anna: building a wall. president trump is expected to announce plans for a mexican wall as it focuses on national security. manus: earnings propel the s&p 500 to an all-time high. oil and gold are leading commodities lower. bank and spain's biggest reports earnings in our next earnings. francine will sit down with the chair, with plenty to talk about from trump to brexit. ♪

anna: a warm welcome to "bloomberg daybreak: europe" >> santander novartis kicking off earnings. hasourth-quarter net profit come in at 1.6 billion euros, better than the estimate. the estimate was for 1.40 8 billion. they're telling us the bad loan ratio is moving in the right direction, saying the ratios at 3.93%. an update on their fully loaded 10 .55%, a little higher than it was in september. chair sayingk, the that the 2017 environment is even better than the main market in which they operate.

that's at 7:30 london time. plenty more to come on the european banking story. no doubt that will talk about political change in europe and the united states and much more beyond. novartist's talk about , one of the huge drug companies. net sales coming in at $12.3 billion. ,elow what the market wanted which was $1.13. this is the critical point, net sales will be in line with the prior year. in the eye care business their problems, you have the heart drug that will be critical, fourth-quarter adjusted net ,rofit pretty much in line $2.66 billion. withid performance continued operations pretty much in line.

francs, so they are guiding pretty much in line. will have a conversation with 5:00 a.m. novartis at london time. let's talk about the markets. it's official, we have donald trump saying he's ready to build the wall. , so it'sis going lower a classic market reaction. investors have been buying mexican bonds virtually every single day since donald trump was elected. what you have is 112 billion pesos added to the bond portfolio since he won the election. the debate is, as the peso drops, what would that do to compensate for any border tax of 36%? just after 6:00 london

time. we talked about the peso, that's one of the big market moving stories of the morning. also the japanese currency, the dollar against the yen, the dollar in retreat against yesterday's session. japan has now to 14 month run. goldman sachs talking about who has the most currency wise in terms of exposure to donald trump, south korea and the taiwanese dollar. fourth-quarter gdp came in ahead of what the market had expected. exuberanceional driven by financials and the oil and gas companies? that is the debate. weaker than

estimated inflation data out of australia. president donald trump plans to unveil actions on national security today, including steps toward building a wall on the next in border and admitting refugees close to the u.s.. the mexican peso fell on the news. prospect formp theet director says national debt needs to be addressed sooner rather than later. he also said he would push trump to break his campaign promises and cut social security and medicare. in his confirmation hearing he told senators without doing something soon, the medicare and social security trust find could go bankrupt.

more than $284 million in bonuses, stock holdings and other investment through the back. to help them avoid conflicts of interest the bank is letting him immediately collect about $65 million in cash and stock tied to its future performance. he was paid $20 million for his work in 2016. japan's nafta 14 month run of falling exports in december. exports rose 5.4% in december year on year. his left japan with the trade surplus for a fourth consecutive month. global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. find more stories on the bloomberg at top . this is bloomberg. manus: the markets are moving, the end is confused, according to top .

take it away, juliette. easy, thankjust too you very much. we are seeing some good gains coming from across the asia-pacific region after the s&p 500 it that record high in the u.s. session. the regional index in asia is trading at its highest level since late september. one market worth looking at is australia. we did see that strong rally coming through in metals players and aluminum, which always moves after alcoa reports out after the bell. its revenue forecast looking better than expected and aluminum up by almost 11%. we did have the yen a little confused but the nikkei was trading higher on the back of the export data that sherry was just talking about.

the nikkei finished higher by almost 1.5%. the shanghai composite up by about .2% in late trade. weakening the most since january 9. a couple of movers we've been up over 18%,akata saying it doesn't foresee -- reiterating it wants to avoid bankruptcy and bhp billiton did second quarter iron ore production numbers looking pretty good. manus: more detail on the novartis line. the operating income, the guidance are giving encore operating income is going to decline by low single digits. they are considering options for

the eye care business, this has been a part of their business that they promised the market they will turn around. they are considering their options for that business. , and alsoean a sale we have a share buyback on the way. in the absence of any great path of what to do with your money, how to keep your shareholders happy, that could be the beginning of a bigger move. out corn asaining well as an ipo spinoff. let's have a conversation with the ceo in just under 30 minutes. what happens next for the eye care business? of options there. let's talk about the united states. president donald trump plans to unveil plans for building a wall on the mexican border today, fulfilling a key promise made during his election campaign. the announcement saw the

