>> steady as she goes. china's factories show gains signaling growth is strong enough for reforms to continue. delivering on the deal. today kicks off oil output cuts. co-ceor deutsche bank joins counter as its new president. welcome to bloomberg daybreak europe.

it is our flagship morning show. a happy new year. what does the year have in store for you? if manufacturing is anything to go by, things do not look too bad. dataellow line, the china stability. towardsge line heading 2012 peak. looking at the white line, the u.s. is expecting a strong manufacturing number. europe, the data coming through yesterday. the purple line. growth -- that reflects more on your perspective of what growth is. europe is expanding at the fastest pace since 2011. europe is at the highest in three years. concerned,hina is they still have a certain number of risks to deal with. one is the federal reserve and

one is the triumphant donald trump. reserves, we will get that data on january 3. let us look at the risk radar. the china data is playing out across the spectrum. emerging markets. a nice rally there. longest winning streak in almost four months. .% on the msci em engaged again in terms of rate rises. gold is up by 0.9%. the world is not void of concerns. now, when it comes to oil, we are up 0.6%. in the headlines, kuwait has begun to deliver their cuts. who will come next and at what size and what shape? sinceggest yearly gain

2009. kuwait reduced production by 130 billion barrels. drillers are back. a couple of different things. china data. time, yout the same are seeing stop orders triggered. that is where the aussie comes into play. , roseprices, in australia the most in seven years. those are the challenges for the rba. house prices climbed 9.8%. those are your markets. back to the state of play. a full trading day. the risks, the rewards. let us get the bloomberg first word. good morning. sophie: thanks. state run chinese tabloid says

toald trump is pandering irresponsible attitudes after the president-elect accused china of not stepping in to curtail the north korean nuclear program. china tweeted that north korea -- that china would not help with north korea. north korea has announced it is close to the launch of an intercontinental ballistic missile. a u.s. trade representative office leader has been chosen by donald trump. arguing that they kill american jobs. singapore's economic growth quickens to the fastest pace in more than three years in the last quarter as manufacturing and services rebounded. gdp rose from the previous quarter. more than doubled the 4%

extension estimated. australian house prices increased at the fastest pace in seven years in 2016. the average value of a home rose 10.9% last year. as record low interest rates helped fuel demands for property despite warnings that such price increases could be unsustainable. to be a nexting patriot, make it switzerland. lauren workers there are in the annual equivalent of more than $188,000. the highest in the world and twice the global average. however, previous data released by hsbc says they are close to last in social life and cultivating relationships. global news 24 hours a day powered by our 2600 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top .

this is bloomberg. markets, what do they hold for 2017? does juliette saly have her crystal all out? inity markets seem to be moderately positive form. happy new year. >> my crystal all is at the workshop at the moment but suddenly we seem to have a positive start for the first major trading day of 2017. private manufacturing coming through at of china that showing once again some more robust signs in terms of that economy. the shanghai composite in late good up by 0.9% doing a boost to most of the markets in asia that are open today. japan is still closed celebrating new year and new zealand was also closed.

we saw the australian sharemarket closed at its highest levels since the first of june. a strong rally for the asx 200. elsewhere, we have seen some good movement coming through in korea. the kospi up 0.8% in late trade. the dollar has lost some steam. boost tome good several currencies especially the south korean wan. you have seen some weakness coming through in casino players today after macau gaming revenue, gross gaping -- gross gaming revenue for december was under pressure. it is looking like the global manufacturing story ahead of the ism number in the u.s. is not that bad giving a good boost to the markets in the region. manus: thank you very much.

the latest on the markets. --s year's first serve away first survey of manufacturing has come in at 51.9. a relatively robust note for the closing of the markets. let us go to beijing. jeff, great to see you. how much can we read into this data? what does the numbers tell us about an outlook for china for the year ahead? might likeeconomists to say is never look at one data point but we saw a strong finish across a number of indicators. today's number coming in and a full point higher than expected and the highest since january 2013. that was encouraging. blends nicely with the official data out new year's day where we had the manufacturing ad services both ticking down

little bit but still close to multiyear highs. strength eating painted across -- strength being painted across the calendar. in february, things were not looking so bright. by thes also confirmed december rating on the satellite index. satellite photos are used to track thousands of industrial sites. it ticked down a little bit but remains at a five-year high. all is looking pretty good for the economists. they are raising their growth estimates to 6.7. that would be in line with the first three quarters. we have had a pboc advisor proposing a lower growth target. forking of the challenges the chinese, we have the federal reserve and what happens with the dollar, but the second would be what donald trump does and how that will play out in terms of the growth target. what is the latest thinking domestically on the growth

