jon: good morning, and welcome to bloomberg daybreak. in the equity markets, all time highs across the board. there futures up 32 points. market, confusion yesterday. the euro weakness is the story now. here is what you need to know at this hour. u.s. stocksagi, at record highs in mario draghi announced the extension of the central banks bond buying program until the end of 2017 but at a reduced paste. he trump administration taking form. attacking china vowing that of a laugh to play by the rules. the same time his appointment points towards his promise towards deregulating much of american business. even if opec convinces nonmembers to cut their rates the group may not be enough to train inventory keeping down oil prices. att is what you need to know

this hour. let's focus in on just what the ecb did yesterday and why it didn't. mario draghi went into detail about their quantitative easing programs and how they see the european economy. the securities and the asset purchase problems with maturity below the interest rate on the permittedlity will be to the extent necessary. the outlook for real gdp growth .s broadly unchanged the risk is round in the euro area growth remains tilted to the downside. the two options that have been presented with the ones that were started by the committees in the preceding months. 80 option of continuing with million -- billion euros a month, and the other received a

very broad consensus. david: sorting through the message ridge run by paul gordon european central bank's editor coming to us from frankfurt. paul, i was interested in this question -- was it unanimous? was broader e consensus. does it indicate there is going on within the governing council? know there was some contention. -- dissension. favor is what he said but there was not a consensus. on public comments to come from places like germany and the netherlands. the seven european nations as we reported yesterday wanted more

qe. dragi gott, yes, but it through. david: sort that through for me. is the tilt to the weaker side or the stronger side? if they had gone the other would've been more easing or less easing? paul: this is the reason the markets or somewhat confused yesterday. the more you talk to people the more they saw what they wanted to see. the there was a cut in monthly rate eu can take that as a hawkish sign that the recovery is strengthening. extended for another nine months and the total extension ros.40 billion eu that is more than the alternative option that was discussed. the doves have something for themselves there.

the minimum yield requirement was cut as well. something for everyone was the message here. that makes it very clever that draghi got this message across. david: yes, thank you so much joining us from frankfurt. ecbthan: the ecp down -- down, and the fed to come. 185 basis year, points. is there any oxygen left that high? the divergent monetary policy before the it didn't work out. this time it seems more aggressive. can a become much better than it already has? washat was i yesterday typical consensusbuilding among monetary policymakers to get that strong consensus that draghi talk about you have to make compromises. thanll, implying more qe before but at a slower pace. there was something for

everyone. we have seen this within the fed in the u.s.. they continue to try to move towards the exit there is still some holdouts that don't want to raise rates further. how do you bridge that gap? when you do make strong decisions about monetary policy next week to raise the federal funds rate, you want to be sure it is unanimous. jonathan: let's talk about the asset purchase program. your experience, stock versus flow, the bulk asset purchases of the ecb will get bigger and bigger. the flow, the monthly purchases, that pace will slow down. what is more important for bond markets? >> from the academic policy area it is the stock not the flow. any investor will tell you it is about the flow. we've seen in the u.s. if you look at measures such as the atlanta fed's shadow measure they put out it clearly shows

the tapering was tightening. the ecb may run into this where they think it might be easier to take baby steps toward that and find it is much more difficult which was the u.s. experience. david: we saw this divergence happen 16 months ago now and it felt like the g-20 got together and china was nervous about this. are they getting nervous at this point? what are the dangers here? the u.s. economy, investors are very encouraged at the prospects for fiscal stimulus. higher rates of growth for the economy, higher inflation, stronger monetary policy response. what else happens? oars, not just because there is trade policy uncertainty, but also it is reflective of investors expecting better fiscal policy outcomes for the u.s.. we have seen in the past that

stronger dollar and faster pace has createdion difficulties particularly for monetary policy makers that are looking for inflation to move back. jonathan: as we push forward is howek, the question they respond to any potential fiscal stimulus that comes down the pipe. how do -- to forecast this is another thing. this is the classic economic summary that everyone goes to. official isry fed and where the market was right now. where it is right now is that blue line in line with the federal reserve system will be see federal reserve push their line a little bit higher? ellen: absolutely not. ofyou weeks ago in front congress janet yellen was clear that it is too early to take on fiscal policy assumptions. in terms of what it means for their forecast. academics, these monetary

policymakers are the last that will take on some kind of fiscal policy assumptions. what do we know? we know we could get fiscal stimulus next year and that it all we know. it is much too early for policymakers to make some assumptions about what can be delivered, what can be deficit funded, and how that my transition into the outlook. in 2000 wanted to quite some time for policymakers to pull back into their forecast. we expect no change, almost no change in the medium-term growth forecast. jonathan: they can't projected if they can't forecast of what double we have a knee-jerk reaction when it does come in? ellen: we have put out a new outlook. we have raised our growth forecast and have raised our expectations for what monetary policy will do in response to that. that all itd is does is make the fed current growth forecast and path for

policy plausible for the first time. david: two investments now, if you are an investor what do you do with that uncertainty? do you have a barbell approach? do you stay in cash? seen: so far, we have pretty big pops in business sentiment. our own conditions popped post election. there is a lot of optimism out there. i've seen in a good trim of the ceo saint for the first time in my business planning i am providing not just a baseline expectation but an upside scenario. thisu plan for the best time, for the first time in a long time and you wait until after the new congress reconvenes on january 3 -- there's the rhetoric move in the right direction? does that republican agenda come through so we know things are moving.

jonathan: for the first time in a long time the fed might actually be right. ellen is sticking with us. let's get some outlook. female leader of south korea has been impeached over a corruption scandal. has beendent and suspended and the constitutional course will decide within 180 days whether to remove her from office. this scandal fueled anger over ties with business. thousands have demonstrated against her outside the national assembly. senator john mccain plans to investigate possible russian cyber meddling in the u.s. election according to the washington post. is very littlere doubt that russia intervened. in conflict with donald trump who downplays the possibility of a russian role in the election. on capitol hill, senate democrats are considering whether to risk a partial

shutdown of the government this weekend. the house has approved a spending bill that would keep the government running, and they want the final version of the bill to block -- keep benefits for retired miners. news 24 hours of a day powered by more than 2600 journalists in more than 120 countries. abigail: this morning, we have many of the casino stocks popping higher following a big selloff yesterday. all of these were down more than 10% on a report that macau was cracking down on withdrawals on a daily basis to limit the flow of money to gamblers. has denied this report and jpmorgan the saying this creates an opportunity for shares of mgm resorts. we do have shares of lt trading

higher in news that the french cable operator is saying the environment traded by trump's election plus the pending merger &t could be a positive one. trading higherre on the early release of the company's alzheimer's drug and the trials that appear to be somewhat promising following disappointing results from eli lily last month. 100 compounds for alzheimer's have now failed. more than 5 million americans have this condition. hopefully this one will be the one that works. david: coming up next it is it just the ecb decision driving markets these days, donald trump gives a range of signals every day about his new administration and the policies it will be pursuing. what that means for u.s. investors that is next. ♪

this isrom near to do bloomberg daybreak. dollar-yen with a 115 handle, stock 12 is how we trade now up i 9/10 of 1%. the biggest move we haven't seen since february. david, we saw 100 back in august. david: we were talking about 105. jonathan: what a move. yet weakness and some serious dollar strength in this market. features up about one, record highs across the board. equities just keep pushing hard to matter what happens. donald trump continues his thank you tour of the united states and went to iowa yesterday when he announced the governor of iowa would be his ambassador to beijing. aboute a glimmer of hope

china but that tone changed. >> we will of mutual respect and china is going to benefit. terry is going to lead the way. you're the massive theft of intellectual property putting unfair taxes on our companies not helping with north korea like they should. will and massive devaluation of their currency and product dumping. other than that they have been wonderful. david: still with us is ellen, morgan stanley's chief u.s. economist. you saw both sides of donald trump he gets it away and takes it back. you talked earlier about the possible upside. is the market pricing and possible downsides including trade problems with china and mexico? ellen: until we get some clarity on how this will play out it means volatility. as you described it, say one thing then turn around and say another, that is volatility.