peso fall to a session low, ahead of a focus on national security. let's bring in a strategist, global strategist, how are you today? another day, another tweet. trade drawbridge getting drawn up, there is a wall to be built. the is all making good on rhetoric of promises he made during the campaign, so were in the beginning of a great shift in u.s. policy? >> in the sense that there is no doubt here is someone who doesn't like multinational trade deal, so nafta is going to be changed beyond all recognition. symbolic?l just it's a big symbol, a big

statement. it's not going to make anybody comfortable about his protectionist isolationism. that's what ist it all due to the dollar? >> it's obviously bad for currencies. it's the cheapest a pretty much any currency out there on some measures. it's better for the yen than the dollar, which is why is confused. the dollar-yen doesn't know which way to go. if capital start staying at home, the yen will be the winner. well.llar will do for the dollar to be the main winner from all this, and for markets to stabilize, we need to get past the bias toward more

protectionism. we still haven't got much from donald trump that's going to make the economy stronger. is -- let'san sachs and a look at the fx boards the taiwan dollar. these are the currencies that perhaps will be under much more trade inwith the trump place. the potential downside has yet to be priced into these markets outside of mexico. so the mexican peso is up, but the other currencies have more to lose. >> u.s. trade is a huge part of their lives. as the chinese economy slows, that is bad. any u.s. china trade difficulty will be reflected.

for people in the markets every --, the korean won manus: there is some momentum there. days whereve been buying the u.s. dollar felt like the right thing to do. there were not enough of them, to put it that way. , ife donald trump arrived you look at where november 9 is element picture, one of the first things he said, you are currently losing money on this idea. we need to flesh this out and see what is actually going to do. that's why people have homed in on the mexican peso story because this is the one where he's really doing it. anna: and you are of a mind to buy the dollar?

>> i think the dollar-yen will get up to 125 or so at some point. we have to get back to things that are good for the u.s. economy, sending u.s. yields up. the u.s. 10 year yield deals have stalled around 20 basis points. it seems just plain wrong to me, the dollar yacht -- dollar-yen ought to be getting a lift. there an irrational exuberance? i love this chart in terms of the backward looking view. this is a value line. are we in danger of the euphoria coming to an end?

i'm not sure you look at dots on a chart -- you still have , i haveof live backs bond issues all over the place. is money coming out of everywhere looking for something to do with itself in the financial market. the developed markets have all got lower bond yields and higher equity markets. those two go together. i need rate hikes to stop this. anna: here's a quick look at your day ahead, we will get the results of the monthly iphone survey of german businesses. prime minister's questions, that's going to be a rowdy one. theresa may is sure to be grilled for her plans for

article 50. anna: in the digital finance conference begins today in paris. that's at 4:30 p.m. london time. manus: coming up, we will discuss how quickly the government will be able to get an offer. anna: then we will be live in madrid for exclusive interview. manus: and in 9:30 a.m. london time will be joined by egypt's finance minister. this is bloomberg. ♪

anna: welcome back. this is "bloomberg daybreak: europe." 2:19 in hong kong. the hang seng is up by .2%. buying a company for

$3.7 billion, snapping up the software maker just before plans to go public. the cisco ceo has been buying software to fire up the company's revenue growth. it's 2017 first major tech offering. janus capital said fourth-quarter profit fell 34% with lackluster performance. the company saw $300 million in long-term net out lows. they said in october they plan to merge and form a $320 billion asset manager. operating profit missed estimates after labor inikes at home and spending the u.s. increase. south korea's biggest automaker said operating profit fell to

$875 million in the three months ending in december. the average analyst estimate compiled by bloomberg was $1.2 billion. sao paulo said it's considering a merger with another bank after three days of reports in the italian press said it was preparing a deal. the merger would reshape italy's financial industry by combining it second-biggest rank and largest insurer. bhp billiton reported second-quarter iron ore 9% as pricesse soared onto mine from china. the world's biggest mining companies that output -- output was 60 million metric times, slightly beating estimates. iron ore hits a two-year high this month after surging more than 80% last year. that is your bloomberg business flash. manus: u.k. prime minister theresa may faces a possible revolt from lawmakers including

members of her own party over the government's plans to eat -- to leave the eu. expected to press for a white paper following yesterday's supreme court ruling that -- the government do not have the right to invoke article 50. >> it was a great speech. the problem is it has very little data and very little policy. we need to see some of the cards and the only thing i can say is perhaps their preferences not to show them because perhaps they don't have any. anna: talking about theresa may keeping her cards close to her best on brexit. tracking all the policies, tracking the judicial ruling, and watching what was going on in markets at the same time, the pound went on a merry dance.

