francine: downward dollar. pressure on the currency continues. will we see a government shutdown on friday? the strong as level since december of 2015. chinese gdp. and hope in hthe city. the financial services sector has a chance of getting a good brexit deal. ♪ francine: good morning, everyone and welcome to "bloomberg surveillance," and i'm francine

lacqua in london. bonds marketsd are closed for this martin luther king day. for our american viewers, happy holidays. a little pressure coming from some of the earnings. without a doubt, these data points come from china. which is why i am looking at the chinese data, filtering to the y uan. euro-dollar, 1.2230. euro strength, dollar weakness. will that continue and when will it hurt european exports? $60.25. brent, $70. airbus joins us in 30 minutes. they could check on the a38 if there are no orders from emir

ates. ofs, the vice chair blackstone group joins us. and of course, tom keene is in town for the week. let's get to the bloomberg first word news. nejra: donald trump is an asteroid of awfulness according to the u.k. shadow foreign secretary. trump on the ut at bbc. >> he is an asteroid of awfulness that has fallen on this world. ithink he is a danger and think he is a risk. i don't want him to come to the country. i don't think he should have been given the invitation in the way that he was. i think it was wrong for theresa may to prematurely give him a state visit. i think it is humiliating for the queen. i think it is wrong to have brought her into this in this way. nejra: president trump has told

reporters he is "the least racist person." that is that fallout continues after bulger remarks he made regarding immigrants from africa and haiti. carillion. shares in have been suspended. the board concluded they had no choice but to take steps with immediate effect. the decision came after talks of financial and other stakeholders, it and the u.k. government failed. 72 people have been injured in indonesia after a floor of the glanced.ange the mezzanine floor fell down during a visit by university students. the collapse occurred during the lunch break, though the afternoon trading session began at the regular time. the british pound's rally could be vulnerable this week. that is according to analysts, jose sterling could come under pressure this week if germany seeks hope of a soft brexit. the lloyds ceo says she plans on

a hard exit from the block. >> we are still going full steam ahead on our plans. this will look after the business from the eu 2017 market. about 2 billion euros. we are going full steam ahead. i think it is going to be a hard brexit and it will be up and running by january 2019. nejra: global news 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries around the world. .'m nejra cehic this is bloomberg. francine: let's kick off the program with u.s. markets. the dollar is under pressure after a fifth straight week of declines. city as they go recoveries are struggling to gain attention over political developments in europe and tapering speculations. the government shutdown will be key this week.

the deadline to pass the spending bill will be this friday. the biggest little risk is the united states. joining us now for the hour, peter dixon from commerzbank. both joining us today. peter, what does the currency move bode for 2018? is it a done deal that we have a weaker dollar? peter: i do think there are limits to the downside. i often suspected these reflected the extremely positive sentiment for the eurozone at the moment, rather than the weakness of the dollar. and i think over the course of the year, this rally will peter out. we will start to get a dollar. weake stronger i would be cautious. francine: what kind of level?

peter: you could be down to 1.15 by year end. francine: what about you? >> we are working with the assumption that the dollar is lagging. we think the general anatomy of growth now is now shifting away from the focus on the u.s. to europe and trickling to emerging europe. kind of surrounding dollar weakness. let's not forget, the way u.s. politics develop themselves in 2017 suggest we could have w aves of risk. they have been perceived as dollar weakness. francine: what kind of level? >> i don't believe -- europe can go to 1.25 there easily. francine: at what point does euro strength need to be brought down by mario draghi? >> he does not need to do a lot

right now because the economy is doing quite well. but i think you would like to see more inflation. that is the point at which, maybe, if the ecb is serious about the global monetary cycle, there is not human that says he does not want to wait much longer before talking the euro down. the tightening will not bring the euro down at all. we're in a bit of a bind. francine: what does the fed do from here? will this impact the other currency pairs you look at, but how do visually fed be this year. three hikes, three small hikes? >> ivanka think we are talking about three hikes. they are slightly higher than? it suggested. i think the worst mistake is to focus on that. the tweak a balance sheets, you can put in a spreadsheet.

we are getting, seeing signals of confusion and a very expensive sense of several members. for membership is now in constant change. there will be changes, but effectively, i think it is wrong to focus on the fed now. francine: let me focus on the fed. let me bring up my u.s. ten-year break even rate. it shows -- you can see the breakeven rate go higher. the concern is that if you do not have inflation, if you have the wrong way bet on inflation -- and as an investor, it is a big mistake, is it not? >> i think it is just wrong. the breakeven came. it's not rebounding. so we have an exaggeration. we continue to rebound from that. if you look into a longer-term average, we are now coming closer to the average. some will see breakevens as wel

l. i do see the markets will regulate themselves. let's not forget. comparing the u.s. economy and euro economy, the u.s. recovery is somewhat older than the european one, which once again the buyers the appreciation of the euro. francine: peter, do you think we are over focusing on the fed, or is it justified? >> i think it is justified. if you put the balance sheet of economy,s agiainst the my concern -- and it is a concern more than a forecast for this unwinding might be one of the triggers that causes investors to think about the equity positioning. and particularly the time when t he two year yield -- francine: the rotation -- >> that is a chance there could be this theme.

