francine: trumps lump. the president's first few days in office show little deals on plans. the u.k. prime minister will become the first european leader to visit president trump as she heads to washington on friday. how special will the relationship be? and socialist showdown. -- the party presidential candidate. does this change the electoral map in france? good morning, everyone. i'm francine lacqua in london. we have a great show for you. first things first, let's get to

your data check. this is the picture overall for stocks. dollar weakening, gold invited. this is a very classic risk off mood, metals and asian shares outside of japan rising. look at the stoxx, probably at its lowest yield this year. they're sliding a little bit after the underlying gauge rose on friday. a little bit of repositioning, offering pause as it's overselling its major peers. that your data. first, let's get straight to the bloomberg first word news with nejra cehic. nejra: china's state media has used donald trump's inauguration to warn about the perils of democracy. the flagship paper of china's communist party says democracy has reached its limit and deterioration is the inevitable future of capitalism. the paper touted the relative stability of the communist system as president xi jingping heads toward a reshuffle of

senior leadership. the former education minister emerged as the front runner in the french socialist party's's round primary this weekend. it will hold a runoff vote next sunday between him and the former prime minister. polls show that the socialist candidate will finish a distant fourth or fifth in the first round of the presidential election on april 23. will be the first european leader through the door of donald trump's white house. the british prime minister is set to visit and engage him on questions about the future of nato and syria, but the most important task is to nail down details of what a u.s.-u.k. trade deal would be like. >> he has already said to me that he wants to see a fairly strong relationship between the u.k. and u.s. into the future. there are issues that we will work together on in the future. the importance of nato, for example. defeating terrorism. these are issues where we share the challenges, we see the

threat, and we have worked in the past. nejra: brexit will force the u.k. to get rid of much of its social safety net, and may call a 30% decline in wages in the next 20 years to enable the country compete. that's according to terra firma's chairman, guy hands. he thinks the effect on his business might be more positive. this is always one of the strange things about business, i think it is probably bad for the majority of people and the country, but i think my business is probably going to be good. nejra: saudi arabia's energy minister says opec and other oil producers have already cut supply by 1.5 million barrels per day since january 1, more than 80% of their collective target under last year's deal to stabilize prices. he says it is one of the best agreements produced. a meeting in vienna over the weekend agreed on monitoring to ensure 100% compliance.

global news, 24 hours a day, powered by over 2600 journalists and analysts in more than 120 countries. i'm nejra cehic. this is bloomberg. francine: thank you. it's the first working day of donald trump's presidency, and the market is already reacting to the news over the weekend in which he mocked protesters who gathered for the large demonstrations. he rowed with the media about the number of people who turned up for his inauguration. but he offered little information on his plans to boost growth, and's counselor said the white house has no intention of releasing his tax returns. let's get more with tim hayward, investment director of comparative politics at the london school of economics. thank you for joining us. what did we learn on inauguration day and over the weekend? it felt more like a campaign rally than an inauguration. is it too much of a leap of faith in saying this is how he will govern? >> i think we learned that the

mythical pivot to a presidential trump is a mess, and we saw more of what we saw in the campaign. he did not extend an olive branch to anyone who disagreed with him or didn't see him as a unifying figure. and i think we also saw a dangerous tack against the media, where the first press briefing used in donald trump's white house issued a statement that issued five claims and four were demonstrably false. you can see pictures that proved they were false. no one cares about the crowds other than donald trump. but we care about the fact that the white house is attacking accurate reporting, and that their credibility will be called into question, which is a problem for diplomats, investors,. everyone. francine: we are on day three. do we give him a chance? this was an unusual inauguration speech. can he still change tack and be more friendly? >> absolutely. i would be the first to invite and hope for a new, presidential trump, but people have been

asking for this for a long time. he needs to take advice from advisers who say, luck, you have been support of about 37% and you want get more than that in less you behave like a president and say this is how i can offer you something even if you didn't vote for me. he hasn't said anything of that sort yet, and until he does, he is going to try to govern as a politically toxic figure. republicans will only go along with that for so long of a time before they realize he is a liability to the reelection. francine: what does it mean to markets? is there a danger of being distracted by all of this? or that he is being distracted? >> it has become the sole focused, sadly. -- focus,. sadly. the fallback position is to focus on see what everyone else is doing, away from trump.

what has to be active in reaction to tweets. long dollar, short trade, long u.s. equities. all of them have come under some pressure. francine: the dollar is lifting a touch. could this be the start of a new trend? >> sure. not for too long. i suspect that the superior growth that happens in america caused the dollar to rally many of thewever holders at the moment are looking for that presidential trump behavior, and it is not coming through. francine: what are his priorities going to be? we have the domestic trump, three inflation, infrastructure, repealing obamacare. you have china and europe. >> if you think about trump and his relationship with congress, which is essential to making things happen, you are talking about a venn diagram. you have a trump priorities and the republican congressional priorities.

where they overlap is things like deregulation, tax reform. it's not things like lifting sanctions on russia. he may try but he will not get massive bipartisan support. and protectionism is not widely shared with most publicans. the question is, how robust is the response in congress when he tries to do things like renegotiate nafta? francine: is there someone from the republican party, apart from paul ryan, that monday morning takes them to the side and says, you need to unify the country? the gop will only support you if you don't go too far. >> they have been telling in this message since he began the republican nominee. whether or not they can break through now that he is president we will see,. he did say one presidential tweet, the most presidential thing i have ever seen him say, where he says i respect the right of people to protest even if i don't agree with them. it is sad that it seems presidential and he is agreeing with the first amendment, which is a starting point for every american, that it is a breath of fresh air.

maybe there are signs that people are getting through to him, but paul ryan is going to have to say, look, we aren't going to send you with this -- francine: will you listen? is there someone he trusts? >> i think you will listen as soon as he realizes that without bills to sign, the power of the presidency is limited. on foreign policy he can do a lot more, but in terms of getting infrastructure bills passed, or building that while he is so excited about, all of that needs to come from congress. you campaign in reality soundbites, but people know when they don't have health insurance. you can't say the media is lying if you lose your health insurance. eventually that catches up to a politician and it starts to eat away at their approval ratings. francine: what is the market doing from here? the situation is something we have never been in before. we are guessing what policies are. are we just clear that there is going to be more volatility until the market decides whether

it is good or bad for the u.s. economy? >> and that's not all of it. obviously janet yellen is going to hike rates as a changing monetary policy. we're going to see a slowing in the cessation in europe. a lot of things changing. you would expect volatility to pick up, all things being equal, and yet some markets are being quite calm. francine: how do you manage a trade war? do you put probability on the china-u.s. trade war? without be disastrous? >> i think it would be disastrous. also for transportation companies, ports, they are going to suffer, too. it pays to be active. it is difficult to have an that hast policy multiple years and thinking when you have such a transient decision process. francine: tim hayward, investment director. both stay with us.

let's get straight to the bloomberg business flash with nejra cehic. nejra: samsung electronics says batteries made by an affiliate were to blame for its flammable note 7 fiasco. the fires were caused by separation and the batteries. the companies apologized and promised to strengthen battery safety. samsung said in a statement that it has invested about $130 million and safety. barra is leaving his chinese electronics company, according to a post on his facebook page. he wrote that "the last two years of living in such a single or environment have taken a huge toll on my life and started affecting my health." you will transition out of his role in february. he he has been asked to remain an advisor. mitsubishi will push back delivery of japan's first a mystical passenger jets by two years. the delay comes as the company tries to meet the latest requirements for certification.

the mitsubishi regional jet was originally set to hand over in 2016; this marks the fifth delay announced. foxconn is considering building a u.s. display facility for upwards of $7 billion. japan sharp may be a partner but details have yet to be finalized. the major investor could create tens of thousands of american jobs during president donald trump's first year in office. that's the bloomberg business flash. francine: thank you. the uk's decision to leave the european union will lead to dramatic changes, according to the chairman and chief investment officer of terra firma. he sent down for an exclusive interview with guy johnson. >> because britain will have to continue to borrow money, and we won't have it in the european union, people will put a risk premium on that, interest rates will start to go up. bankruptcies, to

and it will lead to opportunity. sadly, and this was always one of the strange things about business, i think it is probably bad for the majority of people and the country, but i think for my business is probably going to be good. guy: on what kind of scale? give us a sense of how good it gets. how big will the opportunity be? the talked about a 30% reduction of wages -- about interest rates -- how high will it have to go? >> when i say a reduction in wages, i am talking in real terms over 20 years. that's a very small change each year. it's similar to a frog eating boiled. it won't be quick. in terms of interest rates, that's going to take some time as well. the u.k. at some point is going to have to continue to pay its debt. people talk about the j curve. the j curve in terms of

devaluation has never worked in the u.k. the u.k. did it for 200 years, constantly devaluing. we never, ever did. the only way we can continue to pay for debts was an increase in interest rates. how much, i don't know, what the differential between us and europe will need to be several percent. francine: this comes after this appears to be the first european leader. the british prime minister will be at washington this friday, to engage the new president on questions about the future of nato and syria's civil war. but her most important task is to nail down details of what a u.s.-u.k. trade deal could mean, and what it would cover. still with us, tim hayward and brian cross fellow. there was a rumor around when i was in davos, and i don't know if it has been confirmed, that she was studying old videos of