as we get rhetoric around the trade and more appointments that might affect his trade policies, this is going to keep uncertainty alive. we are focused on the positive thinks he can deliver through fiscal policy and tax reform, it is the trade policy that is the biggest unknown. it does feel like some of the elation we've seen from markets postelection is not quite taking into account that there is this other side of the coin and we don't know what will happen with it. david: when will we know that? he appointed wilbur ross a successful investor who is talked openly about there is too much trade going on and we need to be really careful and clamp down on this. any appoints terry branstad who's state trades extensively with china. even those are mixed messages. how do we plan for this? u hope these policies

play out over a long time as they typically do. and we don't have knee-jerk reactions where world leaders tend to poke each other. when you come into power they test each other. our trump has not been poked yet. we've seen that when he says if you poke me, i punch back. that trade policies play out over a long time. it is the tough rhetoric that will keep the uncertainty alive but with the jets suddenly announce tariffs? will he say i am pulling out of a trade agreement. that is what keeps uncertainty alive. you have to assume there is going to be some amount of undercurrent of uncertainty that does dampen asset particularly if you rely on the export sector. jonathan: politics is one thing, this is it really similar to this time last year when everyone was are relaxed about china them awoke up in january

and the federal reserve hiked rates and we realize that dollar-yen was a thing to be worried about. i wonder if the politics doesn't change anything next year but actually the markets once again become a big thing for china. the dollar is strong. when does that become a massive issue? len: this time is different because the strengthening in the dollar a lot of that is probably that investors are saying it is going to be a new day we are turning a corner and next year growth will be supported. there is this big unknown about trade, it is not unfounded to expect that we're going to get some injection of growth next year. stronger dollar is reflective of those expectations of a stronger economy. that is one reason why the strength we've seen in the dollar cents donald trump was elected is not worrying the fed and doesn't keep them from moving on interest rates in december. he was one thing as we go into

the new year, last year fed delivered a december rate hike but they promised they would follow it up with four. what they underestimated was the global market reaction to what looked like an alarming pace of rate hikes. this time that already cut that in half and say at best we will have two. ellen, thank you very much the absolute head, opec's track record gives a good indication of what this latest reduction cut could mean for the markets. and our reporters taken to the reports you need to watch that is next from new york city. ♪

another: opec is having meeting with producers in vienna on saturday to discuss production cuts with russia agreed to fulfill its pledge to

cut out by as much as 300,000 barrels a day if opec follows through on its commitment to curb production. i'm pleased to say we can bring and bloomberg team amalie halley from london. you might as well rent a flat and marie. what are we getting from another opec meeting this weekend. what set of says googl -- what sort of schedule? non-opec members will join most of the members here in vienna earlier we only heard that 54 coming. nine.ist is expanding to they include azerbaijan and kaz extend. stan.zah the leader of this non-opec group same it will intercut threader thousand barrels a day. now it turns to who is going to sok up the remainder of that

far besides russia all of the other countries that said they will be willing to cut was oman. it will be interesting to see who is willing to cut, -- toldave turned bloomberg may be part of the cut would just be a decline in production most of you and i both know that is not a real cut. it will be interesting to see if they can you close to that 600,000 barrels a day to see the deal through. jonathan: you and i played this game earlier, i am rusher and your saudi arabia and ann marie is an oil trader we both say we're going to cut and annmarie buys crude, how will she know we cut production? >> compliance will be the key. know for sure whether the cuts are happening for at least another 10 weeks. it will be the beginning of february when we can see if the production cuts are happening. how we know, 50 go to the counting. that is in the middle east thatg how deep and how low

is going under water to estimate how much oil is inside of that this is more over the science and the tolerances the amount of uncertainty where going to get pretty significant. the market is pretty skeptical at the moment. it is going to take a long time before we see the evidence into the markets. david: even if they do follow through and historically they haven't followed through on 100% of the cuts, what does that do for inventories next year? javier: even if opec cuts production and does that we will still have rebuilding in the first half of the year. through than in the second half come june the and willlks to them see the prices increasing. you're right the first half of the year is going to see inventories building across most

of the months. jonathan: we like full disclosure here a bloomberg. what about that vienna hotel and beverages? these two will be back there all the time over the next year. thank you to javier in london and annmarie in her second home of vienna. david: the riskiest place to invest in europe what that reveals about new threats to the markets. ♪

a

david: this is bloomberg, digesting draghi, u.s. stocks at record highs any yields rising after mario draghi announced the extension of the central banks a

bond buying program until the end of 2017 plus at a reducedt pace. the trump administration taking form. china will have to play by the rules and promising to deliver to deregulate. even if opec convinces nonmembers to cut, the agreement may not be enough to drain inventories keeping down oil prices. that is what you need to know at this hour. jonathan: an all-time high for the equity market in futures signal we could get some more. digit on the s&p 500. the fx market applies to go. dollar-yen has a 115 handle. another move lower, about half of 1% a weaker euro story and that dollar five cents line in the sample be a huge resistance point where we had those aggressive lows. david: as you know one of the biggest beneficiaries of the

decision yesterday was the european banks. immediatelys took turn up. bloomberg surveillance spoke with the ceo earlier and that gives us our morning must watch. he sees 2017 is a good year for european banks. they will see a clear earnings outlet. first, margins will go up. that is fantastic. they don't need to do anything they can just make more money with the existing balance sheet. secondly, you're the positive effect with gdb growing by 1.6% in europe top the last 12 months gdb has been higher in the u.s.. that is just numbers. that will lead to some lending growth. third, they are cost cutting. meaning, being more focus. there's one good thing, in 2009 that focus needs to make a choice.

for example, if you see would morgan stanley did coming up and focusing on one when it's been is doing. clearly they relate to the party. result, with the positive back shepherding there is significant upside. david: joining us now is the manner did that interview. welcome, tom. tom: this guy is a real bank analyst. he actually analyzes banks. what is great about this is that you know the surprise over brexit is the world is coming to an end. davide is saying that for the gloom of european banks 12 months out -- david: to your point he segmented european banks. he said you get the people that we money setter banks and tell. he really analyzed each group. tom: it is just like america.

what i'm getting from ember the is a rosetta stone. yes, i did find -- [laughter] tom: i need to get myself out of this quickly. david: it is actually tom keene's birthday today. italy is they for have some problems but saris as they worked their way through domestic political system really fix it up. david: you watch mario draghi he says the italian government will take care of it. tom: this is important. this is the institutional view that italy must all that on problem. all of these meetings are good on that. just fix it, versus the other thef lieke roger at

economist talking about lira depreciation and all that. david: there is this thing called state aid. mix?is brussels in the jonathan: they're trying to stay on top and if you give state aid yesterday bring in the bondholders as well. but it is retail money and it is household. if you're told to take over a caretaker government which is possible for you going to go in with the debt holders? tom: the wildcard to me over the qatar, is i believe which is invested in barclays and deutsche bank was great pain is considering putting money into troubled italian banks. will they or won't they? that is a big debate into the weekend. some years hasr

wanted to be a geopolitical player that is why they have al jazeera, after all. at the same time investing. tom: they did the piece earlier, is very fluid it into the weekend and into the end of the year. there is that mystery of 2017. david: thank you so much from surveillance radio. but in every day from 7:00 until 10:00 a.m. with surveillance radio with tom keene. it is hisi am told birthday. happy birthday, tom keene. you look so happy about it. now i am in a sugar, right -- sugar coma right now. thethan: for more, and riskiest places to invest, we're joined by the mobile head of asset management. the italian versus german spread, the disclaimer as always is this is in 2012.

many people are looking at the situation that there could be more pain to come on the periphery. >> we believe there is a bigger theme taking hold not only globally but a theme which is quickly going to take old within europe which is the theme that the safe has become the unsaved. the of see that play out quite violently with the rapid shift out of bonds yesterday. we've seen a play out quite violently with the carnage which has hit the high dividend yield and the low volatility stocks and a shift into more cyclical stocks. wenoamely, those assets traditionally labeled as more safe assets providing safety net are going to see more pain going forward. jonathan: certainly a lot more pain. off the back of yesterday, let's talk about the news. decision from the ecb quite clearly bullish on the front

end. dropping the deposit rate floor for bonds, taking the maturities to a shorter term. that is bullish on the front end. the long end, how does that develop? ash: what will drive the long and is inflation expectation. what you are seeing happen in terms structures across the globe is a steepening of that yield curve. toward the first step normalization. will we get our view that the theme of the safe becoming the unsafe will take old comes about from a unique way. we look at the options market. they give us an insight into the future. the option market is really an insurance market. it tells you a lot about the potential downside and the potential upside to the markets. you can use option prices as the pallet to paint a picture of the future.

but that is telling us is this whole thing which is a powerful theme right now of the safe becoming unsafe is going to take an impact and take an effect on european equities. how is this going to play out? traditionally is a safety net in europe is showing much more vulnerability than peripheral europe. david: in what sense? is: the danger that europe going to evolve into as the risk increases, the european union may break down. the idea is simple, what country has benefited the most from the euro? is germany. they benefited from a weaker currency versus the deutsche mark if it existed. what country is likely to suffer the most pain? germany. jonathan: what you explained

make sense. let me tell you why doesn't to me. for assets, specifically, if we did down the road, let's say we do that again. fx analysts would say i would rather ride the deutsche mark to the italian lira. denomination risk means that bonds go from euros into deutsche marks. why is it risky for the assets? ash: germany if you look prior to the introduction of the euro, a trade balance that was slightly negative. as the deutsche mark converted to the euro, the euro was trading cheaper than the deutsche mark because peripheral europe wasn't as productive as germany. the trade balance in germany increased from slightly negative, today it stands close to positive 10%. the opposite happened with peripheral europe. all of the arguments you heard

about germany being the true benefactor of a cheaper euro, when greece was in the forefront in 2010 and 2011 still holds. jonathan: we talking about the nomination risk? ash: that is a tale risk. given that tail risk, the event is so severe that you can't ignore it, what we see this is going to be quite surprising, as the risk increases, we actually do believe you will see peripheral equities and risk asset rally relative to germany. jonathan: i like the way you comingn, and not if, up on the program, donald trump continues to piece together his administration. what is most recent appointment means to the regulation of u.s. companies.