francine: the markets would not be expecting it. think they are quite at this stage it where they are worried and concerned about the rotation. it's important to many that they need some signal. the two year yield is now higher than the yield on the s&p 500. that could be one of those factors that starts to play a bigger role in the weeks and months to come. francine: thank you, peter dixon and luis costa. u.k. builder goes into liquidation. details on what this means for theresa may's government. later on, we speak to john leahy . this is bloomberg. ♪

francine: economics, finance, politics. this is "bloomberg surveillance ," and i'm francine lacqua in london. here's nejra cehic. ceo saysat chrysler's they can double profit inf ive years. the jeeps can lead 25% of the global market. he also said u.s. tax cuts could further boost profits by $1 billion each year. softbank jumps tokyo trade after saying it is considering an initial public offering for the mobile phone unit. the company said no decision has been made. has beens as softbank examining ways to unlock value in boost the share price. morgan stanley and goldman sachs

have been selected for the planned initial public offering. according to a person with direct knowledge of the matter, credit suisse and deutsche bank have been chosen to work on the ipo. , goldman sachs in credit suisse declined to comment. that's the bloomberg business flash. let's focus on the u.s. and donald trump. the immigration deal could not be reached and he blamed democrats. the president tweeted, "daca is probably dead because democrats don't really want it." daca is a program that shields undocumented immigrants from deportation. donald trump told reporters he is the least racist per son after making folder remarks -- after making vulgar remarks

regarding immigrants from haiti and indonesia. stephanie, what can you tell us about these allegedly inflammatory remarks? is there a big fallout for the president? is there a fallout? 70: i think there is -- stephanie: i think there is a fallout. people over the weekend who said they first did not remember him saying that, came out and out right denied it. trump came back out and said "i am not a racist" to quell the uproar over these comments. i think it is clear that these comments are not helpful when it comes to trying to get a deal on immigration. the other and porton thing happening this week is that congress needs to pass the spending bill by friday to avoid the government shutdown. and now they need democratic votes to pass that. democrats are now tying the

immigration issue to the spending bill. so, it raises a lot of questions as to whether or not they will stick to that. and how trump will respond. francine: is there a real chance that the government shuts down? stephanie: it really depends on the democrats. with a stick -- will they stick to their guns and get this deal on imitation and risk being labeled as the party that is observing military funding? or, to the rollover and just past a continuing resolution to keep the government going and try to deal with this immigration issue in a month or two. an issue they have taken to heart. they wanta straight daca bill. you know, this is an important issue for them as they get into the november midterms. francine: there are huge spats

between the president and "the wall street journal." stephanie: i thought that was an easy mistake to make. if he swallowed his words, saying "i have a good relationship," or "i probably have a good relationship. journalists have said they stand by their story and they sent the recordings to an independent transduction agency, which verified their quotations. it does not help matters that he is constantly back and forth fighting with media. and you have again, senator jeff flake of arizona who will be giving a speech, saying that trump's treatment of the media echoes joseph stalin. the peoplelabeling is the enemy is incredibly dangerous. i think this increases the standoff we have seen between

established media outlets and the white house. and it is not very helpful. francine: does this have an impact on in markets, or not? >> know, this is an american domestic little issue. which could spillover. if you get a government shutdown, it could be a different story. it is what it is. it is the american political issue. there are dark clouds over the white house. this gave the dollar more impetus to weaken, rather than strengthen. that is basically the start and the markets were focused on the fiscal stimulus and the fact that the rest of the world yes vivistar willhink continue to facilitate into we hit the wall. it is very important to understand what is next for the

proper inflation. be when wegoing to have many rumors that he wants to tackle china a bunch of his trade policy. that is the risk. francine: thank you, stephanie baker. both stay with us. up next, we show you fourth quarter chinese gdp data later this week. this is bloomberg. ♪

francine: good morning, everyone. this is "bloomberg surveillance" in paris the rising just rates, it is all about the growth outlook and data from china will be the key. the world's biggest emerging onket releases data friday. none emerging markets. actually, should we not focus on deleveraging? have somebody coming to help out. it is going to take a long, long complete their you saw theted

money supply much the lackvery of growth. this is all related to the current we are getting from chinese pranks. you know wahat, that's all we know. it's a park. this is the one thing we have been complaining about. so far, this is not bringing too many ways of going to markets.

francine: do you agree with that, peter? is it neutral or negative on the world economy? >> it is generally a woman. i think if things were to go thinkand the pair of risk you manage it as best as possible. is the politically from

commerzbank. both stay with us. battle withbus' boeing. we speak to john leahy, the owner of their bus. in the month to you and have the king day to everybody in the u.s. this is why we do not see a movement on treasuries for the yuan touching a two-year high.

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francine: economics, finance and politics. -- donald trump is an

asteroid of awesomeness. out athornberry lashed from during an interview with the bbc after he called off the plans saying that he did not like the deal. in the u.k., shares in carillion have been suspended after the company says it will take that's liquidation.ry woul

the city came back. theeople have been injured afternoon trading session started at the usual time the highlightsd's rally this week. still under pressure this week. global news 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries around the world. oil is trading near the highest levels in more than three years with wti above $60 per mail. thek was called by the

executive director give his view. >> we have the dollars. still more philosophy with us and luis costa

from citigroup. luis if you look at the price of oil -- i have a great little chart looking at oil rigs, wti and brent. it is very clear that the uti does not go fast enough in high enough. .e are focusing a lot of time look, there are some in the higher elevations. is not a huge matt a little pickup over the

last two or three years. it is a very fragile balance. is the nextink now level to establish a lawn there. i still believe that in general, i don't know if

this is the inflation story, or if this is the strong-willed story. >> i think to a large extent, it's demand. , running demand, set the running at higher from supplies. they can adjust the fly on wednesday when they feel about it.