ongoing merkel and donald trump, in knowing how to deal with him. you are a world leader, you need something, how do you approach him? >> you need to flatter him. i think this guy has a big ego and he likes being in the spotlight, taken seriously, elevated on his platform. now that he is president, it is obvious he will expect even more. but i also think this is going to be a relationship born out of pragmatism rather than adoration. i don't think theresa may looks at him and thinks this is a terrific guy, but you might have to say, you are a terrific guy. the u.k. does need the u.s. and vice versa. francine: will we have a special relationship or new trade deal? >> i think there will be a continuation of a special relationship. the trade deal will be a priority for trump. he could use brexit to pave the way for his election, and wants to have payback. on the other hand, trade deals are complicated, and they take time, and the u.k. can't

officially negotiate until it has left the eu. it is up in the air whether the strait deal that happened before the end of his term, as it is certainly not going to rescue britain from the perils of brexit in anything near the short-term. francine: what does that mean for investment? as brian is saying, maybe it doesn't save the u.k., but it certainly helps. >> it would, and i think both politicians need to have a nice win here. whether they get it is another matter. obviously the u.k. has performed well economically, but many spectators are shorting the pound. we have seen the reaction with a speculative position comes under pressure. the trump trade and the brexit trade have that sort of asymmetry. they could unwind quite quickly, even though the core trend is obvious. francine: where do you see pound six months from now? >> i think it ends up a little bit higher. it is going to be a wiggle. it probably goes up before it goes down. if we don't know what's going to

happen with trump or with brexit, once we do know it, that is the one thing we can say -- francine: we are a little bit how dobout what kind -- you see brexit playing out? >> i think the hard line on the single market will probably go forward, and i think that is probably realistic, because immigration was never going to be on the table unless the single market was off the table. but on the other hand, we have to keep in mind -- the u.s. is around 10%-15% british trade, depending on the measures. the european union is about half. the idea that this will all of a sudden create this massive resurgence in transatlantic trade is a fantasy, and the u.s. and u.k. are facing the same pressures to diversify. its not like all you will have this trade deal and everything will come back to this

partnership. politically, it makes sense to play that up. but it doesn't make sense economically to expect all the eggs in both countries baskets will be facing each other. francine: what does it mean for europe? there was a nice story about the criticism the eu is facing, meeting it will be looking into what europe stands for and whether we can continue along the same. plus, the netherlands, italy, not doing too great. what does it mean for the markets? is a possibility for the eu to reform? the >> i think it does. i think there is general dissatisfaction with i how it is performing. what you are seeing in europe, there have been a series of surprisingly good years. people expected to fall apart. it didn't. it grew quite well. we had the credit impulse, the rate of bank lending was improving. now we have slightly higher inflation numbers.

basically, europe isn't doing too bad, partly because the euro is weak. but politically, we have some hurdles. francine: the chancellor -- marine le pen? >> low chances, but i was wrong about trump. you never really know in politics, but i would say there are a lot of warning signs that the french have been given, both from brexit and trump, and a lot of people are asking clear questions about, does the populist rhetoric match the policy reality? that is what trump will set the tone for going forward. if people from kentucky feel the there will be a lot less impetus from working-class people -- francine: but this will take one or two years. he is giving them short winds of bringing 1000 jobs -- >> absolutely. i don't think this will have a big effect on the french election, but i think it will be a clear and crucial moment for populism globally into 2018.

certainly it will shape his reelection chances as well. but i think that trump has become the global mental populism. how he does sets the tone for other countries. these movements aren't just in france and the u.s., they are all over the world. authoritarianism and the rise of strongman politics is becoming more popular. but these headlines he is creating by intervening in the economy are short-lived. francine: but at the same time, if you deregulate wall street, it seems that indices are going higher . >> in theory, but they already have a lofty level in terms of ratings, and it is one of the trump trades haven't bought. one worries that we aren't going to see the level of economic and earnings growth -- it's a close knife edge. at 3% we probably have the earnings growth and at 2% we don't. it's the long u.s. equities which i think is perhaps the most at risk.

francine: thank you so much. tomorrow, we will get the u.k. supreme court ruling on whether theresa may can legally start the brexit process without parliamentary approval. we will bring it live to you, right here on "surveillance." with three months until the french president election, the socialist party has a new front runner. the former education minister took about 36% in the contest, about five points ahead of the former prime minister. let's go straight to paris and carolyn conan, who is with our guest. caroline: good morning. just like we saw during the republican primary, the third man in the socialist party has become the front runner. eyeing going to talk about this with a socialist member of parliament. good morning. is is a reflection of an

anti-establishment feeling in france? >> out of the so. -- i don't think so. he used it to be minister of france while on -- years,, in the last two [indiscernible] caroline: did he have no chance, because he had to defend the policies of the current president? >> i think he was a favorite, he was supposed to win. he was supposed to win the primary. we have to wait until next sunday, but it's a surprise that -- considerede's much more left wing, an admirer

of bernie sanders in the u.s. is he good news for emmanuel macron? >> i don't think so. a favorite yesterday by almost 2 million voters in france. ever run anad election. he has a lot of supporters, but we cannot prove he has already won. him,not a good news for because [indiscernible] caroline: many believe emmanuel macron would be the only one who stands a chance against marine le pen. do you agree? >> no, i don't agree at all. [indiscernible] macron, toward emmanuel

but also to other candidates on the left wing. in macron has no position the political checks, and it's something that cannot allow him to win. caroline: but wouldn't it make sense for the socialist candidate to rally emmanuel macron -- >> no, because we have more than 1.8 million electors who have decided to vote for the socialist party. what do we do with all these voters? they have to be taken into account, and they do not agree with mr. macron. caroline: you are also an economist. investors are worried about the rise of marine le pen. does she really stand a chance of winning the presidential election? >> unfortunately, yes, she has a chance, because her party right now in france is the most

powerful party. of theke 25% or 26% expected vote for the next election. -- sheld be the first could have the first result, and as we have seen in other imagine that could she could finally win. [indiscernible] you have to be aware that in france we have a little issue with this high populism party. caroline: does that mean that we could potentially see a frexit referendum? >> i don't believe so. even if marine le pen is campaigning against europe, i think she could not afford to leave europe. by the way, she could win the french election, but she cannot win the majority, the political

majority, in the parliament. caroline: thank you very much. party,of the socialist after the primaries in france. francine? francine: caroline, thank you. up next, from this moment on, america first. what will those words from his inauguration mean for the global business over the next four years? they will speak to the former ceo of a company -- this is bloomberg. ♪

francine: this is bloomberg "surveillance." let's get straight to the bloomberg first word news with nejra cehic. nejra: francine, china's state media has used donald trump's inauguration toward about the

perils of democracy. according to the people daily, flagship paper of the communist party, democracy has reached its limit and deterioration of the inevitable future of capitalism. the paper touted the relative stability of the communist system as president xi jingping heads toward a reshuffle of senior leadership. former education minister bryn mawr on bond emerged as the front-runner this weekend. it will hold a runoff vote next sunday between him and the former prime minister. polls show that the socialist candidate will finish a distant fourth or fifth in the first round of the presidential election on april 23. theresa may will be the first european later through the door of donald trump's white house. the british prime minister is set to visit washington on friday. they say the goal is to engage the new president on questions about the future of nato and syria's civil war, but her most important task is to nail down the details of what a u.s.-u.k. trade deal would cover. >> he has already said to me

that he wants to see a very strong relationship between the u.k. in the u.s. going into the future. there are issues that we will work together on in the future, the importance of nato, defeating terrorism, these are issues where we share the challenges, we see the threat, and we have worked together in the past and will the future. nejra: brexit will force the u.k. to get rid of much of its social safety net and may cause a 30% decline in wages in the next 20 years to enable the country to compete. that's according to the terra firma chairman guy hands. he thinks the effect on his business might be more positive. this is always one of the strange things about business, i think it's probably bad for the majority of people and the country, but i think my business is probably going to be good. nejra: saudi arabia's energy minister says opec and other oil producers have already cut supply by 1.5 million barrels

per day since january 1. that is more than 80% of their collective target under last year's deal to stabilize prices. he says it is one of the best agreements producers have had. a meeting of the yen over the weekend agreed on monitoring to ensure 100% compliance. global news, 24 hours a day, powered by over 2600 journalists and analysts in more than 120 countries. i'm nejra cehic. this is bloomberg. francine: thank you. if the first working day of the trump presidency and while ,quities have rallied since his pronouncements on trade have added uncertainty. how can corporate leaders plan for the next four years? with me now is someone with a distinguished track record in business, a former ceo and luxury shoemaker. he's now on a numerous number of boards. great to have you. thank you for coming in. let's say you are the ceo and you had to deal with donald trump, concerned about terrorists, trade wars.