if remus closed the day -- tell us what is moving the currency at the moment. >> is telling us more about the current developments as is theion that the u.k. biggest current account deficit of the major economies and the cheapest currency of the major economies. they cannot bounce again, sterling cannot get back up from these very low levels because we still have all of this uncertainty. we still think the economy is going to struggle for the next few years. the fund is to persuade foreigners to buy the current

account deficit. it's over 5.5% of gdp. i'm going to borrow some money off you and i like to borrow it very low rates of interest. manus: they had their own uncertainty age from the height of the financial crisis. the uncertainty levels are vacillating, but this is what holds the u.k. back, greater uncertainty. the s&p wants to put 50 amendments on the table. it only begins for a much bigger protracted debate. >> were going to find all sorts of ways of thinking about it. through we get the vote

andarliament approves trigger article 50, that doesn't remove any of the uncertainty and we all understand that. around at ato shop high level of uncertainty for as far as the eye can see. where is the risk at the end of this week for the pound as we see theresa may going to the u.s. to me donald trump? there is still a lot we don't know about this resident. the uk's out there first with this meeting. will get some good soundbites about the relationship they have. trade,cup is not against he's against multilateral trade deals. the fact that were making up our trading relationship with our biggest trading partner, i think

sterling is going mostly against the dollar trade to the top end of the range for most of this year. much. thank you very anna: stay with bloomberg this morning. the egyptians are coming to town to raise a few dollars. that's at 9:30 a.m. the egyptian finance minister as his country goes back to the bond market. next, we'll talk about protectionism and hear from the ecb board member on what he thinks president trump is signaling about trade and international institutions. this is bloomberg. ♪

manus: 3:30 on a beautiful, glorious day. the dollar-yen is confused. a new edition of "bloomberg daybreak: europe." stories makingop the news. we kicked it off with italy. anna: an italian wedding are waiting plans. withdering a merger generale and executives from both companies will meet today

or tomorrow. manus: high demand for egypt's global bond sale. investors were attracted by the country's first cell. we focus on the deutsche bank ceo and the asset management unit after five straight quarters net outflows. manus: asian stocks are on the march, earnings are driving the market. morning, a fresh record for the s&p 500, asian shares following u.s. equities higher, headed for a four-month high if you look at the msci asia-pacific index. the asian benchmark has already hit its highest since october. -- economicmand for .rowth driving the risk on

speaking of commodities and commodity producers in theicular, if you look at asia-pacific index, most industries are up and the biggest gainers are materials stocks, even overseeing some industrials down for the first day, copper for example. bhp billiton among the gainers reporting a 9% rise in iron ore production in the three months ending december as prices soared. speaking of soaring iron ore prices, they're at their highest level in more than two years as we go into the year of the rooster, approaching that lunar new year in china as speculation -- saying demand for the rally is overextended and will unravel. thenteresting piece saying global reflation trade is not dead, in fact what is happening

is the axis as dividend to .lassic china driven trades industrial metals and the aussie dollar on fire. not today for the aussie dollar, it's the worst performer among major currencies. also seeing weakness in the mexican peso because of those reports that donald trump is planning to build that wall, and then looking at euro sterling pre-much unchanged and the yen unchanged as well. one analyst saying the yen may strengthen as the truck train does unwind. anna: the ecb executive board member says he sees trust in the global institution and that president trump's approach suggest a connection for bilateral is him. >> it remains to be seen what will happen, of course. what we see today is a sort of

mistrust in global institutions. i'm thinking of the imf and also the european union. these institutions are key in and the wealth and prosperity that we are creating. the final day of the global macro conference in the asia-pacific at the hong kong four seasons. thanks for joining us. and thelook at markets results, people are talking about a global recovery that started before trump came to power. you say that europe is going to model through 2017. is that your best case scenario, muddling through? >> i think it is hard to see a decisive break out to the upside

in terms of european growth. we have become more specific. the current momentum in the european economy is maybe a little bit stronger than we expected six or seven weeks ago. -- recent date has been relatively robust. hand, we do think there will be sufficient growth in the european economy and sufficient institutional resilience in the political system that we can avoid the big political mishaps which might lead to significant economic , maybe with more unfortunate consequences. at the same time, in this environment of political challenges, elections and so forth, we're not really expecting to see european institutions and european governments be able to make the necessary but difficult structuralhat allow