i certainly would focus on oil. how do you actually tell? >> the trick of the trade here is to understand generally how shale generally speaks. we know there is a lack for your sometimes maybe months thank you so much.

airbus close 2017 on a higher. will we had our very own aviation and aerospace expert, joining us now to discuss all of this. is it fair to say you are going out on a high. >> well, thank you. it is a record for us.

there are tractors and airport congestion. it means that you are more airplanes and bigger airplanes. guy: you said something this morning that a lot of people thought was a reality for some time. if you don't get a seal with camera on the 80. the emirates have come down with some fair questions. isunderstand those questions that correct.

that number is between 6:00 and

:00 right now and that is what we are working on. guy: what are your biggest excesses? persuading the four they should put new engines into the 320 line. the aircraft has been sold extremely well. talking about the possibility inside a lived in that line. thing.sible is the i don't think we should stop. that is not my decision to make. that would be the board and others and manufacturing, but there is demand for the product.

the idea that the the suit incorporate some of the technology. you get a new version of the aircraft. i can understand why boeing thinks it needs something. we have got about 90% of the .arket

we have the product that they are trying to compete with. so, yes, they will link to move into the middle of markets. we are already in good shape. that would continue denser the street pioneer. you are bringing aaron schulz to take over from you. him, or,ay one for more particularly, gather a down hawaiii he will be

fine the whole day, reviewing what we have done. what are our goals, and what should we be planning 2018. >> that will be seven months more. i am helping him out. chief ofy, airbus' sales. 80,ncine: we think about a 3

and we think about the tenure at the top. north korea has been found guilty of public litigation. what does this mean for the u.k. government? ducuss we transmit wirelessly up to 30 feet so you have to transmit from your seat. you can hear loud and clear.

you can enjoy your favorite tv show without preserving your family. watch the game. we sounded so clear. the only ozone transfer plus, they are super soft. for the specialty be discount price of only 39.90 nine dollars. it is backed by a 100% risk-free 90 day guarantee. we will pay to ship it back into fight this you get all of

this. the incredible value. francine: you are watching, companies the break up the orderly. for theresa may, this comes as jeremy corbyn questions the long-standing policy. it is part ofot

the high-speed ii media line. the immediate question is, what happens to those people getting paid by a north korean, or it will have to be through the korean pension is. we shouldn't be getting private companies to do the state's job. the labour party is making sure that the government cleanup was orderly.

at the moment, the labour party is using this as the way to challenge the hallway the government does things. whether it becomes a bigger issue than that is how he depends to treat the outage. if they can get to the past and in in two years time, nobody can remember this. thes not like clarity of

argument for doing things his way is actually the private sector takes on the risk. one of the reasons korea is in trouble is because it is doing a large construction project and some of them have gone wrong. now in the old days, theoretically at least, are technically there is ar's full story on the bloomberg terminal saying financial services are hoping to get a lift back here. they were thinking negotiation. -- we willpact unit impact the third term.

the pound is on course with the boe. it translate? -- doe translate? leavingpends on which the banking sector there.

we will be very interested to see what happens with the alliance in germany and what the final stance is. francine: it was great having luis costa and peter dixon. is going to double spending on electric vehicles making up a fraction of the car market. benefitsalso have the of thomas technology. connected vehicles are starting to happen. people talking infrastructure and

we think the payback on this is going to be tremendous until he get here. it will change the business model in a way we think is going to be really amazing. the process for vehicles, and we think they would be really quite remarkable. human that vehicle is gone.

we are focused on how we personalize that, so when you get into that a.v., it is your a.v. when you have an experience that is electronic and cool, you as the canadian

testedent reportedly something we would not support. nafta -- it could be modernized. we could get some currencies threatening inside and outside. nafta has been in place for a while.

risk going to happen to oil, cobalt, lithium? clearly, they are going to the effect. we have been sitting in the fundraiser. that was bill ford. joining us. i am quite excited, he could arm in new york. tom keene. this weekend we are hearing from bill ford. it's amazing how much he can and john norman i know are coming up with jpmorgan. jpmorgan looked it up from a street percent to 8.8% global.

and he will go down in history and his family. there is "bloomberg surveillance," live from london. that's next. ♪

francine: denver dollar. pressure on the currency continues. will we see a government

shutdown on friday? china's levels climbed to the strongest levels since december 2015. chinease gdp. the u.k. financial services sector has the chance of getting a favorable brexit deal. good morning. this is "bloomberg surveillance, in london forne is the week. tom keene, i do not know if you got the royal invitation. tom: there is a booming economy here. if you look at where dollar weakness is today, where sterling is we have the resiliency of the united kingdom and the experiment. francine: i really do mean it because if you look at the trail fx leaves, you could see the dynamics. weekwe had a guest last looking at japanese yen.