target? been moree has discussion of that lately. our own reporting has indicated that the president may be open goallaxing the five-year to keep gdp growth above an average of 6.5% through 2000 -- through 2020. coincides with policymakers taking a hard look on how to manage risks and not going to too much of a debt fueled expansion. there was a note yes -- last is onhat said that china the way to getting rid of growth targets in the next couple of years. this commentary over the weekend from the pboc advisor to be right in line with that and confirm there may be some thinking along those lines that targets are not the the all to end all or the economy. targets, targets,

targets. thank you so much. joining us on site is the european head of fx. welcome to the show. happy new year. we're just having this conversation with jeff about the possibility of the growth targets. stability butts if the chinese are seeking latitude, and i am being generous with that word. impact could that have on the currency? >> one of the things that has been driving the currency weaker in our view has been the rapid pace of debt accumulation. for a aim is therefore smaller target, that could actually mean that we are going to be headed for a period of more restructuring, more rebalancing, pushing ahead with reforms but ultimately at the pace of debt growth slows, that

should be requiring less of a risk premium in the r&b. that could be a positive for the currency. weis: we have the trade ghted renminbi. and the dollar weighted. since are down the most 2011. you are making an interesting call. nine-monthay a option on dollar-yuan. quite an aggressive level. talk me through your thinking. >> we are saying dollar weakness back end of 2017 versus the r&b. -- versus the renminbi. the fiscal deficit will drag the dollar lower in the second half of next year after a higher peak yet still to come in the first

half of the year. that is the dollar side. rnb is a managed currency. it is still a current -- a current account surplus country. secondly, the main point for our view is that it is not really in china's interest to continue to encourage rnb weakness. it spurs higher inflation in a year where there will be leadership elections at the top for the presidency, it deters foreign investment in the it does not really serve china well to encourage that weakness. manus: your best case scenario is there is no one-off situation. awe movement for

the chinese. >> we do not think it benefits china. if you keep on doing that, where is the bottom? china needs foreign investor interest to grow its capital markets which is still once to do in a gradual manner. we are not suggesting they want to rush to do that but it needs foreign investor interest in its currency. expect it tou right side the economy? is that going to be a hallmark of 2017? >> possibly that it is a gradual thing with china. i remember when we saw from mario draghi. it is ain't in history. in december of last year, trying to get out of qe while still trying to stay in a. it is a tight rope act for many bankers and pboc is in that list. manus: stephen will stay with us. coming up, we take a look at eurasia group's top risks of

four 2017. tom keene will be joined by a host of guests including larry summers. that will be at 11:40 a.m., u.k. time. business ways in. the head of britain's five bodies will look to strike a brexit deal. crude cuts. a production reduction. a complicated year. for the federal reserve ahead. future trade the policy and what it means for the world's central bank. this is bloomberg. ♪

manus: it has gone 6:18 a.m. in london. hang seng trading.

up 0.6%. global equities are not doing too badly this morning. formere: deutsche bank's co-ceo is restarting his career at a much smaller firm. he is joining cantor fitzgerald as president where he will oversee expansion of trading. he helped build deutsche bank into europe's biggest security firm over two decades before stepping down in june 2015. south korea has banned a sale of made by bmw and porsche after an investigation found that they had fabricated documents regarding emission tests. they have also been slapped with fines. neeson --tative of nissan said they would provide documents.

china has started a freight train to london as part of the president's efforts to strengthen trade ties with europe according to a state news agency citing china railway corporation. the train departing will cover more than 12,000 kilometers in 18 days before reaching the u.k. capital. passing through russia, poland, in germany it will carry goods such as clothing, bags, and suitcases. spacex is set to return to launching next week, cointreau months -- cointreau months after the explosion. the announcement of a launch spacex's report has been accepted. that is your bloomberg business flash. manus: thank you.

