francine: rolling back regulations. trump orders a review of dodd-frank and else the so-called fiduciary rule. the first jobs day of the trunk era, but as the u.s. nears full employment, the new administration says old criteria overplays the strength of markets. theresa may heads to a summit in malta, hoping her relationship with donald trump can gain her leverage and brexit negotiations. this is "bloomberg surveillance ." we have a great impact show coming up for you.

we speak to the chief ratings officer at s&p global ratings, and former chancellor nigel lawson. if you have questions for either of them, go on tv go. on the bottom of the video screen, you can give any questions you want to put to our extend guests. we are getting breaking news in terms of euro area composite for services. these are basically pmi figures. we also have some inflation figures. january services pmi unchanged at 53.7. we have a break down depending on the countries you are in. germany is a little better than expected. we will get back to that. i put it in my data check. euro-dollar, 1.0744, not that much, pretty much coming in line with expectations.

the stocks gaining a little bit. euro-dollar was unchanged. the decimal522, points on that, something we need to fix. the stoxx 600 banks index gaining 1% on the back of that regulation, or deregulation starting point in the u.s. let's get more from the bloomberg first word news. sebastian: the bank of japan fights to assert control over rising bond yields. the japanese central bank disappointed with the smaller than expected increase in bond purchases this morning, which spurred the 10-year yields in the yen to advance. it is scheduled to buy debt. china's central bank is tightening monetary policy by raising the interest rates in open market operations.

the pboc raised the cost of repurchase agreements by 10 basis points each. thethat follows an increase in rates on medium-term loans last week. said todministration is be planning new sanctions on iran. according to people familiar with the matter, the measures are aimed at punishing tehran. both trump and national security adviser mike flynn have said iran is on notice since a missile test last weekend. e.u. leaders meet today for the first time since trump took office. migration is set to be the key topic. later, the other 27 members of the block will discuss the post-brexit future. snap will become the first u.s. social media company to file for an ipo since twitter. the maker of snapchat filed with an initial size of $3 billion. snap plans to raise as much as $4 billion in the ipo for a

market value of as much as $25 million -- 25 billion dollars. global news 24 hours a day. i'm sebastian salek. this is bloomberg. francine: thank you so much. trump will halt a regulation that requires retirement advisors to work in the best interest of their clients while the new administration reviews the rules. the president will also review the dodd frank act. that is according to white house officials. we are joined by bloomberg's michael moore. he heads our u.k. finance team. we're also joined for the hour by luca paolini. thank you both for joining us. michael, we knew that he was going to look at dodd-frank. the fiduciary rule is probably the one thing that we knew may come but we didn't know the timing. michael: and you've heard some

of trump's advisors talk about this rule as something they want to address, but trump himself had not explicitly talked about it. the fact that he's looking at it is somewhat new. this is something the industry was not a fan of, but it has been in the works for so long that some of the banks have made the changes already, or have pledged to make the changes already. it will be interesting to see if they roll some of those back, or go ahead with the moves they've already done. francine: from a european standpoint, if you are protecting your clients less, doesn't it mean you are getting rid of regulation or just trying to impose something that is better thought out? michael: i guess we will see. they're going to do the review and then this is one of those devil in the details situations. the industry would tell you that clientle would limit

choice. it would destroy some of the commission-based models. there perhaps is a middle ground, but we will have to see how strong he wants to be. francine: luca, you follow a lot of the industry. is this automatically bad news for europe if the u.s. gets deregulated? luca: i don't think so. we feel that a lot of this kind of deregulation was already in the price. we believe that there is much more potential for european and japanese banks. the credit cycle is well behind the u.s. i don't think it is a huge change in what we expected. it is good news overall for markets. banks,opean japanese they will outperform u.s. banks in the coming months. --ncine: does deregulation do we not need better regulation? is there a danger that we see

the next financial crisis? luca: there's always the risk. previous crises have been followed by regulation. i think it is just minor. that is absolutely fine. deeper, into something the risk is overshooting markets, much higher inflation. we have to wait to see the details. francine: michael, what do we actually know about dodd-frank? we've spoken to a number of of banks that say they don't want to go back to light touch. what what the -- michael: the banking industry expects is later implementation but not a total rollback of the rules. i think they're going to look at the cfp be and whether that bureau is needed. they are going to look at the volcker rule. that is something gary cohn and steve mnuchin have talked about perhaps limiting market

liquidity, so that could be an area they focus on. francine: how does that fit with populism? i guess this is more general foreign policy, democratic, but you have a president that was elected on largely populist agendas and it seems that he is deregulating the ones that earn quite a lot. luca: it will be a much bigger impact if you reduce corporate tax by let's say 20%. the regulation is a very technical issue. trump way, this is what said before. it was already kind of known. we have to wait for the details. francine: michael, who are the companies that would most likely benefit from this? we've seen a leg up for wall street banks. in terms of fiduciary, it would be the brokerages? smaller a lot of the firms i think would be particularly helped by this. they've talked about the burden

of the compliance cost. the larger brokerages already have some of that in place. i think you may see the larger brokerages kind of go on as usual, but the smaller firms may benefit from this. francine: thank you so much, michael and luca. michael moore with the latest on this possible act of changing dodd-frank and the fiduciary roles, and luca paolini stays with us. if you are a bloomberg customer, you can watch the show using tv go on your terminal. you can also follow our functions. it keeps you up-to-date with the various movements. producers ifd my you have any questions for luca or for mauritz cramer coming up. we will be sure to ask them it on air. let's get the bloomberg business flash. sebastian: amazon has projected

earnings for the current quarter that indicate stepped up spending on warehouses, movies, and gadgets. sales and forecasts missed analyst estimates. operating income is seen between $290 million.nd uber ceo travis kalanick is stepping down from president trump's economic advisory council. prompted apation backlash on social media after trump's executive order on immigration. ick said immigration is vital to the u.s. and to his company. honda has raised its forecast for full-year operating profit for a second time this fiscal year. the company says operating profit will probably rise to $6.9 billion in the fiscal year ending in march, an increase

from an october forecast. those projections could be clouded if protectionist policies raise costs. that is the bloomberg business flash. francine: thank you so much. it is the first jobs day of the trump presidency. polls indicate an increase in nonfarm payrolls with the jobless rate likely holding at 4.7%. the fed sees this number at being at or near full employment but president donald trump and his team spent last year's campaign calling the measure phony. cramer.ing in mauritz he's in frankfurt. with us in studio, luca paolini. great to have you on the program. how do you measure the strength of the u.s. economy. we heard from the trump administration that a lot of measures used so far are phony. will he change his mind when he gets the first jobs number?

moritz: if you look at the fundamentals of the u.s. economy, you can see a lot of bright spots. you have seen a great recovery in employment, steady growth, a recovery which was much stronger than in europe, so overall, the situation is rather comfortable. you can always find areas of concern. but if you really look at the big macro picture, this is not something that keeps me awake at night. francine: how should we -- how should the fed actually look at the data? we've been told over and over that they are data dependent, but now they have this big unknown of trump economic policies. how do they way the two? moritz: i think the question was about the fed. we work under the assumption

that the institutional establishment under which the fed operates will remain unchanged. we have important nominations, replacements, starting early next year. is too early to speculate where this will be going. i think the new administration has not pronounced it very explicitly, regarding its views on the future operational environment of the fed. we are not seeing any reason to doubt that the independence of would beal bank increased or lessened or anything else in the future. francine: luca, how much is a reset for the fed, the trump policies -- i have a number of economists saying they won't make that much of a difference, and other saying, let's wait and see. luca: i think obviously they

will make a difference. if you consider what france is proposing, a fiscal stimulus of more than 1% at a time when the trend, is growing above obviously there is a risk on inflation, but this would be felt year. [indiscernible] would donald trump have to fix productivity? luca: that is very difficult. this is not a problem we've seen in the u.s. it is a global phenomenon. some economists think this is a measurement issue. it will take time. a fiscal boost will not h elp. you need to invest in infrastructure and education. it is a long-term task. francine: is there something that the trump administration could do now to fix productivity, or is it a measurement problem?

productivity growth in the longer term is always a question of skills and education. it is a question of organization within companies and modernization of those structures. i think the u.s. is doing fairly well on the latter of those two. we believe there are clear issues to be addressed. that is not u.s.-specific. the u.s. may have it more than others. it is really on the education front. you have one of the best were some of the best educational institutions in the world, but a large part of the population never gets anywhere near those. this is almost a generational , to bring the skills up to a higher level. once you achieve that, many of the issues we have been seeing about the growing income

inequality will be mitigated. this is sort of the economic timeframe. i think the political timeframe is much shorter. that is why other activities and policies will have to be implemented in the meantime. you can't wait for this glacial shift. francine: what is your biggest concern on the u.s. economy? do you really worry about strength in dollar, currency, or trade wars? somethinge dollar is we keep an eye on. if you have an appreciation of the dollar, what happens is the tradable sector in the u.s. will become less competitive. this is where we have the interaction with monetary policy as well. if you have a fiscal policy fed mightuably the

take the view that this will stoke inflationary pressures and they might hike faster than before anticipated and that could mean the dollar strengthens further and the tradable sector is getting weaker. that could feed on itself in terms of protectionist instincts getting the upper hand. early to conclude that there will be a complete change in trade policy and protectionism. is not fullyation in place yet. many important nominations are still awaiting approval. congress needs to be on board on many of those measures. it is not that the white house has total control over this. there is division of powers in the u.s. democracy. that is still constitutionally in place. dramatict will be less on protectionist fears than the reality.