what is in the control of the ceo at this point? >> i would say we have been dealing with protectionism, with still haves -- they kept high barriers, but the united states is the number one country for consumption of luxury goods. i think it sounds almost impossible, or very difficult to realize the production of the luxury goods which never produced in the united states. away so longved ago and it looks impossible to produce. it will just be a matter of duties. luxuryes increase, products tend to reposition their price globally, so you may not want to increase the price too much, but you may recover somewhere else.

impact could be disastrous because the consumer is still someone who knows the value of a product. beyond that, it's unpredictable. you don't know when it will happen if there's a change. but i also believe trump is a businessman, so he will not want to hurt consumption in a serious way. he would probably like to create pressure. francine: so you are telling me that it's difficult for a luxury company to look at the supply chain at the moment. is there a risk, for example, if there is a worsening of tensions between the u.s. and china, that china takes the brunt? i don't know if certain parts of the luxury industry are made in china, but is it worthwhile for ceos to look at their supply chain? countries like the u.k., where you could have a more special relationship with donald trump? >> i think, a real luxury,

nothing is really coming from china. if you go into different categories, i wear, you -- eyeware, you may have components from china, sportswear. danger.ittle more in all the trends -- people will be trying to rethink the business, and in some cases it would not be producing or manufacturing, i think -- you can move something more into europe or in the united states and mexico. francine: how do you deal with currencies? >> the currencies -- if you look frame, you would see that the dollar last year was weaker than now.

the price differential, if you you at it in luxury items, will see that the difference was a little higher. -- thel probably devaluation of the yuan is in a certain way impacting, because it can still increase in china and you might lose margin. if you look at the end of the year as being good in terms of faith but not in terms of margins. francine: what about emerging markets? let's say there are ta rriffs, and the markets feel they are worse off. does it impact markets or is it largely -- >> i would say that the biggest factor has been the movement of the consumer.

the chinese consumer can afford to buy locally certain kinds of products. he will buy and traveled to spend money in the united states or europe to buy a specific product. he is very well-informed but knows what he wants to buy. look at consumption in china. they will create free trade implementy will stronger controls on imports paralleling the luxury market -- i would say general consumption would get bigger -- it's difficult to predict, but if we look at the last numbers in november, for example, traveling was still extremely good. europe is becoming again a very interesting destination, apart from the political -- francine: partly because the currency. >> is extremely interesting.

francine: thank you so much. we will continue our conversation with him. he is also on the board of rocco forte. stay with "surveillance." the owner of luxottica and lens maker absolute or -- what does the future hold for the luxury business? -- we will goay live to new york and get the latest on what we can expect from donald trump as he begins his presidency. then in the next hour, we will bring you the latest market news on how investors should play the trump white house. for more, tune into daybreak europe. this is bloomberg. ♪

francine: good morning, this is "surveillance." let's get straight to your market check with mark barton. mark: president trump's inauguration speech on friday, the america first rhetoric, is causing uncertainty in the lack of details on fiscal and economic policy, also causing uncertainty across various asset classes. this is the stoxx 600, down by .5%. strong basic resources up, most of the industry groups are lower today. and fell for the first time, and europe is underappreciated ahead of the investment office. if you like at the economic data performance and how it is improved, investors are focused too much on politics when it comes to europe and less on the

underlying fundamentals, which he says create investment opportunities. this is the dollar against all its major peers. as you can see, all the peers are rising against the dollar today after president trump took the america first approach, spurring concerns about trade protectionism. bank of tokyo mitsubishi says and could boost treasury yields. in says the dollar-yen pairing has a high correlation with u.s. yields, no major catalyst to sell the major pair, but the dollar is lower today against all its major peers, meeting sterling is higher today, rising for a third day against the dollar. the highest level in almost a month after the first weekly gain in three. sterling got a real boost last tuesday when theresa may gave her brexit speech tomorrow.

the supreme court will rule on she can trigger article 30 without the consent of parliament on friday. that she has to washington to be president trump, and will mail down details of what a u.s.-u.k. trade deal will entail. and flight to safety means gold's run continues. only two days this year hasn't fallen. it is now on track for its fifth weekly gain, the best run since july last year. gold has just come off its worst quarter in over three years. francine: thank you so much. mark barton with your asset check. 22.8 billion euro deal to bring and looks liker a will create the world's biggest group. we will talk more about the future of this megamerger as we talked to a man who spent 10 years o at the company. thank you for sticking around.

this megamerger, i match or how we view it, whether it is a consolidation of power which goes back to retail and how we consume things or if it is a french company buying an italian company. merger,quite an unusual because it's a merger of equals, which rarely happens, and the government at the end will be extremely balanced. two major points -- it creates a lot of value for shareholders, because we are talking about a company with a market cap of around 50 billion. mentioned is that they will create opportunity for people to have access to eyewear and lenses. whoe are 2.5 billion have no access. with a lotegration

of synergies that can be developed. from an italian point of view -- it's a little sad, in a certain sense. at the end, 20 years down the road, most probably, the control of this company will be remaining in france. more, we reason a little we will understand that we have with a potential to increase growth both in life and in product development. -- it seemsart from that a lot of italian jewels in terms of luxury groups get sold to big french conglomerate. >> i think what's happened in

the last 20 years, there was not financezer in italian or on the politicians side. with different entrepreneurs which are first or second generation, they tend not to under again. whichht be an opportunity could not come back again, but still negotiations for more. france has been shopping in luxury but thely media, telecom, you name it. but italy has a discount because -- >> when you talk about in some brains you

see that middle eastern's are chinese are ready to pay more. in some cases it's an integration of similar markets, because at the end they are similar markets. i was thinking it could become a little more important. if we think about europe, we have mr. draghi, the president of the european parliament -- i hope the role of italy could become stronger, both in politics and in financials. otherwise the industry will have big difficulties. francine: thank you so much for joining us today. the former ceo and current consultant. president trump's first working day. what can we expect of his first 100 days? we discussed that next. this is bloomberg. ♪

francine: this is bloomberg "surveillance." let's get straight to the bloomberg business flash with

nejra cehic. nejra: samsung electronics say batteries made by an affiliate or to blame for its flammable note 7 fiasco. it says overheating were caused by separations in the batteries. the companies apologized and promised to strengthen battery safety. they said in a statement that it has invested about $130 million in safety. xiami's vice president is leaving the chinese electronics company, according to a post on his facebook page. he claims it has taken a huge toll on his life and has affected his health. he will transition out of his role in february. mitsubishi will push back delivery of japan's first to mystically made a passenger jet by two years. the delay comes as the company revises systems to help meet the latest requirements of certification.

it was originally set for handover in 2013. this marks the fifth delay announced by the company. united airlines has lifted a grounding order in the u.s. after resolving problems resulting from computer failure. all planes a serving domestic airports were affected for about 2.5 hours. a tracking site says the third-biggest u.s. carrier had 481 delays on sunday. hong kong has retained its rank as the most expensive housing market among 406 major metropolitan regions for the seventh year in a row. the prices of secondary homes increased 7.7% last year, hovering 2.6% below a september 2016 record. sydney held its position as the second most expensive housing market in the world. francine: thank you so much. today marks donald trumps first working day as the u.s.

president, and it is set to be busy if his campaign promises are to be believed. here is a look back at some of his pledges. >> my first day in office, i am going to order a review of every single regulation issued over the last 10 years. that begins with immediately repealing and replacing the disaster has obamacare. in this country we are going to go with strong borders from the day i get in, on of the first orders i will sign. just think about what we can accomplish in the first 100 days of a trump administration. we are going to massively cut taxes. on trade, i am going to issue notification is intent to withdraw from the transpacific partnership, a potential disaster for our country. all needless, job killing regulations will be immediately canceled. we are going to build a wall.

i could wait about a year and a half until we finish negotiations with mexico, which will start immediately after we get to office, but i don't want to wait. francine: we are joined from new york by our international economics and policy correspondent, michael mckee. a significant is it that theresa may is the first foreign world leader to see him? >> from a political standpoint, it's important because the u.s.-u.k. relationship has always been key for the atlantic alliance, but whether there is anything significant to come out of this is hard to say, because britain can negotiate anything in terms of a free trade agreement with the united states until it withdraws from the european union formally, once the brexit process is completed. this is more style than anything else. as far as what donald trump is going to do today, it gets back to what you just said. if donald trump is to be believed, the man has made 26 first aid promises, and as we know, he doesn't always follow through, and what he says is

often different from what he means. francine: what can we expect in the next 100 days? is it going to be -- his priorities as we understand them are what? obamacare and foreign policy? >> obamacare he took care of on friday, at least what he could do. most of it has to be to congress. front, he could announced the cancellation of the transpacific partnership, which wasn't going to happen anyway, but it is symbolic to his voters. he can also plan to renegotiate a withdrawal from nafta, which everyone knows is coming, and he could start work on the border war with mexico. there is congressional legislation already in place that would enable him to get it started, not to make mexico pay, but to get it started. the other thing you might look for something on immigration. he can tell sanctuary cities he will cut federal funding and could announce an end to the so-called dreamers program that

allows children brought to this country illegally when they were young to remain in the united states. francine: thank you so much, michael mckee. "surveillance" continues in the next hour. tom keene joins me out of new york. we will be talking to alberto gallo about zero-sum world's. we will understand more on the trump-putin relationship, getting headlines from the kremlin saying that there is no meeting in the works yet, however he does expect to have an agreement as soon as they talk on the phone. "surveillance" continues. this is bloomberg. ♪