the heads of britain's five biggest trade bodies urging the u.k. to take the industries input as it looks to calibrate a deal. in a letter to the telegraph, the group said input from companies is critical, that was the word they used to the success of brexit negotiations. it is part of a lobby group. they warn that the french could be the beneficiary of the exit from the u.k.. i love these articles. an exodus of 20,000 banks within weeks. there is no doubt about the fact that the risks are real and we have not even begun the brexit road. bumps that at the could come this month, we have a high court ruling, the triggering of article 50 resumably by march, is

brexithard, gray coming? the simplest way to explain our view of sterling is below 120, we like it. but we believe it is closer to 140 then when hundred 20. -- then 120. manus: help me get to 140. stephen: the interim deal and victory has not been factored in. we think there is a high likelihood that the u.k. will mimic some of to that rollback in financial regulation. for the uk'ss position in the brexit negotiation is to strengthen it.

financialthe eu's center. with the regulation rolled back, it becomes a more efficient financial center if it is used wisely throughout europe. stephen: you have just decided to be contrarian on everything. one. -- one dollar 40 is where you are going to go. pay to play. involves a variety of currencies. me,n what you just said to volatility relative to the others is relatively cheap. my question would be what you buy that kind of protection? would you buy that volatility? it is not going to be a forward trajectory higher for sterling. does that offer an opportunity to get some at a cheap value? stephen: liquidity in fx markets will not improve drastically

anytime soon despite the rollback we expect from the donald trump administration. we could have a another liquidity driven move lower. all we are saying is that fundamentally we do not like it on those deep moves lower. we expected to move lower before higher. au rightly said that we have view on how the brexit negotiations are going to go. fine. but let us look at the fundamentals. do not forget with the balance of payments is showing. drastic improvement in the u.k. investment position largely because of the week pound. surely the bank of england does not want it strengthening rapidly in the short run but one of the key arguments for the bears in sterling has been the week pound. improving dramatically as a result of the weaker pound and secondly, foreign investors in q1 inc. you three did not prefer u.k. assets.

the odds of a recession, and this is for the u.k., the odds of a recession is the blue line has dropped nearly 50%. theof those doom mongers, odds of a recession has dropped like a stone. that runs in parallel with what you just said. stephen: in the u.k., certainly the uncertainty from brexit is weighing on growth potential and some of the uk's longer-term growth potential. but in a way that is more drastic than it was when we had the week productivity picture and not rights it. i am not so sure about that. manus: the tolerance level by the bank of england to look through inflation, what is there proclivity and tolerance level, what is the peak that carney

will not grip the edge of the chair and 8 --we will have to raise rates? stephen: behind the scenes, they are ok with letting it run hot but verbally and publicly they will be a bit more cautious. why? high inflation hurts household consumption. pc, whatn terms of the m mood music will they play for us running up to triggering article 50? stephen: pretty neutral. i do not expect this to happen but if euro sterling were to get down to 80, they would become a bit more dovish. i do not think it will get to 80. manus: a book 40 by the end of the year. a buck 40 by the end of the year.

oil rises as kuwait kicks in with the production cuts. who follows? will they all play by the rules? that was the deal agreed to. all of that to come. this is bloomberg. ♪

manus: 6:30 a.m. in london. 3:30 p.m. in tokyo. a beautiful shot of the emperors palace. dollar-yen, 117. what happened? are we becoming a little more risk on as the day continues? a new addition of daybreak available on your bloomberg. and your mobile. let us take a look at what is making the top stories. of cover story -- the return deutsche bank's former co-ceo. a lovely title i thought would be from banker to broker.

he is joining cantor fitzgerald. i worked there for a number of years. institution.g he will oversee the strategy and expansion of the fixed income equities as well as a number of other areas of business. story, chinese manufacturing pmi. we have 30 covered this. data fromnflation a.m. lender.5 -- london time. finally, and this is a harrowing story, a manhunt continues for the attacker that shot the nine people celebrating new year's inside in istanbul nightclub. the islamic state claimed responsibility for the massacre.

raid resulted in no arrests. those are the main stories on the daybreak a dish in. -- edition. inusing on the stock markets asia. trading hide. a very happy new year. nejra: very brisk trading. asia markets getting onto a firmer footing a racing earlier losses. we are not getting a full picture because japan, new zealand, and thailand are closed because of holidays. excluding japan, looking at the some gains.n see material and energy stocks performing well. higherial metals moving and a stronger oil price. if you look at the msci

asia-pacific index, a broader gauge for the region, it had its first annual gain in three years in 2016. but the game is still below the 2015 peak. it is getting off to a brisk start though. looking at fx markets, the dollar closed 2016 with the strongest quarterly rally since 2008. 10 year treasuries offering the highest yield since 1999. little bit of dollar weakness, it is retreating against most of its major peers especially the new zealand dollar and the aussie dollar and the south korean on as well. the oil price is up after the biggest annual gain since 2009. up byf uti and brent 0.6%. signaling opec and other producing nations are trying to -- are starting to trim production. wti, up above $52 a barrel.