seeuld really step back and whether these policies on protection really come forward. they do contradict much of what the republican party has been standing for over the decades. francine: thank you so much. moritz kraemer and luca paolini both stay with us. john willens joins us later today. you can catch him on "bloomberg markets." bying up, a surprise move the bank of japan as it tries to assert control over bond yields. this is bloomberg. ♪

francine: this is "bloomberg surveillance." the bank of japan fights to assert control over bond yields. but the boj has now offered to buy an unlimited amount at fixed rate. let's get more with brian fowler. he joins us from tokyo. tell us about this move. dramatic an incredibly day in the markets. oj came up short of expectation. that disappointed investors. the 10-year yield got up to 1.5%. then the boj came in with a surprise operation with a fixed rate unlimited buying in the upper -- in the afternoon.

i think the market came away with a sense that the boj failed with its communication. there's also some sense of, what does this mean for the future? policy board minutes that were released this morning showed that a couple members of the board last month said the boj might want to be more flexible in terms of setting a range, or could even live with a slightly steeper yield. there might have been some speculative moves as they attempted to push the long-term rates higher. francine: thank you so much. we back with moritz kraemer and luca paolini. luca, what do you make of this? we are calling it the boj's heavy hands. the first circle is when the boj announces this operation. the red circle is when it announces its fixed-rate operation. it was always going to be difficult. we had rising bond yields

globally. the japanese central bank has this problem to keep bond yields at the level of 0%. what is important for us is that what the central bank of japan is doing is expecting to keep interest rates low when there is pressure for the fed to hike. i think the conclusion should be a weaker yen. francine: mauritz, what is your take on it? will it work? this is a textbook example of how you can overburden monetary policy in trying to rekindle growth and dynamism in the economy. i think it is pretty far-fetched to say the japanese low growth experience is due to too tight monetary policy. the boj is really throwing the kitchen sink at the problem. what is missing in my mind is a more dynamic implementation of

the so-called third arrow of abenomics, structural reform, which makes the economy more conducive to investment and job growth. the central bank is powerless. this is the role of the government. francine: i guess a follow-up from that, is this a communication problem? do you buy that should not be the role of central banks? is this a communication problem, and investors will keep on testing the boj? i think the bank of japan has shown a great ability to communicate with markets. i think what they are trying to achieve is pretty clear. you have inflation going down. they have to replay the economy. sometimes they make mistakes. i think the key point for us is they need to keep the yen down. globally rise. this will be very positive for japanese stocks and the japanese

economy. seconds, moritz, in 20 what is your call on japan? they will succeed in 2017 or they need to get structural reforms through? moritz: i think it will be a slow process. i don't see any impetus for acceleration right now. i think they are waiting on what the boj can achieve. i think 2017 will not look that different. it is a very slow process. francine: thank you so much, moritz kraemer and luca paolini. we will be back in a couple minutes. we will talk about theresa may, brexit, our weekly brexit show. this is bloomberg. ♪

francine: welcome to our weekly exit show live from london. for a roundup of the brexit stories from this week, here's sebastian salek. sebastian: the bill to send the european union -- the u.k. out

of the european union asked parliament. mp's warn the approval should not be mistaken for unconditional support. brexit minister david davis outlined his vision for the future in a white paper. he confirmed the u.k. will need both the single market and the customs union, which enable british exporters to trade tariff-free with the rest of the block. the bank of england left rates on qe unchanged yesterday. it upgraded its economic forecast and revealed that some policymakers are more concerned about inflation. mark carney said the central bank is ready to respond as the u.k. begins its formal exit from the european union. >> it will be the country's new relationship with the e.u. and the reforms that it catalyzes. these processes will have a significant bearing on inflation

over the next few years. sebastian: smaller manufacturers warn of higher inflation. the collapse of the pound is driving up the cost of raw materials. costs rose at the quickest pace since 2011. the confederation of british industry says that led factories to raise their outlook for inflation to the highest level in more than two decades. global news 24 hours a day. i'm sebastian salek. this is bloomberg. francine: thank you so much. we are just getting some breaking news out of the u.k. services pmi a touch below estimates but still at 54.5. pmi also amposite touch below but at 55.5. i don't see much movement on pound. we will look at any repercussions. e.u. leaders are meeting today for the first time since trump took office.

the u.k. prime minister heads to the summit with a message from her meeting with donald trump that he is committed to nato. european commission president jungle juncker said the u.s. administration sometimes doesn't understand the e.u. >> we think there is room for explanations because sometimes ehe impression that th administration does not know the details, but in europe, details matter. francine: how will this prove useful in brexit talks? let's go to malta and speak to caroline connan. should we expect a united front today? caroline: theresa may is the leader, the only you leader, who has met physically with donald trump so far. she's expected to act as some kind of bridge, at least that is what she wants to do.

she wants to show the other e.u. leaders that she's the only one who can understand donald trump. you heard the uncle juncker saying that donald trump doesn't understand that he you and he may have to explain what the e.u. actually is. similar view from the e.u. foreign policy chief, who said on her way in this morning, we do not believe in walls, and it is ok to disagree with the u.s.. you have some defiance against the unity that europe is trying to show in malta, especially from countries like old and and hungary. french president hollande said on his way in to hungary and poland that they need to understand there is no future without europe unity. we need to explain to these countries who are starting to defy unity, because we don't really know what donald trump wants.

it is a difficult balancing act for theresa may today. the e.u. leaders are well aware that she may use the special relationship the u.k. is trying to build with the u.s. has leverage in brexit negotiations. francine: thank you so much. we will keep an eye on malta as the e.u. leaders meet. we also have some breaking news from france. this is the french interior ministry saying there is a serious incident ongoing at the louvre. apart't know much on that from one of the radio stations in france saying a french soldier opened fire at the louvre this morning after being attacked and seriously wounding his attacker. we shouldn't jump to conclusions , but it brings us back to some serious incidents that france had to deal with in 2016. just a reminder for viewers joining us right now, the french

interior ministry saying there is a serious ongoing incident at the louvre. all of you in paris, stay safe and keep watching for updates. now on to our brexit show and the u.k. government has set out its 75 page strategy for brexit. the white paper includes plans for emergency laws to protect the u.k. economy in case negotiations break down. next week, the u.k. government will face more scrutiny with its brexit bill as it enters its committee stage. following a final vote by lawmakers, the bill will be sent for more debate to the u.k.'s upper chamber, the house of lords. joining us on the phone is a senior member of the house of lords, margaret thatcher's longest-serving chancellor of the exchequer. lord nigel lawson, thank you for joining us once again. you campaigned for brexit --

>> i'm sorry i can't be with you in the studio, but as you know i'm in france. francine: i know. you always thought brexit would be a success. are you comforted by what happened this week? >> i think it is an excellent white paper and i was very pleased that the bill passed by a massive majority. >> what is -- francine: what is the one thing -- it seemed that kept away in the final pages of this plan, there is something which, if brexit negotiations don't go so well, they could have emergency laws protect the economy. what form could these laws take? >> i'm not sure they said emergency. i don't think it is emergency. but economic policy would be reoriented to meet the conditions when we leave the

european union. that is perfectly sensible. ishink the important thing that this is likely to happen. clearly, paper says echoing the prime minister's there earlier on, that will be deals on other matters, but no deal on trade if it is a bad deal. and there's no way we can get a good deal, even though it is in the economic interest of europe. we should offer them complete free trade but i think they will reject it. they will reject it even though it is against their interest because they are desperately scared of the anti-establishment in most ofning power the countries in the european union. the national front in france and other things in germany, in

holland, other countries, they believe that if they gave anything remotely like a good deal for britain, this would encourage these anti-establishment parties in other countries in europe, so it won't happen. so we will leave on wto terms. we do most of our trade on that basis and do very well. lawson, do you believe we should be paying to have privileged access to the e.u.? >> there's no question of privileged access. the sums which have been mentioned are nonsense. there may be some smaller amounts of money that we are legally obliged to pay. if we are legally obliged, we will pay them of course, because

we believe in law. but in general on the financial side, we will benefit enormously from no longer having to pay the net contribution, which we do have to pay, of some 10 billion a year. rise substantially more if we were to remain in. francine: do you believe we will have a transition every deal is -- transitio nary deal? >> there might be some specific areas in which deals can be negotiated. i have to repeat that they are desperate not to give us anything which is a good deal because it would encourage the front nationale and the other

antiestablishment parties in europe, most of whom are also in favor of leaving the european union, or breaking it up as it presently exists. prepared to dore it, which they are not, then the european parliament would certainly vote it down. francine: thank you so much, lord lawson. i want to bring you up-to-date on the serious incident ongoing in the center of france at the louvre. we understand from the french interior ministry that security services are intervening at the louvre the cause of a serious incident. we are looking also at the local media to give us an update. .here has been a french soldier he opened fire at the louvre on friday after being attacked and seriously wounded by his attacker. he seriously wounded his attacker.