the major theme is already this important surprise. said qatarderstand the uae has now intercepted a plane. fraqncine is in charge of all breaking news. francine:. sebastian salek. -- here is sebastian salek. >> the company is struggling with debt. orillion employs tens of thousands of people. n jakarta, at least 72 people were injured. police found no evidence there

had been a bomb. the stock exchange started the trading session at the usual time. president trump told reporters he is "the least racist person." the president, in palm beach, florida, reacting to the folder vulgar comments he made about immigrants from haiti. hawaiian residents were sent into a panic when immobile alert said there was a real ballistic missile headed their way. global news 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries around the world. i'm sebastian salek. this is bloomberg. tom: let's look at equities, bonds, currencies and commodities. i'm going to focus on the foreign-exchange. john morgan will join us soon from jpmorgan. like light futures,

but a lift for thre markets. early.rude, up to $70 next one, please add me go to the vix. these numbers are now adjusted, 10.16. sterling is stunning. i put eurosterling in there, so about -- in talk want to talk a little bit about qatar, tom. there were reports that a qatari fighter jet or jets plural intercepted a regular playing. .e have much more than that target stocks were down from 2%. gaining fromlier 1%. i was also looking at the markets. supposedly the one thing i want

to talk about was the yuan. 6.4335.see the yuan at butink we spoke about oil, there is again, $63.23. tom: let me look at the bloomberg, and this is bloomberg. this shows a weak dollar. again, many different stories and that is what we will work on, particularly this hour. covering -- what a recovery, and this is the first can we everou say, " get back to the june 22 are june 21 level of sterling?" francine: i agree and today, the fx market is the one area we have to watch out.

it is martin luther king day, meaning treasuries and equities are closed. tom: we figured it out. the biggest thing about this holiday, besides the remembrance of dr. king, is it's the day where parents can collapse because 1/3 of the kids in america are sick. it is a perfect day for families to collapse nationwide. francine: i think it is the most depressing monday. now the u.s. dollar remains under pressure after capping a fifth straight week of declines. the steady at that goes recovery is gaining tension over political tensions in europe and of course, the ecb and boj. talks to avoid the government shutdown will be keey for the dollar this week. the biggest political risk is the united states. joining us now, our guest host for the hour, john norman.

studzinl with us, john ski. let me start out with you, john norman. when you look at dollar strength and weakness, what do we see? >> it is a combination of dollar strength and dollar weakness. there are a number of u.s. factors that are related to the bigger budget deficit. the non-us developments are slightly more powerful. you are seeing people big francine: is this a divergence play, john? i know you are removed from the markets, but what is powering ahead and what is not. >> when you look around the world, you are still looking at

and 3.5%tween 3.2% globally. you are looking at china and india as having the two big numbers. and i think the wildcard is the u.s. tax legislation. it is going to save small businesses. it will be a big boost, probably in six to 12 month time to the small businesses, which is as we know, 50% of the u.s. economy. will be an optional upside that people are still trying to assess in terms of the impact. the small business sector has not had access to funding or the additional tax savings. tom: i am glad to have both of you with us today. john, you work in the arts. and obviously, with blackstone. people are stunned by the resiliency of europe. are you surprised by what

appears to be a recent european miracle. you've been here since 1984. you.st have caught the center was germany and the german economy and we know that the backbone of the german companies thatmiddle star invest on a dynamic basis in the future. she's very productive in the short-term, but is less than .elpful tom: what have you done, john, with your call on euro? the capital market, moving the other way to 1.10. we jpmorgan stand on this? >> we have a target of 1.24. tom: so, you are going to take

the rest of the year off? i like that. been, if my view has there is much more common this in common. francine: can mario draghi actually take the quests. >> this could be somewhat of a problem for exporters. there is discussion about possibly moving rates very soon after qe ends. i can see that timetable being stretched out. john normand,

jpmorgan. coming up, we speak with labour party member bareness kennedy. route,n, tom keene is on staying in london for a week. of course, the world economics forum is next week. this is bloomberg. ♪

sebastian: this is "bloomberg surveillance," and i'm sebastian salek. airbus is publicly questioning the future of the a380

superjumbo. john leahy says the plane risks being shut down if they cannot win a crucial order from emirates. in onays it is horning electric cars, doubling spending on the vehicle. the company plans to shell out $11 billion to bring 40 models to the market in 2022. matthis. with jim a >> we have to play to win. if there are markets where we are not winning, we should be exiting. vehicles: 16 electric will be that durine factory earg models. smartphone maker has also chosen credit suisse and deutsche bank to work on the ipo. no word yet on when shares will be listed. that's the bloomberg business

flash. tom: thanks so much. it's an extraordinary week for american politics -- i don't know where to begin, other than if you are up in a plane for six hours and you get down there is another new story. john studzinski with us. lead brought in our american translator, stephanie baker steph, within all of this uproar and the lights reflected on the trump hotel last night, is that ohn?rt installation, j d be an artb installation, right? >> it is certainly contemporary. [laughter] tom: the shutdown on friday, is intangible? could we have a government

shutdown as the president migrates to davos? stephanie: last week was not good for immigration talks. the democrats want to tie the immigration bill to a spending agreement. to avoid a shutdown, trump needs democratic votes to get a spending resolution. his comments last week were not helpful to reach the agreement. i think it is limiting when we have the leader of the free world having to defend himself and say he is not a racist. that does not bode well for the future of those talks. francine: is there anything he can do to get the democrats back on his side? : they had a preliminary agreement when they agreed to start funding for border security, but that was not good enough. you had trump tweeting over the weekend, saying that daca was

all but dead and blaming the democrats for that. the negotiations are very complicated and the question is, will the democrats stick to their guns and you know, have a government shutdown in exchange for this immigration bill? tom: wonderful to see a new democratic party around this. john studzinski, how will the president be greeted iin londo? your perspective on how he will be greeted in london. will there be millions out in protest? >> i have lived in this country now for 30 to 35 years. as much as you do not want me to because it does not make good news, the english have an impeccable sense of good manners. if you remember when benedict

came to the u.k., people expected him to be slammed and enamouredkinere with him. trump is more controversial, but the government and royal family and everyone else will pay him the right amount of respect. francine: to a point. one of the labor ministers called him an asteroid of awfulness yesterday. are right., you people will say that because it makes good television. having said that, when you are in the room with somebody, people behave a different way. there clearly will become diversity an what has happened over the lastd four or five business days, it is ironic we are having this conversation on martin luther king day. it is almost like you could not make this up.