this is bloomberg. ♪

emma: this is bloomberg daybreak, coming up the next hewlett-packard. -- m jim international chairman. david: the as the ecb to extend the doubt -- mgm international chairman. david: he asked the ecb to extend the bailout and potentially avoid losses on shareholders and bond markets. in the last couple of minutes a that willm reuters

reject the request to extend the time they need to do those things to potentially january 20. the stock rolling over by about two full percentage points. we haven't matched the story. a 2% drop on the particular stock in italy something we see quite regularly. we see a whole lot more. david: we seen staffing and trading. jonathan: it is something we are used to. we want to come back to the united states and talk about donald trump. the president-elect continues to put his new administration together and announced a slew of appointment including a secretary of labor the ceo of cke, the parent company of parties and -- hardee's and carl's. said obama care the principal problem for restaurant industry. >> the restaurant industry is going to a recession, traffic is

down 3% it was some research out of a group called civic signs that showed it is basically due to increased obamacare premiums people and not going to restaurant as often. restaurant growth the generally is down. it is a problem. it is a very significant problem that would to address. david: for more we are joined by marty, welcome to new york. let's talk about these appointments. about the direction and policy, there several ceos like mr. haver, and people that been outspoken about regulation and the need to do away with it. marty: anybody who had any doubt about trumps rhetoric about regulation -- puzder has been a staunch opponent of obamacare and railed against all the regulations that stifled growth

in his restaurants. he is already drawing great howls of protest from democrats in the senate. david: it is not just him, we also the epa nominee scott pruitt who has been outspoken on the position of climate change. it is interesting because donald trump had suggested maybe there are some elements of the paris accord he can support whereas the oklahoma attorney general has been way outspoken on the problems with the paris accord. somehow that is going to have to get reconciled. it is clear regulation will be a target of this administration. david: you do beyond that, something's the attorney general has written and the said bring into question whether there is climate change at all, and the extent to which it exists. he is a climate change denier. will beeah, and it interesting to see how that transportation to auto and mileage standards. all of those things have reached

harmony in the industry. if that is upset it is going to cause great consternation in the auto industry. david: we are talking about energy here, this internal document we have gotten our hands on from the tribe administration that is asking for the names of everybody from the obama administration who attended you and climate change climateces -- un change conferences. what is that about? marty: our sources they don't make too much of that it was not meant in any way as a witch hunt . we will see. it is interesting they want to identify those people who, maybe it is information gathering only, but it does sound sinister. david: finally, secretary of state that is the big appointment we're waiting for. do you have any sense when that might come? marty: i think it is next week and mitt romney to me is still the front runner for that job. i think donald trump really wants to pick him. is moving up to be

surprised that is him. david: the ceo of exxon? to theings us right energy department. i hear that did the trays is fading. is fading.treaus thank you to marty, it is time other stories making headlines with your bloomberg business flash. emma: it is the third biggest ipo of the year which raised little more than one billion dollars most investors called 27 million shares for $40 a piece. at ipo's price is valued $7.4 billion. the company accounts for a quarter of the asset management fees. regulators investigating emissions's diesel

scandal is concerned evidence might've been destroyed. regulator said that 23 mobile phones linked to the case were either lost or wiped clean. vw has said top management was unaware of the decision. he wants a london housing market has cooled off. luxury home prices have fallen by more than 10% in the exclusive areas. forecasters say prices will fall further because of brexit and higher rates. this is bloomberg. jonathan: coming up in this program the federal reserve decided a december hike may be into the markets but will the fed shift the rate hike path in 2017? we look ahead to that meeting this is bloomberg. ♪

david: bloomberg.r, this is

coming today both the 10:00 a.m. eastern wholesale inventories and university of michigan boasesersentiment, matt is getting excited about that at the federal reserve as well. what is the story we expect to see later? the firstll be consumer sentiment reading we can after the election that should incorporate perhaps the results. it will be interesting to see what happened on the inflation expectation. looking ahead to the fed, that is something they're looking to look for. they haven't really gotten that yet. be interesting to see if we see something so early after the election and reaction to that. jonathan: what interests me is that wall street gets excited but if you are voting for clinton or trump you may feel differently about this economy. with that show up in the data? an interesting

question because our consumer confidence survey breaks down among republicans and democrats you can see in uptake in confidence among republicans and less among democrats. we will not get that today unfortunately but we will be some politically related questions like how do they think the government is doing and that sort of thing. the federal reserve has their data points but the what the want to know is what this fiscal stimulus looks like an 2016 in nobody really knows. in the federal reserve adjust their forecast to some women don't know? -- to something they don't know? is been the big question. the general sense is that they the to wait until administration comes in la's apologies. that lays out policies. and might be more balanced they were on the downside that

could actually affect the rate outlook and the forecast. david: they have an easy decision to make, they can just hike rates and get on with the trust them a massive discussion about the blurred lines and trying to understand what the function is for the central bank. explain to me what that will be at the federal reserve. of speechesries about running a high pressured economy. the let that happen -- do they let that happen? hard to understand how the outlook is now different than it was a month or two ago. not only have forgotten the election but also the john cooper we got last friday -- the jobs report because last friday dropped. the fed was more worried a week ago about downside risk, now they are in a situation where they're kind of right where they want to be. you have inflation picking up

and unemployment coming down. fedould see more normal policy for this cycle. yellenn: when janet talked about being an automatic stabilizer for monetary policy how much work is the market doing for the federal reserve right now? the fed doesn't have to be as quick as some people think. matt: there are different expressions right now, the dollar and interest rate are higher but credit spreads are lower. those may be offsetting but it is a great question because for example you have housing and that is still interest-rate sensitive. we havedealing with low gotten since the election. how does that impact play out before we actually get the stimulus that investors have decided to mark of the interest rate forecast? jonathan: let's assume that higher rates we get that with the economic projections and not

much changes what is the first question for janet yellen? want to know how important inflation expectation still are given what we have seen and if they expect those higher interest rates to filter through towards consumers. and how soon they might expect to see that. jonathan: great to have you with us on bloomberg news don't miss special coverage on wednesday beginning at 1:00 p.m. eastern time when the federal reserve concludes its two-day meetings. coming up, macao denying cuts to the atm limit after a report. more on that and the company's big bet. this is bloomberg. ♪

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with davidan ferro westin. alex deal has today off. the headline in the fx market is dollar strength and euro weakness. the line in the sand is the dollar. david: and here's what you need to know. digesting draghi. yields rising after the ecb president announced the buyingon of the bond program until the end of 2017. the trump administration taking form. the president-elect again attacking china, val has to "play by the rules." his appointments point to his promise to do you regulate american business. falling short kid even if opec -- falling short. even if opec persuades non-opec

itbers to stop production, may not drop oil prices. we want to turn out to the ecb. president mario draghi laid out in detail what the ecb would do the next 12 months and why. but even after an hour of answering those questions, some were left wondering if this was a hawkish ease or dovish raise. >> this was not a taper. as saying wetaper will have a steady step function going down. they said they have not decided that. they could do 60 forever. >> what we are is important is marketshort and, when participants know they will not raise rates, before they are while they are buying bonds, so they said they will buy nine more months. that gives three more months

then we thought. they will probably continue for a long time. they can bid yields down. at the short end, they look at this as being dovish. than 80.certainly less i see this as tapering, to the extent it is open-ended. if there are some dovish elements to it, they have put in language to their two increase the duration. clearly, draghi has turned the super tank qe to the exit by cutting the run rate down. i see it more as a hawkish move. rates have gone out in the bond market. the equity market sees the open-ended miss -- op en-endedness. they seem to like it. so it is a good question. just because it quacks, does it

really make it a duck? joining us now is paul gordon, coming from frankfurt, where the ecb met yesterday. so if it quacks, is it really a duck? what are the markets telling us? paul: it depends what you are after. if you are hoping to see the ecb and0 billion euros of debt find out they are buying 60 billion euros instead, you may take that as hawkish. on the other hand, the ecb has added more than 500 million euros to its sheila e. program -- to its qe program. so there is a lot to work on, depending which angle you're coming from. jonathan: there are two hats in the ecb. one is monetary policy, the other is ranked supervisory. iste dei paschi wrote --

down. the headline now is the ecb is set to write down monte dei paschi. time to put together this $5 billion capsule increase. toy wanted to extend that january. we now learned they will not get to gettension in time capital raising in place. how significant is is for italy, the financial sector, and the ecb? that is right. it is significant. there are reports that monte dei paschi's bosses are meeting with the treasury in italy. they wanted more time. it does not look like they will get it. that intensifies pressure on them and on italy. of view,ecb's point

this is an interesting stance. someone said to me no one wants to see armageddon. absolutely true. but that pain has to be felt, otherwise no one does anything. that may be with the ecb is after. make sure people feel pain to concentrate the mind. also pressure on the italian government, and we do not have one now. how does that work out? paul: the situation in italy is somewhat messy. to way or another, this has be resolved. i think it is in everyone's interest to resolve it. the wrongis probably were to use in a banking situation, but they need to find a solution with the least mess possible. that will not be easy. david: thank you. bloomberg's paul gordon. jonathan: the european central bank is set to reject monte dei to get the capital

increase it would need to avoid a state they'll out, which would impose losses on bond and shareholders. bailout,id a state which would impose losses on bond and shareholders. the stock rolling over. limit down in italy over 4.4%. let's talk to the head of thematic equity solutions. i feel for you, because it is breaking in front of us. but the conversation surely thats to the possibility they'll holders may have to be bonded in -- bailholders may have to be bonded in. >> european markets have struggled so much relative to other global markets.