we understand that the incident is ongoing. we understand the whole area, the center of paris, there is the pyramid of the louvre, and this has been sealed off by police after the incident. we will keep you updated and cross over to paris for any live updates. stay with "surveillance." as the bank of england ups its forecast for growth and inflation, we will look at what shape the economy is in. plus, we will bring you the best analysis of what to expect from today's jobs data and focus on trump's plans for dodd-frank. for more, tune into radio live on london dab digital. this is bloomberg. ♪

sometimes the e.u. doesn't understand that you -- the e.u. that was professor ted malik speaking to bloomberg earlier. he said to be in the running for the job of u.s. ambassador to the e.u. let's get your market check. here's nejra cehic. nejra: i want to start with something in the asian session. attempts yield curve control. the yen gained briefly after the bond purchases disappointed markets. the jgb yield hit 0.15%. since then, the 10 year yield has come down to 0.1%. we've seen the yen resume its losses.

i'll talk more about the dollar in just a moment. first, it wasn't just the boj. the pboc raised interest rates. this chart shows one-year interest rate swaps climbing to the highest level this year on that step to tighten monetary policy. in terms of what we are seeing in european equity markets, the stoxx 600 gaining at the end of the week. financials and energy stocks are the best performers, with materials one of the only industry groups heading lower. ofe's the big picture ahead that u.s. jobs data. equities gaining in europe, a stronger dollar. the bloomberg dollar index is still heading for a weekly decline, its longest losing streak since 2010. we are seeing dollar strength today. sterling, 1.2483. .ields in europe moving higher

tracking the 10-year treasury yield, and if we look at the commodities space, you are seeing metals lower partly on that china pmi data, and you are seeing gold off by 0.2%. brent higher. francine: thank you so much. the bank of england left rates and qe unchanged yesterday. it upgraded its economic that somend revealed policymakers are more concerned about inflation. governor mark carney said the central bank is ready to respond to surprises. determinant of the u.k.'s medium-term prosperity will be the new relationship with the e.u. and the reforms that it catalyzes. these processes will have a significant bearing on inflation. francine: let's bring in moritz kraemer. he's in frankfurt.

joining us in london, stephen booth. moritz, thank you for sticking around. what is your take on brexit? how can the u.k. make aches success -- make a success of this? moritz: the brexit hasn't really happened. that is important to remind ourselves. so far, we see the sunny side of brexit. you have monetary stimulus, soft peddling on the fiscal side, and weakening sterling. think the negotiations would be very difficult. they will be difficult early on. after setting the general framework of negotiations over the summer, you will see the discussions starting on the settlement.

as he and divorce, the financial settlement tends to be very difficult. from what we hear, the e.u. feels the u.k. one of them something like 60 billion euros, which would be six or seven years of contributions. lord lawson just expressed this is probably beyond what the u.k. government would feel appropriate. this is a crunch point already. in any divorce, you need to take care of the kids. who are the kids? do they need a transitional agreement? moritz: we were hearing a lot of talk about wto. i think wto is a sideshow. manufacturing exports is not what the u.k. excels in. the u.k. excels in service exports. this is a different framework which has to be negotiated. we cannot fall back on wto. this will be critical.

there's been a lot of speculation on who would lose more, the continent or the city of london. i would think the city of london has more to lose. this will also be a very critical part. we need some guidance early. financial institutions need to plan i had of time. to movefeel they want operations to europe, the have to start doing that now. francine: stephen, if you look at what we heard from theresa may, we are in a better position knowing what they are thinking. stephen: that is right. we have a good idea what the government's objective is. it is looking for a decent trade agreement with the e.u. that means being outside the single market and the customs union. i think one of the other big messages that comes through theresa may's speech and the white paper is the rest of the european union saying, don't

force us to choose between being a european economy or having to adapt. there is that sense that if the deal is not what we would hope, the u.k. will have to take measures to adapt. that is the message that comes through from that. i think the geopolitical developments, with the election of trump, theresa may's ambition to make sure trump remains committed to nato, that is part of a broader package of the u.k. trying to remain relevant to the european union. francine: moritz, do you think theresa may is in a stronger position because she was the first world leader to see donald trump? can she be the brokerage between the e.u. and the u.s.? moritz: no, i don't think so. relationship with the u.s.,

especially on trade, will be quite difficult to negotiate. however it will go, the u.s. will remain a relatively small economic partner compared to the e.u. nations mostly trade with their neighbors. to hope that free trade -- and there is not many constraints on the trade anyway, as we just heard by nigel lawson, so this is not going to offset the potential loss in europe. i don't think this has strengthened the u.k.'s hand in any meaningful way. francine: we need to update our viewers on what is going on in paris. there was a serious incident at the louvre. a french soldier fired on a man that was armed with a knife. the interior minister confirmed the police action is still in place after the serious incident. the area around the museum in

central paris has been sealed off by police. i'm looking at the twitter feed of the interior minister of france. if you are traveling to france, either look at us or other media to get a sense of what is closed. saying the metro is closed going to the louvre. we saw in the attacks in nice and elsewhere, not to diffuse false information. they are just saying, follow the rules, don't spread rumors, and keep calm. it is something we saw maybe going a little pear-shaped in the last 2016 as people get worried and emotional. a french soldier fired on a man with a knife at the louvre and the area surrounding the museum is closed off. we can't jump to any conclusions at the moment. getting someso

live pictures from paris. i believe this is basically on the alley that lounges the louvre. around 250nd that people have been evacuated from the louvre. this is according to the prefect of paris. we will keep on top of those live interviews -- those live images. police everywhere stepping up. they were at their highest security level after the attacks that paris had over the last two years. let's get back to our conversation on brexit. i wonder whether any kind of , moritzthe uneasiness kraemer, stephen booth, moritz, it is difficult to know what is happening. people will automatically jump to conclusions. if there were to be some kind of terror threat, does that actually change -- does it play

into the hands of marine le pen? it is political and this is the biggest risk that could face the european union. moritz: it is highly speculative. as you rightly point out, we don't know much about the louvre right now. if you had a major attack, i think it is fair to assume that the front nationale can probably make haste with that. this is sort of a law and order philosophy that the party is pursuing. not that the other say we are going to be lax on law and order, but this is a hallmark of their program. votes for prop up the le pen in may. francine: stephen, i think the u.k. is one of the biggest contributors when it comes to defense and security in the e.u. some of the conversations the have, that mayll

change the relationship as well. the lastas you enter year with these threats, the u.k. and the european union have shared risks and mutual interests. i think it is the job of the u.k. to explain how the u.k. wants to contribute, particularly in areas of security, foreign policy, and also dealing with russia and the migration crisis -- these are areas where the u.k. can play a role. i think lots of member states would like to see the e.u. engaged in that process. will it be difficult to negotiate? who does the u.k. actually negotiate with? stephen: there are major elections in major european countries. in terms of the substance, we may not see much negotiation of the actual substance of the

brexit trade arrangements until later on this year. part wille important be the process. are we negotiating the divorce terms or the subsequent deal? it is important to get it clear that we are negotiating both. francine: stephen booth from open europe and moritz kraemer at s&p global ratings. "bloomberg surveillance" continues. i will be joined by tom keene. up-to-dateng you with any market movement. it is job stay in the u.s. we will talk brexit and this news of the last 40 minutes. a french soldier has fired on a man armed with a knife at the louvre. this is bloomberg. ♪

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♪ francine: regulation rollback. president trump orders a review of dodd-frank while -- brexit

leverage, theresa may will be hosting a meeting with u.s. president -- a stronger hand at today's summit of eu leaders in malta. curve control of the bank of japan, first underwhelming and offering a buy on maturities. this is bloomberg "surveillance." i am francine lacqua in london and tom keene is in new york. a lot of people watching what is happening in paris after we found out that a french soldier has fired on a man at paris louvre. the section is closed off and they evacuated to 50 people. -- 250 people. tom: i like what the interior ministry reports, a serious matter to gauge the enormity of this -- way too early to tell. francine: i am looking at the

twitter feed and they are giving on where people should go or not go, the area affected, they remind us, not to diffuse false information and to follow the security -- the official account and security we see. ats is what we are looking and what you should be watching as well. let's get more on the bloomberg first word news. here is taylor riggs. trump says heent will block the the do share a role that requires retirement advisors to work in the best interest of their clients. a white house official said the president will order a review of the dodd-frank rules and acted in response to the financial crisis. the u.s. expected to impose new sanctions on iran for testing missiles and sponsoring terrorism.