the reality is better than the script could possibly be. francine: there is another saga with "the wall street journal," the president now disputing that he told "the wall street journal" that he had a good relationship with the north korean leader. e: he now says he is misquoted, saying that he said, he would have a good relationship with him. the journal is disputing that. they say they did quote him accurately. you put this into the context of donald trump's broader attack on the media, his threats to issue these fake media awards and jeff to give a arizona due speech where he compared trump's treatment of the media to joseph stalin -- tom: unbelievable. stephanie: for trump to be equating the media as the enemy of the people. tom: i saw this morning, i think it was 10 or 15 years ago, there

bodies.d bo uproar of the president and frankly, all of theican clumsiness, i go to article today that they will our sense london, y of how london has withstood the last year and a half and where does going out. the bigger issue is brexit. this is why you see markets with close financial services, like the real estate market, trying to decline. and overall job growth in the u.k., the performance of u.k. financial assets, you would never know something like brexit is going on here. francine: thank you, stephanie baker. inhave plenty more on brexit 10 minutes. in the meantime, breaking news from the middle east. arabderstand a united

emirates that a fighter jet intercepted one of the fighter planes. hisunderstand that t could be something that qatar has denied. this is bloomberg. ♪

francine: this is "bloomberg surveillance," and tom and

francine from london this week. we need to talk about china. we are inspecting these gdp figures out on thursday. is china neutral in 2017 in terms of market impact, or is it a negative because we are concerned about deleveraging? >> i think it is a light negative. francine: slight. gdp numbersll will be stable because there is an external left coming from a global economy. the industrial production is slowing, which is why it is tough to be positive on base models. nots a slight negative, but a huge one. >> how much of that is slowing because that slowdown is being managed by the government? they still have among the highest growth in the world as an economy.

versus something that demonstrates a lack of control. >> the volatility is an extremely low activity affair. vacuum, when you are looking for foreign policy .n the united states do you assume china goes its own way, dealings with a dysfunctional, bilateral tone they have had with united states for decades? >> i am encouraged by the fed that u.s.-china relations have not gone off the rails in the way the initial rhetoric from the trump administration suggested. it seems somebody ensured this relationship is not reduced to an issue of fx. francine: the previous pboc chairman warned against delevera

ging. do you look at policy? >> right, i think you can look at the policy made by the small group of people. more or less, a similar focus in terms of the initiatives and deleveraging process going into the next year. aboutrancine, you wonder dr. navarro in davos, what ethert r they will have a voice. francine: john normand of j.p. morgan and john studzinski both stay with us. this is bloomberg. ♪

♪ francine: good morning everyone, this is "bloomberg surveillance" . tom and francine. after a qatari

jet intercepted a commercial plane. we are trying to figure out, this is something that yo uae is saying. qatar says this did not happen. do we know what happened? sure aboute are not what took place. the uae said at one of its airliners, was intercepted on its route. at the same time, al jazeera theyg, official saying, are denying the incident. this now we know from, escalation,, the feud has been going on for a while. yesterday, there was a

qatar was being quoted by the saudi's after this feud was erupted, put out a video saying someone was held against their will. the human rights division came out. there have been issues brewing for a while. what would an interception of a commercial plane look like? flying with the commercial airliner to make it land? do we have an intelligence of what that would look like? know how thison't incident transpired. from what the statement sounds like it seems the airliner was on its way and a fighter jet was

in the air and tried to signal do it to come down. we don't have details, statements from the uae did not say what was involved. meanwhile, qatar, presented to the united nations, an issue timing a fighter jet from the uae, have been flying in its zones. it is complicated and we don't have clarity on what happened. give us a tripod of saudi arabia, qatar and the united arab emirates. i cannot keep up with who the ally is of who? started sevenfeud uae andgo when the

saudi arabia, severed economic ties with qatar. no planes flying directly from these countries to qatar and vice versa. the tradeally severed at, most trade relationships. this feud escalated as more division in the gulf started to take hold. the u.s. and kuwait have tried to mediate the conflict. they have not been able to do anything. from the uae side, they have been saying, we do not have to come to a resolution. the turn of events today shows this can be dangerous. incidents like these happen more and more. tom: thank you so much. a briefing from dubai this

morning. let's get to news in london. >> in washington, republicans still see the possibility of a deal allowing young documented immigrants to stay in the u.s.. the immigration issue, this is a bigger debate and federal spending has to avoid a government shut down. president trump denies he told a newspaper he has a good relationship with kim jong-un. speculation.d palestinians will slap they will try to replace the u.s. with other international players in peace talks with israel.

