anna: matthew renzi will put his resignation on hold until next year's budget is signed off. italy's president seeks to demise political instability. and successfully completing one part of the increase plan with the debt-to-equity swap for over a billion euros. the bank will decide whether to proceed with the capital raising elusives still seeking anchor investors. setting the stage. german chancellor angela merkel tough stanceue a on migration as she prepares for her reelection bid. we are live from the party's national convention. fiscal boost. -- the chicago fed

president said the incoming trump and asked ration cost decision could help support economic rates. welcome to bloomberg daybreak. our flagship morning show. i am anna edwards. the call after the storm. some of what is happening in the asian equity sessions and other asset classes as we consider whether the market is making of the latest coming out of italy. forgh of relief, promising italian voters. that was the conclusion over the weekend. it has come down the little bit.

running into that italian vote. it did not take long for markets to readjust this time around. let's show you where we are on the asian equities session. italy reliefe rally as the president of italy seeks to minimize political fallout. approval could happen this week. s&p futures are muted. the dow returning to record levels. u.s. data is in focus. that is the focus as we go through december. we got that you -- news yesterday. we see the euro is weak or by about .1 of 1%. near its strongest level since the middle of december. we have the price and therefore you. another -- down another 1%. snapping that four climb that we have recently seen. rba.ange in rates from the

let's get the bloomberg first word news with angie lau. angie: let's get you a little bit more on that and australia's central bank has kept interest rates unchanged as the global commodity upswing eases. the reserve bank of australia's governor -- traders has written up policy moves while the [indiscernible] the prime minister of france is confirming he will run in next year's presidential election. as part minister to prepare for the social -- for the primary. announcing his candidacy he warned that his country is divided, it risks letting marine le pen into office. ministerprime

[indiscernible] overheard a parts to brexit. willsa may has said she trigger exit talks by the end of march. as many as 40 tories could vote with the opposition party. putting forth a motion that she planet -- she plans to publish a brexit plan. the supreme court hearing into whether the government needs to parliament before triggering article 50 enters its second day. yesterday, police riot vans weren't attendance. as a small crowd gathered at the court. the governor of the bank of england has launched a defense of globalization, speaking in liverpool. mark carney sent out a manifesto for central bankers and government growth and make the world economy more equal. decade realpast

earnings have grown at the slowest rate since the mid-19th century. this weaker income growth that focused attention on its distribution. any qualities that might have been tolerated during generalized prosperity are now felt more keenly. angie: al gore has met donald trump to discuss an issue close to his heart, global warming. the president-elect has rejected the existence of climate change. gore said their truck -- talks were a sincere search for common ground. mr. gore: the bulk of the time was with the president-elect. i found it an extremely interesting conversation. and to be continued. i will leave it at that. thank you. angie: singapore and australia are introducing collateral rules for over-the-counter derivatives. will be required to have

systems ready to exchange collateral known as variation margin which covers daily market swings. the guidelines which will prove -- apply to very admit -- variation margins are part of an initiative to make transactions in the market safer. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg. i am angie lau. this is bloomberg. anna: thank you. let's check in on the live market action in the asian session. it seems asian markets are joining in that relief rally today. haidi: we are setting up for quite a nice open. we do have asian investors getting involved on the back of lead, -- a strong shrugging off the uncertainty that is posed by the italian referendum.

this is what we are saying -- seeing. are closinge stocks up by half a percent. we have the stronger dollar session and that boosts some of the exporters. we're not seeing the strongest buying calling -- coming from stpi.ost be -- ko we are hearing about the impeachment mode and potentially addressing the nation tomorrow. driving the rally. also around the region, up by half percent and the rbs holding that cash rate steady.

predicted by every economist we spoke to at bloomberg. shanghai just up .1 of 1%. not a lot of take up when it comes to that. northboundes to that quota there. hong kong is headed for the biggest gain in about three weeks, up by .8 of 1%. energy names doing really well. let's take a quick look at the movers. japan saying the lower house has passed legislation when it comes to potentially legalizing casinos. they make some of the equipment for these and japan cash machine. they did selloff with the understanding that legislation needs to go to the upper house of parliament. it is a long road ahead when it comes to the casino legislation being cemented when it comes to japan. some of these names are coming up in the south korean inquiry,

doing very nicely. , the heads samsung of the companies under questioning in south korea. anna: thank you. let's get the latest in italy. italy on hold. the italian prime minister was asked to wait to resign until next years budget had been approved. this is italy seeks to minimize the political instability triggered by renzi's stinging defeat. let's get to francine lacqua. when will renzi step down? we hear talk of linking this to the budget. this is a very live budget conversation. is italys interesting is the president of what chooses next. we understand that the president of italy had over an hour of around 6:30 p.m. or 7 p.m.