according to people from the are with the plan, sanctions could be announced today, the trump administration said iran is in the fights of the un security council resolution after the landmark nuclear deal. british prime minister theresa may will carry a message from president trump to today's eu summit in malta, telling other leaders that the president has promised to support nato, the military alliance he often has called obsolete. they will brief colleagues on their impressions of a man many viewed with suspicion. in china, the central bank taking steps to rein in asset prices and inflation, the people's bank of china raised interest rate and open market operations, chinese policymakers have been tightening the supply since august to curb leverage in the financial system. global news 24 hours a day, powered by more than 2600 journalist and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. .om: very good, thank you

a job state data check, dad, i have one screen, turkish lira, mexican peso stronger, the turn, we have seen this all week with a single spot, dead. what do you see, anything exciting? of data, a little bit retail sales, i do not know if it is exciting, the month of december, holidays, the weather, 1.1, below estimates but a month for december so backward looking. -0.3%. european stocks overall gaining and i mentioned the banks, what we are seeing with fiduciaries and dodd-frank. nice toail sales is mention, the shock in america the exit of the ralph lauren eeo wiltshire -- ceo will join us in both eras -- in both hours.

there is the, moonshot me know, apple in 2005, they came out with a phone that works and up we go. what are they worth? the service sector business, from a year ago an estimate from munster,muster -- gene that is the add on. this is what everything else in apple is worth, absolutely remarkable when you break apart into some of the parts on apple what you get. i have never seen anything like this chart ever, ever, ever come extraordinary, service sectors, cash, the rest of apple in red. francine: look at the world we live in, snapchat possibly an ipo for $25 billion. i did a chart for you, a simple job state chart but it shows you

productivity, u.s. output per hour increasing a touch, not where we needed to be. initial jobless claims -- need it to be. -- theyjobless claims want us to measure it differently, not how we should measure it as -- left it more on the jobs report. -- let's get more on the jobs report. thank you for joining us. u.s. jobs, if you look at the trump administration, do they want to look and measure things differently? do you believe the jobs market is phony and we are nowhere near full employment? numbers,erage earnings one of the key conundrums for many central banks that we are approaching what made can be

called the non-accelerating of unemployment at the average earnings rate has remained very low. a breakdown of the labor market numbers are very important, who is being employed and where is that growth going? this is the best we have come up to the administration to interpret what it sees within the numbers. francine: would you mother -- measure things differently? >> if you look at the chart from the bank of england yesterday, chart -- mark carney's says how much they overestimated wage growth. realwage puzzle is a conundrum for policymakers. it tends to undermine's the veracity of what we see on the headlines of them -- of employment numbers.

all of the benefits of the expansion of a decade went to capital and labor. the central bank is worth that may turnaround. tom: it is great to have you me, help mark gilbert with his next column, to me it is about rising real rates. we have trump reflation and recovery, help me with the character, the makeup of rising real rates. >> in terms of the rising real rates, the market is starting from expectations that the trump fiscal bank is starting to come -- bang is starting to come, if you look at emerging markets, the market is of the view that the reflation story is the reason we are seeing a move up in nominal rates in particular, inflation break evens are starting to rise as well. me, mark gilbert, help

bring up this chart, italian , il yields, a boring chart tried to get something more exciting and failed. the financial crisis, this is a cyclical path for italian real yields and then, mark gilbert, a move upward in real yields as the nominal comes up modestly, you have disinflation in italy. when you look at europe, mark gilbert, where will the real yield increase come in italy or in germany? italy is a have seen one-off shock, the spread between italy and spain, a good indicator of what people think about italy, the political situation shaky and that is reflected in yields. the wider yield environment, nominal -- we have had such low inflation on the threat of deflation for so long, where the ecb has been fighting, we are starting to see that turnaround and pmi numbers, you are

starting to see inflation -- you will expect nominal yields to change in that environment and that is what we are seeing, whether that rate continues depends on whether you think the ecb -- a defense if you think they will start tapering on the quantitive easing program going forward. francine: the italian story is a banking story, it seems huge to me. this is spread between french and german 10 year. this is not price in a political risk at a very time where fillon is weakened, honey price that end to what happens with the euro -- how do you price that in to what happens with the euro? thatu can make an argument she will assist with that, i think the market is myopic in its view at the moment, trading is very choppy.

looking beyond the next week and month or so, is tricky. we had the dutch elections in march and the french elections coming up, as we come into that one month bucket of fx options, the market will -- it should mean the euro coming under pressure. francine: thank you very much. later today, michael mckee in san francisco with a conversation with john williams. they will be talking productivity and unemployment, look for that at 1:30 p.m. in new york. this is bloomberg. ♪

♪ capitol hill and

washington, d.c. where the trump administration is getting to work and we will talk more about financial rate -- the regulation -- deregulation. the first social media to go public since twitter three years ago, the maker of the disappearing photo app snapchat has filed for an initial public offering. $4 billiono raise with a market value of as much as $25 billion. they lost $550 million last year. apple was underscoring its focus on the world's fastest-growing major market for smartphones, according to a regional minister, they will make iphones in india by the end of april, he says apple would use a taiwanese company to put together the company in the tech capital of india. a spain bank cap shareholders for money regarding real estate

deals, a fourth quarter loss of $3.9 billion, in 2016, they had charges related to real estate, and access loans charged mortgage clients. that is your bloomberg's nest flash -- bloomberg business flash. francine: obama -- president president will order a review of the dodd frank act rules in response to the 2008 financial crisis according to a white house official. joining us is the bankamerica merrill lynch director -- of dodd-frankew is widely expected, what can you tell us about this by the cheery rule, affecting not thanks or financial services, brokerage. >> telling people where they

should be putting their pension money and the objections to that role, it would restrict the range of products available to retirees for what they can do with their money. on the face of it, you would expect financial advisors to act and their clients interest. ,his has been widely criticized we have said they -- there is flaws in the way this has been approached and clearly the overhaul trump is planning on financial regulation -- the volcker rule is the big question, whether -- talking to european banks, they are afraid of this because the u.s. banks get more freedom at the same time as regulation is increasing in europe, the level playing asld, which is are releasing on level by european banks both tilted and more favor of the u.s. banks. francine: how do you square populism measures with the

egulation. -- der >> down to big business is not how trump was elected but at the same time, the regulation in the u.s. has gone quite far, banks have raise more capital and u.s. banks have positioned themselves in the global markets, they have done a much better job than their european counterparts and scaling back this regulation -- it will be a tough sell even within the trump administration. tom: two weeks ago i believe we had an inauguration, was it two weeks ago? help me with the dollar certitude, the idea the dollar will go up at 47 articles, we talked to barry eichengreen and this person and that person about dollars certitude, do you buy it? >> the view pre-election trump narrative will be different than

the postelection trump narrative. , a lot morechange focus on trade, protectionism, international diplomacy, and as yet, we are going through the nomination process for treasury secretary. there has not been a huge amount of commentary about the fiscal stimulus, some of your headlines reported markets on a sugar high at the moment, something we would agree with, positioning very long on the dollar at the moment and it is vulnerable if the commentary around the fiscal stimulus package is delayed. believe once it is delivered it will be bullish for the dollar against the australian and the yen but now in a chop -- now in a choppy market. tom: help me with the ecb, carney, yellen, nobody is looking at mr. draghi, how nice

-- is mario draghi's toolkit organized or limited in a big mess? >> he has a big fight between germany, which is seeing faster inflation, which wanted to scale back on the quantitive easing program, and italy where you still have massive unemployment, not seeing inflation in that country, tried to set policy, a single monetary policy for such a divided region with such disparate growth rate and unemployment rate and inflation rate, that will be a tricky task. those forces that are pulling in either direction -- we saw him scale back how much he will increase the length of the quantitive easing program, that is trying to serve two masters, the bulls and bears, that task will get harder as inflation in germany looks like it will accelerate more but in places like italy you are not seeing it

come through. francine: with a weak banking system. will things get better for european banks? regulation and the fact they could not be on a level playing field but interest rates at the levels put pressure on business blood pressure on more consolidation which is lost -- which is what the regulators want. >> that is almost the make or break point for european banks, if they cannot get that through, the new guy in charge, he is that issue is almost too big to fail. you are seeing all of the big banks going in an underwriting because they recognize this has to go through, monte dei paschi failed to get money from that market, italy putting aside public money for this banking

rescue once more. the failure to get the provisions through have been damaging for the outlook. tom: i would suggest an urgency on italy into the weekend, our guest will continue with us, a summary of this morning to get you into the weekend and beyond the jobs report. at a: 30 this morning william gross of janus capital -- 8:30 this morning, william gross from janus capital will join us. looking forward to that. this is bloomberg. ♪