starting off your market year for 2017. kuwait has kicked in with its cuts. the first of the opec members to deliver. what will the other nations do? our bloomberg markets middle yousef has antative lot of our answers. yousef: starting the year with oil. i have a chart together with news from the kuwaiti -- the ceo from the kuwaiti oil company announcing they have moved forward with production cuts. according to a newspaper, they have cut by about 30,000 barrels. what is key to bear in mind is that opec is rolling out with its 1.9 billion barrels of cuts.

on some additional context your bloomberg. what is key to remember is that the biggest threat is perhaps not be close allies of saudi arabia like kuwait but it will probably be countries like those exempt from the opec deal including nigeria and libya. i love what is written here. there also watching information from the baker hughes index showing the targeting crude increased to 525. support prices create a healthier environment for the u.s. crude producers. watch out for the weekly commitments from some of the money managers when it comes to -- whences of the brent

it comes to the prices of the brent. manus: thank you very much. dominated by terror a, brexit, and donald trump's election. this year is set to be defined once again by the shifting global landscape of president a -- of politics. the french president delivered his new year's eve address where he praised the country's resilience. >> france is open to the world. it pushes for brotherhood. how could one imagine our country hiding behind walls relying only on its internal market, changing back to its own currency and discriminating against its children. it would not be france anymore. what we canore on expect from 2017, andrew joins us. he joins us from dubai. the aftershocks we have had --

brexit and the u.s. -- are we done with surprises? what will be the big surprise of 2017? andrew: i do not know if we are done with surprises. i came back to work this week and looked at the calendar, it looks full. maybe a few days in june you could book your holiday but otherwise it will be nonstop. an election march, in the netherlands. and then the french election, the german election. italy is holding the g7 presidency. italy has the g-20. and then brexit and donald trump. those happened in 2016 but will take place in 2017. donald trump taking office later this month and brexit -- may says she will trickle -- trigger article 50 at the end of q1. a loaded calendar of elections

and the donald trump administration and the changes that will bring with brexit in the background. a very busy year indeed. manus: i am just surprised that you used the word holiday. not takeors do holiday. propensity for -- do you think that the angela merkel, german election has the propensity to be the powder keg? all, youell, first of cannot discount anything. a lesson from brexit and donald trump is that anything is possible and that is very much the way we are looking at this year. when we spoke with investors, the one thing that we found is that although angela merkel has held europe together for 10 most importante

character, people are not that worried about her situation. in part because of constitutional checks in germany that make it more stable, also because she has been there for 10 years, but the one that investors are paying attention to and the one that keeps them up at night is the french election. who up marine le pen until recently was leading roles. she said she will hold a referendum on leaving the eu. of probability but the risk what that would entail is very withand that, to me, and my conversation with investors, that is the one event people are zoning in on. manus: andrew, thank you so much. stephen is still in the house. riskse talk about the that andrew just outlined, europe is at the core of the thential of upending

equilibrium. aboutncerned are you europe delivering counter -- powder kegs? stephen: the potential is there. these populist, nationalistic trades -- a have the shadow of doubt with them. people want to believe they are not happening. number of risks on that front in 2017. manus: a number of people have and andrew alluded to this, as far as the german and french elections, those are perhaps the only saving grace is for sterling. they are one of a few saving graces that may bolster the sterling case. or would it knocked the euro? which is the biggest issue? stephen: it is a scale.

the more powder kegs going off that you have in europe, the brexit negotiations move a little more toward the uk's favor. if those powder kegs go off, nationalism, elements of populism in the government or having an influence on decisions, the more it looks like we are heading for a rebranding of the eu which is effectively at its core what we think brexit is. we do not think the u.k. could move away from the rest of europe but what it could do through its demands and the brexit process is move forward for the revamping of what the eu is. manus: i struggle with that because in theory chairman tried to do that. stephen: but that was

superficial. george soros was referring to this in a recent article. are on a path basically towards a rebranding or a new understanding of what the eu is. manus: one would hope the french and the germans would read that article. stephen: some of the populist results could be positive for europe. manus: a positive force for change. the other dynamic is what mario draghi tries to do too counter the powder kegs. many people have talked about inflation. this is the white line. inflation rates. and the headline is what we are looking at. the whole thing has not really taken off with a flight thus far in terms of consumer prices. with the result

