to 16 almost months, so undoubtedly, that is having an effect. yes, global conditions are important conditions in terms of u.s. interest rates. undecided seat of japan and recognize that they 10 year jgbo their at 0%. what does that mean? it means the japanese investors can sell jgb and they don't have money left, but they can sell them by treasuries for currency adjusted 60 to 70 basis point pickup, so watching with the ecb does next week in terms of their are quite critical in terms of the overall global bond market and the effect on u.s. treasuries. tom: i want to come back on italy and the drama of the

weekend. do you just assume stronger dollar and could you agree that we could get a brutally strong dollar? bill: not brutally strong. ,t depends upon when you start a 6% to 7% against the majors, and much more against emerging-market countries. it is there where the brutal line comes into effect because emerging-market countries have taken out -- was janus capital's bill gross with tom keene and david gura. next, we talked to guggenheim's chief investment officer scott thoughts ont his job numbers and what they tell us. this is bloomberg. ♪

emma: this is "bloomberg daybreak."

andng up, mohamed el-erian agreed us on the jobs report. us on the jobed report. julie: we are looking at markets in the lake of that jobs report. headline number coming slightly lower than estimated in terms of payroll. however, the number that stands out is the average hourly earnings number falling .1 of 1% month over month. taking and s&p futures leg down from a cover to some degree, down about .1 of 1% and a ftse and dax heading said with a decline of about .78 of 1%. announcing an acceleration of selling of the u.s. dollar versus the japanese yen, euro down .1 above percent and crude oil prices now up half of 1% and more than increase in the 10 year yield or decrease.

i am getting started on the new graphics. david: bond price went up and yield down. julie: moore buying in the market and yield has now doubled to four basis points. with us,ott minerd giving us initial thoughts. some puzzling numbers. scott: it really is and creates a dilemma for the fed because you think of getting past the meeting, year, they will be looking at potentially a large stimulus package out of the trump administration. at the same time, they have a decline in the unemployment rate and dissipation rate but no pick up in wages. what are they going to do and -- rate been aation pick up in wages. what are they going to do? i think this puts them in a chilly situation because the whole theory that the fed has been operating is to let the economy run hot, but unemployment fall, that will cause wages to rise and

dissipation rate to rise and that will increase output. and participation rate to rise and that will increase output to are not seen people come back to the work force and we will spend a lot of time sifting through the data. julie: if with the fed has done has not been successful in raising wages and persistent -- input dissipation rate, what can the trump administration do? scott: i think the focus that the trump administration has in terms of infrastructure project and their focus on manufacturing, those tend to be higher wage jobs and that will probably push us in the right direction. ofm always suspicious micromanaging and economy. i think markets do a better job and government programs cause and efficient allocation of resources. three years down the road, we may set ourselves up for a problem. david: thank you, scott.

he will stick with us and we will hear more from bill gross, next. this is bloomberg. ♪

julie: we go back to bloomberg radio and janice capitals bill gross. tom: we welcome bloomberg television with william gross of janus capital. bill gross, i want to turn to italy and the moment for the time people in europe to redo have been a great student of european of the quote economics. mario draghi has to react to what people will see sunday. how would you expect the ecb would react to a no vote from the time people? suggests thatpect draghi will buy italian bonds to support the credit. i think that is reasonable. perhaps, a lot of that is already built in in terms of the spread.

italy has them better in the past days because of the expectation that hands would be open in terms of buying by draghi and ecb, so they have ofn on whatever it takes cap policy and i would expect in terms of the referendum, whatever it will take works for the short-term but not the long term because ultimately, it is approaching the basket pace in terms of -- basket case in terms of potential bankruptcy. tom: the singular distinction right now if it really cannot go to the lira and depreciate or devalue themselves out of this disaster, what is the gross solution that bill gross solution for all of italy and for the european experiment if currency depreciation is not available? is -- ll, the point hill: well, the point is there is little in -- bill: well, the

point is there is little in a solution because it tied the lira to the mark at a [indiscernible] great, which may germany more competitive to italy, with the extent they are stuck in that euro currency and there is very little to do other than structural change, etc., but it really is not good at structural change. they like things like they are, which is why they have been behind the eight ball for the years and decades. i simply think that the way things go in that type of situation is that ultimately bankruptcy leaks out, whether in the financial institution or in terms of low growth rate for italy itself, relative to neighboring countries. not much to do other than to break out of jail, understand jail, and set up bread and water. david: what we have seen in the u.s., you have written that the populace sunrise is barely broken. but this scene is look like?