♪ francine: bloomberg "surveillance." currency war between the transatlantic, the u.s. and germany, angela merkel rejected accusations we were talking -- from donald trump's top trade representative who said germany's excessive surplus we find grossly undervalued currency, peter navarro made it very clear that any country with a surplus is cheating america. back to our guests. pretty simplistic, germany will not react very well, not -- is it because we have a surplus you

are cheating america. >> the euro is some of some of the parts, some strong and some weak. you have a strong german economy and at the bottom the likes of greece and italy in the periphery. if you look at some of our own a valuation metrics, we believe the currency is undervalued, is it structurally undervalued or being manipulated, i would not say it is. there was only- one metric the fed and the treasury used to assess whether the currency is a current simulator, the euro and the ecb have not intervened to way down on the currency. it is pursuing a divergent monetary policy the cause of its macro needs. as peter navarro suggesting there is undue influence from germany to the ecb? >> given the ecb has continued

qe policy even though the bond is make is not comfortable, -- -- the reason why italy and spain and portugal have low borrowing costs and half or so long is because germany is in the euro, a balance between german benefiting from a weaker currency and what the other currencies have benefited from. tom: let's come back. getting you ready for the weekend, the jobs report at 8:30 on bloomberg markets. ♪

♪ tom: good morning. francine lacqua in london and i am tom keene in new york. the news out of paris we will get to in a moment. guest.d

with a news update asterisk taylor riggs. ministerifferent from -- the france prime minister says an attack seems to be terrorism, a shoulder -- soldier outside the louvre was attacked by a man, the area around the louvre was closed off and terrorists have killed more than 200 people in france in the last two years. president trump will side an executive order into scaling back financial regulations put in place as the recession, ordering a sweeping review of the dodd-frank rules enacted in this -- in response to the financial recession. iran has responded to president trump's executive order banning visas for iranians.

therefore in ministry says the special committee reviewed the case before the decision was made to ban american wrestlers. the u.s. expected to give new sanctions to around four missile testing -- iran for missile testing. they said they were in violation of human -- un regulations. global news 24 hours a day, powered by more than 2600 journalist and analysts in more than 120 countries. this is bloomberg. francine: let's get more on this louvre attack. bring us up-to-date, we know there was a french soldier that fire on a man armed with a knife at louvre.

how much more do we know? >> a patrol of soldiers and police on the entrance to the louvre. a man went towards a soldier and lightly wounded the soldier and another soldier fired on him and he was wounded. francine: the concern that people will be afraid that it will be a repeat of 2016 and 2015 with some of the terrorist attacks, too early to jump to conclusions, now we just wait for the french interior ministry? people inere were 250 the stairwell area that were kept aside and are now being allowed to leave. i assess the area and they are removing the exclusion zone around the museum. it does seem to be under control, he was alone.

the incident seems to be over. tom: tell me about what it is like within life in paris, we see canada a number of days ago, i think of sydney, there seems to be almost at will, there could be an injured visual -- individual event of terror, how does paris adapt to that? >> we have to keep perspective, the incident two years ago, we would not be talking about it on this show, it would be on page 25 on a newspaper, it is because of the context that an incident like this -- one soldier was lightly injured and he got was shot and not killed. let's not overdo it but yes, after what happened in paris over the past few years, there is concern, and you see it. this man attacked a patrol of soldiers, you used to not have

soldiers wondering around paris and now you have paratroopers in camouflage outfits around paris because of the risk. -- a always a moment moment away. francine: there is a lot of spotlight on this incident and on paris across france is in the middle of a chaotic collection with the future of fillon in doubt, how much does public security -- how much of a key issue is it in the presidential campaign? >> marine le pen would like to make it the big issue because that is where she is strongest. an issue some candidates like marcon and any socialist party like to avoid completely because it is not an issue they are considered to be particularly strong on the it feels somewhere in the middle -- strong on. it feels somewhere in the middle, arima them will try to

milk this for all it is worth but this incident was not pen will-- marine le try to milk this for all it is worth but this incident was not enormous. francine: there is an investigation of the scandals surrounding fillon and rumors he could step down which is never happened in french history, what are people saying on the ground? >> it depends on who you are talking to, within the party a growing number of people who say he has to go. he is running on a campaign of belt-tightening. to find out his wife was doing possibly a no-show job and earning 10,000 euros per month does not go together. there is a lot of pressure to step down. on the other hand, there is no procedure for replacing a candidate, so it could be almost worse if he did leave.

he is trying to run out the clock. i have stopped making predictions this year. i do not know what will happen. tom: you cannot come on "surveillance" if you do not make productions. smart -- predictions. he is smarter than us. on the merrillu lynch a few of economic growth in europe. every report we get is that it is pretty darn good, does that fold into the political process, or are they discrete? , athey are discrete for now growing belief that the underlying fundamentals in most of europe are strong, we are bullish on growth, the disconnect will -- the core inflation numbers remain very weak which from a macro perspective gives the ecb a little bit of leeway and time to

start that tapering discussion. can you imagine a dialogue between a new french government and mr. trump? prime minister may has been trying to do it, give me your view on terrorist and the new and the new- paris ?ashington >> it does not reflect the risk of a marine le pen presidency. some are convinced she cannot win the second round but greg is saying he will not make prediction, the mark is not figuring in the real risk of a marine le pen presidency, as the election gets more massive, you could see the markets think -- we got brexit and trump wrong, maybe we got this wrong. francine: this is not the same

as brexit or trump, the margin of error could not have predicted brexit but marine le pen is so far off. who do you look at? be thekey test will candidatetions, one pulling around 30-35 seats, they do it on seat basis rather than percentage basis. 10 or 15 more is than that, the concern about the closeness of the french opinion polls come into stark clarity. the fear is the markets are not the opinionbelieve polls and therefore they will attach a risk premium to the euro heading into the elections. i think that will be through volatility.

we think that will be a key driver for the brexit negotiations and the euro cross. francine: we may be jumping at shadows. we also cannot see risk at every corner. cannot, because we missed the financial crisis that we start to be worried about outcomes that are not going to is oneible, i think that -- people so far are making choices that they have not made before in elections. you cannot discount that. francine: stay with us. later today, michael mckee in san francisco with the conversations with john williams and they will talk oductivity, full employment, and the jobs they -- day. this is bloomberg. ♪

♪ at 8:30. gross francine lacqua in london and i am tom keene in new york. he needs to brief me on the super bowl, we will do that later. post"es in the "new york to get me at this beat on the dreaded atlanta falcons. i go to ralph lauren and the resignation of the ceo. if they grow at 30%, and next 7.5%,5%, and next year, where is retail given the amazon juggernaut in five years? >> retail sales as a low

single-digit number of what is happening is the migration of sales from bricks and mortar to online which is a percent of retail sales go online -- 8% of retail sales goes online, some say that will be north of 10%, 50 percent next year, that is the top like bull case for amazon -- 15% next year, that is the top line bull case for amazon. right believe i have this , he will develop an amazon in the midst of northern kentucky folks and spent more money than donald trump whatever think of to create american full-time and part-time jobs. is jeff bezos donald trump's best friend in terms of job creation? >> job creation and cap -- capital spending, you have seen years, the past six seven years, eight years, and

was on spending money, investing and logistics, fulfillment centers to get close to the consumer and out into actually -- actual logistics, transportation, airplanes, shipping, here is a company that is willing to invest because they recognize the long to death long-term revenue story is a long-term growth story and he will put the money up now to get close to the customer. francine: are they right? amazon has gone for market share and they think about the profits -- not secondary but they want to make sure they go to the first and then about making profits, when do investors lose patience with that? >> investors have been conditioned for the amazon story to invest for the long term. if we think back to 2015, they dial back the spending and put up pretty significant profits and the cloud business started to grow which is a profitable business. 20 -- and early

investors got profitability but the last couple of quarters they are darling of the expenditures and investments across the business which is what we are seeing. this is a company that can dial it up and dial it back but now most investors fairly comfortable with the long-term revenue growth story and willing to give jeff bezos the benefit of the doubt in terms of spending. francine: i want to get to snapchat in a second, but does amazon need to kill it in the grocery arena to become the unbeatable retail? will all by milk and solid -- will i buy no and salad from lk and salad from them? >> there is no category i think they are not thinking about going in big. tom: this is what our team at bloomberg intelligence, apple

computer, i show this chart at the opening of the hour, here are services, itunes, the one dollar and two dollars fees, this is a gene munster analysis from a year ago. here is their cash -- gross cash not know --. is that -- not net cash. is that fair? >> the tremendous cash flow that they throw off is what investors jump at comics for nearly, what can they do with this cash, will they reinvested in the business and come up with the next new thing above and beyond the phones to drive the growth story , if not, what do they do with the cash, return it to the shareholders in aggressive ways? that is what shareholders are thinking about. francine: we will be back. in the meantime, if you are a bloomberg user, go to tv go and

follow our interviews and great charts and analysis, help me push back against tom and his crazier ideas. go to tv go. this is bloomberg. ♪