the fact that we are not seeing fromader risk off move stocks tells us investors are not looking at this the way they may have months ago, which would have sent markets into a panic. jonathan: wiser not sending markets into a panic? >> we see a more broader based market. we have shifted away from the playbook based on monetary policy to a more deflationary, better growth indictment. if you think about that, that is supportive of the banking sector. so i think investors are looking , butis certainly as a risk also recognizing there is a lot of other positives in the world that mean this can be more isolated than in the past. saw stocks react

yesterday. take us into italy specifically. the italian banking sector. how much does this tell us about the rest of the italian banking sector? stephen: i am not an expert on the italian banking sector, but we have seen this story play out multiple times last couple of years. in some ways, reaching some sort thissolution around probably brings stability to markets. i am less focused on italy and italian banks but on opportunities in europe more broadly. jonathan: to me, there is a here -- clear line that needs to be reconciled. the politics that emerges in places like italy and the rules. the rules say if you cannot raise capital in need state aid, that means you need to they'll in bondholders and

stockholders. a lot of those are from retail money, which creates problems when it leaves set to go to the polls. so the politics in italy, what does that mean for your world? stephen: the challenges in the italian banking sector and it is the retail client base that is a holder so much debt has cost this to drag on so long and the reason they have not been willing to take on the pain. if this year has taught us anything, it is trying to invest based on politics, whether it is u.s. that -- brexit, the election, that is not the way we think of investing for our clients. the political situation in italy could create opportunity for us, because the fundamentals are about growth. that is in better shape. jonathan: this is the move in the debt on the bloomberg. rollingi paschi debt seven cents on the euro.

that is a big move. the equity rolling over. but the debt rolling over more viciously. if you do have to reach for state aid -- and we have no confirmation of that -- but if you look at the erie, you have to -- theory, you have to bail in these guys. in a: you have to invest way so when politics, into play , you'reare a bondholder prepared. this is true in the united states and europe. think all about building a portfolio for clients, i put to put politics and any guesses about policy to the side. in the u.s., everyone is getting excited about potential for tax cut, deregulation, repatriation. because of that, there are animal spirits creeping up. if you put that aside and look at the fundamentals, that

earnings are reexam rating because the economy is getting better, if you get just some of that positive policy, we are looking at mid-single digits earning growth. the goldilocks scenario where we policy, that gets you upside, but you do not build based on that. jonathan: stephen parker, thanks for keeping up to speed with us. the news the last 10 minutes that the european central bank is set to reject monte dei aschi's request to get capital increase, increasing the possibility of a state bailout. we will keep you up to speed. for now, let's get you headlines outside the business world and cross over to emma chandra. emma: the president of south korea has been impeached. the country is bracing for aftershocks. lawmakers voted to remove park

geun hye over and influence peddling scandal. led to some of the largest protest in south korea in three decades. it is also expected to have a lasting impact on the political landscape. the president-elect's team plans to shake up u.s. energy policy according to a document obtained by bloomberg. trump advisors want to keep aging nuclear power plants online and want to identify staff members who helps promote president obama's climate agenda. and senate democrats from coal states are threatening a government shutdown over the benefits for retiring coal miners. there needs to be a stopgap measure by midnight or some government operations have to cease. global news 24 hours a day, powered by more than 2600 journalists and analysts

in more than 120 countries. i'm emma chandra. jonathan: let's get you up to's in the markets. tension in italy but not in futures or u.s. equity markets. here is abigail doolittle. abigail: we have a rally in

casino shares. pullback, a selloff yesterday. most of these stocks were down more than 10% on reports that macau was going to limit atm withdrawals daily. it theuld not have heard all-important vip gambler. but shares are trading higher. stillwater mining surging on the news that it will get acquired by $2.2 billion in cash. the south african central bank has already approved this deal by sibanye. finally, looking at two retailers faring less well. tradingion hardware lower after it lowered its full-year earnings forecast by as much as 34%, hit by a slowdown in sales and a change in business models. duluth cut their forecast on revenue. but it is a bad day in a good year. the stock up on the close yesterday more than 150%. thank you.

♪ breaking news out of italy. the european central bank said to reject monte dei paschi's request for more time, increasing the likelihood of a state bailout. we reopen the stock. down by five percentage points in italy. joining us now to discuss us, dan leaf green -- dan liefgreen. let's talk about what we learned, then about what we have learned. what have we learned? from ourave learned sources that indeed, the european central bank has rejected italy's request to extend the deadline until january 20.

a bit of a surprise. most observers were expecting the ecb to accept the request. the other hand, clearly, it has been known secret there is impatience on the part of regulators that monte paschi has not been able to get this recapitalization done before the end of the year. minutesaid a couple ago, it is a problem in the sense that this increases the likelihood of some sort of bailout solution. jonathan: at this point, we have learned that the italian government has not approached specifically for monte paschi then, how do the dominoes fall? this is a country that possibly faces an election the next 12 to 18 months. that is retail money. is there any idea on how to get around that?

dan: no. and that is a good point. that is clearly something renzi was trying to avoid. he realizes the importance of these retail investors. that is why he was and has been insisting that the bank find this private solution, raising 5 billion euros with the first leg of the debt for equity swap, then pull off a share sell, then pull off a package of nonperforming loans. they managed to get the first leg off, but they have not been able yet to figure out a way to perhaps do the stock sale with the talk -- clock now ticking. that is why we are told the finance minister padoan and other officials and bank executives are meeting now in rome. clearly, the markets

are reacting. the equity rolls over -- that is the initial market reaction. complex was a three-part capital raising mission. they wanted more time. the end of the year -- is that enough or no? we increase the likelihood of state intervention, but is that a certainty. is three weeks enough to find another solution? think theis point, i 5 billion euro package they talked about before -- i do not say how that can happen at this point. i think they have to hammer out a solution in agreement with brussels and the ecb for some sort of rescue. how you define that, whether they indeed apply for that mechanism -- i think this weekend, they have to come up

with a solution before markets open. jonathan: thank you. dan liefgreen, our milan bureau chief. david: thank you. one of the industries most affected potentially by the trump presidency is health care. joining us now is the ceo of health care ago system. --hael mussallem focuses runs a company that focuses on heart valves. let's talk about obamacare. what changes are coming down the pike from your point of view? michael: it is not clear. it seems obamacare will have some sort of change. it will be dramatic. i do not think it will be completely disassembled. our business is less likely to be affected.

many of our pages -- patients .re already on medicare that is not likely to change. what has changed is a medical excise tax. right now, it is suspended for two years. end is going to come to an at the end of the year. david: what about the fda approval of devices? we have heard a name, jim o'neill -- how could that affect your businesses for better or worse? michael: one of the things businesses like us like to happen is allow our innovations to get to patients. there is a substantial structure between fda and cms to guard against bad actors and so forth. there has been discussion against dismantling some of that. some of the bureaucracy slows down the pace of innovation

getting to americans. we look forward to that being a positive development. there is a bill moving through congress that has been passed that will likely be lamented called 21st century cu -- will likely be legislated called 21st century cures. david: your devices are used with catheters, not open-heart surgery. can you keep up that pace? michael: the growth of that business has been spectacular. is the leader in surgical heart valves. but this new technology that allows heart valves to be replaced without opening the chest and stopping the heart is a remarkable. the growth of that business is more than 30% this year and is approaching $2 billion in size. it is significant. next year,w slower

but in our estimation, it is a 15% to 20% growth rate. david: in q3 -- michael: which is natural. today, there is a market that is $2.5 million. we expect that to be even more in 2021. david: where are you on microvalves? we think it is possible to bring catheter-based technologies to that. we have almost six initiatives in humans at this point that will look at that. david: and that is potentially a bigger business? michael: it is potentially a larger opportunity, but we still have much to learn. david: thank you, michael mussallem, ceo of edwards life sciences. jonathan: the european central

bank set to your just monte dei timei's request for more to raise more capital. the conversation now shifts to the potential of a state bailout which would impose losses on bondholders and shareholders. equity and debt rolling over in italy. in the broader market, record highs in the u.s. futures remain firmer on the dow, up 18 points. a story ofarket, dollar strength in euro weakness. down half of 1%. from new york, this is bloomberg. ♪

jonathan: this is bloomberg. breaking news out of italy. the ecb said to reject monte dei paschi's request for more time to get a capital increase. this increases the chance of a

state bailouts. italian trade down by 7.43% in montebello -- monte dei paschi. a spokesman commenting they have not received communication from the ecb so far. according to people briefed on the matter, the ecb is set to reject monte dei paschi's request for more time. i want to cross over to our mila n bureau chief, dan liefgreen. a widely been reported about this rejection, but the bank has not heard anything. are they sending this letter by boat? we do not know. our sourcing, i think, is strong. like the ecb has definitely rejected a request to give monte dei paschi more time until mid-january.