♪ francine: the trunk era begins. markets react to the first few

days of donald trump's presidency with the dollar dropping. the attention turns to the uk's prime minister visit on friday. foreign education later leeads the field. turkeys parliamentary referendum which could give president erdogan access to power, the focus remains on the battle. i am francine lacqua in london. tom keene in new york. we are still talking about the inauguration day. some parts still having an impact on emerging markets. tom: it is amazing we are still on speaking terms. we will see if prime minister may and president trump is still on speaking terms. i would suggest friday is a big deal. we will see. francine: we will see.

let's think of the timeline. the trade agreement is being intimated in the u k could take between the u.s. and you take more than four years. let's get to first word news. >> the process to end the war in syria ends and new states today. negotiations begin and kazakhstan. the u.s. has been excluded. british prime minister theresa may outline for new industrial strategy today. she will offer to work with the u.k. business sector by sector. areas where they think the u.k. can excel, including artificial intelligence and mobile networking. over in france, the education minister was the front runner in the socialist parties primary. the runoff on

sunday. independent candidate could be helped next week. some socialist voters find him to left wing. key senate republicans have oppositionir opera say tillerson becoming ceo. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. ♪ we really wondered how we would open and australia. no abrupt move either way. features negative. a little bit of flatness, not much there. a little flatter yield curve. oil not part of the story.

onto the next screen. the vix, dean curnutt will join us this hour. that on a monday. that is the benchmark of where we are. dollar mexico is stronger mexican peso. to 21.39.ing peso my data check is similar to yours. stocks a little lower in europe. this is gold. metals are up. we are a little risk off. it is not a huge movement. tom: very good. let's get to the bloomberg. everything we tried to do with "bloomberg surveillance" and i think i speak for bloomberg news is not to have an opinion and be balanced. we will show you facts and charts that are not alternative

facts. claims asbless compared to the number of employed in america back to richard nixon. you can see the ugliness of the 1970's and 1980's. down we go. that yellow line, the financial crisis in red. down we go, spectacular low claims. the is one part of optimistic recovery which pushes against the carnage that president trump mentioned in his inauguration. francine: i like your chart. this is my chart. this is looking at america's creditors. it is a simple chart. the foreign holdings as a percent of u.s. marketable debt. this is in white. the blue is a generic 10 year yield. the orange circle on the left of , it is one of the

highest we have seen before, that is when president obama took office back in 2009. donald trump enters office as foreigners hold down there holdings of u.s. debt. --ning us is overkill gallo. alberto gallo. good morning. .ou look at these charts what does it tell us about how donald trump will float the u.s. economy? alberto: we know that he is inheriting a very good economy. much better than obama eight years ago. andreason people are upset voted for an antiestablishment candidate is that there is an unequal recovery. you have people out of the workforce. you have sectors in the middle of the u.s. and u.k. which have been obsolete. these people working in the sectors have not found other jobs.

there is very little mobility. you should get these people an opportunity to get back into the workforce with educating and retraining, which is what australia is doing. it is short-term to try to get back the jobs in the u.s. where workers are paid $20 an hour if in mexico they are paid five dollars an hour and you have robots competing with these workers, which consume probably three dollars an hour. you can try to get some jobs back to the u.s., but you need to embrace change. not fight against it. francine: short-term it can work, but the main market check is stronger dollar, which makes funding difficult and exports much more difficult. alberto: we have corporate tax reform that will be positive for the u.s. some of this inflation is that inflation.

you are increasing the cost of production. it is also a very piecemeal approach. you are hitting car manufacturers but not car parts manufacturers. it is a headline sensitive approach. it will generate inflation, however this is well priced in the u.s. markets. where i think we don't have inflation pricing is europe because everyone in the market thinks europe is uninvestable because of political risks. pen does not win everyone will find themselves short european stocks. i think the real trade this year is relation in europe. trump'swe get mr. lero-sum world, how wil

fixed income markets react to that? by definition nominal gdp returns, do you assume lower yields? alberto: we are not in an environment where we are going to hyperinflation. it is not just the fact that central banks have less ammunition and are withdrawing qe. hits populists which can by markets. 10 year yields are around fair value. the market has priced inflationary measures, spending, corporate tax reform. in europe, bond yields are well below inflation. inflation 10 year in the u.k. is it 3.6%. we are talking about markets where the fear of little risk is pushing people to buy bonds well below inflation.

tom: i'm going to give you the question first and i will be asking everyone for the next days and weeks. when we see what we saw this weekend, the character of the inauguration speech, the press conference, should market participants change their strategy off of what we see out of washington? or is it business as usual for alberto gallo this morning? alberto: short-term it is business as usual. we have economic reforms which may be implemented. becausem we are worried the politics in the u.s. and u.k., they speak about unity, but in the end they are more divided for these united states and united kingdom. you think about the economy in a very bad situation where the reality is it is a good situation in bringing everything

back to america, this is divisive language within the country and globally. the same for the u.k. where theresa may spoke about uniting the country, but the policies she is implementing, for example the tax haven scenario, they are even more divisive. this is a risk. we have talked about it for many years. tom: thrilled to have you with us today. alberto gallo, synthesizing the events of the last several days in the united states and worldwide. we will continue the discussion on this monday, "bloomberg surveillance." economist for jpmorgan joining us in the 6:00 hour. from london, new york, this is "bloomberg surveillance."

lacquae: i am francine in london with tom keene in new york. we look forward to the first week in office. let's get straight to the bloomberg business flash. >> the biggest manufacturer of apple devices may build a u.s. ,actory for up to $7 billion this may create tens of thousands of jobs in president trump's first year of office. foxconn is considering joining investment with sharp. the company is one of the largest private employers in china. samsung said the design and manufacturing of batteries cost phones toxy note 7

burst into flames. the phone from their plans. the total cost is estimated to be more than $6 billion. there is a report that one of the biggest units at archer hathaway has agreed to buy a german company. make piping components. the details have not been disclosed. that is your business flash. tom: thank you. it is his day. it is his celebration. picking up the pieces in washington, kevin cirilli. chuck todd was over on nbc talking about how we run out of we run out of be nouns, verbs, adjectives. what is the language senator mcconnell of kentucky will do to instruct mr. trump on washington? >> i think this is the new

normal. the communication strategy we saw over the weekend on the sunday shows and with the press and what we will see later this afternoon is going to be a continuation of the same combative press strategy against the media we saw on the campaign trail. tom: what about the legislature? forget about the media. i don't feel sorry for you. you are only working for hours a day. tell me about the reaction from leaders in the house and leadership in the senate, guys like senator mcconnell. how do they adapt and adjust? >> at 9:00 this morning, the white house will be meeting with economico talk about trade policy in manufacturing. he will end the day meeting with paul ryan. when you look at early legislative actions, which as i

said last week are just political photo opportunities at this point, is sending a clear message that donald trump will be relying on senate leadership to pass key legislative fixes and follow the house's lead on the affordable care act and trade policy. that will put him at odds with people like the majority leader in the senate because there are several key republicans who worked with president obama to craft the tpp. when the first meeting you are taking at the white house this morning is to discuss manufacturing jobs and economic trade policy, that is sending a signal that this economic policy is going to be coming from trump and not the senate. francine: who does he listen to in the senate? is there anyone that can make them actually more residential? -- presidential? >> i think they would push back

on the notion that that is something they need to do. i spoke last night with a senior white house official. there point is he is president now. regardless of whether or not people in the senate agree with his style and messaging, they still have to answer to him. this is a similar parallel to what we saw francine when he became the nominee after cleveland. i think over the next couple of days, you will be seeing donald trump testing out whether or not people in the senate as well as the house are going to be willing to get in line with his message, or whether the there will be divisions. francine: what happens to the democrats? who do they unite and rally for? overasked that question the weekend during the women's march. they are still looking for that leader.

at that women's march, you had people like senator elizabeth warren, speaking not in washington, but boston. you had people like senator kirsten gillibrand. when the democrats are looking for their opposition, he will be looking to the future with people like gillibrand and warren and chuck schumer. francine: thank you. let's bring in alberto gallo. and does this mean for us the markets to understand what donald trump can or cannot do? alberto: we have some initial testing grounds. corporate tax cuts is the first one. the most difficult one will be the infrastructure plan. on the first to come you can achieve relatively low-cost lands approved by congress for

infrastructure, you'll have to do some spending. the danger is markets may overshoot. there are a lot of expectations else up -- built up. we have record highs, u.s. treasuries above fair value. everyone is bullish on this plan. we could have another short-term rally in risk assets, but it is well priced. one comparison is the coolidge administration. what we had before the 1929 crisis. they were pro-business, cut taxes, but ended up with a high deficit. is this is a sustainable plan? where will the administration leave the deficit in the next four years? tom: last night i saw a tweet that the german government is literally trying to get in touch. they are trying to dial one 800 white house in washington.