♪ tom: bloomberg "surveillance." more on the event in paris and a bit. francine lacqua in london and i am tom keene in new york. raises forecast for the second time this year, they sold a record number of vehicles in the u.s. and china in 2016, they project global sales will rise in the fiscal year beginning in april because of demand in those markets. lockheed martin has turned to donald trump's former campaign manager to settle latest bid with the president. they are hired corey lewandowski and his lobbying firm, the predators -- the president criticized the company for out-of-control cost for the f-3 5. nordstrom stop selling the

ivanka trump line, they said they found sales, they have been threatened with boycotts. that is your bloomberg business flash. francine: the bank of japan world of markets this morning, a smaller than expected increase in bond purchases and the 10 year yield advance, unexpectedly offered to buy an unlimited amount of debt which sent rates and the currency falling. when you look at what happens, was this missed medication or a process of keeping dust miscommunications -- was this a minister -- missed medication -- -- -- the bank of

japan were uncomfortable with the move, a move in line with proper yields, higher in just robert yield come higher in gtn -- higher in gtn. -- g10. francine: where does japan go from there? no real structural reform. the governor has struggled to deliver on the markets. the trump saying they are manipulating the yen. >> the currency market will be important going forward, the bank of japan is putting doubt in traders when it says they want to keep yields around zero, where is it, the general rise in yields around the world, if the 10 year -- where does the bank of japan intervened, it came in , traders willekly

be wary about what they do next as you see the yield approach the .1 and .15 levels going forward. tom: instabilities to say the least. if i look at asia dxy, a basket of asian currencies, bring up the chart, the 1997 crisis, weaker asia, asia recovery, lehman low. this is a strong dollar, weak asia, mr. trump suggests a discourse of a weak dollar policy, can any country, can the united states of america jawbone a weak dollar? >> this will be a paradox of the trump administration. we look at a broader array of policies that he is bringing in , theym fiscal stimulus

are potentially very stimulative to the dollar at against the backdrop, donald trump has been concerned about the buildup of current account surpluses across the world, set against a large u.s. current account deficit. what the donald trump administration needs is reflation in asia, we are not seeing that and that is part of the issue, unless we get some domestically engineered reflation within the major asian economies, like we are seeing in central european economies, it will be difficult for the asian currencies to absorb that against the dollar. tom: are we at the point in a real rate analysis where capital flows takeover? will that be the shock of 2017, flows matter? >> absolutely, we have been looking at the trump administration's comments on currencies have seen currency

move along the line of current account surpluses and deficits, we saw that on the german and china and japan comments on the same day. if you think the market is in for trade protectionism and trade wars, you will gravitate towards surplus. chances: what are the of a full-blown trade or currency war? i am told even if the trump administration antagonizes, those on the other side will not do anything because it will be lose lose for everything that's for everybody -- for everybody. >> i do not think that is true, i do not think anyone can stand aside and be accused of being a currency manipulator. that could be --

tom: this has been wonderful. thank you so much. mark gilbert, look forward to the european analysis and the britain analysis, he writes for bloomberg view. day, and analysis and the drill down to the american economy. r will join us from deutsche bank. a linkage in politics and economics and bill gross at 8:30 . hour.ith us, another ♪

sundry,er various and central banks report.

it is jobs day. in this hour, peter hooper on the american job creation machine. cost push and demand pull. does trump reflation mean a bigger paycheck for any and all? and dealing with jeffrey bezos and amazon. this is "bloomberg surveillance ," live from our world headquarters in new york. i am tom keene. francine lacqua is in london. i know you were looking at paris, the linkage of the terror attack and the idea of the french elections to follow. great reporthad a from our reporter on the ground. we call it linked to terrorism, but this was one man with a machete that was then fired upon. i know tourists would be afraid, but they reopened the area that was affected, which was next to the museum louvre.

when you look at national security, one of the big things for the french presidential election that marine le pen hopes gives her a winning advantage, but it is too soon to see how this will play out. tom: these are live images from paris. let's continue this discussion, with first word news. here is taylor riggs. taylor: president trump is taking aim at his obama administration regulations of the financial industry. today he will block the fiduciary role. the white house is the president will review the dodd-frank rules in response to the financial crisis. the u.s. is expected to impose new sanctions on iran for testing missiles and sponsoring terrorism. according to people familiar with the plan, sanctions could be announced today. the trump administration says after theeen defiant

landmark nuclear deal. theresa may will carry a message from president trump to today's e.u. summit. she will tell other leaders that the president has promised he will support nato, the military alliance he has often called obsolete. may will brief colleagues on her impressions of a man many viewed with suspicion. 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: data check real quickly. it has been boring all this week. it still is. futures up fractionally, euro up fractionally, oil up fractionally. francine, what do you have? because: i am not bored it goes back to what banks and regulations are doing. gaining at 0.8%. watch for any change with dodd-frank and how it will impact european banks. it is not boring -- the vix down

1.8%. tom: it was extraordinary to see showinger vix complacency, or the algorithms at work. it is jobs day. i know david blanche flower will be a long from dartmouth college with "daybreak." we start strong with peter hooper of deutsche bank. has years of global experience and synthesizing it into the american economy. joining us as well, carl riccadonna of bloomberg intelligence, our chief u.s. economist. i had to do this chart. you have new logs, this early in the morning with carl riccadonna. here is the regular unemployment rate. it is down here just under 5%. here is the ugly unemployment rate showing more americans in pain. we all know about this. here is just before the crash.

because we went logarithmic, on axis, we can see the difference just before the crisis. carl riccadonna, look at this gap right here. that is one symbol of what i will call the trump gap. there is still a lot of pain out there. carl: absolutely. chair yellen has highlighted that the standard, official unemployment rate does not fully get the picture. as i look at that chart, i see both metrics moving in lockstep in the right direction. tom: peter, you have been way out front on the constructive factor of the american economy. are we creating higher income jobs as the vector improves? higher incomere jobs, but let me point out that the gap is partly because we have had a shift toward industries with part-time workers. this is not necessarily excess supply.

there is excess demand for those kinds of workers. that gap will be persistent for a while. it: as dr. hooper mentions, is not just one analysis, it is a set of ideas about a changing american economy. danny roderick at harvard says it is distributional, that we did not take care of the people in north carolina. did we not take care of the people who lost their jobs to trade? peter: certainly a lot of people lost their jobs. a lot of firms have moved overseas, a lot of firms have moved in. so there have been losers and winners. we are looking now at a shift. i sa up strongly. manufacturing is beginning to come back. are hearingter:, we a lot more news about the trump administration during the campaign trade, calling the figures, that measure, the leading indicator when it comes to unemployment.

how would you rephrase it? peter: pardon me, francine? we had a story about the trump administration saying that way we measure employment is phony. how do we replace it? peter: labor department statistics is probably as good as we will get it right now. other items are going in the right direction. not just the unemployment numbers, but the unofficial claims numbers have been going down. certainly small firms are feeling good about the labor market, good about their hiring prospects, so things are moving in the right direction. there is always room to improve the data. you will always find some problems, and the amount of funding that are statistical agencies have been getting has been going down. there is room for improvement, but given the amount of resources we have put into this

now, the labor department has been doing a reasonable job. francine: carl, what is your take on how we measure unemployment? are we full employment, or do we need to look at things differently? carl: we know we will be at full employment when we get wage pressure to a greater degree. some hints of that are materializing, but wage pressure is like all inflation, a lagging indicator. rearviewt in the mirror. my sense is that we are very close to full employment now, which is what changes the performance of the economy as we look to 2017 compared to the last seven years of this cycle. we have had excess labor slack leading to wage stagnation. that starts to change this year, but do not expect a significant flareup. the gaps between the u six and the you three unemployment rate -- the rate is flatter.

ok, so you are expecting a jump in average hourly earnings growth. talk about productivity. when does that get realigned? carl: economists are wringing their hands as to why productivity has been so low. but productivity we can think of as miles per gallon for the economy. when the input is cheap and labor costs are cheap in the last seven years, there has not been a great incentive to push productivity higher. as wage pressures build this year, we will see productivity pickup. we have a width of that in the q4 data. i'm going to do this anyway because i control the bloomberg. peter hooper, help me with wages , and most of our audience subtracts mentally about 3% inflation.

if i go back to 2001 and take nominal wages and weight them down 3%, here is positive wage growth, up to the financial crisis, a down we go with the angst we see with president trump and senator sanders. flat, wagegrowth growth after 3% adjustment. that is not getting it done for america. what is the why that gets back to a peter cooper vector back to wage growth? peter: carl mentions the so-called phillips curve. the sensitivity wages to unemployment has been reduced over time, but there is still sensitivity. the unemployment rate is continuing to trend lower. 4.7re leveling off around for the time being, but i expect it to go down to the middle or lower 4's.

average hourly earnings has been moving up to the 2.5%, 3% range. timewhat is the length of to get to the peter hooper estimate on full employment? peter: we are almost there now. we are starting to see some upward movement in wage inflation. you cannot deny that. ok? says we are there, francine: let's see if we are there a little bit later on when the figures come out. thank you, carl riccadonna, in charge of our bloomberg intelligence economic analysis. later today, michael mckee is in san francisco with the san francisco fed president. this is bloomberg. ♪

taylor: this is "bloomberg surveillance." let's get straight to the "bloomberg business flash." it will be the first company to go public since twitter did three years ago. snap plans to raise as much as $4 billion with a market value as much as $25 billion. apple is underscoring its focus on the world back his growing -- it will fastest-growing maker of smartphones. apple will use the taiwanese company to put the devices together in bangalore, india possible tech capital.