this after president trump recognized jerusalem as the capital. malpractice rules this year. the chinese banking regulating commission examining bank supplies, looking into wealth management businesses. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm sebastian salek, this is bloomberg. tom: thrilled you are with us this morning. from our studios in london, two weeks in europe. john normand is with us from jpmorgan and joining us as well, john studzinski of blackstone. let's talk about brexit. what would ben franklin do? you are a great supporter of the legacy of ben franklin in london. he would come over here in another time and place and observe, what we observe

everyday, the soap opera. is it a normal soap opera here? translate, you're talking about ben franklin, the u.s. president? tom: he was a founding father. francine: just translating for viewers. studzinski has been a huge supporter of his views. do you perceive this as a soap opera? isaacson, whoer wrote the best biography on benjamin franklin would be better at articulating this. ben franklin as you know is the essential diplomat. if he was here today, brexit would never have gotten to the forefront of even being in place. he would have maintained the ifegration within it europe, anything he would have and

reconfigured the entire european union. francine: as a u.s. statesman? >> as an international diplomat. he was the first ambassador between the u.k. and the u.s. he is the quintessential, empathetic diplomat and listener. he was good at putting himself in a culture and listening to that perspective. he probably would have reconfigured the european union in a way that merkel wanted to reconfigure it, at the time she was trying to convince david cameron to be more patient in terms of what you wanted to do. francine: how would that have helped with brexit? to go back and understand the underlying causes of brexit, people feeling left out, how would diplomacy have helped? >> i think ben franklin would have done a better job. he was one of the first media magnets. he published.

he would have been a more transparent communicator during brexit and everyone would have known in advance what the issues of brexit were, the referendum might have gone differently. tom: were we hearing about a second referendum? john, what would that do to markets? it is unimaginable, isn't it? >> my understanding of the polls since brexit, public opinion has not moved that much in terms of favoring the remaining camp. if the polls have been shifting over the past 1.5 years, you might think a referendum would supportive of u.k. assets, especially sterling. since it appears to be a close case, whether a second referendum would vote to stay in europe or exit, it means volatility. francine: if you look at the pound, does it go to 1.50?

not so bad. one of the boldest calls. >> you still have a lot of policy uncertainty around whether or not soft brexit is the eventual outcome. we think that is where the u.k. will end up in several years. you'll knock it certainty around that policy path. tom: that is your base case? this will and constructively -- this will end constructively for all? >> one of the reasons the referendum came out the way it did today, people think they will continue to have the benefits of europe, financial services being one of them, and there isn't going to be a material change but they will be more independent of what they seem to be the harsh decision-making framework of brussels. the advantages of independence. i'm not sure that's true.

there is still a lot of detail that has to be worked out and while many people think, brexit in name only, we still need to see the harsh details about trade and immigration. that is yet to come. francine: you see it as something ugly? if we go through the hard brexit? >> i don't think there will be a hard brexit. i don't think there is a political will for hard brexit. more and more, you have heard me say as negotiation is protracted, particulate with macron, things will become more and more open-minded. tom: we have to come back. john normand is with us. the spirit of transactions in it europe, and also i want to touch upon the election of march 4 in italy. for your morning briefing in america, four date work week,

you can start tomorrow with robert moon. new york, boston, san francisco, london. don't forget, next week, coverage live, from the world economic forum. this is bloomberg. ♪

♪ tom: good morning everyone. "bloomberg surveillance" from london. i'm with francine, looking forward to an eventful week. the world economic forum. john normand with us from jpmorgan. linking in correlations of different markets. with us as well, john studzinski of blackstone, we have been

having a spirited discussion about the tone of europe. two mergers and acquisitions, what does a weaker dollar signal to you of dollar dynamics and what it means for the urgency of chief financial officers? >> if you have listened to me in the last 25 years. by exchange driven rates, interest rates. it is generally driven by industry-specific strategic issues. interest rates are at a 25 year, low. cash is everywhere. m&a, in certain sectors, you saw this with mr. murdock and mr. toer, a strategic reaction -- tom: the defense of reaction is

2018 the year of the dispense of transaction in combination? >> you have a certain amount of m&a is defensive, but a certain amount is offense of -- offensive. you could see both. you could see more activity in the financial services sector in the united states because remember, the tax legislation favors the banking industry. they will be on a stronger footing. hinging economics on profitability. do you assume and less and superior profits for companies driving these transactions, these mergers? quarters we have been surprised by earnings? it has been a shock. >> i think we're talking about long-term growth. growth of revenue, of profit. i think we are also looking at,

big systematic changes right now with artificial intelligence and technology. people are focused on that, in every sector. we could talk about every sector. m&a, you have to talk sector to sector. francine: i would like to talk about commodities. this is something that caught our eye this morning. noble group selling the mobile unit, i don't know whether this is a reaction to volatility. if you want to sell, if you want to restructure. or if this is a commodity concern. mining stocks and oil-producing stocks, the share price is just not following commodities higher. be as good as it gets for commodity prices like oil. i don't think it is as good as the oil prices can deliver over the next year. there are issues in play. this opec rush, unprecedented, and a strong global growth.

a lot of people have been working on this idea that oil can't stay above $60, they will be surprised by how shale output goes up. tom: what do you see in london? we talk about europe and banking and jobs moving to frankfurt and the things that make tv exciting but within the collegiality of banking in the new united kingdom, does there have to be further consolidation? >> i think limited consolidation. you still have rationalization from 2008 in certain people in second and third tier businesses that they should not be in including real estate, other types of financing businesses that are not core. people in banking are going to core-retail,sale, core-investment banking.