what does populism bring to the u.s., european and global economies? bill: that is down the road, is it not? we have four years of trump policies and as they are unfolding, the are not populist-oriented. populist-oriented in terms of trade policies, which i elected in the midwest, but to the extent that trip policy are integral, they may not be job productive. movement ispopulist a global movement, dissatisfaction with corporations relative to labor, an expression of the need for higher wages or jobs, period. will that go way to molly of thinking? no because the situation will , so ultimately, how is it resolved? it is resolved with populist policies and the french unrest

that continues to distress this satisfaction and as a result by continuing to vote down current administrations in terms of existing policies, whatever they are. worldwide, you're adamant statement of financial repression will continue for many years, including one decade. can you reaffirm after the election of donald trump that we will continue to see financial depression? repression? bill: bad is a question mark. -- that is a question mark. not listen, but aside from that, he has the ability to appoint members and that should increase fed policy. to my way of thinking, trump's view on the fed will be an easy monetary policy to accommodate his there a strong fiscal

deficit type of spending. financial repression, is it not? it is an implementation or interest rate that is far below what has been earned over prior decades. move to stamford, bill gross, your beloved 49ers, we would not talk about them. we will stick with stamford, they suggest that dan taylor of stanford university would be an appropriate red chair given the politics of the moment. can you live with the taylor rolled and taylor economics at the fed? ken: i cannot and i admire for his research but not john taylor. rule was implemented in the mid-1990's and made sense back then when the economy was less leveraged and you had input at unemployment and you inputted the potential real interest rate and you came up with the magic

formula as to where it should be. the taylor role reflects what has been wrong with the federal reserve for many years, model driven, and models are based upon 20 years or 40 years of history as opposed to current date, in which there are high debt levels, which is the primary factor. there are aging demographics, technology advancements, which displaced people, said unemployment rates and real interest rates that used to be, that 2% real interest rates of the taylor rule, no longer exist. the minute you use it, that is when you start to lose. david: that was bill gross and bloomberg's tom keene and david gura. scott minerd is still with us -- still dilemma's. what is going on with wages? scott: basically telling us there is a a sick structural disconnect between the labor

available in the jobs that need to get done. is transition in the economy. manufacturing is booming toward robotics and there is an increase in productive output in manufacturing but not the kind of jobs that pay high wages. julie: do you think the supposition that is priced in the markets at this instance, we will see inflation under the policies? to think that will happen? scott: not at all. i think history shows us that shocks, the increases in government deficits, cost the dollar to rise, which causes deflationary or disinflation or a forces back into the u.s. economy, so we see commodity prices come down, gold fall, import prices fall, and that will probably contain inflation for the next year or two, so i do not see an inflationary spike. david: but the markets anticipate one. scott: if the market anticipated

increase in inflation or the bond markets are priced in for an increase in real growth, and i think that we are more likely what is going on. julie: and we could have one upset the other? scott: i think so. -- scott,ottmi thank you. coming up, mohamed el-erian and rick reider. julie: final check on the markets, 30 minutes after the jobs report, ed decline in futures but very small. round-trip since before the numbers came out. this is bloomberg. ♪

♪ david: welcome to "bloomberg daybreak," on this friday,

december 2. i am david westin with julie hyman. alix steel and joh jonathan ferro are off. let's look at the premarket. julie: 30 minutes after the jobs report, so u.s. futures little changed. there was an initial reaction to the jobs report and now moderated. ftse and dax off about .6 of 1%, pretty consistent. moving over to rates and fx, only see the u.s. dollar was little changed against the japanese yen comes of the dollar came back in the wake of jobs and the euro falling more against the u.s. dollar. crude oil prices down about .33 of 1%, smaller drop than earlier and the 10 year yield with the drop of two basis points. it, too, has come back to where it was before the jobs report. david: a little bit of a y awn. at this hour, hiring in the u.s. picks up, unemployment rate

tumbles to 4.6 percent, the lowest since 2008 and employers in november. jobs europe's triple threat with an italian referendum, austrian presidential election and ecb policy decision in the next six days. european bonds of honorable. possible bad news, including ecb talking about tapering. raining on the trump parade with equities, the dollar and bond yield rallied dramatically since the surprise election. someone wall street question whether it is real or a fairy tale. the first time since candidate from became the president-elect. that is what you julie: need to know. and also it is moving, starbucks in the move after howard schultz step down as chief executive officer of the company, becoming the executive chairman. schultz,er howard kevin johnson will take his place, the chief operating