there is a fourth-quarter earnings loss of $9 billion. -- popular that is your "bloomberg business flash." now, as he has day after day after day, 100 days of kevin cirilli. our chief white house correspondent. peter hooper, of course, with deutsche bank. kevin, i want to get to regulation and dodd-frank in a moment. but is there a shift two weeks in, in the trump administration? are they beginning to understand that there are reactions to the original efforts of the first 10 days of this administration? kevin: yes. earlier this week, president trump holding a legislative tragedy -- a legislative strategy session in the oval office with some of his congressional outreach teams.

spotted several times on capitol hill targeting -- on capitol hill talking with senators, even some key sessions with paul ryan and others. tom: make me smarter on this. i was asked three times yesterday and said i had to talk to kevin cirilli. who is driving the ship within the administration? is it the president, mr. kushner ? who is it? kevin: i think it is president trump. temporaryook at the travel ban, that was a wake-up call. when you look even in the lower echelon staffers, they saw that as a wake-up call. beyond that, yesterday i was being with a senior aide, a republican member of the house financial services committee. he told me that there was a startling sense of shock after the executive orders on

immigration, and that since the rollout of the supreme court pick, they feel they have a message and a strategy now. francine: talk to me about what we have seen with this regulation. basically trump is trying to repeal all of this regulation that was hated by the financial industry. how much do we know of what he will replace it with? is he getting rid of it or changing the regulations? kevin: speaking with a source earlier this morning who confirmed that later today we are anticipating executive orders coming from the white house that would address dodd-frank as well as the fiduciary rule, which would --act financial advisors that was set up before the campaign. the second point i would make is that earlier this week on the house financial services committee as well as the senate tanking committee, the groundwork -- as the senate banking committee, the groundwork is being laid to walk

back parts of the dodd-frank bill. the chairman of the house financial services is meeting with members early this week to provide a briefing of what is known as the financial choice blueprint will be the for repealing dodd-frank. rules -- kevin, these were they not put in place to protect the global banking system, but also the average investor? i do not know if it is checks and balances. how can we be sure what it will be replaced with our the right measures? kevin: what is similar to dodd-frank is what we are watching on the affordable care act, or obamacare. republicans are going to have to grapple with the political reality, and that is that repealing all of it might not be what the entire country wants. i think you will not see an entire repeal of dodd-frank or the aca. what you will see our key parts walk back -- key parts walked

back. tom: kevin cirilli, thank you so much. peter hooper with us at deutsche bank. let me ask a really important question, dr. hooper. can economists quantify what less regulation does to an economy? to conservatives, it is gospel to republicans. but is there any research that shows if you diminish regulation at the margin, that it leads to economic growth? peter: this is an area where we do not have a whole lot of information, but there certainly have been times in history where you have seen significant movements in economic activity around changes in regulatory pressures. going back to the reagan years -- the first two years, a major recession was caused because we were fighting inflation. halfway through his first term, the economy suddenly reject --

the economy suddenly jumped coming out of the recession. you saw growth move up an awful lot, and it had to do with some of the feeling that things were changing, regulatory pressures are coming off. tom: if you are sitting here with david stockman, who has monetarycal critic of policy in the world of peter hooper, the feeling is about dampened regulation, or is the horse before the cart, the confidence that business gets because they feel there is going to be dampened regulation? peter: there is a feeling that the regulatory environment is shifting dramatically here, from a trend toward greater regulation to just the opposite. you combine that with the notion that business taxes, corporate taxes are going to be declining significantly, that gives you a bigger reason to feel better about the business climate. so i think we are seeing

business sentiment indicators, from small business to large business, moving off the chart, with unprecedented increases within an independent business survey, small business survey, how businesses view the current environment. this has to do with the changes that have occurred since the election, the kind of talk about deregulation, about tax decline. yes, there is a major sentiment impact here. francine: peter, it seems strange that we forget we went through a huge financial crisis, but it is not mentioned when we talk about globalization, inequality. this is where everything stems from. is there a danger that we are going to have a new financial crisis if the usd regulates too much? that is always a risk.

the pendulum has swung pretty far in one direction for a number of years. it will swing back. it will be probably well past the next recession that that swing has a major impact on the negative side at this point. you have to be cautious how far back. tom: peter hooper with us, and we will continue through the hour. coming up on bloomberg radio and bloomberg television, a conversation with william grows. we will do that after the jobs report -- with william gross. we will do that after the jobs report. this is bloomberg. ♪

francine: francine and tom, from london and new york. we need to talk about the bank of japan. it disappointed with a smaller than expected increase in bond purchases. we saw the 10-year yield advance , offering to buy a limited amount of debt. i and not sure you have a 10-year yield, but i am sharing on my terminal the 10-year bond future. you is the movement that see the most this goes back to a problem maybe with the perception that the bank of japan is going to struggle to keep the yield at that level. but it is also a communication problem, something we have seen from the bank of japan before. tom: and they are so extended. we forget that the ecb, the bank of england, and the fed are sort of on the same page of assets-to-gdp. japan is truly the outlier. francine: when you look at the

balance sheets as a percentage of gdp -- look at that, i do have a chart. the boj and read, the percentage .f gdp is so much bigger the ecb is in blue. tom: gorgeous! who did you steal that from? we told him he could not come out until dow 21,000. robert doll will join us. bob doll has outperformed 99% of the hedge funds. just be in the market. this is bloomberg. ♪

tom: good morning, everyone. "bloomberg surveillance." jobs day. i am tom keene in new york. francine lacqua is in london. taylor: in paris, there has been an attack outside one of the

world's best-known museums. itnce's prime minister says is characteristic of terrorism. a soldier outside the louvre -- was opened fire on after wielding a machete and screaming "allahu akbar." president trump will sign an executive order into scaling back financial regulations put in place since the recession. plus, the president will put a halt to regulations hated by the financial industry. the so-called fiduciary will requires advisers on retirement accounts to work in the best interest of their clients. iran has responded to president trump's executive order banning visas for iranians. iran's foreign ministry says a special committee reviewed a

case before a decision was made. impose. is expected to new sanctions on iran for testing missiles and sponsoring terrorism. according to people familiar with the plan, it could be announced today. the trump administration says iran is in defiance of a u.n. security council resolution passed after the landmark nuclear deal. global news 24 hours a day, powered by more than 2600 journalists and analysts in more i am taylorntries, riggs. "bloomberg surveillance." -- this is bloomberg. francine? tom? tom: peter hooper is with us, from deutsche bank. now joining us, robert dold. i want to rip up this crypt right now. i think this is so important. the president and a lot of people in washington want to do away with the so-called fiduciary rule. you have spent decades jawboning, opening her mouth. you have been right, you have been wrong, and we have financial advisors who are being

placed under a guys of almost guise of be -- under a trying to be your perfect. the gettinglance rid of the fiduciary will with -- --: it is hard to regulate to legislate morality. they have to document a few more things, etc. those who have been lining their own pockets have to make significant changes. so i think a lot of people have felt the fear of god around this. now that we back off, i think life will be in a good place. sweatet's talk about the of 2014, and more importantly, the sweat of 2007. we have done this and this in a bull market that has been stunning. how do we catch up?

for people whoh have sat on the skylines -- on the sidelines, skeptical and watching. we climb walls of worry, people doubt, fear, and are uncertain. that is when you and i will invest and hang in there. francine: unless it goes pear-shaped and something happens. unless currency is out of control and there are significant trade wars that impact the supply chain. bob: no question about it, and that creates volatility and bumping us and downside. that is generally a good time to jump in with both feet because the world comes back and grows and the stock market comes back. if you can time those issues, steps of the side, god bless you. francine: i have been told that 2017 is different. we have never been on the brink of real possible trade wars, so how does that balance out, this

reflationary move? nationalism ok, protectionism not. there is a fine line between the two. trade wars mean less global trade, which means less revenue growth, less earnings growth, fewer jobs. that is bad for everything. let's hope the authorities get to their senses and recognize that that is in not -- that that is not a good idea. but if we are still optimistic about equities, how can you be optimistic given the big risk here? bob: earnings -- francine: but earnings go back to the supply chain. bob: we had just come through a six-quarter earnings recession and have just begun to emerge. i think stocks are benefiting from that. we will worry about the next earnings recession. hooper, are we on the

edge of a trade war? is that just media hysteria? peter: i think there is a lot of statements in the media that are perhaps confusing things. my sense is that the trump administration has the primary objective of getting the economy growing faster, getting employment to continue to advance in a good pace. he will not achieve that if he foments a trade war. bob: exactly right. peter: my sense is that this is a rational person with an overriding objective. -- there is some smoke around some various statements being made, but when it comes to the edge, are we going to push into a real trade war that upsets the apple? i do not think they will do it. tom: at the beginning of "surveillance," i do three data boards. three times this week, i have done one data board because i have nothing to talk about.