help us with this new relationship we will seem between the white house and chancellor merkel. the chancellor was the last person present spoke to going out the door. what will you presume will be that relationship? alberto: i think a lot depends elections. ttwo you have france and germany. in germany it is likely that chancellor merkel will win again. if we have a pro-eu present in france, this will be a strong bloc. it can't ignore the risk and volatility. happens, donald trump will have to negotiate with a very cohesive response. i think there is a scenario for europe that is positive, which a

lot of people are ignoring because they are afraid of political risk. they are afraid of headlines from le pen in france. these are still the underdogs. they have low probability to win. tom: very good. alberto gallo, thank you so much. we will continue. in our next hour, a conversation of horizon investors. we will do that in the 6:00 hour. we will be speaking about mr. trump's washington. this is bloomberg. ♪

♪ get to this quickly now. let's get to this chart. german minus italian inflation. this has been the excess of high german, low italian inflation. alberto gallo with us from algebris investments. will there be less german inflation or more italian inflation? german inflation will go to 2% in the second half of the year. we think this is a problem for the central bank. central bankers used to dream about inflation. this year it could become a nightmare because it is too high in some parts of europe. it is too low and other parts. this will push the ecb to justify qe and push them to do a lot less than they can do now. francine: we had a great

interview with the central bank governor of france on friday. he said it was not a problem. you just take the median average. he is wrong. alberto: france is one of the countries with low inflation. they did not do all the reforms they needed to do. the banking system is not lending about. there's a problem when you have an economic area with too much recovery, the ecb is going to push the break. tom: thank you so much. please stay with us. michael mckee to come here on u.s. economics and politics. dean curnutt in the next hour on correlation and volatility. ♪

♪ tom: good morning, everyone. "bloomberg surveillance." francine lacqua in london. i'm tom keene in new york. it is nice to be back in our studios.

first word news in new york city. >> the trump administration may actwait for congress to before it takes action on the affordable care act. according to kellyanne conway, the administration may stop enforcing the obamacare requirement that most americans carry health insurance. >> where turning away from the penalty. the tax has been such a burden on many americans. it has been a burden on many small business owners. individual the mandate would take the teeth out of obamacare, and destabilize insurance markets. u.s., severeastern weather killed at least 18 people over the weekend. seven died when a tornado struck a trailer park in south georgia. it stretched from texas to the carolinas. present erdogan is one step away his consolidating parliamentary power. orders will have the final

decision in a referendum that could be held in april. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i'm taylor riggs. this is bloomberg. francine: thank you so much. let's get to our morning must-read. we picked out something on turkey as a way of doing some of the news. most clever and pernicious elements of the proposed change is it limits the president to two terms, which would allow her began to remain in power until 2029. he is arguing that it would end democracy. bethe end, but again would running turkey for 26 years. that is not a democracy, to put it mildly. concentration of power is something that is worrying investors a lot. then you go on to my bloomberg terminal.

you see that brutal move. highermes with a interest rate, which politically is not possible. alberto: let's remember it turkey was seen for a long time as almost a developed market. within emerging markets, it was one of the safest considered by investors. it was trading close to other european countries and well below greece or cyprus. what we are seeing now is a slow and of democracy. democracy. this rarely gets respected when the day comes and you have to step down. we are cautious on emerging markets. we are cautious on turkey. we don't have an exposure. it is a country that has had a lot of investments. there is no currency depreciation ahead. it is a country that imports oil in an environment where oil is

going to go up. last week in dallas we spoke to the beatty prime minister. this is what he said about growth opportunities. >> the economy is weak. therefore you have that by lemma. -- dilemma. still it is a decision you should be making on the basis of price stability and other macro financial considerations. francine: as you saw, even with the consolidation of power, would that give you hope as an investor to go into the country? willto: the central bank try to defend the currency. because of the strong flow of investments over the last decade, there's a lot of debt in the housing sector. you see bad loans from consumers and corporate's going up. you have the threat of a reddit french domestically. -- credit crunch domestically.

i don't think turkey is going to consider the prospect of entering the eu anymore. there are doubts in the long-term in turkey. generally emerging markets have done well despite what the trump administration promises to do. tom: let's take a look at that beautiful chart that francine showed. this is the beginning of erdogan. this is his massive success, stability. the word i would use is pernicious. ge have a pernicious weakenin in turkish lira. do you have a tip point where enough is enough? alberto: i think it has to be political more than a level. i think investors need to -- first of all, investors are not incomplete. if you think about the currency market, yes, it has been depreciating. if you look at credit spreads,

they are still tight. the spreads of turkey over other countries in euros or dollars are of medium risk. we are not in a credit crisis. it could get a lot worse. tom: i think this is important. what alberto gallo does so well is go cross asset, not only looking at the fixed income market, but bringing it over to commodities and fx. someone else who does that is dean curnutt, macro investment advisors chief investment officer. is your world linked to mr. trump's uproar right now? dean: there is a lot of talk about him. tom: your world is correlation and all till the. dean: in a weird way his policies have served to really depres vix.

correlation, the trump administration after this election has created a low correlation environment in the sectors and stocks within the s&p. lower correlation and lower volatility tom:. you have the long-term average in light blue. everyone suggests this place and see is different from that complacency. you have this dampening in the market, does this get you to white, gray, or black? dean: that is a good question. donald trump is the ultimate black swan. the vix is not going to go up unless the market starts to move. tom: critical question. you just said he is a black swan. what is the attribute that gets us to instability? dean: i believe the market is underpricing the notion that trump can create a much higher

correlation environment. election, after the this has been very low volatility. people are forecasting donald trump will move markets, but he will move sectors rather than the s&p as a whole. francine: how can he be a black swan? we have seen him in campaigns and news conferences, and talking. we kind of know who the president is. dean: again, we have not seen any materialization of risk, meaning the s&p is not moving at all. the recent realized volatility in the market is on the order of 5%. there last three months, has not been a single move of 1% or more down in the s&p. that is not a kind environment for folks that are extending option premiums to hedge. i agree with you. so far, there has not been any real movement from trump. there has been a lot of action

on the rates and foreign exchange inside so far that has not come into the equity market. our forecast at macro risk advisors is that investors are underpricing the potential for a more correlated move in the equities. alberto, do you push back against that? there was a general view that the speech was unforeseen. yet this is how donald trump has been speaking for the last 12 months. there are potential policy surprises. better for business, harsher for emerging markets. i think the reason why volatility is low across u.s. assets, the s&p, the vix, u.s. treasury's. , investors and japan with very low yields, there has

been a huge flow into the u.s. market. there has been 300 billion into u.s. bonds are the last few years from europe and japan. the moment where we start seeing inflation going into europe and japan as well, or where the u.s. deficit gets a little more out of control and assets are not a safe haven, then you can have this black swan for bond markets. you can have european investors and japanese investors buying their own boss. tom: help us here with what we observed in davos. american investors talking about like we have never seen -- their book like we have never seen before. boosterismerican ceo into your vix analysis. are they separate? will they learn a lesson from the current world?

alberto: there has been a surge in consumer confidence. there are some good signs. there is this view that some of the regulatory overhang after the crisis is starting to ease, and these animal spirits. they worry about dean curnutt's world? they will worry about underpricing volatility and underpricing risk. the realized experience in the s&p is volatility has been so low that it is bad for option prices. no one wants to buy options because hedges have not paid off. francine: stay with us. i don't think this was an unperceived speech. as is have donald trump has been talking to the people. that is a whole other story we will delve into deeper. alberto gallo and dean curnutt stay with us. coming up, we speak with the trade minister of australia on

donald trump's trade impact. look for that. this is bloomberg. ♪

francine: this is "bloomberg surveillance." tom keene in new york. let's get straight to the bloomberg business flash. taylor: there is a report that yahoo! faces and sec investigation over data breaches. according to the wall street journal, the issue is whether those breaches should have been reported to investors sooner. hackers stole data from one billion users. toshiba climb the most in a year today. they are drawing attention from possible investors. stake that will

bring in up to $28 billion. the chinese lawmaker after four years. the former google executive was hired to be a pitchman for foreign officers. he is not saying what he will do next. that is your bloomberg business flash. francine: thank you so much. the front runner in the french socialist party's primary. the race is important mainly in how it impacts the future fortunes of a presidential candidate marcon. great to have you on the program. talk this through how this can divide the vote. he is concentrating much more

on the left wing of the party than the former prime minister. he has also been called the jeremy corbyn of france. universalopose a minimum wage for every french citizen that would cost between 300 billion and 400 billion euros to the french state. it was an almost impossible task work former prime minister because he had to defend the policies of francois hollande. this really came out of nowhere. there is a lot of momentum because he has received the of multiple people. is there a chance he will become president, or will he just take butts away -- votes away? >> according to the opinion

polls we are seeing, there is very little chance that he will qualify for the next round of the election. he could have an impact. primariese socialist on sunday would actually boost if heances of the manual wins on sunday. -- he will take some votes from the center. francine: what are the polls telling us of the. first round. went to the polls tell us about the first round? -- what do the polls tell us about the first round? candidate will

gather around 25% of the vote. her in second position -- behind her in second position is the winner of the republican primaries. is not theman socialist candidate, the far left wing candidate. francine: thank you. now with us is dean curnutt and alberto gallo. how should markets view the french election? does this system meet we are more safeguarded against populist uprising? alberto: markets have seen actions with a lot of risk aversion. we saw it in italy last year. it was well priced and not to be

a negative result. in france, investors are very skeptical and afraid of le pen. there is an assumption that europe is uninvestable because of this. there is a risk of le pen potentially breaking a franco german alliance. that risk is relatively low. if it does not happen, you have a german government that wants to spend a little more and a french government that is pro-reform. europe is going to see much more positive growth. francine: alberto has been talking about the zero-sum game for quite some time. is this the year where we really test the limits of the eu? couldn't break apart? alberto: i think they will run out of ammunition. inflation dreams are becoming nightmares as germany goes to 2% inflation.