i don't see london losing. i think people will remain in london and live in london. tom: this is critical, francine, the rest of malaysia -- the rationalization, whole new programs going to asia, did we learn any lessons about overextending geographically? >> it is expensive, number one. internationaly, is a bad word, global is a bad word. the best word for financial services is multinational. needinancial institutions two, 3, 4 hubs. europe, hong kong, tokyo. tom: do you agree? are you going to hire people in singapore this afternoon? francine: compliance will be happy.

tom: john studzinski with us. john normand with us. up, stay with us. this is bloomberg. ♪

is bloomberg surveillance. let's get the bloomberg business flash. the chrysler ceo is counting on the jeep brand. he tells bloomberg the company could double profits in five years by exploiting jeeps potential. the 20% ofs much as the suv market. stock by rose after -- said it is considering an ipo for the mobilephone unit. in $18 billion. softbank's founder has been looking at ways to unlock value and boost the company's share price. that is the bloomberg business

flash. francine: we talk a lot about political risk in the u.s., but let us focus on europe. you have the political risk of the italian elections on march 4, and we hope we can cover that together in rome. jack norman --h john norman. it seems that coalition is the way that italians do politics. we could have a coalition that -- he isbacked by banned from office. is it a strange world where the market looks at berlusconi as a safe space? i think you might be a safe space as compared to a year

ago but with a fractured political system, we have a -- running the government. referendum is eu not a policy admission for the next government, i don't think it will be an issue. need for growth -- growth solves everything. we are seeing growth in europe. can you see that they have a growth of vector? the gdp has come up a little bit but are they recovering from a decade trauma? it always gets there in the end. francine: not in football last year. >> not in football, but they do get there in the end. they avoid the anti-e.u. coalition or the anti-e.u. they avoid the 39

right-wing groups that are across europe. inn there seen as heading the right direction. tom: is this generational? they tried out lindsay -- is that why they will go back to berlusconi? he is perceived as print -- as being out of touch. i don't know if it is a generation that they want to go theyto the older folks but are now seen as the safer pair of hands. renzioes happen to the allies, this has been the belief for a long time but what if? >> you can have a reasonably high amount of confidence that

situation will not be surfacing in the next 12 months. if you have a left of center parties as part of the government. tom: thank you, john normand. see what the meetings and the world economic forum. with aup, a conversation member of the house of lords. lots to talk about about the united kingdom and a stronger sterling, one indicator of a stronger burden. stay with us from our new studios in london. this is bloomberg. ♪ this is bloomberg. ♪

tom: this morning, a renewed and persistent dollar weakness.

pound-sterling strengthen back to pre-brexit levels? brent crude is $70 a barrel. when in london, watch the crown. we consider brexit and a scandal. a politician's wife and a woman from los angeles. and can we just get through martin luther king jr. day with a little bit of respect without the trump uproar? good morning, this is a bloomberg surveillance live from queen victoria street. wonderful to be here. what a building. it fits within the city footprint. francine: we have had great feedback. it goes back to what we have seen with donald trump. moving from central london to have more security efficiency and also for climate change to

affect the building much like ours. and then you see trump saying he will not drop -- because it was a bad deal but he will sharpen down close. weekend tweet of the was -- you went after the president. he said it was about tragedy we had seen in the diplomatic corps. and we are in java's next week. looking forward to our team putting together great guests. stocks are up more than 2% after reports of a qatari jet interpreted an airline over the uae. it was in between the persian monarchy. -- they accused the country of destabilizing the region. in the u.k., liquidation after failing to get a government bailout. the government has been

struggling with debt and shares have fallen more than 90% since july. from thect ranges hospital to the hs to high-speed rail line. and in jakarta, at least 72 people were injured when a stall at the new york stock exchange collapsed at noon. there was no evidence that there had been a bomb. they started a new trading session at the usual time. trump is told reporters he is the -- person they have ever interviewed. he was reacting to the fallout over the remarks in africa. hawaii, officials are invest getting the alarm about the false missile attack. people were sent into a panic when a mobile alert said there was a ballistic missile inbound. an employee pushed the wrong button. global news, 24 hours a day. powered by our more than 2700 journalists and analysts, in more than 120 countries.

this is bloomberg. tom: equities, stocks and commodities. an interesting market. so much of the united states is shut down today. the bond market is shut down in the u.s. -- the euro is a major story. stronger currencies against the dollar, worldwide. , $70.crude the vix is not part of it today with martin luther king day in the united states. sterling, i believe was the 1.38. just extraordinary. even the sterling is stronger against the dollar. francine: i'm seeing a lot of different calls. overall, european stocks were edging a little bit lower. down 0.2%.

the rally is the strongest of more than three years. we are expecting mario draghi to weigh in at some point. ducks goldis headed is gaining and i did this just for you, touching a two-year -- so ifhe fed raised yen is there on my chart. is that a bloomberg first while tom is in london? tom: i think this is a huge story. and what i would notice is that at the end of the year there was an ambiguity about the report and in the last five or six days, people are making a statement on the dollar and equity markets. we will talk to jonathan about this, about the idea of asynchronous global lift. really bold statements are being made. in jonathan, a

chief economist at hsbc. is the call of low, low interest rates but here we go against the call. when we look at the dollar movement being weaker and also with a higher interest rate, is there a new paradigm in the middle of january? not sure it would call it a new paradigm. interest rates have been exceptionally low for a long time now. also the long-term interest rates. it had to come to an end some point and we do have the global economic conditions normalizing. central banks are responding so it is no surprise to see market rates creeping higher. i think the market knows that interest rates are higher than what they used to be. most people are expecting them to talk about at lower levels than we have seen in previous cycles. tom: not that i want to do a

shameless plug on the real yield but on the real yield, do we get a tangible real yield back in the market? inflationyou will see expectations creeping higher over the next year. we think that inflation in the united states will survive on the upside. we think the fed will tighten more aggressively than the market is expecting so we think that will put further upward pressure. francine: what does that mean for treasuries? jonathan: for a long time we have had a target of 3%. have been told that we are mad because they will never get that high. so 2.5, heading in that direction and if we are right in expecting for hikes from the fed this year than they could get to 3%. that is not linear. 1, 2, 3, 4. where does it slam in with the rate hikes?