and it was clear by the statement, this is the president 's palace. the president is externally concerned about civility. he had forced or asked gently mr. renzi to stay on until the budget lies past. it just puts to bed the budget for 2017. there will still be these two houses to a lower parliament and the budget law has gone through to the lower house and it needs approval to the senate. we understand that this could be approved as soon as friday. it could take as much as a week. until next tuesday. we understand that is when the prime minister will step down. the other thing to bear in mind is this gives a little bit more president to go

and talk to the various actors so he does form a technocratic government. when you speak to insiders there was a sense that frenzy is almost too emotional, that he resigned straightaway saying i do not want any part of this because it was such a blow, the referendum did not go my way. it seems the president gave him a cooler head. succeedo is likely to renzi? who will succeed him? francine: we have 45 names that as renzithe same party including the finance minister. this is significant because we understand the president is looking at the transport minister, the head of the senate which he may think will ensure

stability especially for the banks. we have about 45 names of people that would be trusted by the market. ofbably by speaking to a lot inking ceos. the current finance minister has been in charge for two years and he is top of the list. he was the one pushing and helping to reform a lot of these banks. the populist party is the one that is campaigning for the no referendum. it is looking very unlikely that -- or todent would ask take part in a new coalition. this may change but it does seem that the president wants to keep things stable. we would be looking at the market stress to take over from renzi when he steps down officially. anna: there is still the fact that the market perhaps saw this

coming. that explains why we did not see equity markets falling off a cliff yesterday. amazing that we have this on sunday and the dow overturned's a record high in trading yesterday. francine: what is clear is we got burned by briggs it. if you look at the italian index the day after brexit. byy are saying we got burned trump. this time we were not going to get burned. it does seem that the positions were for a no vote. we had a blackout for two weeks. the latest poll in november before that blackout gave the no a victory. us by 60%.s the tory it did give it a 53% no and that latest poll. it does seem that the markets were somewhat prepared. there are concerns about the banks. we understand the government is looking at various options. nothing is confirmed. some of the press are talking

about a nationalization plan. i do not know how that would fit. everything is in flux but this is something that we need to keep an eye on. on thursday we have the european central bank, there was a lot of chatter yesterday amongst the investors we were talking to hear that the ecb may have intervened in terms of buying bond yields yesterday which is why you did not see that spread between the german and italian yields rise by so much. anna: thank you. francine lacqua on the rooftops of room this morning. great to see you. we find her self dealing with a bigany have cast is political set piece event. have this so those with the

bloomberg terminal can get a look. aroundain we saw this the italy vote over the weekend. do you sit down and mark all these events in there, this is where the there are spikes of volatility. is creating aket narrative where people will trade around, we will see and it willlatility normalize back down to where it should be. that is what we should be looking at. the fact that the underlying name, that central banks are ultra-loose my monetary policy is expansionary and it is a primary driver for asset prices. all the other noise around it whether it is trump, brexit, the italian referendum is just that, it is noise. investors need to be able to what issee through

happening, not excepting the topline narrative that is being sort of fed to them and go forward with understanding that as long as central banks keep their current stance, as in prices will continue to thrive and do well. if the threat of the world's largest economic union in the u.k. and eu breakup, does not spark a massive route into safe haven assets for an extended time, a full equity market correction of 20 percent. anything that happens subsequently after that is not going to trigger a massive move. this italian referendum probably would never spark what type of move the brexit could have. said are youat you over italy already? we had these questions are on the banking sector, could that come back to herd the broader eurozone picture? swap.ave done this equity that is one of the three parts

of their capital rating plan. they are searching for these linchpin investors. keeping an i on the italian situation. we do believe the backstop of the ecb is strong enough to move bankingwith any italian salvation. we are not enormously concerned that this is going to trigger a contagion through financial markets. something significantly worrying. that is the key to what investors should be looking at. what are central banks doing more than anything else? anna: to put in context what we have seen, this is the fourth largest swing. do see the euro going from , -- now?re we are now peter: the trump administration

will allow or put pressure on janet yellen to allow the u.s. economy to run a it hot and not tightening significantly quickly. the pace of normalization will be significantly lower. we have seen it recently, the pace of the dollar is down as well as rotation from bonds to equities. even that upswing in global yields has also slowed. theo not believe unstoppable dollar strength is forecastable. signaleyee if th will that on ending qe is on the table or is now the time to signal where there is some the slowdown of e-cig purchasing. that will allow the euro-dollar to recover a lot of its lost ground.

anna: the bond buying program will be expanded. they were talking about extending qe. peter: tapering is in the process. been sos policy had large and so dominant for such a long time, even a slight indication that asset purchases may end in september or sipped -- december. it changed the gradient of how we look at financial markets. anna: thank you. here are some highlights of the trading day ahead. we get final readings of the eurozone and third-quarter gdp. angela merkel gives the keynote ruling party convention.