the 20th of january is what they were seeking, to try to figure out a way to get this project done.on a bit of a surprise. many people were betting the ecb would grant more time. but on the part of the regulators, they are running out of patience for a solution. david: since we do not even know if it has been formally communicated, it is hard to know why the ecb did what it did. but can we know something about whether this is politics or business? is this the ecb saying no to this 20 day extension -- not they want-- because more pressure on the italian government or because there is a hemorrhaging of cash and they are worried about the long-term health of the overall economy in italy? is a hemorrhaging of cash, we do not know about that -- if it is a hemorrhaging of

cash, we do not know about that. they are getting some deposits, particularly the retail investors taking money out. but there have not been any alarm bells until now, saying there is a huge cash run on the bank. that said, i think they are increasingly disappointed that they have not been able to carry out this capitalization. is note doing it -- it an easy job with volatile markets. they managed to get the first planf this three-pronged off the ground. but a remains to be seen, realistically, can they sell shares in this market? particular with italy's largest tok, unicredit, about announce their own plans to raise capital. that is our gigantic task. jonathan: dan liefgreen, thanks for joining us.

the question has always been about this bank and its spillover effects to other bank s. what you do to monte dei paschi, it is it replicated to other banks? and is a difference of kind or degree, in the sense that do other italian banks have similar problems? jonathan: if you listen to the head of the european stability mechanism, he says it is a bank problem. you need to raise 5 billion euros, you have until the end of the year -- they wanted more time. they wanted an extra three weeks. why not? david: it does not seem like that much time. we will continue to cover that story. in the meantime, we want to talk a bite -- talk about oil and opec. on the political motivations of the major participants. shaheenoined by allah

thank you both. we have qatar, the middle east, and russia. announcement of glencore and rosneft. what is in it for qatar? >> there are two fundamental reasons -- economics and politics. on the economics side, this is a tiny economy with huge resources from hydrocarbon. there is no way this money can be invested in the economy. that is why qatar is going on a massive spending spree. buying ranks -- banks in the region, buying a french soccer club. they could see opportunity in russia. on the other hand, they have a

record in making investments driven by political motives. were the arab spring, they propping up investing in several countries in the middle east, supporting various groups. economic plans. that did not go so well. jonathan: talk to me about how they balance the economics and the politics. when you are wealthy enough, the shop goes to you. right now, and italian bank is going over saying they need help? how do they way that kind of this vision -- decision? >> it is an investment opportunity. there has not been any strong political quid-pro-quo types in italy. unlike whatever they're doing with russia, because you suspect there is some sort of political motive there. david: to what extent was us a better move for qatar?

this was a deal we have done at a slight discount to market prices. they needed the money to fill the gap in the budget by the end of the year. the falling oil prices has really hit russia's budget. they were worried they would not find buyers for rosneft, and rosneft would have to buy the shares. this is a deal no one saw coming. david: how was displaying in russia? he went on nationwide tv with the ceo of rosneft. greg: this is a grand victory for him. it comes on the end of the deal with opec, the first time the kremlin had signed on to reduce production. this is a shift in the geopolitics.

you cannot go on tv and say he is not a wonderful president. come on. all, reporting on middle eastern elements and government, and greg white, on russian economics and government. , reporting one middle eastern elements and government, and greg white on russian economics and government. thank you. us.ng up, jim murren joins the ecb set to reject monte dei paschi's bid for more time on capital. the stock and debt lower in italy. but futures higher on the dow. positive one in the s&p 500. this is bloomberg. ♪

emma: this is "bloomberg daybreak." chandra. coming up, cofounder of activate, michael wolf. ♪ this is bloomberg. i am david weston. there is a big resort being built just south of the nation's capital. mgm opened up its constitution the formal harbor in of casinos, restaurants, spot, and entertainment venues. here to talk about that is jim murren, ceo of mgm. thanks for joining us. about this new facade you have. right behind you. looks beautiful. but first we want to talk about

macau and the limits on atm withdrawals. as i understand, there is a limit on how much you take out in one withdrawal but they have not changed the limit on the daily. what it hit casino stocks hard. how big of an issue is this? jim: i think it was a massive overreaction in the hong kong stocks, because i think there was lack of context of what the chinese government is trying to accomplish. this is consistent with what the government has deployed for many years. there is a very strong underpinning of philosophy in china that they want macau to grow but not in an unsustainable and inflated way. they want gradual, consistent growth. is way they have pulled back with travel visas to macau. other ways are reducing credit

availability. that is what you saw this week. i am sure there will be some itest revenue impact, but will not be severe and certainly not long-term. david: apart from the effect of this particular action and its immediate effect, does it signal a large issue about the possibility of china curtailing the flow of capital outside of china that could affect the casino business there? jim: i think it signals curtailing the flow of excess capital. china's central government is looking through abuse through its system. a logical, orderly distribution of capital is completely acceptable to the chinese government. what they have an issue with is or trying toflows work around the system. and i don't blame them.

will see hong kong stocks settled down the next couple of days. because the underpinnings of visitors going to macau, spending money, the folks that use union paid -- this is what we are talking about -- is a relatively small percentage of overall gamblers. i think it will sort itself out soon. david: tell us about this new project you opened up last night. importance for washington and for you at mgm. jim: this is the first time in the u.s. a large integrated resort has been built in a large metropolitan markets. we are eight miles from the washington monument to you we are in the midst of -- we are eight miles from the washington monument. we are in the midst of three large airports, within a 45 minute drive. and here we are on the banks of the potomac.

we spent 1.4 billion dollars. employ 4000 men and women working 24/7 since last night. the casino was so crowded last night, after 45 minutes, we had to stop letting people in for a bit. it's been going all night and all day now. david: we cannot think about washington much these days without thinking about the president-elect. as you look forward to the future, what that would -- what would that mean for your future in washington and for your business? jim: the gaming industry as part of the hospitality industry. millionepresents 1.8 american jobs. we are the pathway to the middle class we are all focused on and yearn for. my industry does best in a growing economy. i think we all agree we want to

see the u.s. economy accelerate its current modest growth. i am looking forward to working with the president-elect on his policies. secondly, we are and over regulated industry -- we are an over-regulated industry. pros at this, but when you throw in regulation that is bureaucratic, expensive, and, in many cases, outdated, that is a problem. i think the new administration could help with that. but fundamentally, i am a capital-intensive business. i raise capital and employer for hopefully high return projects to employ more people. my ability to raise capital at good interest rates, which i can do today, and attract people from overseas, which are our best customers in the u.s. -- all of those policies and economic drivers is key to mgm.

i think that will work in the new administration. mentionedally, you overseas. there are other policies that the president-elect talked about. immigration, trade. how could those affect your business and give you some positive -- some pause? trade am more of a free businessman. to have strong trading relationships with canada and mexico, as an example. i do not want to rip up nafta. can improve our trading relationships, not only with close trading partners but around the world. important country to the u.s. and the u.s. is an important country to china. in the largest economies world. i think we all understand this.

i think some of the new appointments by the president-elect will help. but this is not a time to alienate trading partners. to strike more balanced, fair deals, which i think that is what the president-elect is trying to do. jim murren.nd ceo congratulations on your opening. jonathan: breaking news in coca-cola. leadership has james quincey to succeed kent as ceo on may 1. kent will continue as chairman. james quincey to succeed kent as ceo of coca-cola may 1. david: that is a passing of a large torch. the premarket moving

3/4 ofhe force of 8% -- a percent. the ecb said to reject monte dei paschi's bid for more time to get a capitalization -- capital raising plan in place. this is bloomberg. ♪

david: this is bloomberg. breaking news. quincey, president and ceo of coca-cola will succeed muhtar kent may 1. muhtar kent will remain as chair. stock is up. this is not a surprise. , well the heir apparent known to coca-cola. you can see shareholders are reacting well. jonathan: some are not. in italy, bank of monte dei paschi down over four percentage

points. we trade lower by 9.27%. the ecb said to reject the bank to getfor more time ready a 5 billion euro capital increase. joining us now is bloomberg senior ecb writer. the question everyone is asking is why? why they have not given them , an time they asked for extension from the end of the year to january 20? >> this is difficult to say now because there is no official communication. but what we can imagine is the ecb did not see any advantage in giving monte paschi more time. the re-capitalization plan has been in the plans for a long time. there is not a huge likelihood

that someone. in in the next 20 days, given the instability now in italy, which will be difficult to clear up by january. jonathan: so will the state come in? and if the state comes in, that will mean shareholder losses. >> the state has been trying to allowed to,was not because the european union has strict rules on how this is done. shareholders and debt holders have to take hits before the state can step in. debt --t of the junior 2/5 is held by the little guys. explosivelitically so everywhere in europe.

it really hurts politicians. that is what the government was trying to prevent. viablemay not be anymore , so they have to do it. bailout at theh same time. jonathan: monte dei paschi has not received care indication from the ecb so far. that from a spokesman. -- monte dei paschi has not theived communication from ecb so far. that from a spokesman. had many years to solve this, but the more you put it off, it becomes an urgency. in the referendum, the prime minister's proposal was rejected for a constitutional referendum -- reform.

so becomes an urgency. when you wait until the last minute -- this is the last minute. then you end up with a crisis situation. it is similar to lehman. we knew lehman had to do something in march of 2008. he did not do anything, then over the weekend, we have to stop -- we had to stop it. ecb,han: talking about the they have to make a supervisory decision then a monster -- monetary policy decision. what have they said in the past about the bank and what they could potentially due to maintain financial stability? alessandro: the system is uncharted for the ecb. -- the situation is uncharted for the ecb. usually, the supervisory board, which decides independently from

draghi and the monetary policy side, makes their decision, then goes to the council. they usually have two weeks to object. if they do not, the decision becomes binding. and the council usually does not intervene in supervisory decisions because they're supposed to be a separation of power between those two arms of the ecb. it would be quite unprecedented if the council reverses this decision. david: it feels like monte dei paschi is running out of options. if the ecb could -- thought qatar would come in, they probably would not do this. so who will take the job? yalman: maybe this is why renzi was waiting, so he did not have to do this.

and hoping that the caretaker is only a caretaker for a short period of time and will not have to worry about the political repercussions. i am guessing on this, but it is tough. when political uncertainty is so , maybed there's turmoil that is the time they can do it and it will not be as politically volatile. jonathan: president mattarella had actually asked to see if renzi with stay on. this is bloomberg. ♪ . .