of the fed rate decision in december, monetary policy divergence between the ecb and the fed moved very much into the driver's seat for our core euro-dollar view which by the middle of the year is $.97 in euro-dollar. monetary policy to is one thing but remember from the pursuit -- from the perspective of bond scarcity, the ecb still has the same issue in 2017. the issuance will be very low and there will be a firm cap on yields. within thesay parity first three months of the year. and perhaps accelerating a little bit into the second half. stephen: and don't forget from a fiscal side. in a german election year, how will it be possible that germany an brussels will allow

expansionary position as a whole in an election year? it is unlikely. these two factors supporting the pound and the dollar, the fiscal policy will be absent in the eurozone picture from our point of view. that has consequences on the growth trajectory. stephen will stay with us. done.d a complicated year ahead for the federal reserve. we will break down what the new administration looks like, the future trade policy, the voting members, and what it might mean for the global central bank. of the new the start year with extra requirements for citizens converting yuan into foreign currencies. european equity futures open in just under 15 minutes. direction of trade for the start of 2017 -- all hands back on deck. this is bloomberg. ♪

manus: it has just gone at 6:47 a.m. in london. someone somewhere is finishing a new year's eve celebration. here is a lady who has all of the first word business flash. juliette saly. juliette: thank you. deutsche bank's former co-ceo is restarting his career at a much smaller firm. he is joining cantor fitzgerald as president where he will help oversee expansion of trading and prime brokerage. he helped build deutsche bank into the business -- into the biggest security firm after stepping -- before stepping down. south korea has banned the sale of some cars made by nissan, the him porsche afternoon investigation found the automakers had fabricated documents related to emissions test.

they have also been slapped with fines. a spokesman said it will corporate closely with the regulators wally representative of it bmw says the company will work on re-gating -- regaining its certification. china has started a freight train to london as part of the president's efforts to strengthen trade ties with europe according to a state news agency citing china's railway corporation. 12,000ll cover more than kilometers in about 18 days before reaching the u.k. capital. passing through russia, poland, in germany it will carry goods such as clothing, bags, and suitcases. spacex is set to return to satellite launches next week, four months after a falcon nine rocket blew up on takeoff. an investigation said a liquid oxygen tank failed. accepted-- the faa has

spacex's report on the explosion. that is your bloomberg business flash. back home in the usa, we have a presidential transfer of power from barack obama to donald trump and there are some crucial questions that will have a big impact on the federal reserve. michael mckee has a look. >> the fed did one but are they done? hikesrecast is three rate bringing the benchmark to nearly 1.5% but the change of administration coming may again mean fewer moves. or it may mean more. the u.s. economy is at full employment with inflation picking up. that wellen suggested may not need the kind of fiscal stimulus that donald trump is

proposing. should it boost inflation, the fed may have to raise rates sooner rather than later. a trade war on the other hand could slow growth and hold down inflation keeping the fed on hold or perhaps calling for a rate cuts. the dollar is at risk of higher rates if fiscal stimulus keep pushing it higher. global developments may also play a role. as brexit's forward in the u.k. and voters in germany, the netherlands, and france choose new leaders. the makeup of the fed may also change. chicago,vans avenue robert kaplan of dallas and the philadelphia leader as well as in minneapolis later. the last three have never voted on policy. donald trump will be able to a point to new governors. the atlanta fed bank job is open. and he will also have to decide whether to reappoint janet yellen and stanley fischer. fed will not be out of the

news. michael, bloomberg, new york. manus: truer words were never uttered. stephen is still with us from daybreak euro. to 2017, itaking up is 6:52 a.m. and the fed is in play. what have you penciled in for the fed? stephen: the fed call is not my call but as a house, we are saying two. my question to you is simple. dollar, does it continue as the dominant trade in 2017? yes,en: for the first half but current account deficit will

start to way on the dollar in the second half. in the first half, the dollar wins on almost every french. in terms of rate advantage, economic outlook, and so on and so forth. manus: do we add some stage begin to reconsider what a trillion dollars potential he -- potentially, fiscal stimulus could look like. you have capitol hill to deal with before you get a fiscal stimulus of that magnitude. stephen: that would be really big. and our economists are not expecting that. i would take even what we have seen in terms of the selloff already and the rising yields and the uncertainty going forward, there is room for a in thee in that move and dollar. a slower pace of appreciation in the dollar. consider the fact that many of the people that are saying that donald trump's plans will not come to fruition are some of the