officer, known for his experience in the tech industry, so analysts like sarah senate tour, who spoke to earlier, expected to move more to digital , very big presence in mobile ordering. stock was down nearly 4% and now down about 2.5%. we are watching semtech movers. really interesting situation with the company called ekstrom. it is a german company but these are u.s. shares. administration is considering potentially stopping a deal to buy this company from a chinese firm. it is able because beck stop as a california subsidiary, soak the developing situation. ember alone, watching that -- 8.6%ella, shares down by and workday, watching that, international customers delaying purchases and the company blames the brexit vote an election the u.s. and were: europe -- and oracle in europe, and it was

also down and workday downgraded on the heels of the results. dive into we want to those november job numbers that came up from washington. michael mckee is in washington, bloomberg economic economics and policy correspondent, i wonder about what this tells us about inflation because it seems there are such signals. 4.6 unemployment rate that on the other hand, that average monthly and hourly rate of wages went down to the rate of growth. michael: a surprise and conundrum. not necessarily a surprise that the in employment rate goes down you have a drop in the labor force, but hiring picked up in the number of people who lost their jobs fell according to the survey. i suspect there are statistical problems that make it worked out over the next couple of months because you get to 4.6% unemployment and that is by any definition for the employment and that wages rise. that is what the fed expects. it think inflationary pressure

will come from that. the other side of the question is what does it mean for donald trump and fiscal stimulus going forward? fiscal stimulus puts people to work, but if you are at 4.6% unemployment, can you find people to carry out the projects? there are conundrums in the , not just for the sudden in markets, but the incoming administration. julie: has david alludes to, that wage number was a surprise. where exactly was the weakness in wages last month? weakness was all in the goods producing area. across-the-board declines for manufacturing, mining, and construction, which is a surprise. you think with additional jobs, construction wages would go up. there is the difference in weeks, months, and that may have had something to do with it where payroll falls, so we have to wait until next month if the trend continues, the first time in two years we saw a drop in

hourly earnings. david: that is michael mckee reporting from washington. for more on the jobs numbers, we bring in mohamed el-erian, chief economic advisor and of bloomberg view columnist, joining us from irvine, california. take us into what you take away from these numbers, particularly as it reads against inflation and more important, what you think the fed will do? muhammad: good morning. -- mohamed: short-term, goldilocks report, we had solid job creation, but the wages were very subdued, soap short-term is goldilocks. longer-term points to this structural challenge. we had a lower participation rate, real puzzles about rate formation, so it is an interesting next. i think that the fed, it encourages the fed to hike in december if it needed more encouragement. the only thing to hold it back now was truly disastrous

european follow-up to this weekend's election, but otherwise, domestically, this encourages the fed to hike but not to change the mind about future rates. that is why the market response is subdued. isid: take us into that path a lot of people say what matters is what we expect in 2017 and not december. what do you expect out of the fed? two rate hikes? mohamed: i think two rate hikes is the sensible production -- prediction given what we know. we have a lot of uncertainty because this fluidity, not just on economic rent globally, but the policy front now in the u.s., so i think the central and baseline is two hikes but one has to be humble about the degree of uncertainty. alie: obviously, we sought big pullback in treasuries in the month of november, the

biggest on a monthly basis since 2009. does the market price in this trajectory you talk about once in december and twice next year? mohamed: the pullback was mainly because expectations have changed on the basis of announcements and the expectations now, whether you look at the treasury market or at virtually any other market, is higher u.s. growth, higher u.s. inflation and that is what has been priced in. have brushed a price that been based on announcements. there is a and implementation, so there is two critical steps but i think the market reaction is consistent with what we heard from the president-elect and his team. david: there is a tension between the markets of pricing in bonds and expedition of fed rate hikes. over the last couple of years, when the market disagrees with the fed, the fed comes to the

markets rather than reverse. do think they will have to be adjusted fed expectations? mohamed: this time around, it is the markets adjusting toward fed expectations. in other ways of thinking, if you see what is implied by markets, it is moving up toward the blue dots or what individual fomc members think the rate part looks like. this is different. the reason why is because we have a whole set of policies that possibly will finally be ,ctivated, fiscal, deregulation and we also have other elements that are coming in, including corporate tax reform. yes, finally, the markets are moving toward the fed rather than the fed moving toward the market. julie: we just spoke with scott saysd a guggenheim and he maybe the market doesn't have it right in terms of inflation. he says, historically, when you see a big increase in the dollar, it is actually this