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♪ jonathan: good morning and welcome to "bloomberg daybreak."

alongsidehan ferro david westin. we count you down to the market open. futures positive, up 28 on the dow. the story out of italy is that the ecb is said to reject monte dei paschi's bid to raise capital. the story of the euro is a atker one, and crud positive $51.33, david. david: monte dei paschi rejected. the ecb refused the italian bank's request for more time to recapitalize. shares plunged on the news. digesting draghi. yields rising after ecb president mario draghi announced an extension of the central bank's bond buying program until the end of 2017, but at a reduced face. falling short of even if opec commences members to cut

production, and may not be enough to drain inventories. that is waning you need to know at this hour. over to abigail. abigail: we do have breaking news. coca-cola shares are trading higher on the news that james quincey, the company's chief operating officer, has been named to succeed be current ceo, muhtar kent, may 1 of 2017. the shares are trading higher. trading less well, some of the italian banks. weakness as the ebs to reject monte dei paschi's request to raise 5 billion euros. this is a story of a continuances -- a continuation of weakness. we have seen charts decline. banking index down more than 35% this year. more bad news for the italian banks, jon. jonathan: let's continue the conversation and bring in bloomberg's italian bureau chief

leafgreen. dan, a rejection from the ecb, according to our sources, the bank of said they have not had the official notification just yet. where do we go from here in italy? words that the bank, monte dei paschi, will have a number for session this afternoon, so i would expect that they would obviously have to communicate something to the market, including the fact that they have received notification, probably confirming that they have indeed told that the extension has been denied. and also operably at the same time, their meetings are going on. the treasury down in rome, executive at the bank, the finance ministry officials trying to figure out solution, which increasingly is looking like some sort of a lot.

jonathan: there is another meeting happening, and it is with italian president sergio mattarella and he wants to know whether matteo renzi would agree to be reappointed. who wants to take over a government with this owing on the background, knowing the situation -- this going on in the background, knowing the situation with the italian banks? dan: that is a fair, you are correct, and renzi himself had been hoping and praying, robert -- probably, that the banks have a solution so they would not have to turn to a bailout procedure in which retail investors are going to take a hit. that is not a popular decision in the midst of all this political turmoil. renzi, beyond the banking issue, has to consider, if he is going to be asked to head the next government, does he want to be responsible for the mission of together an electoral reform

model, which is not an easy task. and then facing elections early, probably in the spring or summer of 2017. david: we talk a lot the equity holders, the bondholders, a lot, actually depositors, have an issue with the bank. how does it work in italy? deposit insurance here. what we do to ensure depositors soweto not have a run at the bank? dan: that is a very good. there has to be some sort of government statement today in the form of reassurance that they are setting a solution during it will be tough, though, to dodge the question of whether investors in retail or institutional, professional, whatever, are going to have to pay the cost of this. that to me right now seems unavoidable. jonathan: all right, dan, thank you so much, dan liefgreen. we are getting a lot out of la

repubblica and the website, allowing to stay safe in the bank of the a receptor this 'sjection -- of the bank hosti g capital after this injection. what are you left with? david: there were reports leading up to this last week that cap there are enough alternative where they could protect themselves up to 100,000 euros. jonathan: so many conversations, including whether these bonds them.is-sold to how the political dominoes fall, to me, the political story on what happens with this bank are part of the same thing. david: you could not have two things coming together at a more unfortunate time, to try to make caretaker government at the same time that you have this crisis during jonathan: -- crisis. jonathan: does renzi want to be prime minister again?

david: it seems like political suicide. jonathan: joe weisenthal, record highs. we just talked about it in italian bank potentially getting state aid, and then we have record highs in the united states. what is that, joe? joe: i don't know. [laughter] joe: everything that people thought would be negative for equity markets has not been, and i have not heard a really compelling explanation, so i will not even pretend. [laughter] >> hold on a second. i think it is interesting yesterday the ecb announcement and the ripple effect we saw in the european von market did not have a statement in impact on the u.s. that is interesting. in prior iterations of the be announced, there was a much more significant trickle over effect, particularly in debt. this time, not so much. we're dealing with the world over in trump land where

president-elect trump have a much more dominant effect on the market, certainly domestically, than anything else. jonathan: what we got from the ecb was very bullish from the yield curve. the most since 2008. good for him? lisa: good for banks. this is the most dominant theme coming out of the ecb meeting, which is this absolutely health germany in every which way. health the front -- it helps the front in for bunds. it is that for italy, frankly, that the political bonds because those are the longer-term bonds, they are putting those purchases. it is very interesting to see the ecb take a similar move in some ways to what the bank of japan did. they are clearly trying -- they are concerned about the flattening of the yield curve and how negative this is or the financial system, and they

clearly took efforts to change that. david: going back to jonathan, joe, the one group that was nearly benefiting is stocks. ironically, italian bank stocks were up dramatically yesterday. joe: all financials in europe had a massive day. it is pretty straightforward theoretically. the evening is good for financials, good for insurance companies, good for pre-much everyone who makes their money on the longer and bring of the curve. as lisa said, japan was sort of the early are on this -- early player on this. bank stocks really got clobbered in japan back in january and february. been making more conscious efforts to stephen the curve -- then making more conscious efforts to steepen the curve. lisa: looking at 30-year german bunds compared to five-year german bunds.

it jumped. thatasis points is not deep in the scheme of things, that is the extra yield that 30-year government bonds are paying, but compared to the mere 87 basis points, that is significant, right? why does this help? you have to think banks are able to borrow cheap and they can lend for higher rates. this benefits their bottom line. also, something else that mario draghi said yesterday that was very important. he said the idea of deflation, the risk of deflation, is pretty much off the table for now. jonathan: so for the markets, captured in that curve, also captured in this spread, germany bunds versus treasury. 186 basis, joe. you can see that historically all the way to the early 2000's. reserve, theyl

have a different situation than a few years ago when we started talking about emerging monetary lsu. monetary policy. now fiscal stimulus is on the table. joe: it seems conceivable that at some point in 2017, a lot of these financial market signals are going to bleed back into the economy in some meaningful way, whether it is some tightening, the disinflationary impact of the higher dollar, which is partly a of a unction of that -- a function of that higher spread. it will be an interesting question. since the election -- release and the middle of the summer -- we have seen rates start to take off, we have seen the dollar take off. there has been reviewed view, as lisa pointed out, the deflation's tory is kind of over -- deflation story is kind of over. at some point, there might be a return for the u.s. economy, all of the ramifications, but so far, nothing else. david: that is joe weisenthal

and lisa abramowicz. let's get our news now from outside the business world. emma chandra with bloomberg's first word news. senate democrats are threatening a government shutdown over benefits for retired miners. congress has to find a stopgap spending will by midnight. a one-way extension instead of fix that is in the bill now. john mccain is going to investigate russia's interference in the election according to the "washington post you." other republicans plan to join the pro, putting them in conflict with president-elect trump. and the president of south korea has been impeached, and now the country is bracing for the aftershock. parkkers voted to remove

geun-hye. south korea's constitutional court will now delivery on whether to formally end geun-hye's presidency or two reinstate her. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i am him a try drug. this is bloomberg. jonathan: looking ahead to the weekend and beyond, in an effort to further cut supplies, will it be enough to raise prices? further down the line, m&a under trump, activate ceo and founder michael wolf ways injured from new york city as we count down to the open in new york, futures positive. ♪

jonathan: from new york city, this is bloomberg is we count you down to the cash open. three headlines -- record highs in futures positive, up 28 points on the dow, positive 2.5 points in the s&p 500. the headline on the ethics market.- the fx the headline out of italy, the bank stock getting hammered. bid for morechi's time to raise capital is decline. that monte dei paschi

story as big breaking news survey. there is other breaking news, and that is coca-cola will replace muhtar that monte dei pi story as big breaking news survey. there is other breaking -- he was going to take over the role. whenever this happens, you have a lot of initiatives underway. the question comes -- will anything ever change, or will jim be executing onmuhtar's plan? >> is a great question. muhtar has put a lot of emphasis on appealing to increasingly health-conscious consumers, whether that is through smaller packaging sizes or new product, he has talked a lot about that. i think that is continuing with kent'sd's -- with muhtar