same people that said he would not win in the first place. there is room for more dollar strength further down the road from that perspective. will be the noise positive for the dollar coming out of the donald trump administration. manus: those who thought that he wouldn't win, and those who thought he would not take to twitter to lampoon china and lambaste anyone who stands in his way. is the yield differential. sincedest against the g7 1999. these are 10 year yields. the u.s. is at the highest since 1999 relative to g7. let us dip a little more into g7. we talked about the sterling, i have your call on the dollar. where are we on the dollar-yen and the other crosses when we look at the yield differentials. where is the --what is the next

piece on the chessboard to move? we think the dollar will continue to gradually advance in the first half of the year. that is moving into the consensus. when you look at the futures positioning data, it is not at all stretched. euro-dollar, which in notional terms is the biggest shorton affect -- fx euro. there is plenty everyone for the dollar to move higher. don't forget what does lay said in december. he said the fed will differentiate between risk off dollar strength and a positive cyclical dollar strength. that the change in the fiscal position of the u.s. changes so many things. it even detaches the u.s. from concerns elsewhere in the global economy. manus: that kind of momentum can

extricate the u.s. and protect its growth rate. that is good news on a global basis. what about the federal reserve -- and the changing complexion there, does that raise any flags? stephen: janet yellen has already indicated to us that she is willing to countenance some of the impact that donald trump is likely to have on the economy. that is enough. we believe the fed will stick with that cautious stance on inflation. manus: stephen, thank you so much for sharing the first hour of daybreak with us. some interesting and contrarian calls. daybreak, over in china, we will break down the nation's latest pmi data plus future stock trading around the european market. london has indicated higher by 0.7%.

futures are trading moderately higher. let us see how your kicks off 2017. this is bloomberg. ♪

gains china's factories signaling growth is strong enough. deliberate on the dale -- deal. since 20 -- 2009. deutsche bank co-ceo joins cantors as its new president.

-- it isbergs bloomberg's flagship show. manus cranny with a warm welcome , happy 2017. hopefully the trading year will shape up to be brisk and you will be on the right side. markets are starting the first full trading day with quite a brisk tone. london up 2/10 of 1%, oil rallying. 1%.dax up by 2/10 of you are seeing equity markets open a little more enthusiastically. -- the factorys report we have had from china and europe all showing nice indication, levels we haven't seen since 2012. the minutes from the federal reserve this week. how hawkish is the federal reserve? how strong does the fed see the

u.s. economy? markets -- in germany, fastest pmi in a most years. in france, the fastest in five years. the ecb are still very much full. the china data is pretty pervasive across everything we are seeing in markets this morning. eighthg markets up by an of 1%. nearly 9%, the biggest yearly since 2012. gold is up this morning by a tenths of 1%. the first annual gain since 2012. chinese jewelry spread. oil making good. wages coming in with 130,000

barrels. that is going to be good news. that is adding to the tone with the rest of the opec nations and non-opec nations. dollar up 6/10 of 1%. pmi data doing nicely. prices, or has the money gone? dollar is up, house prices in australia up by the most in seven years. what does that mean for the rba? let's see how bond markets are doing. yields are just dipping. herest had stephen gallo talking about what they expect from the fed. two rate hikes. german bond 1.9%.

into 2017. the euro will break to parity in the first six months, it will break down 97 by the second half of the year and dollar will trade up at 139. japanese government bonds 0.5%. those are your markets. the first word news. statement chinese has said dollar drop is pandering to irresponsible attitudes. the president-elect accuses china of not stepping in in north korea's nuclear program. trump tweeted china won't help with north korea. korea's leader said his country was close to a ballistic missile. manufacturing

rebounded. gdp rose 9.1% in the three months of december from its previous quarter. most double estimated by economists in a bloomberg survey. evaluations should be stable. that is according to china's state information center in an article published. we have been asking our guests to state their addictions on the yuan in 2017. strategist says he sees the currency falling fast. 7.4 inave a forecast of three months. which would trade before the chinese lunar new year. expect thing is we ongoing gradual depreciation of currency. manus: now, if you are in

expatriate, make it to switzerland. that is findings of the survey that says foreign workers there -- the annual equivalent of $180,000 is almost twice the global average, while the country tops the bank expatriate ranking. switzerland ranked close to the last in social life, cultivating relationships. the cost of living is notoriously high. news.hat is your global global news 24 hours a day, powered by more than 2600 journalists and analysts in more around theuntries world. a bit of breaking news for you on turkey. we have the inflation coming out 8.53% in december. that is year on year data for