inflationary. where do you stand on that idea? mohamed: i think we're moving toward higher inflation but not toward were inflation is a problem. i think we get to 2% and the fed will meet its inflation objective. that will enable the fed to but note the gradually anywhere near inflation. i think we have put aside the threat of deflation. i think we are going back to more normal inflationary conditions based on domestic consideration. the global, interestingly, we are going into the period of divergence, not just monetary policy but on other elements of -- on every other element of policy and that will be interesting out market prices fixed in because the exchange rate market cannot. the burden of policy divergence. david: before we get you a short break, i went to raise a different subject trade

yesterday, an announcement of august in carson, governor of the bank of mexico, step down. can you give us a sense of the effect in the marketplace? mohamed: first, he is an incredible central bank or and has been mexico, good to see them go through the bis. in terms of mexico and what happens, i do not think it is a huge deal. mexico has a rich pool of [indiscernible] i think the major issue is what the u.s. do with trade and that will be the critical element going forward. david: mohamed el-erian will be staying with us. later, erik schatzker will have an exclusive interview with stens ate 2:00 p.m. eastern. emma: donald trump has picked mattis to be his next secretary

of defense. he left after his 14 year career and left as a four-star general. he argues the u.s. should play more assertive role overseas. the european union's law enforcement agency is warning that islamic state is likely to carry out attacks in europe in the near future. according to euro paul, intelligence indicates several dozen people directed by islamic state may be in europe now and police say they're capable of committing terrorist attacks. christmas gloom for a number of britons. according to a survey by pwc, they say holiday spending will be affected by the company's decision to leave the european union. the survey found that britain's will spend less this year. globa. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. chandra -- i am emma chandra. ics.e: coming up, trump-onom

keeping 1000 jobs in the u.s. in exchange for tax incentives. is the retention strategy good for the economy the long run? we will look at that, next. exclusive interview with ireland's prime minister with john nichols wait -- john later in the hour. this is bloomberg. ♪

david: this is bloomberg. i am david westin, donald trump held a rally in cincinnati does his-- to celebrate

election. has kept 1000 carrier jobs in exchange for tax incentives. he said they would bring advantages back to the united states. donald trump: we want to compete in the world, but we are going to compete in the world, where it is a two-way road and not one-way road. the advantages are going to come back to our country. david: joining us from washington, alex wayne, bloomberg news white house editor. welcome. give us a sense, early going, but his face a new presidential approach to direct intervention? to persuadeompany people to keep jobs in the united states? alex: if you take donald trump at his word, it is. this is what he says he will do. as companies plan to move jobs out of the united states, they will get a call from the trump

administration and he said if they move, anyway, there will be "consequences for those companies." the great irony is had president barack obama pursued a policy like this, he would been raked over the coals by republicans and accused of central planning and socialism of the economy, but now, it is merely populism and apparently going over quite well with donald trump supporters. through, he follows this would be a level of micromanagement we have not seen in a long time. this he had time on his schedule to go company by company? alex: he said yesterday that not all the calls with come from him and said he would have plenty of people in his administration to negotiate, probably not as a less he thinks he can, but good negotiators and the administration will make the phone calls. david: in fairness to the president-elect, this is something you put a flag on the ground and delivered. that is one win, which must up

his transition. alex: it is a political masterstroke to read carrier became a symbol for his entire campaign cash masterstroke. carrier became a symbol for his entire campaign -- masterstroke. became a symbol on his campaign and he did it before office. this is unprecedented for president-elect. david: thanks, alex wayne from bloomberg news, white house editor. julie: for more on terms impact trump's.s. economy -- impact on the u.s. economy, we are joined by mohamed el-erian. alex was just talking about politically that this was a masterstroke or victory on the part of trump. what about economically? what is your view of this carrier situation? mohamed: i think this signaling is strong, but when it comes to macro fax, this is not a

scalable policy. you cannot make move the macro numbers in a major way through these micro interventions. you also need a macro policies. if we are to get healthy and labor markets, by which i lean more people coming back into the labor market and produce a patient rate going up, and better -- participation rate going up and better wage growth, you will have to move on other elements of structural reform. it is not just about corporate tax reform, but it up a structure to enable the private sector to do more, but about education reform, labor market retooling and retraining. that is what it will take to improve the functioning of the labor market. julie: are they going to happen under the trump administration question mark we heard tax reform -- administration? we have heard tax reform, but what about educational reform? mohamed: we have not, think of it as a phase approach.