we will be live with updates. in the u.s., we have trade deficit numbers at 1:30 p.m. u.k. time. angela merkel says that germany's election will be the [indiscernible] we ask if this will be the year that more political risk comes to europe. can the left take on marine le pen? announcing he will run for the presidency. and rent his future. italy seeks to limit instability from the prime and referendum. we are live in rome. this is bloomberg. ♪

anna: welcome back. this is daybreak in room. 7:23 a.m. the dollar, wet are calmer than we were this time yesterday. 107.47.

let's look at the european stocks. joining us now. station f.r of talk aboute to startups in france. do you feel that it is popular right now? guest: i think france has been a for attractive place startups for well. you have a number of startups in the u.k. and elsewhere that are looking to other locations and france has risen to the top. anna: this is an old station being turned into a habit for startups. is this going to put france on the global tech startup map in a bigger way?

guest: yes. i think this will make a huge impact with regards to the french ecosystem. madell make -- it has france visible. there have been a lot of smaller actors that have been doing very well for a while now for a number of years but this has -- one giant project with them in the same location and attracted a lot of attention from around the world. anna: it is still under construction. let's talk about the politics and how this plays in. many tech companies say we might not have much access to talent. andlook at marine le pen the rise of [indiscernible] and you wonder where that goes. thet: everyone has this in back of their mind. with a start up ecosystem we

remain positive and we things just keep on working on what we are currently doing. france has made tremendous progress with attracting international talent. -- they have been working on bringing international entrepreneurs. anna: if you're looking to , what does the tech industry want? guest: it is much more about talent and not just entrepreneurs. from within the company so we can keep a lot of the jobs in france. anna: great to hear your story and good luck. thank you for bringing it to us. off --ection of station businesseso persuade to take a look at the realm it. angela merkel says that germany's election will be the hottest in years.

we ask if i-17 will be the year of political risk in europe. this is bloomberg. ♪

♪ anna: welcome back. the euro against the dollar. one of 7.50. lots more coming up from francine. live on the ground in rome. a new edition of daybreak available on your mobile phone. let's take a look at the top stories making it into today's edition. mexico's first competitive deepwater oil option. exxon oil and chevron all on block. bring $40 billion in investment, helping the country to recover oil

production lost amidst the collapse of crude prices. once january the 20th his passed, it could be interesting. the other story. -- a potential challenge to johnson & johnson's move to acquire this with -- swiss biotech firm. the number is based on johnson & , the opportunity top is more than $27 billion. today's final euro gdp data for the quarter. the big picture is the expected between 0.3% want soak up slack in the economy fast enough for the ecb to scale back qe. lots more conversation about what the ecb does on thursday and into next year a little later on. commodities have made a comeback this year after sinking to a

quarter-century low in january. yousef joinskets us with the chart of the morning. >> we are set for the first game since 2010. let's pull out the bloomberg commodity index. this covers 22 commodities. everything from oil to coffee. this is the index. you can pull it up on your bloomberg. a beautiful chart that shows you the difficulties the bloomberg's commodity index has. 2013 and 2014. three-year returns of -30%. put out a note here predicting strength will continue in 2017. as global economic growth picks up, that will eat into the oversupply. investigators are bearish on performance ing commodities was a fluke. they also see a decline in

soybeans given the fed is about to height rate -- by craig. we spoke to one of bloomberg's top forecasters on bloomberg markets, he said a lot of the gains we have seen in commodities have not just been on infrastructure hopes were chinese investment, it has also been a hedge against inflation. that is another key component driving this speculative enthusiasm. a lot of reality checks kick back in. anna: thank you. now back in dubai, great to see you. says germany's election next year will be the hottest in years with her party facing challenges from far left and the right. she made the comments to a german tv station ahead of her convention, which gets underway in essence today.

matt miller is there in essence for us. rick to see you on the program. what will the focus of the platform be ahead of the election? the subject of migration will come up. matt: absolutely correct. that is going to be it. the refugees are the focus inside and outside, all across the germany. the party would like to focus on other things, namely the subject of europe and holding it together. those two are so strongly interlinked right now that they cannot avoid trying -- tossing up their rhetoric. because they are getting so many attacks from the right and they don't want to lose any ground to not only the right wing party, but also the right wing of their berean -- csu, the bavarian contingent. they will try to toughen up language on deportation and how

they do that. acause thus far, it has been real problem getting them out of. they don't belong here. anna: the migration story has taken a toll on her popularity domestically, hasn't it? what about the field she finds herself thing? she is running this uncontested, right? matt: she is running uncontested, that it will be unlikely that she gets quite as much support as she did the last time they help this convention .wo years ago in essen she got more than 96% of her parties support. today, it will be interesting to see if she still holds in the 90's or drops down to the 80's. a lot of people internally have asked her to leave, but not a huge amount. you will see a lot of news if that number comes out as low as 85, 88%. it will be business as usual if we get 95% to 98%. anna: amazing numbers from a

european political perspective. populism, the rise of the way politics has been going in europe in the wake of the brexit vote? the austrian election outcome and the italy constitutional vote, and donald trump the mix, as well. how to these factors play into the german debate? i know the austrian election, the cdu doesn't see that as a turning point. i just spoke with the general secretary of the party. he told me that doesn't give them a lot of hope and optimism, but they do have that hope and optimism from angela merkel's stability over her last three terms and they hope to carry into a fourth term. she is going to run on a pro-europe platform and that is important because of course, you haven't seen a platform doing well across the rest of europe.