we need fiscal policy to take action. after the election, the german government should potentially increase spending on defense and infrastructure. remember after the turkish deal, refugees are coming in much lower numbers. they are still there. you need to actually spent. they have the capacity to do it. it is a make or break year. however investors are pricing a very negative scenario because of the le pen risk. there is positive. tom: we will continue. coming up, he is now in the minority. austan goolsbee of the school of chicago, the former chairman of president obama's council of economic advisers. this is bloomberg. ♪

tom: good morning. "bloomberg surveillance." i guess this will be the first 100 days. let's try to get to day three or day for if we can. michael mckee joins us now on the goings-on.

thead henry aaron of brookings institution. a great walk-through of mr. trump's non-options on the affordable care act. can you take that over to everything else where he has not nearly the wiggle room he thinks he has? >> not really. we don't know what he is going to try to do. he does not happy with the room on certain issues that have to be adjudicated by congress. it cannot do much about obamacare or unilaterally on taxes. ,e can on immigration and trade so that is what people are going to watch. tom: what is he going to do with this important meeting with prime minister theresa may? >> they are going to try to make nice. theresa may would like to have some sort of trade deal in progress.

if she has something in progress, some sort of informal understanding, that gives her a lever to use against the european union in their talks. they will probably look at the idea that since we trade things already with each other, we can eliminate tariffs on that. easy to do except for in agriculture. the hard work to do is in harmonizing regulation between the countries. tom: what meetings in washington will occur between capitol hill and this president? what happens next after what you observed over the last four days? >> you don't know what will happen with donald trump. he is having congressional leaders over to the white house for meetings. what would normally happen is his legislative people would go to capitol hill and work with congressional leaders on legislation and give their input into what congress is going to do. we assume that is what is going to happen. tom: can the market assume?

markets don't like the word assume. >> anything but certain i would call that. the next 90 days with donald trump, incredibly low option prices for the s&p 500. , in the: is the s&p case of tariffs and trade wars, they have trade issues. alberto: remember when donald trump was elected, emerging markets to the back. -- took a dive. they have recovered fully. they are almost record highs. foreign exporters and earnings, it would be expected. the market is pricing this at very low levels. also because you have a lot of foreign flows of money keeping the s&p stable. that is one risk. tom: thank you so much.

news, swirl of political too little talk on the markets this morning. michael mckee, good luck. that is all i can say. good luck in the coming days. we have good luck in our next hour. joining us from jpmorgan, they have a fairly cautious view on u.s. economic politics of the moment. worldwide, coast-to-coast. stay with us. from new york, london, this is "bloomberg surveillance." ♪

♪ tom: this morning, markets are stable with little u.s. dollar movement after a tumultuous

weekend. does the washington consensus lay in disrepair and decay? we consider the carnage that will be u.s. trade relations. we stop right here and right now. what can be the many responses of republicans to president trump? this is "bloomberg surveillance" live from our world headquarters in new york. the sun comes up in washington today, and literally no one knows what to expect the white house. francine: i would bring you over to our website and terminal. we have a great story saying that donald trump at this point has no intention of shaking off his campaign persona. is it a persona? isn't what he really stands for? towill need to wait months see what the implication is for the markets. tom: meeting on friday with prime minister may.

let's get to first word news. taylor: president trump is reaffirming one of his campaign promises that he will renegotiate the north american free trade agreement. he has repeatedly blamed the deal for the loss of american jobs. he says he will meet with the leaders of mexico and canada and promises what he calls good results. prime minister benjamin netanyahu has accepted donald trump's invitation to visit the white house next month. he may be hoping to court take his policy on palestinians with the trump administration. in france, former education minister was the front runner in partycialist prim elections. candidate emmanuel macron could be helped next

week. some socialist voters find him to left wing. theresa may outlines her new industrial strategy today. she will offer to deal with u.k. business sector by sector while preparing the economy to leave the eu. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i'm taylor riggs. this is bloomberg. tom: let's get to the data. we want to get here. futures negative four. oil doing nothing. the vix at 12.05. really all that down. mexico peso stronger earning on the dollar. francine: this is what i have,

shares in the developing markets. that has been lifting. this is after the inauguration and donald offering little more on plans to boost growth. there is concern about protectionism. those movements, they are not very big. gold is at 1212 .95. tom: we will go to the bloomberg and look at the shades of america. this is the most optimistic chart i have. this is jobless claims compared to the number of employed. here is the horrific carnage of the 1970's. the double recession in the 1980's. down we go. the small recession in 2001. here is the ugliness of 2007 and 2008. this is spectacular, the reduction in claims. this is a chart that describes a better america. francine: i like it. this is my chartered is is about

america's creditors. revisited this to make it simpler. this is foreign holdings as a percentage of u.s. marketable debt. the orange line is when obama took office. donald trump enters office right here. foreigners sell down holdings of u.s. debt. there is a threat to boosting american are running costs. tom: subvert. we have a lot to talk about. we could have 12 hours today and not run out of things to talk about. we will be lucky if we get 10 minutes with him, jpmorgan's chief economist. i would suggest within the macro economics that you know, you would say there is one america. the twoll talking about americas. can mr. trump succeed in only talking to his electric? -- electorate?

>> on the economic side, can you put in place enough growth oriented policies and is there enough room for the economy to grow to lift everyone? there is an opportunity, but whether we get those policies remains uncertain. tom: to me, it is the idea of , his constituency, he spoke to on friday. is this led by infrastructure? >> this is something we need and will probably get. i think the size of it is going to be small. i think the timing of it means you will have to wait for two years before you see it in the economy. dampenedought i saw a jpmorgan view over the weekend. did you adjust your forecast after what you observed in washington? >> we remain uncertain and cautious. that is to say we are neither

building in a fiscal stimulus coming from this administration nor very destructive trade actions. we are tempering the extremes. we think the economy is better, but not that great. we think the global economy is where the action is. i don't think our call on policy is one we hold a lot of confidence in. francine: when do you think we will have a clear idea on policy? >> the first thing we want to see is the stuff president trump can actually control, whether he will pull levers. that is on the trade side. we think we will enter into a phase of negotiation, not the u.s. putting on unilateral trade research and spirit if that is the case, that will validate our view. then we turn to the interaction between the president and congress.

look at what happens on tax reform, the infrastructure bill, regulation. that will come quickly as well. that will be two or three months of just checking out how that dynamic works. francine: do we have any indication on whether he will focus first of all on domestic growth and inflation and then focus abroad? >> i don't think there is a reason to believe one will be dramatically over the other. the question in both areas will be what are the priorities? on trade is it renegotiation or putting up barriers? on the tax stuff, which congress has a big say in, it is how well can you get reform, which in principle congress does not really want to blow the budget deficit out. the interaction between changing the rules and not creating revenue loss is going to be a difficult one to manage. francine: what is the one thing we know about dollar?

is it difficult to call dollar higher? >> i think will generally be higher if we get growth oriented policies. i think it will generally be lower if we get more protectionist policies. i would argue the global dynamic by itself is probably not a strong dollar story, if we are right manufacturing is picking up in global goods are picking up. that will help a lot of countries more than it helps the u.s. tom: people of all persuasions stood in shock on friday at the populist message. for from jpmorgan look the economy as we react to this new uncertainty? does uncertainty mean dampened nominal gdp? >> you have three forces working out. you have uncertainty, as you say a negative for markets and could be a negative for growth. you have the possibility of

doing things on policy that could support growth and help the economy. the third thing you have is the organic dynamic of what is happening in the world. i like to keep to my knitting what i can actually see and understand. that is a relatively significant positive in terms of getting inflation up and improving the global growth picture in a broadway. francine: thank you so much. bruce caston of jpmorgan stays with us. we will speak with the australian trade mr., steven ciobo. this is bloomberg. ♪

francine: live pictures of the

sydney opera house. one of those beautiful sites. we do not look here very often. this is an honor of the trade minister of australia joining us shortly. tom, i do not know this, the celebratewhere they the chinese lunar new year the most outside of china. tom: i did not know that. francine: there you go. let's get to business flash. taylor: the biggest manufacturer of apple devices may the u.s. factory for upwards of $7 billion. that is a major investment for foxconn technology that could create tens of thousands of jobs. foxconn is considering a joint investment with sharp. the company is one of the largest private employers in china. samsung says the design and manufacturing of batteries caused the note 7 to overheat