phase one, the first 100 days, will be an attempt to move out we have heard already, tax reform, corporate and individual, infrastructure, deregulation, perhaps energy and something on obamacare. stage two, which is after that, moremoves to the complex and structural reforms as important, so it will be a stage approach and a lot will depend on how he is able to work with congress. on the jobs question, when he campaigned, donald trump said he would create 20 million jobs in the united states of america, given unemployment at 4.2% -- 4.6%, where do the jobs come from? mohamed: it will be hard to create that amount of jobs. we created over 14 million since the great recession, and there is not that much of a pool to be able to create another 20

quickly, but i think the critical issue that you are starting to hear is a quality not quantity issue the quality issue. today's numbers, on wages and unemployment and inflation rate, tells you this element of quality of jobs is very important. david: mohamed el-erian, allianz chief investor will be staying with us. we will be joined by another giant in the bond market, rick reider, black rocks level cio of fixed income. this is bloomberg. ♪

david: this is bloomberg. i am david preston. aggregate total return index, plus a record $1.7 trillion in the month of november, that

ended the 30 year bull market for bonds, as we will see investors rotating from bonds has talks on the back of donald trump's win. we are joined by rick rieder and still with us, mohamed el-erian. rick, welcome. what about this? onterday while we were year yielde u.s. 10 treasury shot up. rick: incredible. we lived through the last several years in this era of distorted interest rates with just monetary policy, and markets are reacting to monetary policy. by the way, it will happen over the next be months to the rest of the world, particularly europe, but the transition for monetary to fiscal, which should ago,happened while while and the federal step back and it is a big deal and the move is significant.

david: it has not happened yet are the over anticipating? rick: i don't think so, for the data today and the data that has cannot, and by the way, some of the survey data in anticipation is pretty strong, we have to put into perspective we are running 155,tenure moving from 130 that was an equilibrium and we are close today. we had to take out some of that access and that is what the market has done quickly. julie: what has been interesting over the past month is how concerted the movements have been in global bonds. in other words, that bond rout was not just in the u.s. but europe and around the globe. is that justified in your view or will we continue to see that correlation? interesting issue because we have moved around 100 basis points in the u.s. relative to where we were in july, and yes, we have pulled other rates up and not by that much.

i'm sure rick does end of this, i look at the differential between 10 year treasuries and that was a pretty stable relationship. we have loan right through that nd in the last few weeks. interesting issue is to what extent does the divergence continue? to a restore relationships or not? that is important because you have to central banks, one explicitly and one implicitly, especially the ecb, implicit the bank of japan, targeting rates nowhere near where they would be if the u.s. leads the pack, so it will be fascinating to see how the bond market reconciles and divergence in economics a broader set of policies and and markets. david: and other divergence, investment in the united states has not come up nearly as far as treasuries, -- is spot on, what valve?relief

biggest currency. you see the dollar strengthen and you have the bank of japan paging rates at zero, so what happens when u.s. rates need to move? currency has to be the relief valve and other markets where you hit-year-old levels for clients, particularly insurance companies, where your liability streams now, which start credit, etc., causing that spread of treasuries to compress, which is as it should. rieder is staying with us. thanks so much to mohamed el-erian. the opening bell coming up next on "bloomberg daybreak." futures little changed into the opening bell. this is bloomberg. ♪

david: this is bloomberg daybreak. i'm david westin. we are moments away from the opening bell in new york city. slightly on the dow

jones futures, s&p futures, nasdaq not a great deal. there has not been too much reaction in the marketplace to the jobs numbers that came up. the other assets, you will see that the dollar is down against the here. the change in the dollar, the dollar overall has been climbing steadily and is softening some today. it might be down some since the trump election. the 10 year yield, the value of the bond has gone up, the yield has gone down slightly, and crude continues marching up after the opec agreement on wednesday. julie, with talk about what is going on in the marketplace. julie: interesting there are reversals with crude which had been trending lower. also reversals when it comes to the week. we have been watching a three-week our tire for u.s. averages. that will continue for the doubt but not the s&p 500 or the nasdaq. all of which it records in the

prior weeks. what we have seen this week is putting on the brakes of the postelection rally. induced rally. a lot of investors, including this morning, folks we have been to, including bill gross, have taken a step back and said is this really justified given what we know about potential trump administration policies, global dynamics, global economy. this is the weak link numbers. that we areovers watching, one of the groups we are watching, is banking stocks. , bank of america, wells fargo, trading down to some extent as we have seen yields come in a little bit this morning. both before the jobs report, they were trending that way, and in the wake of the jobs report. the stocks are highly correlated to the bond yields, more red on the screen than we had the for the bank stocks. david: thank you. let's look at how markets may be