reforms and so forth that could lead to a decisive break north of that 1.5%-2% range of growth we are forecasting for the remainder of this year and into 2018. describeseconomist the german economy. how far can it pull away from the eurozone? pack? -- how far can it pull away from the eurozone pack? the germanight, economy is doing very well. it has low levels of unemployment and is self-sustaining in terms of growth. confidence in the household sector is showing more of a positive dynamic. the other economy that has shown signs of life and is building up momentum is spain, although spain is starting from a different starting point. with much higher levels of unemployment and a lot of slack in the economy, it has more room

to grow and we've seen strong performance over the last 18 months or so. the key similarity between those they'veomies is that both been early reformers. germany took some important structural improvements more than a decade ago. crisist the peak of the also bit the bullet in terms of doing some labor market reforms. both those countries in different ways from a cyclical perspective are benefiting from the fact that those reforms were put in place. where we have a bit more concern is in the group of countries we call the late reformers. that might be a euphemism basically for non-reformers. perhaps italy is an example but there are other countries in that group for you cannot seen the structural changes and you've not seen the declines of

unemployment. it is those late reforming countries that are still dependent on the macro stimulus coming for monetary policy. manus: one thing donald trump rhetoricin his trade is provoke countries to reform. talk about the risk to europe, specifically germany, from a protectionist oriented trump. deals, butlateral he's referred to the german domination and the eu as an issue -- instrument of german domination with the purpose of beating the u.s.. >> i think you are right. across asdoesn't come a great enthusiast for european institutions. in this new more transactional

mode of how the u.s. is dealing with its international partners, that is not a great signal for europe in general. and for germany, which is perhaps the most export oriented and that the european economy overall. as we move in the direction of more of bilateral agreements and we see less reliance on multinational and multilateral global economic institutions, those countries that have strong governance of their own national deftlys, mr. trump's heading in that direction. china and japan are countries that have unified economic making.ce and policy the danger from the european perspectives is that the governance of the euro area, the fact that we have 19 different sovereign countries and only one central bank and the difficulties of managing that makes it difficult for the euro area to come up with a united voice and be able to be an effective player in this more

transactional arrangement. there.e are bigger risks it puts the emphasis or need for europe to shape up in terms of improving its governance so it can deal with the challenges posed by this new mobile regime. an new domestic politics within the eurozone as well. when you look at the risks that lie ahead, do you think markets have overdone their concerns about fiscal risk? >> i think it's difficult from the point of view of an analyst not to sound somewhat complacent. we have been wrong about mr. trump's election and about brexit last year, so our track record is not a strong one. i think the base case has to be in line with the conventional wisdom.

mainstream incumbent government and politicians in europe is probably unlikely to win the elections in the netherlands and france and germany that we are facing through the course of this year. at the same time, i don't want to sound complacent. certainly those forces probably, some risk. consequencest high , but more importantly, at a lower frequency and with a longer horizon, perhaps looking , note next election round this year, if we don't see response from the mainstream which will improve economic performance in europe, then the populace pressure will only build. even if they don't achieve victory, they are increasingly shaping the political debate in these countries and that will improve governance moving toward

fiscal union to make the euro area more workable and effective. it's only going to make that more difficult politically. there, but weisks are in line, which i said earlier. we do expect to muddle through where we don't see that uphartic moment where we end with a government that's looking to take it outside the eu. those would be the events that would produce a significant market response. that is part of our expectation for this year. speaking here from asia, there are many attendees at this conference who are thinking i don't want to touch europe because the political risk is too great. that is an understandable sentiment when you are a long way away. i think they are two negative about the short term. i want to take you back

to your home ground, which is the ecb. should we ready ourselves for greater conflict on the german inflation rates? we have one of their executive sayingembers last night that all the preconditions for a stable rise of inflation are there. would it be folly? is a going to be more just trust in the ecb? there you go, he's not going to be able to respond. european economist from goldman sachs in asia. he's not with us in the longer. anna: really interesting that he said asian clients would be overpricing due to the political risk in europe, which seems understandable from a distance.