turkey in terms of inflation. how is 2017 going to shape up? juliet has the first. manus, the first curtain raiser was a good one. the shanghai composite flows out 1%. private manufacturing coming in better than expected. seeing mores we're robust movement in terms of the chinese economy. have seen good movement there. in late trade, a hong kong index looking quite good. up by 7/10 of 1%. we did see some weakness today in those casino players. inwth gaming revenue december was a little below what the market was looking for. elsewhere, a great session in australia. 200 at itsasx highest level any year and a

half since june 2015. markets in japan and new zealand remain closed today for the new year holiday and the dollar weakness, a little retreat in the dollar gave good support to some of the emerging markets currencies. closing higher by a quarter of 1%. the fastest pace in more than three years. a pretty good start to the trading year 2017. manus. manus: the latest on the markets from hong kong. the first survey on manufacturing from china. 51.4 is the reading, shows that china's factory services on a relatively robust note. we are joined from hong kong. great to see you. what you make of the data? the word we are using in copy is stability. policy,s it mean for

what is your take? economyows they got the where they wanted towards the end of last year. cost.f it has come at a higher, the exit from deflation was dragging. things are on an up right now. back policymakers can step off the stimulus pedal and do more on reforms. there is still plenty of challenge, exports remain slow. sentiment in america remains fragile and currency and capital outflows. none of the bigger challenges have gone away. manus: one of those challenges is the rebalancing. those companies which are

self-healing. growth targets is something that is debated. betweencent and average 2020. there are rumblings. what do you make of the pullback and the de5% target facto redline in the sand? >> it is interesting. saying he was open to slower growth if they could rein china. the growth target should be say chinanomists shouldn't have a growth target at all. it is politically charged and ends up creating unsustainable growth my cheap debt and creates problems. i don't think we are at a point were china is going to step away

from a growth target. least, there is an emerging view now from the official sector within china that perhaps it is not all about reaching a target. perhaps there should be more focus on durability. a big year for chinese politics, a reshuffle in november. an emerging consensus that china should lower its growth target. we are not at that point now. manus: not there yet. look forward to this year's contribution from the hong kong side. and the latest on the data from china. to try and interpret all of this, trading thoughts and strategy, we welcome our next guest. happy new year. >> here is to the roller coaster. through just talking

the ramifications of 6.5% in china. i thought we would pull this together in terms of the overall global manufacturing pmi. the eurozone relative to the official is the blue. look to do that. i would almost say that the pound -- the point is half full. >> i would say it looks at her than the same time last year on this day. kicked off. we are starting 2017 on a more positive note. question is, where is it coming from? is the main driver china, which has turned the corner on growth or is it that we don't really have the headwinds of austerity anymore or so the markets think, and therefore everybody is pushing up production. manus: what is your gut feeling?

is it that there are less headwinds for china or is it that we are going to have less is,erity, or the third leg you had central banks, does that change in 2017? three big subjects. last year, it was mainly china turning the corner, bringing back growth onto the global agenda. now the markets have taken a of theof the benefit doubt, any change is good change and that change probably needs austerity for the fiscal headwind should be there anymore. manus: shouldn't be because we haven't really got the realities yet. banks, apartral from the u.s., continue to be supportive and therefore, that is not really posing a headwind yet. but it could be interesting in terms of currencies which would be a pivotal element for this year. manus: it will absolutely be

pulled -- pivotal. sticking with the currency thing. i should've had a different chart up. there you go. on -- yuanyou against the dollar, against the basket. the basket of currencies, the yuan is doing a little better, trading at a four month high. what is the risk? the risk that the chinese go for something spectacular in terms of devaluation? out as theys chessboard for 2017? >> i think the chances are low from the perspective at the moment, i would expect them more to bid a more slow down -- some more breaking on any capital movements towards the u.s. and i

am of the opinion that what we just saw in your chart there is against the dollar, a reaction of chinese fearing that trump might change what capital flows are allowed to the u.s.. and therefore, a sort of let's get in there before they close it. manus: equity markets -- if i look at china, stock market lost the most since 2011. where in terms of equity exposure does china ring for you, or du look at in europe, emerging markets, iron ore, aussie dollar. have you play china with that headwind from a global perspective? >> we play china more on the of who benefits from china moving us. we see the stock market

influenced by political themes in china and therefore not so straightforward to forecast, even if you get the economy right you might not get the markets right. therefore we prefer to play from the outside. manus: stay with me, we've got more to get to. one headline coming through on the bottom of the screen. h, the stockc exchange. they get in your revocable shsa for offer to buy l 10 billion pounds. -- million pounds. lse group will use the proceeds for general corporate purposes to view and approval i the european commission. this is in connection with deutsche.