the austrian candidate, although he beat the far right populist, he was still the first third-party candidate to win an election in austria in over 70 years. antiestablishment feel, whether from the left or right. the cdu will have a problem from the left as well. there are a lot of concerns that the ultra left party, which used to be the communist would band together with the green party and the socialist party to form a coalition to beat the cdu. they don't just have to worry about the right. the right wing isn't really as much as a problem as those three parties to the left will be for the ruling cdu party in germany. thank you for the analysis. anna: he will be there throughout the proceedings. still in the studio, peter is here. he talked about the broad political scene in europe. what theso focusing on ecb is going to do about the sluggish level of inflation in

the eurozone. chart, which shows the european cpi and german 10 year breakeven. , lookssure of inflation to be moving in the right direction. peter: draghi must be encouraged by those charts. i think we have to temper expectations. monetary policy globally is not supposed to be the primary stimulus of growth. is there is providing conditions for growth. that is what they are doing. if you have a central bank click the ecb with an expansion of 2.2 trillion, 2.4 trillion, at some point you have to start thinking, we have put a lot of effort into it, these were the results we are going to get. we probably won't get something significantly better. is it worthwhile to accept more risk? at this point, that is where the

ecb is considering. anna: many central bankers are the first to admit they do not want to be at the forefront of driving the growth story. talked about the cdu there in germany and the forthcoming elections. it has been the germans who have not wanted to back that handover from monetary to fiscal actors. will it? peter: no, i think there has been an increase in budget deficit. they are moving closer to fiscal stimulus. conditions, whether in the u.s. or asia, aren't starting to improve as well. europe will start -- are starting to improve as well. europe will start benefiting as well. i think rocky will seize on this and start talking down into possibilities of endless quantitative easing. and i think the market the signal quickly.

anna: a few lines coming through on italy story. francine is on the ground. italy,rious newspaper in saying the kospi will meet with the ecb today. republican reporting that the ramsey-may press for election. we watch all of those for you. peter stays with us and we get his take on what is happening between the u.s. and china next. of president-elect trump could affect growth. he has been there should be patients to see what fiscal program emerges. this, as the fed is in good shape to hit its inflation target next year and a rate hike this month would be a very reasonable option. last official to speak before the start of the blackout.

with the fed meeting taking place on december the 13th and 14th. increasingly moving into view as we head into next week. peter, your thoughts on the fed at the moment? hearlike everyone else, we the headlines from donald trump. we don't know any of the details. the marketsnk probably biggest fault in my mind is jumping to conclusions. hasng the election, which no -- of donald trump, which has no experience, and using that to extrapolate buying into pharmaceuticals and infrastructure trade. to me, it is too far out there to put a bet on. when it comes to the political situation, i would temper the current narrative of what we are seeing. i think investors need to step back to see what he actually does before jumping too far off. when it comes to the fed, the

economic data in the u.s. clearly warrants a rate hike. the credibility of the fed is also in question, and i think by them not moving forward with the 25 in december would reflect negatively. i think it is in the cards that we get a hike. -- a 25. i think there is a question on what trump actually does, and that is that equal and increased gdp of .2 percent or .3%? is there the growth in the that equate to inflation? the market is not confident that is the case. anna: it looks as if we will have another this year -- this month, one next year? peter: it depends on the x factor that is trump. onare not betting too much it. there is significant uncertainty

about policy and pushing policy through that we don't know. but we do believe by september, we should start coming into another rate hike. curve thatlow rate allows other currencies, when , but alson europe higher-yielding currencies in e.m. to start improving as well. anna: investors are having to get used to watching the late-night twitter activity of president-elect donald trump. its entertaining you, and i know some of the things about china are entertaining you. i pulled up this chart that has the yuan in the yellow and the outflows of the economy in the white. what is the end story on china? peter: i think this is one of the biggest stories in 2017. what is happening between trump and china is concerning investors. and people in china, saying this is going to become less stable more likely. they want their assets out of