and burst into flames. banned thelines phone from their plans. the company had to recall them. the total cost is estimated at more than $6 billion. there is a report that one of the biggest units in berkshire hathaway has agreed to buy a german pipe company. terms of the deal have not been disclosed. that is your business flash. tom: thank you so much. of australia. we know sydney. we know melbourne. maybe we know like tasmania. up above in queensland is the gold coast. steven ciobo is australian minister for trade. he knows it is more than important to have international relations. thank you so much for being with

us. i would suggest there is a bigger difference in growing up in northern queensland versus growing up in sydney. what does that tell you about the need for international trade? these are two states that are focused on resources and resource exports. we are a very trade exposed nation. we are always forging to have that are market access into markets like china, south korea, and japan. tom: we talk about the washington consensus. after what you observed over this u.s. presidential campaign and the crash and burn of tpp, do you suggest your consensus moves toward beijing? steven: i do not. we have always had a strong relationship with china. it is our single largest exporting country. we have always had a strong

focus on china. also on japan and korea. those are the three key markets alongside the u.s. tom: i have already had a surveillance correction. i butchered the capital of australia. showine: we are taking the to australia. you have a strong relationship with china and the u.s. what happens if there is a trade war? you will almost automatically suffered. steven: we certainly do not want that to be the case. the fact is we need global trade growth to continue. the very worst outcome would be if we had that kind of scenario arrive. australia is focused on what we can do to continue to grow export opportunities for australian is this is. francine: what does the donald trump administration mean for australia? i'm talking about the impact on commodities, and if there is a trade war, china could suffer a

lot and offer less on commodities. if there is a trade war, everyone suffers. it is not a binary thing. i don't think that will happen. everyone does worse as a consequence. to focus onnuing opportunities. we have put in place free-trade agreements with china, south korea, and japan. we are in conversations with indonesia. i'm focused on what we can do , withhe u.k. after brexit the europeanth union. francine: how long does it take to do a trade deal? even if there was for commitment between the u.s. and u.k. on both sides, it could take four to five years. steven: it does very. -- vary.

the u.k. is not in any position to conduct official negotiations until they actually exit the eu. we will have to see. we have had a number of discussions already. we would like to conclude as soon as we can. jpmorgan isasman of going to give you a briefing. restarted?odity boom long: we have been in a deflationary episode. i think what we are doing is we're shaking off the drag of the last couple of years on the supply side in key commodities and on the demand side. i think what that does is give us some lift. we are looking for commodity prices to be up 10% over the next several years. tom: the market, i'm sure it has been ugly at times.

what do you need from commodity australia right now in terms of your pressure employing more australians and just bringing in more revenue and turnover? steven: the story with australia right now is significant rebalancing. we had a massive pipeline of projects. we saw expansion in the mining industry. we saw supply-side responding. employment numbers have declined in that sector as we shift from actual investment in capacity to construction. commodities are doing well. we are seeing more sustained prices than we anticipated. that is positive for us. we are focused on doing the service side of the australian economy. the us trillion economy as mature as it is is quite well-balanced. that is the reason we have not had a recession in 26 years. francine: in terms of trade, who

was the first person you will go to see with the trump administration and on the chinese side? i guess not unexpectedly, he wants to wait until after confirmation. navarro and meet that opportunity arises. in china, i met with the vice os last week.av tom: thank you so much. steven ciobo is australian trade minister. coming up on "bloomberg surveillance," we will speak with austan goolsbee, former chairman of president obama's council economic advisers. this is bloomberg. ♪

♪ tom: good morning, everyone. francine lacqua in london. tom keene in new york. i tried to read everything on site on the most historic inauguration we saw, the press conference we observed, whatever it was. i tried to find something that made sense. , ie is the great historian will suggest he tilts to the left, on the former president. i want to spend precious time with my girls, says president obama. remember president obama's

reputation for tact. he goes on to say that it is unlikely he will become firebrand out of office. this is one of the most balanced pieces i saw over the weekend as we look into the great unknown of the american presidency. francine: this goes back to how you deal with the new president, donald trump. with a speaking political science expert who was saying even one theresa may shows up, she will have to flatter donald trump to get something out of him. it was a great piece. i don't know whether antagonizing the president works. on whatm fascinated happens friday. i have no idea how any nation response. i have read the speech three times. i don't know how the u.k. response to that. i'm sure going back to john

adams and george washington, the u.k. has never heard anything like this. francine: we were in davos on friday. we got confirmation that angela merkel in preparing to meet with donald trump was watching old videos of him to find a common language. tom: what is the common language of what we observe in washington to your world of economics and what it means for viewers? >> right now there is a theme of american first, which has protectionism to it, and opportunities to support growth. one of those things would be disruptive and her growth, and the other would be positive. as economists, we are struggling with a high degree of uncertainty as to how this balance is out. tom: is this a zero-sum presidency based on what you have observed so far? bruce: i don't think it is. i think this is a president who

expresses certain themes of the zero-sum game. i don't think the world is a zero-sum game. the actions the president takes and the actions of congress in reaction to him will matter. as we look at the economy forecast, and wait to see where the actions lead, we are trying to leave the rhetoric aside. tom: well said by risk has been. speaking of those actions, we have the perfect guest for you. we will speak at length with greg valliere. he is focused on republicans meeting with trump administration staff later this week. this is bloomberg. ♪

york.t is a beautiful new it is unseasonably warm, i would call it, in late january. it is good, good to be home.

customs at jfk was running like a swiss watch this weekend. francine lacqua, and london. i am tom keene in new york. let's get to first word news with taylor riggs. taylor: british prime minister theresa may will be the first foreign leader to meet with president trump. she will speak with the president friday. the trump administration is working on a trade deal with the u.k. that would take effect after britain leaves the european union. the trump administration may not wait for congress before it takes action on one aspect of the affordable care act. according to kellyanne conway, the administration may stop enforcing the obamacare requirement that most americans carry health insurance. >> we are doing away with the obamacare penalty. the tax is such a burden on many americans and many small business owners. taylor: analysts say removing mandate- removing the

could take the teeth out of obamacare. in the southwestern u.s., severe weather killed at least 18 people over the weekend. the storm system starts from texas to the carolinas. turkey's president, reset erdogan, is one step away from concentrating his power. ineferendum could be held april. global news 24 hours a day, powered by more than 2600 journalists and analysts in more i am taylorntries, riggs. this is bloomberg. francine? tom? tom: this is our first single best chart of the trump administration. have bruce kasman with us from j.p. morgan. this is the animal spirit of america, nominal gdp. toward mr. trump's concern about where we are. nominal gdp, 10 years, 20 years

ago, 1996 to 2006. here is the decline in animal spirit. clearly, bruce kasman, the goal gets back to a sustained level. do we do that with a built up inflation, or can president trump do it with a buildup in economic growth? bruce: the idea that you will have inflation moving up is good. i think it is right given how low it has been. but to think about inflation getting much above 2% given the fed's objective is hard to see on a sustained basis. if you want to get to 5% nominal gdp growth, you need 3% real growth. the problem, independent of policy, is that we are in decline on demographics. we believe technology adds to growth, and we have not invested much in a long time. it is hard to argue you will get sustained growth close to that. tom: bring up the chart again. acta the green circle.

what bruce cap -- back to the green circle, what bruce kasman is talking about. if that is the case, it is about productivity, which you summed up with capital, labor, and technology. the technology is what everyone at the world economic forum is focused on. bruce: that is key. it takes time to deliver improvement on that front, but we have demographics which are hard to change, and we have technology, which is a big debating point as to what is driving it. we have lost the benefit that we had in the 1980's, 1990's, early 2000's, from basically bringing on computers and the internet. we do not think you will change that quickly here. francine: is making america great again automatically at the expense of the rest of the world? bruce: not at all. it does not have to be. isre's is not a -- theirs

zero-sumgle -- a game. this is the key issue we have right now. americapolicies which first could be delivering in a way that is positive for the whole world, but we also have policies that taking that idea could be quite disruptive. we see both strands of it in terms of what the president is saying, and we need a better sense concretely of where we are heading on policy. francine: there is no quick fix to productivity. this is what the u.k. is grappling with. if you were advising president trump, how would you suggest he brings productivity up? that is beingff talked about in terms of regulatory reset and tax reform and infrastructure spending are all potentially positive productivity. but i would just say, look, that

is going to take a long time before it kicks in. and secondly, other forces that we think are at work lowering productivity are not things at work that policy has an easy time changing. tom: this is not an easy equation, that's an easy question -- this is not easy question, but do you wear -- do you look at where we are right now as a post-obama world, or is it a one-off of mr. trump and we will revert back to something along the line of a washington consensus? we are only three days into the administration. early to tell.o i am not trying to be a political analyst. i do think we have this force of populism that is global in nature, being expressed in the u.s., and it is likely to continue. populism has a certain theme in europe which may not be the way it is being expressed in u.s. policy. we may have populist policies that are pro-corporate and

pro-come individuals. here. want to go quickly francine, help me with france over the weekend? was it a populist outcome looking at the left votes over the weekend? francine: simplistically, probably yes. it was a socialist party voting on their candidate. the problem is that it is very divisive. if you have a socialist candidate that is quite popular, does he take away votes from marine le pen or bring votes to marine le pen? got -- the man is nowhere near the most popular politician at this point. tom: absolutely fascinating. i cannot keep up with french politics. francine lacqua is my lodestone for understanding what the hell is going on in paris.