ex: 43 here in london. novartisl speak to the ceo as his company reports earnings. this is bloomberg. ♪

manus: welcome back. there is a shot of the city of new york. it was financials and raw materials that punched the s&p higher yesterday in trade. juliet is standing by with the business flash. fourth-quarterid

profit rose to 1.6 billion euros on high income from brazil. that beat analyst estimates. the ratio came in at 10 point 55%. don't miss an exclusive conversation with the bank's chairman at 7:30 am london time. is buying a company for $3.7 billion, snapping up software maker just before plan to go public. the cisco ceo has been buying software to fire up the company's revenue growth is demand fades for hardware and programming. it's 2017 first major tech offering. janus capital said fourth-quarter profit fell 34% amid lackluster performance. the company saw $300 million in long-term net outflows. janice said in october plans to

merge with the london-based company to form an asset manager. hyundai posted earning profits that missed estimates after labor strikes cut production at home and incentive spending in the u.s. increase. south korea's biggest automaker said over and profit well to 870 got really dollars in the three months ending in december. the average analyst estimate compiled by bloomberg was $1.2 billion. sao paulo says it's considering a merger as the bank broke his silence after three days of reports in the italian press that said it was preparing a deal. it would reshape italy's financial industry by combining bank and-biggest largest insurer. bank and largest insurer. bhp billiton reported second-quarter iron ore production rose 9%. the world's biggest mining company said output was 60 million metric times, slightly

beating estimates. iron ore hitter to your high this month after serving more than 80% last year. that is your bloomberg business flash. anna: back to the earnings, novartis earnings out, announcing plans to buy back $5 billion in shares this year. jimenez, ceo of novartis. great to have you on the program once again. if we can start with your plans for the out con part of your business. you talked about considering various options. how far down the path are you? are you talking to potential buyers? >> we know it's today we are going to conduct a review over the next year that will include all options, including retaining the business to exiting the business through capital markets such as an ipo.

we think now is the time to take a look at the best interest of our shareholders for that unit. it will not include the alcon.ceutical part of we have integrated that into the innovative medicines division. we are just starting the review now. we are not down the path too far , but we thought we should be open to it so everyone knows we are conducting this review. anna: so you are not talking to any buyers as of yet? >> i don't want to speculate on that. we are doing the review because now is a good time for us to look. if you look at results in the fourth quarter, we were able to stop the decline on out con. mike ball and the new business management team took the eye care business and grew it 5%. this is the third consecutive quarter of growth for the vision .are side of alcon

we still have to grow the surgical side, but we are making good progress. we will given up take toward the end of 2017. -- an update toward the end of 2017. start of ahis the bigger program for your investors? and what is the motivation here? do you lack ideas in terms of acquisitions, the ability to get any new acquisitions under your belt? >> no, actually it is the opposite. the announcement of the buyback today of up to $5 billion this year is really reinforcing the growth prospects of the company. we gone through difficult 2016 as we get out from under the patent expiration. last year year we had $2.4 billion of total patent

expiration that we completely offset with our growth products. we start to enter the next growth phase at the end of 2017 when we are completely out from under that patent x that -- expiration and we expect to see grow atth trajectory 18, 19, and 20. the announcement of the share buyback reinforces the company's confidence in that growth trajectory. butill continue to do m&a we decided now is a good time to remember up and buy ourselves back and return some cash to the shareholders. obviously you are reinvesting in r&d as we go through the year. my colleagues have a ranking of pharmaceutical companies based on return of r&d. they say you come 10th out of 13 large companies. is that something you are looking to address?

our numbers show that our return on research and development is quite good and is actually better than that, significantly above the cost of capital. you have to look at a long time frame. these are long product cycles. it takes is 10 years to go from idea or target all the way to new product launch. you have to make sure you're looking at the right time period and the investment. we get quite a good return on investment, so that's why we continue to invest. we were able to overcome 2.4 billion dollars of lost sales due to patents and show sales that were flat versus a year ago . once we are out from under that patent expiration, we believe you will see this companies true growth rate start to emerge. let's talk about where you are going to spend your money.

you sat downdavos with us and you talked about your industry getting away with murder. where are you going to put the next investment? will you invest more in the united states of america to reaffirm that you're going to produce more in the united states of america? joe?hifting gears, >> as the ceo of a major multinational company like novartis, i'm constantly looking at the environment of any country that we invest in. the positive news about what the new administration is saying in the u.s. is that they expect to create a lower corporate tax rate. that would be nothing but positive for investment. what we are doing is watching to see how the administration is going to improve economic conditions in the u.s. in terms of investment. veryr the words sound positive and were looking forward to working with the administration to make sure our