china as fast as possible. i believe they are taking steps to try to dissuade people by pushing up overnight borrowing rates very aggressively and make them pay for every time they sell a chinese yuan. i think the big story that will -- if trumpkly sparked a trade war with china -- but not a actual trade war, .ut a verbal trade war it empowers china to create an economic union in asia. asia's countries seem to be very much against the militarization, a hawkish rhetoric, they want trade and stability. so far, out of the u.s. in obama's administration, a haven't been able to get back. what happens in that void, china has been able to step in and say, listen, we can put this forward. we have seen the philippines grandma quickly. look at happening 2017 is a

china that dominates asia. anna: within inter-asia story. despite everything you said there, one of your recommendations -- >> what we are going to see is china playing the optics game. they don't want to go into january 2 -- 20th, with depreciating you want constantly. n constantly. appreciationsee if so that it donald trump wants to go in there and label them a great manipulator, they can say look at the world stage. that is not the case. look at how it has improved. anna: peter joins us from swiss quote. coming up, all together now. french prime minister launching his presidential bid with a call to unity for the countries divided left.

we check in on brexit britain's building industry with earnings, and continuity contender -- conundrum. ramsey says he will resign over losing. the latest developments. this is bloomberg. ♪

♪ anna: welcome back everybody. this is daybreak, europe. 1:49 in the morning. this is the futures. remember, the dow hitting another record level in trading yesterday despite all the attention around the italy story. let's get the business flash for you. a counter bid for challenging

a move by u.s. health care giant johnson & johnson. they say the french drugmaker is working with advisers as it weighs out options. a representative declined to actelion couldn't be reached. according to bloomberg estimates, the metropolitan west fund run by pimco managers is now number one with $79.4 billion in assets as of december 2. the pimco fund fell after it lost 2.6% and investors old out about $2 billion. the de facto head of central group became the focus of a public grilling of the south korean tycoons. lawmakers directed vast majority of questions during a parliamentary hearing over a

scandal that may cost the countries president her job. the vice-chairman of samson electronics denied donations in return for political favors. has signed upimes more than 200,000 new digital subscribers in the fourth quarter and hasn't been any lost since the election. the executive has been heavily criticized by president-elect donald trump over what he claims has been biased working about him. market toed the 100,000 net use, or the twice as many as last year. alreadyell over 200,000 for the end of the quarter. mary big. extensives most deepwater oil auction. companieslocks to

like chevron and exxon mobil. the geology of the area is nearer the u.s. side of the gulf of mexico. that is your bloomberg business flash. anna? thank you. let's talk french politics. the french prime minister has confirmed he will run for the presidency next year. he will resign as prime minister in order to prepare for the socialist to round primary in january. the current front runners are -- right the pen new breaking news. john mark speaking on radio in to say if hening will be named as the new french the president as steps down today.

-- the prime minister steps down today. let's get the analysis. we are joined on set for the next half hour. great to see you. let's start with this french story. manuel valls looks like someone who can unite the french on the left. can he? >> he cannot unite the left .ecause there is a hard left the question is will he be the candidate for the socialists? he has a good chance. i find it reassuring that at least, the sort of leading candidate of the centerleft is a reformer. on the center-right, we also have a reformer, france seems to be looking for reform. anna: who goes for the reformer

ticket, most convincingly? -- valls?s probably macron, we will have to see. is steppingat valls down and can be his own candidate, rather than being tied to the president, maybe comes out at the centerleft. it is great to have reformers competing against reformers. anna: we talked about the german political scene moments ago, the ceu, the conference taking place today in essen. what we expect there. angela merkel, she suffered in the opinion polls because of the refugee crisis and the migration story.

how does she tackle back to maintain power in germany? guest: the refugee crisis is mostly over. that was a big mistake by merkel late last year. she did not close the borders immediately, she let this continue for too long. german policies have changed significantly since the start of this year. germany is no longer that much of an exception in europe. what merkel needs is to have memories of her mistake of late last year. fade into the background -- the mystics fade into the background. that seems to be happening with much of the dispute in the right migration, she is about two percentage points from having a certain reelection already. anna: she takes on a whole different role in places in turmoil, right? stability can be banked on a

little more than elsewhere. germany's political system will probably turn out to be a anchor of political stability. merkel is only two political points away from certain reelected. she will probably manage to get there. the german political mainstream, all parties are in favor of the eu. meanwhile, the ecb -- what you expect the ecb to do this week? economics bring -- economists bringing forward -- expecting more this time around? >> he will probably have the ecb fromng the current length 3-6 months but send a signal about tapering. there are likely to get a two-point message. want to bewe

expensive but this will not tapering very long with deflation out. anna: a two prompt message. thank you very much. up next, more about italy. we're live in rome. ♪

taylor: holding on. renzi will put his resignation on hold until next year's budget is signed off as italy's president seeks to minimize political instability. monte dei paschi successfully complete one part of its capital increase plan, with the debt for equity swap of just over one billion euros. the bank will decide in the next few days whether to proceed with the capital raising, as it is still seeking anchor investment. setting the stage. german chancellor angela merkel's cdu is said to issue a tough stance on migration as she prepares for her reelection. we are alive from their national convention. and fiscal boost. charles evans says that policies