affected by the latest jobs data that came out today. u.s. unemployment rates have dropped to the lowest level since 2008. down to 4.6%. resell an unexpected decline in which growth. still with us is rick rieder. you said that since the trump election we have had a fair amount of movement in the marketplace. jobs numbers, are they relevant, or are other factors determining markets? rick: great question. we have lived in this world for the last few years where everything is dependent on how the child's that would translate into what the fed is doing. i would argue the fed is moving or to the backseat. this jobs report is always important, but in bloomberg, going through it today, it is almost anti-climactic. where moving into a different rare drive with tax adjustment, potential fiscal adjustment. as long as we keep on this path,

it is almost impossible to stay at almost 200,000 job pace we have been on for almost 2.5 years. license is that it turns down, particularly trending closer to 4% unemployment rate. thoseg as we stay at unemployment rates and stay at some fiscal impulse through tax it will be more about growth in the broader economy and wage acceleration alongside of it. david: it is worth taking a moment to remark about where we are. we are creating 180,000 to 200 thousand jobs every month. unemployment is 4.6%. hummingquite an engine along. has it ever been the case you have had this situation and have come in with substantial fiscal stimulus? to a no is the answer couple of points. we're looking at the numbers. 2010, there have been 15.2 million people that have been hired here that is only four states in the country bigger

than that. illinois, bigger than ohio, bigger than michigan. numbers are staggering. now do you put fiscal on top of that? it is historic. dynamic.c however, you still have an economy with slack in it. an economy that could operate at a higher level. if you bring down taxes, we talked about japan, one of the key tenets that they have done is bring down the corporate tax to reduce corporate behavior to locate in japan. we are at the highest tax bracket in the world. 39% and you include state mortgage. when you talk about what president-elect trump has said, 15% tax, state and local, 20% to 22 percent tax is a big deal. you're putting on what has been a vibrant pretty good economy, market, one big thing. all of the jobs have been service sector jobs. in the past three to four years,

almost all service sector. if you can get the goods to the manufacturing sector, part of what he is talking about, if you get that moving you can take a different leg up when it comes to the economy. julie: with those goods producing sectors hire people, or will they buy stuff? when i say stuff, i mean machines to make their products. we have seen an automation wave. what is to say they won't use the money for that? rick: a great point. in the last two to three years, what companies have been doing is borrowing, buy back stock. now, you take some of that and the borough is a bit tougher because rates are higher. maybe take some of the tax shield off because some introduction comes off. how can i grow my top line? i cannot improve my earnings by equity, after grow my topline revenue. i spend on capital expenditure some of what would be jobs

clearly go to automation or robotics. you can see capital expenditure growth that will lead to more jobs and can lead to a velocity into the economy. you spend on capx those vendors that supply the parts are starting to spend. there is momentum that could come to that. this is important. david: we talked about that activity. capx is the key to productivity. no matter how strong the economy is going we haven't the mac n vestment. -- we haven't seen that kind of capital investment. how do you get to that point? rick: if you're running a covenant and wondering if you buy back your stock or by is no risk in buying back your stock. it completes the same return on equity benefits and earnings benefits. now, it will be harder. the cost of that is higher, i have to drive capx. and we have to

see how it plays out, if people believe you can have it that are growth paradigm if you believe the goods sector can pick up, spending will pick up, and cap x will go into the system. that is when gdp comes up from the potentials. to what you do. i am curious where you are allocating. we have seen this movement out of bonds, out of u.s. treasuries, global bonds. is it attractive to get back in? what duration? what country? rick: i would argue that i see there have been big losses in rates products over the past few weeks. there are still ways to make money in fixed income. funds, flexible funds, income on the section made money the last couple of weeks. how do you do it? buy tips, break

events, the inflation market, very attractive. inflation market is accelerating. you can do credit markets or secure time assets respiratory compressing. you can only yield. you can hedge away what is your interest rate risk? for retail investor, i have to say, i was looking at don's yesterday, particularly some of the two to five year municipal's, you are hitting levels and you will see more , you can pick up 5% to 6% . even higher in some of the closed end firms that are starting to be pretty attractive . if you assume rights are not moving dramatically higher, and i would argue dramatically higher. we are getting close to equilibrium. let you goannot without talking about europe. we have a referendum and the ecb. is this a divergence of central banks and economies? we have the unified government

here. it is all republicans in washington, they can get things done. europe is going in the other direction. what is it safe or europe as an investment opportunity? rick: no one says what you said, which is right. everyone is focused on the president-elect, but a unified government is a big deal. you mean do you can get things going faster, tax, infrastructure, etc. very few people say that. i think that europe is tougher, and japan is even tougher. are of the opinion there are things europe can do to create momentum on the fiscal side. one thing you see overtime is governments react when they need to. if you see the u.s. growing and your competitive framework that becomes more difficult some you can see more fiscal come in. part of why the currencies have been reacting as they have is a .rowth dispersion in the world i think that is the right outcome.