investment continues to be good for the company but also for american jobs. this industry spends $70 billion in research and development in the u.s. and it accounts for about 4.5 million high-paying jobs. it is a very important sector to the new administration in the u.s. and the u.s. will become a place where it will be more attractive than it has been in , particularly if they can get that corporate tax rate down. anna: there has been conflicting speculation about your intentions to remain with the business. do you want to put any of that to rest today? on novartisocused and getting the company through the patent expiration and going into the next growth phase. i'm in my eighth year as ceo. ceos don't stick around forever, but i'm really excited about

working this year and helping bring this company through. there's more to come after this. this is bloomberg. ♪

manus: building a law. president trump is expected to announce plans for a u.s.-mexican border wall. >> earnings propel the s&p 500 to an all-time high bolstering asian stocks. oil and gold are leading commodities lower. the [inaudible] .eporting earnings francine lacqua will sit down to talk everything from trump to brexit. ♪

manus: welcome to bloomberg daybreak: europe. it is our flagship show. anna: we have a bit of breaking news coming through on the mining sector. manus: copper is trading at its highest levels. seeull-year -- they tons.tion at 9000 metric their copper production in the fourth quarter was over 200-5000 tons. a little bit of guidance in terms of what we can expect. there has been a huge move on the commodity side area goldman sachs going overweight on commodities. copper is trading higher. you have the stability coming through in china. the fourth quarter production

4.5 thousand tons. they are saying the full-year 8.529.5 thousand, that is the range and the cash byt for 2016, cutting costs 20% to 21%. that is the theme coming here from the oil industry from the commodity producers, all cutting the cost and going prior production. anna: they're saying that opec and non-opec oil producers are focusing in on what they are moving overnight. up by around half a percent. up on thates picking on the asian session as well. manus: let's take a look at the risk radar. that is where the drive comes

through. financials, oils, and raw materials storm debt. s&p futures are at the bottom of your screen. european futures made a record yesterday. the vix, volatility in the u.s. is 27% below its average. we're heading the low we have not seen since 2014. freeport-mcmoran up 8%. the commodities and run materials absolutely on. confusedeone on -- was apparently. japan snapping a 14 month run and dropping exports. are saying what protectionism does. that tends to boost the japanese economy. we saw growth slower in the fourth quarter. the aussie dollar on the backside as well on inflation data. a look at theave

boards. in asia are loath to touch your because of concern about political risk. they were overindulged and [inaudible] the u.s. treasuries when they make it to 3%, bang on change. president donald trump plans to unveil actions on national security including steps toward building a wall on the mexican border and limiting refugee in flow to the u.s. he tweeted overnight, big day planned on national security tomorrow. among other things we will build the wall. the mexican peso fell. -- as thedonald trump 20 trillion dollars national debt needs to be addressed sooner rather than later.

in his confirmation hearing he told senators that doing something soon medicare and social security trust funds could go encrypt. and jumping from goldman sachs to the trump administration. to help the former ceo of what conflicts of interest the bank is letting him collect $65 million in cash and stocks tied to future performance. he was paid $20 million for his work in twice 16. and fourth-quarter profit rose to 1.6 billion euros on lower loan provisions and high income from brazil. that beat analyst estimates. the common equities here, one ratio came at 10.55 versus 10.47% in september. don't miss an exclusive

conversation at 7:30 a.m. london time. japan has snapped a 14 month run of falling exports in december with shipments to china setting a record as global demand picks up. in december 5.4% jan year. the rise with a trade surplus for a fourth consecutive month. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top . of thegetting the close china session, the shanghai composite has finished higher by .201%. it has been a good day for asian inities led by that rally u.s. equities with the s&p 500 hitting that record high. talkingd anna were about the yen being confused. we saw a great rally coming through in export stocks on the and we that export data

did say the yen snapped a little bit of its gains in the morning part of the session. australia closed higher, a lot of strong rallies coming through as you would expect from the likes of bht billiton. and also illumina which has a joint french or with alcoa. alcoa reporting after the bell in the u.s. session and illumina rose, one of the best performers. also strong gains coming through from hong kong and across the region on the back of this rally that we saw in u.s. equities. the regional index hitting its highest level that we have seen since last september. the aussie dollar falling in fourth quarter cpi missing estimates today. manus: thank you. let's turn our attention to the fed. the next guest says the central bank is making a huge mistake by saying the u.s. is at full employment when it clearly is not. guest is a former boe policymaker.