under discussion by the incoming trump administration help support economic growth. ♪ anna: a very warm welcome to "daybreak europe," our flagship morning show in london. we are going to start the hour with breaking news from germany. german factory orders, the number looks incredible he strong. german october manufacturing orders rise 4.9% month on month. the estimate -- it's a volatile series, of course -- was for an increase of just .6%. this number does look to be very strong. german factory orders surged in october, suggesting growth in europe's largest economy accelerating at the end of the year. portis adjusted for seasonal inflation jumped 4.9%. they're looking for the details of why. it was the biggest increase

since july. orders gained 6.3% from a year earlier. orders for investment goods climbed 7.2% in october, according to the report. we'reget the brief -- joined on set. this looks sick a strong set of data, supporting the bundestag, the argument coming out of germany from the bundesbank, that we saw a surge in activity. >> we are apparently seeing that and we have a number of reasons. first of all, the u.s. economy is doing better after having a raft the first half of the year. secondly, after emerging markets, we saw signs of a pickup. german industry or european industry is doing fairly well. we are heading for trend growth, especially in the industry, possibly a bit more than that after what was a bit of a lull

during the emerging market. anna: the euro slipping just a touch, but not by an awful amount. by 2/10 of 1%. we will watch with the ecb does next, part of the euro conversation. we will have more with our guest as we go, watching with the euro does against the dollar. thiss get the details of plumbing business that operates in europe, but also in the united states. first-quarter revenue is at 4.3 7 billion pounds, their trading profit. revenue growth since the end of the first quarter has been in line with estimates. that they see full-year trading profit will be in line with analyst views. an as you were statement coming through. let's have a look at the futures. going a little higher at the

start of the european trading day, up 5.2%. the ftse 100 may be a bit of a laggard, cac and dax all expected to open a little bit more strongly this morning. let's have a look at the risk radar, the italy relief rally seems to have gripped the asian equity session, up 5.8%. s&p futures pointing to a fairly flat open. u.s. data, services data yesterday, the fed increasingly focused in the u.s. we saw the dow returning to record levels. 1.0744.lar title,t one is an old the oil price of 51.32, down by .9%, snapping before the day climb. how are the bond markets reacting to the data we got out of germany? this is the picture across the bond market, 2.39% over in the

united states, unchanged. 10 year german bund yield at .33, italy at 1.9%. we will have more from francine lacqua in just a moment. for the moment let's get the first word news. australia's central bank has kept interest rates unchanged as the global commodity upswing uses the impact of slower growth at home. the bank of australia governor says it left the cash rate at 1.5%, as forecast by economists in money markets. traders have written of policy moves next year while the median estimate of economists is for a cut in the third quarter. the prime minister of france is concerned he will run in next year's presidential election. he'll resign as prime minister today to prepare for the socialist's to round primary next month. announcing his candidacy, he warned his country's divided left that it risks letting marine le pen into office.

euro area finance ministers have agreed on measures that will help ease greece's debt burden. finance ministers meeting in brussels say they could cumulatively reduce the debt by 20 points relative to gdp through 2016. at the same time, they insisted the country's government needs "serious reform" to maintain a proper fiscal record after the end of its current bailout. the u.k. prime minister could face a revolt from lawmakers and her conservative party over her approach to brexit. so far all theresa may has said is that she will trigger exit talks by the end of march. according to one mp speaking in an interview, at least 14 conservative lawmakers could vote with the opposition labor party, which is putting forward a motion demanding that may promises to publish a brexit plan before beginning formal negotiations. that will all be discussed in parliament tomorrow. meanwhile, the supreme court is

hearing whether the government needs to consult parliament before triggering article 50, entering its second day of deliberation. inice in riot vans were attendance as a small crowd of protesters for and against brexit gathered. 7:06. global news, 24 hours a day, powered by over 2600 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top . let's check the life market action in asia. haidi lun has details. anna. hi, we are really jumping back into this recovery rally, or relief rally. essentially, asian investors are playing follow the leader on a very strong gain, setting the way when it comes to the wall street session, and shrugging off some of the global uncertainties when it comes to italy that are continuing. here in the asian session, shanghai closing a little bit lower.