coming up on bloomberg television and radio, this is a really important conversation. he is michael leavitt of utah. he is the former health secretary. michael leavitt on the affordable care act and reality. ♪

francine: the ecb president, mario draghi, speaking. he is not talking about monetary policy or inflation and targeting inflation. he is turning philosophical, saying there is widespread instability in italy and globally. he thinks that in these times, many -- i imagine he is talking about populism -- have a nostalgia for some dark paths.

we will come back to what the ecb president is saying. we have plenty more on finance in the markets. but history to the "bloomberg business flash." taylor: there is a report that yahoo! is being investigated on multiple data breaches. the issue is whether they should have an reported to investors sooner. yahoo! reported that data was stolen from 1.5 billion users. there are reports that toshiba's plans to sell a stake in its memory chip user -- its memory chip maker is bringing attention from investors. too barra is returning silicon valley, quitting the chinese phone maker after four years. says it is time for him to return to the u.s., but he is not saying what he will do next.

that is your "bloomberg business flash." francine: turkey's president erdogan's campaign for sweeping authority with parliament approval will occur on saturday. tomorrow we will be watching for the turkish freight decision. we are joined tomorrow by bloomberg news' international government editor. in new york, bruce kasman. with?will turkey and up investors are questioning whether there is too much power at the top, which means that investors are less secure? john: there is some optimism that we might see some sort of a turnaround in the currency -- in the current system at some point, given that the presidential election is the big piece hanging over turkish politics and turkish markets right now. but certainly it does look like

heading for this referendum in early april -- i am not 100% sure yet which way we will go. areainly a lot of people saying it will be a stunning development. francine: let's say that the referendum is in his favor. is he in power for the next 30 years? john: if you look at the terms of the referendum, the maximum of terms he could do is three , if everything fell into place. that is still a long time. erdogan is not necessarily a young man. but you could see him governing for the rest of his life. francine: we have seen such wild gyrations in terms of the turkish lira. forced the central bank to remain independent to fight for its independence and raise interest rates? john: that is one of the big question marks. erdogan has made no secret about his desire overtime since he

became presidency. he will be one of the most powerful presidents in any political system around the world, and that would give him a huge ability to sway central-bank decisions and perhaps also to change the mandate. back 20 yearsra -- it is real simple -- this is where mr. erdogan came in, and this is the success of the erdogan regime. just fabulous lire stability. how does he do this? how does he stabilize the economy, stabilize the system, and just get lire back to 4 to 1, notn at normal five to 1? this is one of the reasons he is so popular in turkey. people ask me, why is he so popular and keep winning elections check of the simple

answer is that you look at the previous 20 years. period before he came in -- he can tell you, i have given you economic stability. if he were donald trump, he may say, "i made turkey great again." middle provincial classes in the country again. that explains his popularity. tom: what is the turkish view for jpmorgan? bruce: we think the economy is going to do ok, and it does ok in the environment of a global economy that is doing better. we think they are going to widen the ban and raise rates -- widen the band and raise rates. the issue for turkey for the near term is going to be what the region and with the global

economy is doing, how much capital is flowing in, and we think the picture overall is reasonably constructive. tom: is there a tip point on lira? bruce: i don't want to get into that. tom: thank you so much for your incredible work. coming up on bloomberg radio, we will speak with david herro, heavily medicated after the packers were just trounced by the atlanta falcons. david herro, medicated in the 8:00 hour. bloomberg radio. ♪

tom: foreign exchange, the litmus paper of the global system. the dollar a little bit weaker, pretty conventional this morning. 1.0732 as well. the renminbi is really not part of the discussion this morning. francine: coming up shortly is bloomberg daybreak: americas," westin, jonathan

ferro, and alix steel. alix: over the weekend we heard an executive order was signed by donald trump on obamacare. how easy will it be to replace and repeal? we will be speaking with michael humant, former health and services secretary. he will give us insight as to how easy or not it will be to change obamacare. also signing -- also shining the lens on bank services as well. there should be some great discussions. good to see you back in the warmth, back from davos. tom: thanks so much, alix steel. we appreciate that this morning. it is the trump first 100 days. maybe we have to get to the trump first 10 days. valliere of verizon, and

bruce kasman. the republicans will go for more than an hour in philadelphia later this week. i would suggest that meeting is more important than the meeting with prime minister may. what does speaker ryan and senate majority leader mcconnell say to trump after a bernie sanders-like speech? : you look at that speech. first of all, he said the politicians, both parties, were out of touch and corrupt. that angered a lot of people. but then on the issues, he did not talk about tax reform. he talked about spending a ton more money on infrastructure. he did not say a word about the deficit. so on issue after issue -- and then he ripped on free trade. on issue on issue, this was the anti-wall street journal editorial page speech. of awithin this idea

tactical response, topic by talking -- -- topic by talk eric -- topic by topic -- i read a great summary in "the new york times." these analyses are miles apart from where the president is. greg: and they take time. a lot of republicans feel they have gotten blind-sided. trump said we are going to have a plan soon. it will immediately replace obamacare. he also made comments on tax reform that blind-sided them. here is the problem for the markets. if this obamacare replacement drill takes months and months, that will not well for tax reform later this year. francine: i am going to bring you some earnings from halliburton, the company that provides energy services, engineering construction services, and manufacturing products for the energy industry. the fourth-quarter adjusted earnings per share seems to be a little better than expected. if you look at the operating

costs, that is better than expected. halliburton does not see reflection in the international markets until the second half of 2007. greg, what can president trump the ceo's such as halliburton and others, so they start spending again? i do not know whether that means investing or m&a, but the animal spirits to pick up. couple of gooda points. first of all, he will make it can merge m&a -- coke with pepsi. it is going to be the most liberal, relaxed m&a from the justice department that we have seen. the other thing, i think he will talk more than a lot of republicans about spending a ton of money on infrastructure. i still think the infrastructure story is a 2018 story, but we are going to get something on that. francine: what can he do so that president trump does something which is valuable in the longer-term?

the problem with infrastructure -- and this is something that was decided right before brexit -- the project can take too long a time or you can build projects that do not sustain the economy longer-term. how does he pick the project? greg: that is going to be a long debate next year. i am not sure how many shovel-ready jobs there are. here is the big point. there are going to be dramatic tax russ -- tax cuts from 35% to the low 20's. i think that is dramatic. companies as we go into late 2017 will be anticipating a whole new landscape when it comes to taxes. tom: help me here. when jennifer rubin of "the washington post" writes the most scathing op-ed from the weekend -- help me here, when mr. trump differs from the conservatives of your granite state, new hampshire. is he a conservative in any way?

in some ways, yes. but more than ever, he is a -- but more than anything, he is a nowlist the democrats are the establishment. the fact that he has done it so it jointly really does not step -- does not set the status quo in this city. tom: do we look at the trump moment as a one-off within our scope and scale of history, or is this a sea change on an era? which is it? i grant, it is only three or four days into the show. greg: i do not buy this dystopian view of america. but at the same time, my new year's vow for this year is to not underestimate this guy. tom, he has got the votes -- he has the votes on nominees, obamacare, and tax reform. tom: i think this is absolutely critical.

greg valliere, more than anybody i know, said do not underestimate this guy two years ago. francine: what i want to hear more of is, does he have the support of the party? what does donald trump tend to do it -- what does donald trump intend to do to keep that support? greg: he needs do three things. the market needs to do pretty good, approval numbers need to duplicate. if his approval numbers go down more, even republicans will get nervous. but for now it would be a huge mistake to underestimate him. tom: within those ratings, 40% is a breakpoint. what is a number? is it 38% or is it as bad as francois hollande in france that he has to get to before there is trouble? i think the low 30's would be a real problem for him. he is not there yet, but he has

to stop the tweeting and stop some of these vendettas that are not helping. political capital is tricky. he has to hold onto it. tom: greg valliere a, thank you so much. bruce kasman, thank you so much. maybe next time we will talk more economics. bruce kasman is with j.p. morgan and economic politics for us today. it has been an extraordinary moment since that time friday. 6:00 p.m. in davos, where we saw the inaugural speech. we are going to continue. austan goolsbee, thrilled to bring you austan goolsbee on radio. we will talk with him about america's future. this is bloomberg. ♪

jon: good morning and welcome,

from new york city, bloomberg daybreak," on this monday. how many her -- how many times have you heard this in the last week? teachers negative, -- futures negative. in the fx market, switch of the board. a weaker dollar in the g 10 space, captured by dollar-yen. treasury stable -- treasuries stable. alix: here is what you need to know. the u.s. dollar touching a six-week low, global equities edging lower. and investors respond to trump's first days in office. the dawn of a new beginning. prime minister theresa may will become the first european leaders to visit the new america first white house. will they find common ground, or are there challenges too large to overcome? and president trump's first days in office show no sign of shaking off