welcome to the show. here we go, you have trump on attitude, taxal breaks, and you have the fed on the other side trying to juggle all balls. you say the fed is going to make a mistake. guess: the reality is they have mis-underestimated the first line. in the past you could look at the unemployment rate. today it is pretty low. the unemployment rate move perfectly. as one went up the other wind down. if you look at the employment rate it is over three percentage points below where it was in 2007. these are the people who voted for trump, the left-behinds. people ought to be feeling good. that to feel that there are plenty of jobs out there. that is exactly what they do not

feel. if you look at the estimates of a was the employment rate in 2007, what is it today, the answer is how many jobs, it is about a million jobs. that is the first and all is well. the at what has happened in voting, people are not doing well. you have underemployment after that. the speech that janet yellen made says all those people are gone, you can ignore them. you cannot ignore them. they stood up in the election and they are to be counted. one of the big things we are listening to is whether those people are going to have things delivered to them by trump. i think this is crucial. we'rerd them saying thinking about cutting social security and medicare and medicaid and taking people's health insurance away. these are the people who voted

hoping none of that would happen. we have this big dilemma going on. manus: on top of that and front and center, let's build a wall. that was tweeted overnight. i wanted to take that big issue which is protectionism. what that means to those people, those -- to those people who voted for trump. the reality for them with a protectionist trump. will see what protectionist trump means that we have to think about what will any of this due to the folks in ohio, michigan, pennsylvania, kentucky, west virginia. will he be able to deliver to those people and once you start to repatriate money and you get cuts and other rest of it and you give big cuts to corporate taxes, our firm firms going to go to ohio, michigan, and pennsylvania question mark i suspect they are not. they're going to texas and south carolina where the unionization rate is 1%. anna: do you see anything in his policies that will boost growth in the short term? guest: probably not.

a long time. the best hope we have is a rising tide lifts all boats. the problem is that the boats are going to rise, the people who essentially he really needs to get to do not look like they are going to get help. they will get jobs building pipelines and the wall. what is going to happen to these folks who put so much hope and trust and faith in him? that is the big question and you might see the same question of brexit. the people who voted for brexit, the people in seaside towns and cold towns. how is that going to be delivered to them? manus: you're not getting away with that. let's talk about the dollar. there is a thought of that presses is. let's say he gets moderate

growth. what does it do to the dollar in what is the dollar impact on this people in the rustbelt? guest: if you can get 4% growth, that is fine. manus: i will be the greatest job creator that god has ever seen. guest: if you look at the numbers, he says he will create 25 million jobs in a decade, if you do the calculation it is about 200-8000 people a month. that you have to create for a decade. obama created 200-6000 a month. when he said it is the greatest -- it is thef exact speed that obama created. can you create jobs in a way that has not been done before since probably recession is headed your way? we will see. it will take a while. it does not put people in place. there are 4000 jobs you have to put in place to implement this. it is going to take a wee while. anna: why do you say recession

is on the way? guest: the business cycle moves, it normally takes eight years to 10 years. if you say the u.s. enters recession in december 2007, you can add 10 to that and you know that ultimately, recession is probably coming. if the fed starts raising rates thinking we are at full employment when we are not. the reality is obviously it is very uncertain. they are sitting there thinking, what is trump going to do, so my view is the last two rate rises were mistakes. they should be sitting and waiting and watching and looking and we will see what happens. the problem is what do they do on the downside if suddenly their economy starts to slow and trump is not able to deliver these big tax cuts. let's hope he does. i would be very supportive. we are drawing a line under that.

brexit is next. anna: 9:30 a.m. london time we joined by the egyptian finance minister. we will be speaking to him as his country goes back to the international bond market for the third time since it floated its currency. manus: next, battling brexit. the u.k. supreme court rules parliament has the power to invoke article 50. we consider the opposition lawmakers might do next. this is bloomberg. ♪

anna: like them back to bloomberg daybreak europe. belooks like it will stronger at the start of the equity day for european markets. that is what futures are suggesting. let's get the number is less

flash with juliette saly. europe's: second-biggest maker proposed buying $5 million in shares and is considereding -- considering separating its buying division. pdynamic.g ap the ceo has been firing up the revenue growth. they price the ipo in the first tech offering. and fourth-quarter profit fell cashs investors pulled amid lackluster performance. three hundred million

dollars in net outflows. in october he plans to merge with the london-based henderson to form a asset manager. that is your lumber business flash. anna and manus. premise -- prime minister faces a potential revolt i lawmakers including embers of her on party over the government's plans to leave the eu. opposition and some rebel mps are expected to press for written brexit plan. anna: following the ruling that parliament has the power to invoke article 50. invoke article 50. we spoke to the lead plaintiff in the case. >> it was a great speech. the problem is it had very little data and very little policy and surely as we make this decision to go forward, we need to see some of those cars and the only thing i can say is perhaps it is a requisite not to show them because they do not have any.