a do have a stronger yuan and stronger yuan fix, the longest we have seen. and wekei closed higher, have the tailwind of a weaker yen in the overnight session, while fiscal gains do quite well with this legislation being passed through the lower house. the topix is back to the high that we haven't seen since january. this is looking at the highest gains in three weeks. the won also accelerating, bonds on the way up when it comes to south korea on the hope that this leadership transition that has been gripping the nation -- we are looking at an impeachment and resignation of the president in the transition of that leadership. it seems there is a little more optimism the chapter could be behind them. rest of the region, most gains coming through from southeast asia. taiwan, a resurgence into the

tech base that has been so badly beaten up. some good moves when it comes to fx. generally the dollar index has been meandering, dollar strength largely priced in. we are seeing a bit of stability when it comes to emerging-market currencies. it is looking like the won is seeing some strength, the malaysian ringgit snapping that four-day losing streak that we have seen. anna: thank you very much for the update. haidi lun in hong kong. italy on hold. italian prime minister was asked by the head of state to wait to resign until next year's budget has been approved, this as italy seeks to minimize the political instability triggered by the stinging defeat in sunday's referendum. francine lacqua is with us in rome. timeline. idea of the

he has been asked to stay until the budget is approved, but that doesn't necessarily mean very long, does it? francine: exactly. we're expecting the prime minister teo renzi to officially resign in 45 days, but it could take as much as a week. we heard from the president of who issergio mitre a la, really making the decision. we understand he met with the president yesterday for over an the, and at the end of it, president issued a statement saying that he had asked the prime minister, despite tending his resignation, to stay. onuntil this the budgety on until law was passed. it is very simple, not controversial, it just allows italy to have a budget. we are close to passing it because there are two houses -- the lower parliament has already passed it, and have to go through the senate. it may give them a couple more

days for the president, whose only concern is stability, a couple more days to speak to involved parties and make sure that he picks the right prime minister, the right caretaker. the president nominates someone, and who ever gets nominated from the cabinet has to when the vote of confidence in the italian parliament. anna: do we know who is likely to succeed him? francine: we have a couple names. it seems they are all center-right, most of them of renzi's party. the current finance minister is one of the most likely names. certainly he is the one that the business community seems to prefer. we also have the head of the senate, the culture minister, the transport minister. if you look at the challenges for the banks, it is very clear that there is extreme pressure, or at least a lot of pressure, on monte dei paschi. they are going through a massive

cap raising exercise. 5 billion overall, one billion to swap, quite a complicated exercise. we understand that they still don't have the full commitment for an anchor. we thought that would be qatar, and without hearing from the italian press the leaders at monte dei paschi are trying to meet with the ecb to get an extension. ecb had put as december 31 the deadline by which they have to raise capital, and there are some nonperforming loans. we just need to take with the caveat -- the italian newspaper is extremely reputable but are not mentioning any sources, reporting that the meeting will take place between ecb and monte dei paschi. anna: francine, thank you very much. francine lacqua joining us from rome, with an update on the italian story. we will get the thoughts of our guest in just a moment. let me bring you some breaking news as you are coming across the bloomberg.

south korea's president agrees to resign in april, according to the largest news agency in south korea. this, of course, goes right to the heart of the political turmoil that the president finds herself in. asia's number four economy potentially facing its first presidential oust since the end of military rule. we have seen equity markets and south korea responding in the run-up to this, and this is a story that has been long in the making. april is now the deadline. the date we are looking at, april. our guest is still with us on set -- let's talk about italy. with your best analyst hat on, can you see a path to power for the five-star movement in italy? is that where the story ends, or will that stop? >> it may theoretically happen,

but we are far away from it. five star is roughly on par with the current centerleft party; they may not win elections. when it is a more serious issue, such as real national elections, people may think twice, as we just had and austria, where they really want these funny chaps and power. on top of that, italy has a complex election system and the referendum preserves the checks and balances. in a way, you have to win two elections in one to have the power in two houses of parliament. if five-star were to come into a position of power, it would probably need to compromise with other parties to form coalitions, which would be awkward for them if they were to make it. there would likely force them to drop some of their weirder demands. so probably they won't be in power, and if we might see a tamer version of them eventually empower rather than just

speaking loudly. anna: these funny chaps. one divergence i see in the polling -- and i know we need to be careful with pulls of late -- the movement of far right parties seems to have around 40% of the vote. but then when you look at support to leave the euro, that runs at only 15%. is that what you are suggesting that have to be watered down if they wanted to get into power? >> very likely, yes. as we have seen in austria, with the right wing chap almost becoming president, almost becoming president he had to drop his earlier demand to leave the eu. i think a five star ever wants to be a serious contender for power in the sense of being the majority or close to majority in both houses of parliament, they would have to become tamer. otherwise they would not be elected. and if the question of italy's euro membership came up -- and i don't think it would -- we would

probably see a bit of turmoil in our markets, which would likely remind many italians that may be going back to 7% or 8% interest rate is not what they would really want to do. so hopefully this is an upset, but probably we are not on the road to an italian exit. anna: and how much are you focused on the short-term in the banking sector in italy? we are watching these comments coming through in italy, reporting that the italian treasury is considering a precautionary monte dei paschi capital plan, to meet the ecb on the capital plans today. we also understand from our own that monte dei paschi will decide in the next few days whether to go ahead with its capital plan. how much is this the whole story around italy, and how much is this just unfortunate timing? >> i think this is a side story. the real italian story is the politics. i hope to avoid new election and get some clarity.