positions. david: a couple of big fundamentally, a big shift, and on the other hand, a challenge to sugar drinks. what do we know about how jim may approach those two issues? jennifer: you are right. those are two issues. they are trying to roll off their company-owned bottlers to focus more on the higher-margin business of selling the formula 's concentrate, and doing the marketers to push it forward. they are increasingly facing this problem where american per capita soda drinking was the lowest it has been in 30 years in 2016, so it is really a big challenge for them. i think he is going to continue kind of what they foreshadowed so far, which is smaller cans, smaller packaging sizes, greater variety of packaging sizes, and

also they promised or they pledged that they will reduce their reliance on sugary beverages by a significant amount in the next 12 years. david: ok, jennifer kaplan, she is our bloomberg's consumer reporter. thank you very much. jonathan: opec gives appreciation. we will tell you what we found. from new york, this is bloomberg. ♪

jonathan: for anyone in the new york market, vienna is the focus again this weekend with opec and non-opec meeting this weekend. will members be able to persuade nonmembers to curb production, and if so, will be enough to drain oil stockpiles? we're joined by bloomberg's chief commodity corresponded and adam longson, head of commodity

research at morgan stanley. what are they meeting again for? guest: it is the biggest cut since the crisis eight years ago. what opec is doing is getting non-opec members. they have already said yes, they have been back in all 14 countries. 10, 11 perhaps will participate. the key question is whether they offer to freeze their production or if they will do something in between, or maybe they decide they do not want to join the production cuts, but they are happy to travel to vienna. jonathan: we are all happy to travel to vienna when we can. javier and i play this game earlier. he is saudi arabia, i am russia. i think you certainly care, or at least you care

enough in telling the market you are going to do something. it does fall to verbal intervention, and it is a wait and see game in terms of whether people follow-through. jonathan: how do we follow whether they will follow through? javier: what we see are the denominations, the indicators that they give to refiners how much crude they are going to get. but that is happening right now, andwe will get indications, the indication is as it gets cut, it will happen, but to see a real dollar -- what the real power see through the market, we will not really see that until the second week of february. as adam was saying, it is a lot of intervention, but we have not yet seen those borrowers -- barrels disappearing from the market. david: assuming they do do what they say they're going to do, which is a big thing to say, what effect will have on oil prices?

inventories are so large come it will take 6, 8 months before it even shows up. adam: there are two pieces to it. there is an incremental positive if they actually bring production down. there is a small chance of they will get to the target of a laid out. we all know that market, skepticism, if you were to cut deep enough, you can get the market into balance and then start drawing into inventories. i am a little skeptical that they will cut that deep. then they could lift the floor. the question is -- is that sustainable, and you they continue to follow through? jonathan: the keyword is complied. javier, i spent some time with people who follow crude in the middle east and looking at the shift in how low down the ships were to gauge how much crude was on board. are we going to be playing that game? compare and contrast saudi arabia to me. how easy is it to gauge that compared to, say, a russia? javier: they are absolutely playing that game. it is more of an art than a science to measure like saudi

arabia or russia. it is a lot easier for saudi arabia because 100% of their oil throughare coming tankers. we can count the number of tankers. in the case of russia, you're right, it is a lot more difficult. a lot of the production is coming through pipeline and going to china. certainly the russians have a greater degree of what i to -- that is think saudi arabia is also worried, people cannot see how many barrel saudi arabia will place it to the market. we'll be more difficult to see how many barrels russia is doing. david: adam, at one point does successfully to failure? success gets high enough that u.s. shale opens come back into the market and drive it right down again? scale.t is a moving

i think saudi arabia will probably get the uae, but the question is, as everybody else? even non-opec is taking credit for declines anyway. if the market is so high that we are in the mid-$50's or higher, every three gallons or five gallons is a big deal. it takes six months to nine months. i have been stunned looking at trails.ent they expect what has happened already, the u.s. will be up over 250,000 barrels a day. that is basically $50. jonathan: how does he put together a forecast? does he have an asterisk next to it? adam: you think of it in terms of trading binges, it's eventually, but it is a bit like a soap opera in trying to read the tea leaves. jonathan: i cannot little bit. stanley, to, morgan thankerg's javier blas,

you very much for your time on this program. the opening bell minutes away. equity benchmarks around the board pot all-time highs. s&p 500 futures positive 1.5 points. dollar strength euro, the euro is down by .4%. yields go nowhere, 10-year treasuries at $2.41. big action in europe. yields higher on bunds. cruise up to $51.55. up next, the open up from new york. this is bloomberg. ♪ ways wins.

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you wouldn't pick a slow race car. then why settle for slow internet? comcast business. built for speed. built for business. jonathan: from new york, this is "bloomberg daybreak." i'm jonathan ferro, moments away from the opening bell. benchmarks closing yesterday at all-time highs, futures marginally positive across the

board. gallup about 10 points, s&p 500 single even a point during euro weakness is the theme right now. down by almost .5%. the bond markets, treasuries at $2.41. italy -- we will get to that in just a moment, $51.52.e at let's cross to abigail doolittle. abigail: we have the dow, s&p 500, and as that call trading slightly higher grade in the week, it is a different story. big outside gains during up more than 2% on the week. itsact, the dow is up for fifth weekly gain in a row, the largest gain since march 18 of this year. not so shabby. turning to some movers. you have lots of companies moving on executive changes. , jamesla moving higher

quincey is set to succeed the current ceo, muhtar kent, effective may 1, 2017. shares of coca-cola are down slightly on the air. shares of an era down about .5% on the news that blaine hearst has been named ceo. .his after dramatic resigned finally, rio tinto, shares are down. they have fired the head of hr as the company is facing a scandal around bribery in guinea. jonathan: thank you very much. equity market, new all-time highs. the nasdaq hit a new intraday high. the bank of monte dei paschi di siena down over 14 full percentage points. european central bank is set to reject the bank's bid for more time to raise the $5

billion euro capital plan. for more on the markets, julian emanuel, ubs securities, joins us now. the remarkable thing about these record highs right now it's we've had a series of outcomes that i think many people would say was market negative. you had the brexit vote, president elect donald trump, the italian referendum -- a smaller one, i admit -- and now has nothat effectively had its day over in italy. yet we are seeing record highs. why? julian: part of what zero interest rates have done over the last two years is supported access -- asset prices, no question, but in many ways, we in july,jor bond low and now we see the catalyst for the potential for overvaluation, for greater growth in 2017, and

clearly has name is president-elect donald trump. jonathan: how do ceo's react to all of this. tracks the whole story. this is ceo confidence levels. this is something you have been following. tell me why this is so important to the s&p market right now. julian: we have known for several years that the consumer was the stalwart of the economy. the jobs picture verifies it, the strength in the housing market verifies it, and that will continue into 2017. is what has been missing come as he said, these animal spirits on the part of corporate executives. return casho instead of investing because you could not see growth, now there is a belief that there is going to be growth, and that is really raising the confidence. it, donaldsaid trump. by the way, he has not done anything yet because he is not president yet. but i wonder if a lot goes

beyond donald trump's election and the fact that we will have a republican house and a republican senate, which increases the chance that donald trump may be able to do what he would like to do. julian: there is no question. we have done a lot of work on past political set up, and if you look at the past two times, when the republicans have controlled both executive and legislative branches, you had very outside return on the equity market. 74% over four years under george w. bush, and 50% over two years under eisenhower. jonathan: earlier this year, we talked about a disconnect between where the market was and perhaps enthusiasm, the overenthusiasm of some equity investors out there. options markets right now and whether the bullishness and the conversations that happen around this table are actually matched by a positioning in the market itself. julian: the story is that people were not prepared for these historic 30 days post-to the election. what they have done is essentially scrambledto buy c

all options. we have seen record volumes as people get exposure in 80 limited risk. what that tends to mean is long-term, the outlook is very positive because essentially you're going to have support underneath in terms of buying calls younst the sold. shorter term, that kind of enthusiasm may mean that santa claus has come early, and we may cause -- pause. david: what indicators would you look at to see whether this was overbought? what are the good things we see in a attachable -- in donald trump? julian: we are always good fans of the vix. actually, the vix has stayed firmer than one might have expected, given that we are at all-time highs, over the last 12, 15 sort of the range. we do not think of donald trump

as -- president by any means, but if we traded, that would be a sign of complacency to us, a sign that we are moving too far ahead, and we need to see what can be accomplished in washington. jonathan: we have played this game so may time, we could probably play it and record and check it in six months. stocks all-time highs. the nasdaq right now, all-time high. record highs. every time we have a conversation, how do we know when we are at the top? it feels like a stupid question because nobody can really answer it, but typically, historically, the dow at 40,000. are we there yet? are we anywhere near that level? julian: we are not, and i continue gone you going back to the late 1990's, i got my dow 10,000 hat. it is still in my closet, and now we are near 20,000. where we are in the market --

there is definitely excitement. valuation has puffed up to almost 19 times, which is the highest since post-financial crisis, but by substantial market peaks, you are one multiple point below, and as long as interest rates stay in check, we think you can move higher. david: let me turn a different direction. look at where we are in the business cycle. the credit cycle, in terms of the equity market, when was the last time we had a major fiscal intervention at this stage in a cycle? julian: never. david: doesn't that make you a little worried that we do not know where we are? julian: it absolutely does, and i think the comparisons to the beginning of the reagan presidency may be a little bit out of line. the plan may be similar with regard to tax benefits, fiscal stimulus, and the pro-business point of view, but in 1980, interest rates were 15%, inflation was 10%, you are at the other end of the spectrum 35