julie: is your not attractive -- is europe not attractive to you? like, for this referendum coming up, we think it will either be a narrow no vote or a yes vote. we think the markets are priced in and the ecb will be accommodated. extend their will program in terms of asset buying. we have added a little bit. on the bloomberg we were talking about how we have added some of the banks. dead and equities. not a tremendous, you will have to see some of the data. some of the italian debt and spanish that has backed up quite a bit. article he added a bit to take advantage -- we have tactically added a little bit to take advantage. much. thank you so we appreciate your perspective. a blackrock ceo's six income. coming up, an exclusive kenneyew with indra

next. this is bloomberg. ♪

julie: this is bloomberg daybreak. erik schatzker has an exclusive interview with the head of mexico's central bank. julie: the major averages, 13 to

14 minutes after cash trading in new york, little change down .1% . the s&p up that amount. .3%.asdaq gaining one stock is moving quite a lot. that is pandora, surging by 14%. the company is open to talks with serious accident. there have been talks about the radio, internet radio, satellite radio industry in the past. an interesting reaction. the pandora shares. we will bring new developments we get on this story. for more on what is moving, let's go to abigail doolittle. abigail: we have retail movers on the open, starting with ulta so long. chairs are higher on that are than expected third order with boards. they raised their full-year earnings and revenue growth forecast, looking at high 20% growth and earnings relative to

what they were looking at, middle 20's. chen, hedes oliver says stock is expensive, but the performance is impressive and he raised his price target for the shares of ulta salon. less well in the open, we are looking at lululemon. shares are lower on a down grade over a tuce. the tough copting with other issues. with the price target by 32% to $44 a share suggesting the stock to drop 20% from here. this could put pressure on the shares of lululemon. david: we will turn now to an exclusive interview. bloomberg's editor in chief is here joined by the island prime minister enda kenny. >> welcome to bloomberg.

and we start on brexit? you are the person with the best of you. you follow it closely. other the past few days, have you seen a softening in the british tell? the british seem to be saying, can we grab some bits of the target in exchange for things? do you think it is possible to cherry pick the european union as they want to do? p.m. kenny: the first thing to remark is that the process for britain exiting the european union would not commence until after it is triggered. prime minister may see is looking for the end of march 2017, that is a formal letter to the commission. after that negotiations will start in earnest. all of the comments made in speculation, the rumors, are only that until such time there is clarity above with the horizon will be coming you

cannot decide with any certainty what the outcome will be. >> you must have some kind of principle. one of them would be that you would not want the european union to be cherry picked? p.m. kenny: certainly not. one of the fundamental principles of participating in the european union is if you want access to the most developed market on the planet, you must cater for those freedoms, freedom of the movement of people. there will be no concession given by europe in that regard. >> what about the timing? you said 2 years is not enough and it will go on longer. if you had to guess about the eventual date of the british leaving, what would it be? p.m. kenny: it is impossible to say. no one has left before, this is the first time a country will leave. you have 50 years of legislation dealing with the relationship with europe and the united king them. we joined on the same day.

to end that it two years is probably impossible. they should have a transition beyond negotiations. it is important to remember that britain remains a member of the european union until it has left. it accepted responsibilities and will pay its way as a country as it should. it is awkward that as of meetings on the 28, all the members of the european union will have meetings on the 27, making arrangements without formal negotiations as to the contingencies that must be considers. we have planned that for some time with the particular circumstances of ireland. >> i'm interested in those circumstances. in terms of positive or negative, you have a huge negative of a major trading or separating. on the other hand you are here, seeing a lot of people who may conceivably move jobs from london to dublin. the kenny: why time of

european council and from observations before, britain was always an important member and was a voice for change and a vision for the future. cameecision for brexit as a shock. it is something i did not want to see, but i have to respect because it is a democratic decision. so, a country leaving would be the subject of pretty intense negotiations. irelandrms of where comes out of this, how many jobs do you think ireland would be able to get from london? issueenny: a political like this, there are always opportunities. we are having a stream of abouties from britain the possibility of financial houses, banks, moving to different locations. have business, fairly, for example the european and the european