oft has been on the bottom your screen. up next, a roller coaster year that closed with the ftse 100 at a record high. run in 2017? to we discussed. this is bloomberg. ♪

♪ london.:20 a.m. in a: 20 a.m. as don breaks in berlin. a beautiful shot of berlin. you got euro-dollar on the bottom of the screen. lira. you -- dollars inflation came in at 8.53%. a her and his terror attack in istanbul over the weekend. ongoing search for the perpetrator of that and isis claimed responsibility. lira at record lows on the back

of the terror threats. in december, almost 1% above the estimate out there. more issues on the turkish lira. julia, good morning. julia: manus, thank you. bank's former co-ceo restarting his career at a smaller firm. he is joining cantor fitzgerald where he will help expansion of brokerage. he helped weld -- build deutsche into germany's biggest security firm. korea has banned the sale of some cars made by porsche after the automakers were found to fabricate documents related to admissions test. the three have been slapped with fines of -- a spokesman said it would

cooperate force -- closely with the regulation while bmw said the company would work to regain its certification. office -- ropean china has started a freight train to london in an effort to strengthen ties with europe. thetrain, departing from eastern changing province will cover more than 12,000 kilometers in 18 days before reaching the u.k. capital. passing the russian, polo and germany it would carry clothing, backs and suitcases. return to satellite launches next week, four months after a takeoff.ew up at an investigation concluded that one of three pressure vents failed. the announcement of a launch date means the -- they have

accepted the report into the explosion that found that elon musk called the companies most perplexing failure. that is your business flash. manus: thank you. call 2016e safe to into more to us year for u.k. assets, with the surprise that -- brexit vote. 2017.er what is in store for the u.k.? benchmark ftse 500 -- ftse 100. is the record close -- in pound, this is an dollars and blue.s are you aboutic exposure to the u.k.? what you parrot back a little bit? do you want to be very exposed? it is a global play. >> a global play and therefore,

it was last year driven by currency changes and therefore, that puts more risk into that market and we are comfortable with. we're certainly not going to overweight it. we see the brexit risk as very much on a 50-50 basis. either in 2017 it is going to because it will need a longer transition and one happen so quickly, or the french and german election really bring it to the front and lots of noise around it, which could upset markets and the currencies quite strongly. guest was stephen $1.39 and he was saying is where he sees it going. u.k. place that out as well. sterling could be a buy. do you think all the bad news is in sterling? we make it up as we go here.

the lowest in months, would you buy protection? do you think all of the bad news is baked in? lothar: there is the 50-50 chance of it going either way. that is the problem. if it continues as it is at the moment, then yes, i would say it could be applied baked in because if we get this prolonged basis, that could be potentially positive for the u.k., but if we get a lot of air around election time, not so good. talk about the bond market, the differentials between u.s. treasuries and the g7 counterparts, the whitest since 1999. do the yields in u.s. treasuries continue higher prodigiously and uninterrupted? lothar: at the moment they have paused and clearly have come back to the 10 year in the u.s., 262 to to 45.

that shows me this is not a relentless rise. it is a correction and deposit. how 2017l hinge on goes. trump and political changes have a big role in here. toncine: how much exposure the u.s.? lothar: not very much, they are pretty highly valued and therefore not going to be majo bullish on the u.s. stock market. pans: let's see how 2017 out for everyone in markets. daybreak is it for europe. the first show of the new year. european open this up next with .uy johnson markets indicated a little higher as you start the full first day of the trading year. the china data, the pmi is what

is driving the market. join me on bloomberg radio, daybreak europe. we are live from 8:00 a.m.. this is bloomberg. wow, x1 has netflix?

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only xfinity gives you more to stream to any screen. download the xfinity tv app today. ♪ guy: happy new year. welcome to the european open, the first trade of 2017 coming up shortly. i am guy johnson, matt miller on assignment. the rules onnues taking money out of the country, telling its people not to purchase foreign property. will russia and iraq follow suit? life after deutsche.