years later. david: julian, thank you for being here, julian emanuel, ubs securities executive director for equities and derivatives strategy. coming up, mergers and acquisition under president trump. is the tech sector about to go under a tear? vice president michael wolf weighs in. this is bloomberg. ♪

emma: this is "bloomberg daybreak." i am emma chandra. later on bloomberg, the ceo of

talks about tommy hilfiger and calvin klein brands. jonathan: in the market, 11 minutes into the session, how many times as i said that this week gekko record highs across the door all over again. points,up about 3, 4 let's get into some health care. at biogen,a look abigail. abigail: shares are nicely higher on the open here. very positive on this. ahead of the release yesterday, results, detailed results from from the failed alzheimer's drug came out that were seen as more positive than previously seen. bestschmidt said this is a case scenario for biogen, and

biogen's else i'm are struck me be one of the largest -- biogen's alzheimer's drugs may be the largest ever. this is a longer-term chart. pressure of a big bear market over the last few months. the index has been trading more so in a range, and we are 50-day at potential, the moving average, most below the 200-day moving average. be enough to help prevent that from happening, and perhaps the biotech sector will be up and out of that range. see.: perhaps, and we will thank you, abigail. congress weighs into the at&t-time warner merger, and even him centers question whether it could curtail competition, others suggest they were busy fighting the last war. senator chuck grassley said the medium world has been largely pushed aside by tech. grassley: this industry is

going through a transformation in disruptive times, and consumers are going to enjoy and are enjoying the drive. with tax giants like google, facebook, amazon, netflix, and others changing the way consumers access content, we want to ensure that competition drives in this critical market, and we do not stifle innovation or deter emergence of cutting-edge technologies and consumers demand. david: joining us now is michael wolf, activate's founder and ofmer president and coo mtv networks. let's pick up on what senator grassley has been talking about. jeff stephenson says boy, we were worried about this getting together, a phone company with a cable company, and grassley said, wait a minute, what about facebook and google. we should be paying attention to them. is he right? michael: so much has been rooted

in history. we need strong companies getting in the way of companies like at&t and time warner merging as well as a lot of the regulation around the sec is actually going to hold those companies that. this deal makes a lot of sense from a consumer perspective, and it is not really taking a way any real control of voices. congressman does not enforce the antitrust laws. justice department does. we have any sense whether the trump administration will view it differently? michael: there was a lot of tough talk in the campaign around this deal, but first of all, the mysteries will be much more open to m&a deals, and second of all, rolling back some of the power of the sec should make a big difference in this field.

people even argue that the sec does not have to approve this deal. but no matter what, those regulations are really rooted in the past, and this deal makes sense to go forward. i think that the congress will approve it. david: so looking forward and accepting what you said, it is going to be easier to get mergers and acquisitions, particularly in the media and tech area, to come to pass under a trump administration. what sort of deals are you looking at? i talked to les moonves earlier, and i said what about you, and he said, "i would not rule it out congo not selling, but -- rule it out," not selling, but what you think? that haveompanies reached the broadcast ownership cap -- david: and they are the biggest owner, i believe. michael: and they are likely to buy more stations. the second thing that is going

to make a difference is it is going to ease up some of the regulations that the sec put on cable companies. some of the things in terms of being able to limit their ability to sell set-top boxes and classifying them as a utility. that is likely to go away. we're going to see deals like tech companies buying media companies. a tax holiday bringing back $200 billion for apple means apple will be able to buy something like netflix. apple historically has not wanted to invest in content. will apple step up to the bar and say ok, i will change our approach? have a: they may not choice. when you look at companies making these investments, one way or the other, they're going to have to have access to a streaming service. this world is converging about ways in which people get tv that does not just go through a cable, so apple probably will end up doing a deal. david: michael, go back to grassley's comments.

any anything give competition between google and facebook? advertisingspending dollars in mobile at this point? 75% of dollars? michael: 75% of new dollars. david: can anybody compete with them through any merger or acquisition? michael: it is not a question of whether they can compete or not, the question is -- why hold these companies back? there are areas that they can compete for it americans spend over 30 hours a week watching television, so the fact that you would hold back an industry that is really taking up most of people's time just does not make sense. they are going to compete in different ways. these companies are not going to really compete on advertising with google and facebook the same way, but at the same time, they are not going to get help back. david: we will have you back to take us through this as donald trump actually moves in and gets his administration in play. michael: it will be a great moment for these companies. david: there you go, michael

wolf, activate founder and former in tv networks coo. jonathan: 17, 18 minutes into the session, we look like this. all-time high on every single benchmark in the united states pretty much. the dow, the longest run since march of this year. coming up at the top of the hour, "bloomberg markets" with mark barton, a little bit of pain and in the league -- in italy. it, jon. said we will be talking about monte dei paschi. time for a significant overweight in equities because of cyclical and structural headwinds. beat ipo's in the u.s.. we are speaking to the ceo of athene holdings -- holding spirit and andrew plus, the founder of the short seller,

yesterday, they prompted a 7% selloff. it is the culprit behind pharmaceutical price gouging. paschi, inte dei cannot even get my words out, jon, i am so excited. we will see you in 11 minutes . jonathan: i am looking forward to it, mark. mark barton, that is at the top of the hour. coming up, two big stories we have been following for you this morning. shares of monte dei paschi under pressure. the ecb in jack's been good for more capital. and here in the u.s., coca-cola, shares moving higher. we breakout those stories next in the market, once again, record highs. this is bloomberg. ♪

ivid: this is bloomberg cared david west injured news out from the world posted largest soft drink company very coca-cola ceo muhtar kent will step down in 2017 after 8 years at the helm, passing the job to coo james quincey. coca-cola is the biggest gainer on the dow right now, up 2.2%. joining us is a senior analyst for food and beverage. he is in princeton, new jersey. thank you for joining us. how unexpected was this, and what do we expect out of mr. quincey? guest: today's announcement was not that big of a surprise, but james quincey has been working hand-in-hand with muhtar kent over the past year or so. arguably most important initiatives, and that is to streamline its mobile water leak -- bottling network partners, andl

basically to reduce its dependency on asset-intensive the u.s. perations in james quincey is a logical person to assume the helm here, and i think the market should take it as such that coke is doing it at a time when coke is basically hitting its target with this big transformation. david: getting its target, but it is interesting -- coca-cola is often associated with pepsi-cola, but they are very different companies. coca-cola is really concentrated on the soda and drink business as opposed to pepsi, which has a lot of food in it. coca-cola has been going for increase margins. where does growth come from for coca-cola, besides increasing the margin seattle kenneth: -- the margins? kenneth: that is a great question. about half the global market share of carbonated beverages. look to their like history what argument i would look at the 15% global market share of all over the -- all

other beverages. look at the dunkin' donuts deal, the flavored waters and things like that you will see more of. we talked to james quincey when earnings came out last time. let's play it for you. james: we are selling out of the bottling operations, some of them in germany and principally in the united states. we are on track with our accelerated re-franchising to create a company more focused on helping create customer value and more focused on leading the franchises, a higher margin and focused on growth into the future. david: ken, it sounds like seti as she goes, basically. is that what we expect? kenneth: i think so, david. 2017 will be a year where they finish up the transformation of 2018 will be the big year for coke's next chapter. they are preparing james already for that. what is the next chapter for coke after this transmission is done? david: many thanks. that is bloomberg intelligence

senior analyst for food and beverage. jonathan: that is another brit in charge of a u.s. company. [laughter] jonathan: the monte dei paschi di siena bank getting hammered, the stock down by 14 percentage points, david. the ecb rejected the bank's request for more time to ready the capital increase. we cut away from the equity toward the potential, the statehood of a' bailout, which means losses for bondholders are driving quickly bring it up on my bloomberg for you to give you a feel. this is bank of monte dei paschi hammered. do you a feel of the scale of this move, we have really rolled over a couple of times, rolled over because we have had this discussion a couple of times, but it does feel at this point like we are getting toward an in game. do you have a private sector solution? you have a couple of weeks. if you do not, it is state bailout. david: it certainly appeals that

the -- appears that the ecb think that is time for a resolution. they called to question, essentially. there must've been something behind that. jonathan: they have had so much time already. what is three weeks really going to do? david: exactly. ar was rumored to be coming in but said no thanks, i will pass. michael: particularly -- jonathan: particularly with an election on the horizon, but never the less come appoint 5, 26 minutes into the session, pain for italy, the s&p 500 on a six-day winning streak, they longest in over two years. record highs for the u.s. benchmarks. from new york, happy friday, this is bloomberg. ♪

>> it is 10:00 a.m. in new york, i am julie hyman. and i am mark barton. welcome to "bloomberg markets." ♪

julie: we will take you from new york to seoul. we have some breaking economic u.s.on the u.s., the consumer confidence reading for december coming in at 98, better than the 94.5 that was estimated. if you look at the current editions index, that is higher 112.1.timated at this is relatively lower than the others, but that is better than has been estimated. reflecting the better feelings among consumers as we see folks get past the election. that reading, the overall reading is at the highest since january of 2015. interesting in the wake of e