than thes clarified, banks will find it much easier to actually attract capital. at the moment, well we are in political limbo, is very difficult. at the moment, it definitely makes sense to talk about these precautionary measures, and possibly just talking about them as a first step will hopefully help to keep markets somewhat settled. there are matters that could be taken to shore up the banking system while we have the need to clarify. anna: ok. thank you very much, good to see you. 7:17 in london. up next, construction equipment makers expect full-year revenue ahead of expectation. we speak live to the ftse 100 company it makes a lot of money in the united states, and talking about trump will be a feature. this is bloomberg. ♪

anna: warm welcome back; this is daybreak europe. this is berlin this morning, 8:20 in berlin. we are having some really strong data out of germany this morning on the industrial front, but the euro is still down pretty much where it started, around one .8%. a lot of the action is taking place with the cdu conference. let's get the bloomberg business flash with haidi lun. haidi: hey, anna. there is a counter bid for that's according to people familiar with the matter. they say the french drugmaker is working to weigh its options. a representative declined to comment, while carreon couldn't be reached outside regular business hours. the pimco total return fund has

lost -- according to bloomberg fund is nowhe bond number one with $79.4 billion in assets as of december 2. $78.5o fund failed billion after it lost 26% during the month and investors pulled out. says it hask times" found more than 200,000 new digital subscribers and fourth quarter and hasn't seen any low since the election. they have been heavily criticized by the president-elect over what he claims as biased reporting. regarded the market to 100,000, and that would have been more than twice as many as q4 last year. readywell over 200,000

and we are nowhere near the end of the quarter. haidi: mexico's first competitive deepwater oil options cut expectations with the words going to the top oil companies. the national hydrocarbon commission awarded blocks, and companies including total, exxon mobil. they are said to mirror the u.s. side of the gulf of mexico. and that is your bloomberg business flash. anna: thank you. let's talk about one company in london that is reporting numbers this morning. an international construction equipment rental company reporting half-year earnings this morning. we are joined now by the ceo of the company here on set for his first interview of the day. jeffrey, very good to see you this morning. just looking at the details of what you said, a fairly punchy, upbeat statement, results ahead of expectations. is this a reflection of what we are hearing from donald trump,

or is this even before we add in any contribution from him and his economic plan? >> we barely saw anything with regards to expenditure on the infrastructure. we have had a very long period of growth. we are benefiting from two things -- the economy generally, in the u k and u.s., but most importantly across a range of sectors which we are benefiting from. people want to outsource, people are happy to share equipment, people are looking to unburden their balance sheets either from a financial perspective or from a complex perspective. anna: your u.s. arm, the construction equipment rental business -- what kind of excitement is there, with 90% of your businesses in the united states? look cut excitement is there around the president-elect? >> clearly he appears to be very business friendly. when you have been in the construction industry as long as have, you learned not to get

overly excited about promises for infrastructure until the shovel goes into the ground. that, it is one of the rare areas where there does seem to be agreement between republicans and democrats. anyone who travels to america knows there is a need for infrastructure, and some of the ways he has talked about funding it do seem to make sense. we will wait to see the details before we commit too much. anna: every year, a lot of the contracts you do are quite short-term. the face ofsee as the u.s. economy? >> the u.s. economy is very strong. we had a small blip around oil and gas, but if you look from that moment till today, there have already been 4 million jobs created. across a broad range of sectors, commercial construction, entertainment space, industrial space, it is a fairly robust economy.

there are so many statistics in america -- there will always be some sector where there's a little bit of shock, but generally, we are very confident about medium-term prospects. anna: 10% of your business is still in the u.k., with brexit very much being the topic of conversation. a lot of the economy seems to have come up quite lately so far. we haven't had the article triggered, but the construction sector has been one area of concern. what is your experience in the construction field? >> i think it's a fair concern. as we sit here today we have seen little or no effect. anyone who walks around london is sees lots of construction activity still taking place. the issue will be one or two years down the track. i believe there is enough structural opportunity in other sectors to compensate for any cyclical downturn. anna: thank you so much for joining us this morning. very good to speak to you. the ceo of ash that group. that will do it for daybreak europe. the european opens up next.

we are live in rome all day. francine lacqua is in rome with the latest developments out of italy. a quick look at the futures suggest we will be fairly flat with a slight positive bump. we believe that there. this is bloomberg. ♪

guymanus: we bring you the firso trade of the day. i manus cranny alongside matt miller. for angela merkel, the cdu party convention. here is that we are watching. the italian president asks matteo renzi to put his resignation on hold until the budget is passed. who will leave the caretaker government? is policy the new data? the fed weighs fiscal stimulus under president trump,