medical agency, decisions have been made to move from london. >> you would like to get there? p.m. kenny: we will compete for them. we offer a particular wage of attraction as an english-speaking country. one hour away from london. they would be staying as a central part of the european union. >> i am hearing your pitch. p.m. kenny: other saying you cannot make the decisions for these entities or financial houses. what we would do in ireland in terms of relocation is to say we will give you a specialist team and you can test us to see if we measure up. say whatortant to companies and financial institutions want is certainty and clarity about their future. frome have confusion rumors and allegations. until the negotiations, what are we talking about? it is impossible to make clear outcomes. >> who did not mention the 12.5%

tax. now you have the british and they will reduce their tax. p.m. kenny: they are entitled to reduce their corporate tax rate. within the european treaties, it is a matter of national competence for a level a country to set its corporate tax rate. ours has been 12.5% for many years across the spectrum, fullytely transparent and accountable. we are not moving from that. other countries can do what we are doing, as we could, some other countries may assess higher rates. that they may examine us on the sector of the location, it may be lower. >> one last thing, do you think that this sets the stage in a long-term for some reunification with island? -- with ireland? p.m. kenny: ireland has a very particular set of circumstances.

the northeastern portion of ireland arose out of the partition of the country in the 1920's after the civil war. it was a very difficult time over the years in some circumstances. obviously, there is a divided administration in belfast with first minister foster and deputy first minister mcguinness. we have worked closely with them. one element of that is that the peace process was brought about with the conclusion of what is known as the good friday agreement 30 years ago. i, as the head of government, and they guarantee her of that internationally binding agreement. include the guarantor hip of that agreement. >> it allows for the people if they wanted to vote -- p.m. kenny: yes. it does. ways written in there in a that in sometime in the future if that were to arise, the

people in north and south with vote to have a united ireland, the good friday agreement and successor agreements. at the european level, we want to include recognition of that fact, which is a legally binding international agreement. i intend to see that that applies. >> do you worry that what might happen in italy over the weekend might mean that job is not possible? p.m. kenny: obviously, my focus is on achieving our priorities, which are our own jobs, trade, the peace process with the northern island, our relationships with united kingdom, and our place in europe . when the negotiations are concluded, ireland will be the only land border within the european union. that is an issue that prime minister may and i have agreed thehould not be a return to hard border of customs and

exposed military equipment. we also agree that the duration for the benefits -- >> do worry about the italian referendum this weekend? p.m. kenny: i have concerns about all of these things. what the italian people do in terms of the referendum is a matter for themselves. i think prime minister renzi should not resign. if it were to go wrong. but that is for the italian electorate. there are opportunities in europe. i feel that europe should focus is where it wants to be in the next 15 to 20 years. make political decisions at the european council, because it is the opportunity for businesses across the entire european set of countries to do business in a way that you would expect. a brilliant opportunity. not a is there pan-european agreement on services? why isn't the single market bigger than it is? back to understand

that membership of the union brings with it enormous advantages and opportunities, which is where i see this. obviously ireland's involvement in the european union for 50 years, back to introverted protections back to a small country that is open to the world. that flexible education system has presented many challenges and provides opportunities for people. on the european level, we cannot have a situation where 50% is unemployed. hopefully young people, they will recognize trouble. europe, politically, needs to say one of the -- what are the decisions for the time ahead? the single market services, opportunities for investment and infrastructure, so the people have careers and opportunities and hope for themselves and their families, which is what politics should always be about. >> what kind of timeframe you

imagine for that more optimistic europe to happen? p.m. kenny: depending on how serious europe looks at this, and it is a port to be serious at this level of politics, to make decisions and move on. every day, is an opportunity to bring that foundation. in new york, obviously the relationship tween europe and the united states is one of immense importance. and for all time. >> we have spent a long time discussing all of these things. thank you for coming on bloomberg television. that was ireland's prime minister enda kenny. david: thank you. it is good to see you. have a great weekend. ♪

>> from new york i am vonnie quinn. >> live from london, i am a rate change which in -- i'm nejra cehic in for mark barton. welcome to "bloomberg markets."

vonnie: we will take you from washington to rome and cover stories out of hong kong and wall street. a mixed lecture for the u.s. jobs report with 178,000 jobs added in november. except, wages unexpectedly declined. we will get a labor economist's take this hour. italy's referendum approaches, hanging over european stocks. the potential fallout or politics and markets for the vote on constitutional reform. oil headed for its biggest weekly advance in years. opec a deal to cut production means for one of the world's largest energy and estimate firms.