formerlet's bring in our boe policymaker in. gina miller would contend there is not any plans to [inaudible] theresa may has wrecked sterling. the situation changed. you are -- or take so far. guest: it is clear the markets are holding that may government in check. every time it looks for some thef edge brexit coming, and preventedd from doing stupid stuff. there are huge amounts of uncertainty and i think the biggest worry of all is the data on the firm's investment and hiring intentions. warning got another about brexit. i we seeing in the data a drop off in investment that you put down to brexit or is it too early to see?

guest: i do not know if we are seeing it in the hard data yet. the big thing we saw was movement in the data street after in june. that is the reason the bank of england acted. those were the days in 2008 that read that recession was coming. some of the things we have to remember is the bank actually acted and that lifted things a little bit. i think the great uncertainty is the -- a big deal. bi has itsmentioned own uncertainty index. it has been sloping down. you sat on the mpc. give me a sense of the kind of data points that you think the bank of england and carney are most focused on now. guest: their most focused on the qualitative data because it takes quite a long time.

the reality is we did not have firm data. they went in in april 2008, we did not get from data saying that until june 2009. you have to look at multiple indicators. this is a huge shock that came. it takes a while to observe things. i think they did the right thing by acting in august. the question now is what is happening from here? i think they will be on hold. i think they will be for a mindful. firms are starting to get profit warnings. that will -- governmentas slowdown [inaudible] isst: the one worry perhaps that people learn from this and they say unless i get a special deal i am planning on leaving. that was always the problem that the government had. you make a secret deal and

everyone says i want one. they will be looking at what the markets think they will be doing about the rising inflation which is clearly a big deal. rise. a surprising they will be watching the data carefully and the worry always is in these circumstances you need to get your retaliation in first. you cannot sit in weight and say we should have acted, this is what happened in 2008. when you are at neutral, which way do they go next? good theirnow how forecasts have been. the answer is always in these circumstances, there are two possible errors you can make. you do not act when you should have or you act when you should have. acting when you should have, the worry is that you do not act when you should have acted. they will be very mindful of that. we do not have good data on this. anna: does that mean get ahead

of the inflation rate hike, get ahead of the recession with a rate cut? guest: that is the problem you might have. they are mindful of the rise in the inflation rate mindful of dataconomy, the employment looked too slow. the great job generating machine that they u.k. has been, that looks to have studied off. there was a good speech about the view that the labor market -- ando be listening loosening again. it is on hold. let's watch the data. if they government does something silly the markets will respond. manus: are you a buyer of the great reflation trade? big day,y that great we are off to the races again. threest: i spent the last days i came back to the u.k. and i spent the weekend watching what was going on in the united states and it wanted to hunker

down. reflation trade coming. thanks for joining us. now at 7:24 a.m. in london. is aboutancine lacqua to sit down with the bank's executive chairman for an exclusive interview in a few minutes. good to see you. you are in madrid. a nice set of numbers. a very good conversation. francine: my interview of the week will be sitting down with our guests shortly. this pair of numbers are good. we saw the goldman sachs note. what we want to focus on if you look at the regional exposure, 20% in brazil, 19% of profits come from the u.k. and 14% in -- spain.

she does see a better 2017 both for the americas and for europe. does it mean that interest rates will change, does it mean there is more opportunity for cost cutting and they will be focusing in on the u.s. and the curl else between donald trump and what he means for the emerging markets if we do enter a trade war in the next six to eight months. anna: thank you. francine lacqua joining us from madrid. conversation around banking and the geopolitical context. futures are suggesting they will be stronger at the beginning of trade. he they are -- they are talking about spinning off the ipo. our guest goes to global radio after 8:00. at 9:30 a.m., i will have a

conversation with the egyptian finance minister with mark barton his country goes to the international bond markets for the first time since it floated it currency last year. this is bloomberg. ♪

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only xfinity gives you more to stream to any screen. download the xfinity tv app today. you're watching bloomberg markets. the first trade of the cash session coming up shortly. london. johnson in matt miller is in berlin. pace of pain. president trump is expected to build a wall on the mexican border. the peso is down but not that much. will the european session see a [inaudible] asian stocks follow u.s. equities higher after the s&p hits a new record but is the optimismre