we do not do math on friday. the answer is the moving averages have all converged on one spot. what does that signal to a grizzled veteran like you and tom brady? in one means we will go direction or the other. i come back to earnings are ok, the economy is ok. i agree with what peter just said about trump's overriding objective, so i think we will grind higher. is it harder for these valuation levels the cycle? of course it is. francine: where do you see the most value in terms of valuations? earnings are up. do you break it down in industry groups? bob: january was a reversal of trend. cyclicaldown kept by a -- the economy is doing better, reflationary is doing better. the dollar is in a setback now, but he will come back on.

trump's policies are pro-dollar, in my view. i would buy health care on the bad news. francine, i want to show some dynamics on the bloomberg. this is too good to be true. the world is terrible in u.s. dollars. the dow is up 21%. up 19%.is these are terrible numbers. let's move it over to sterling. we can do this on the bloomberg. pound, with atish british pound, if you are invested in the united states, francine, it is up 42% in the last year. look at that. in british pound sterling, 21% dollars, 42%. -- 21%. dollars, 42%. if you bought the dow, you would be up big.

francine: it is a great chart, , peter, ifmbers, but you link that to animal spirits, for companies to grow, you need to make sure that ceo's are more confident about the future. numbers, the numbers that tom put up to grow, how much do you need animal spirits to take hold? peter: you ask business, what is the most important factor in determining your decision whether or not to expand your business? i think taxes, corporate tax up there.way that is coming down. number two, regulatory pressures -- that is shifting. this is not just a cyclical increase in optimism. i think it is something a little more secular, and it is going to support this earnings growth that bob is talking about. francine: thank you so much. bob doll with peter hooper.

go.can also find us on tv you can follow. there is what you are showing us, tom, the return in dollars versus pound. if you want to push back, give us advice, send us comments and some of your graphics that you are watching, you can contact the show producers and tom and i. this is bloomberg. ♪

francine: "bloomberg surveillance." francine and tom from london and

new york. let's get straight to the " number business flash" with taylor riggs. taylor: hyundai has raised its full-year forecast for the second time this fiscal year. the automaker sold a record number of vehicles in china -- full-yearraised its forecast for the second time this fiscal year. the automaker sold a record number of vehicles in china. lockheed martin has turned to donald trump's former campaign manager to help with a dispute with the president over the x 35 fighter plane. lockheed has hired corey lewandowski and his lobbying firm. the president has criticized the company for what he called out of control costs for the f-35. nordstrom will stop selling the ivanka trump line this season. the department should or chain -- the department store chain says it made that decision over slumping sales. in paris, there has

been an attack outside one of the world's best-known museums. france's prime minister says it has the characteristics of terrorism. you are looking at pictures just outside the court ride -- just outside the courtyard. for more on that and the two montrose week in french politics, we are joined by greg viscusi, in paris. when we first found out about this attack, it did not play out on the markets. people were afraid it would be a repeat of what we saw in 2016, even 2015. what is the mood out there at the moment? this incident seems to be over. it does not seem to be a repeat of those. it was one guy alone, and he has been shot. the soldier he attacked was only slightly injured. i do not think it will resonate. however, it is a reminder that anything can happen.

it has been quiet recently. there have been no repeats of the attack in 2015 or the one in nice. but it is a reminder that it could happen at any moment. you see soldiers are on patrol in paris. at how theascinated politicians in play play this event. we know it is very serious. paris has been through recently. ine us through the leaders this campaign and how they will adapt and adjust to what we have seen at the louvre. greg: there is marine le pen of the national front, who this certainly works in her favor. this is the sort of incident that helps her. she is very strong on law and order, anti-immigration. tom: so what does the socialist do? what does the guy on the left do? macronhe socialist and

in the center have not really wanted to talk about these security issues because they bring up all sorts of unpleasant notions about anti-immigration and stuff, which they do not want to encourage on one hand, and it is also not the political force on the other hand. they are going to have to address it. , by all definitions the front runner right now, has led his campaign talking about economic renewal and has avoided issues of economic -- and has avoided issues of national security. he will have to come up with some kind of statement, son kind of platform. -- some kind of platform. somethingjor issue, that is on people's minds in france. an incident like today only reinforces that. francine: and the first round of the presidential election is on april 23. bring us up-to-date on whether you feel that francois fillon's

campaign is still viable. into is an investigation allegations that he got his wife and children to do work which they may not have done. greg: his campaign took a serious hit. this is a guy who is wanting a cure for france, telling the country that it has to tighten allegedlyand he is telling his wife and children to do jobs they are getting paid for that they are not doing. do you bring someone who was not even put in front of the voters for the primary? the party has no procedure as to how to do this. it could make matters worse for the party to panic. the campaign is seriously damaged.

what they do about it, i cannot say. tom: thank you so much for your reporting from paris this morning. greg viscusi. "the wall street journal" reporting breaking news, that deutsche bank, with further job the idea ofions -- equities and fixed income jobs, which describes much of what they are doing in the capital markets. we have a very important chart when we come back that has to do with the forward momentum for the president. on this jobs day, don't forget bill gross, 8:30 this morning. this is bloomberg. ♪

tom: quiet markets before the jobs report. foreign-exchange, cx y back above 100. let's leave it at that. your foreign-exchange report. francine? francine: coming up shortly, "bloomberg daybreak: americas," with david westin, jonathan ferro, and alix steel. i know you are excited about jobs, jobs, jobs. alix: and who better to talk about that with our guest, alan

krueger, princeton university economics professor? also the former chief white economics expert. expectations moving into this seem to be ratcheting higher. over 30% of respondents have an opening that is hard to fill. how does that filter into the wages and the slack we see in the markets? tom: professor krueger will be important. and professor gross will join us at 8:30. look for that across all bloomberg platforms. let's go to the single best chart, with peter hooper. you know this chart. this is the jump condition in confidence. here is the financial crisis, down we go, ugly, and then all of a sudden a moonshot. i would suggest a little bit before the trump election. peter: you asked earlier, can you measure animal spirits?

small business survey, this is an element of the economy that accounts for a larger majority of hiring, employment. we havea major jump seen here. it has to be significantly because of the policy changes the new administration is talking about. this is a jump that occurred in the last month. we have not seen this kind of move before. tom: bob, if we get peter hooper's kind of world, what does it do to american consumption? do you need to be in consumer stocks? bob: that will certainly be the part of the story. we have more jobs and more wages, we have more consumption because you layer on top of that things like more confidence. when i feel better, i spend more. consumer confidence is up, ceo confidence is up, business confidence is up partly because the economy began to do better

before the election. then we get the election, and is changes.fiscal policy francine: this chart has the small business optimism. expectations,n to which is purple, and hiring plans, which is pink. how much is priced in of what we are expecting donald trump to do, and if he does not deliver us much or disappoints, does this dip lower sharply? peter: the sense of the economist has changed the outlook for their economy -- for the economy very little since the election. there is a substantial move and what the economics profession is projecting. some of that is built into the market, but not all of it. --we avoid major pitfalls trade wars, etc. -- there is the

potential for a substantial upward move. bob, do you think this reflationary experiment by infrastructure would help medium to smaller sized companies more than blue chips? bob: absolutely. when you also look at smaller companies paying higher tax ,ates than big companies do smaller companies will benefit all the more. that is where the jobs come, as peter just mentioned. that will be good news as well. but we have to get this policy at some point. my feeling is that -- my fear is that it will be half a loaf if not a full loaf. where are you? what is your allocation? bob: i am a u.s. equity manager. i am fully invested in u.s. equities. i'm am not smart enough to guess those. tom: where is deutsche bank security?

does he play -- does bob doll play foreign markets through u.s. multinationals, or do you buy abroad? peter: i think you are seeing emerging markets improving. whatever channel you want to get into that i think is going to be a good one. francine: what is one thing you need to stay away from? is there a risk that markets are not seeing? are we focusing too much on politics? peter: our view is we are going to get everyone else's upside on this. certainly the big risks out there, we have to be very careful in our negotiations with other countries over trade. that is what i am worried about. tom: how do investors in turpin what -- how do investors interpret what cfo's will do on growth? bob: if we get a tax reform bill, we will have repatriation.

yes, they will hire some workers, reinvest in property and equipment to grow -- tom: do you see capital investment yet by businesses, or are we awaiting that? peter: we have had good orders for the month of december, and there is a huge potential out there. capital spending has been depressed for the past five years. tom: what is the good news today? the good news today is francine lacqua will join me on "bloomberg surveillance" on radio. david gura is off today. something about a super bowl party. stay with us this jobs day. this is bloomberg. ♪

♪ >> payrolls friday.

grow increasingly optimistic that the pace of hiring accelerated in fit -- in january. a sweeping review of the wall street review book. -- rule book. from new york sunday, for our viewers worldwide. a warm welcome. david westin and alix steel are with me. futures are up. 0.1 percent. a stronger dollar story i'd of this one and bond yields are climbing. curve policy for the boj. an interesting dance this morning. off by 0.3%. no geopolitical risk premium. and the safe haven trade goals go nowhere. jon: things to watch in frankfurt. deutsche bank. the biggest one-day drop since september. deutsche bank