jonathan: i don't think it does. because i think the market knows that and just rates are way lower than they used to be. once we get into this year and we see the fed tightening than i think it upward pressure on the bond market yields in the u.s. and pressure on the dollar as well. and towards the end of the year ice -- year, i expect slower rates kick in in 2020 and beyond and we may start to think about the fed loosening again. so that to cap on how high treasury yields could go. francine: to your member our conversation with -- from deutsche bank? they said, forget treasuries which are important that there is the pricing of german boots. andf you look at the risks the impact this has on markets, is this more in german boots

then in treasuries? jonathan: no, because they tend to drag everything up. there is a lot more spare capacity in the eurozone. inflation pressures are much lesser. there are pipeline pressures coming through in the united states. think they do. tom: i showed francine a chart of real wages going down and down and down with the sterling adjustment and higher inflation. do you just assume better wage growth? in this recovery? jonathan: i don't think we can do anything about wage growth's.

we are talking about the phillips curve being more flatter. tom: it is even more than that. it is getting power back. and i see no medication of that, do you? jonathan: not yet. if we look at the normally reliable indicators of wage growth, there are difficult these of hiring people and filling jobs, they are suggesting that we will see some sign of wages growth picking up and the labor market is the most tight. probably not in the euro zone where there is a lot of slack left. francine: i do have a bloomberg chart of what tom keene was talking about. u.k. unemployment, that is the white line and then you have the average of the earnings in blue. will this chart get worse and worse for the average consumer?

jonathan: two things that will happen this year which will help in tumors -- will help consumers. this has been a one-off rate,tion of the exchange which you said earlier, it is being reversed. even if it wasn't, you wouldn't expect that to continue to push up on inflation for years and years, it should be a one-off. and if i am right about the labor market tightening points, we will see a pickup in wages growth later in the year. so i think consumers have more to get to as far as real income but it will be anything like as prolonged as it was 2008 when it went on for six years. jonathan loynes, wonderful to have you with us. we will come back on capital economics. and coming up, a most interesting member of the house of lords.

helena kennedy will join us, as well. from our studios in london, this is bloomberg. ♪

francine: good morning, everyone. tom keene is in london for the week and then we migrate to .avos stocks have dropped after the united arab emirates said a fighter jet intercepted a commercial plane in which would mark -- in the ties among the monarchies. joining us now, great to have you back. you're giving us the latest update. so the uae said the qatar flight was intercepting an airline but

we understand that qatar said this didn't happen. when we find out what actually happened? far, both sides -- the uae did not provide details on the incident as far as which airline was targeted and any further details on the incident. and qatar comes out to say it is completely untrue. arere unaware yet if there ways to find out so i would assume this will happen later that so far, for what we know, there is a claim by qatar and a claim by the uae and we're trying to find out which is true. we do need to try to get to the bottom of this. if this did happen, it is an exporting of the tensions but what with this lead to? how bad could it get? >> this is quite dangerous.

because if the turn of events is mean --hat would because so far, they have diplomatic ties with qatar seven months ago and they have no formal ties or informal there isit seems that a complete shutting of the doors on both sides. so this could turn deadly if there are more incidents of this happening. at the same time, all of the efforts by the americans and kuwait have not helped at all. involving emirates airways? does it involve a commercial air flight? >> the uae statement did make it sounds like it is. they have not named it. or flyd be emirates

dubai or any of the airlines. we know the uae airlines but we don't know which one. and so far the aviation authority has not released any further details and we don't know if they will. that is all that has been released. tom: thank you so much. joining us from dubai on this story. we will continue to bring you headlines. jonathan loynes is here with you. this all comes around to the interconnectedness of the different regions. if you look at these ancient links between the middle east and london and we take it for granted the logistics of the linkages of aircraft today. onathan: i'm not an expert aircraft or aviation. but this is not unusual.

tom: this was in the news today. there was a 14 billion sterling development. francine: the developments very often, when it comes to british airways and the hubs, it goes back to the power of other countries or not and also to globalization. and one of the keys of dave us was whether we go back to in 2018, which is what trump promised his base when he was running and i wonder , is this one of the concerns for 2018? do we go back to a border tax or closing borders? jonathan: probably not for 2018. the economy is doing well. i don't think trump will be in any hurry to turn towards protectionism.

the danger comes further ahead and it starts slow. we expect this to happen next year, perhaps in response to the fed tightening. it can't go on forever. and then there must be a danger that his popularity starts to slump and take the blame for economic weakness and he moves towards a protectionist populace. brings up the total wild card that we now have in the world economic forum. correct me if i'm wrong but there was a debate about the world economic meetings and it all changed with the president's attendance. francine: how long have we been too davos together? 17 years? getas always relevant to the celebrities in. and then celebrities came out. and the introspection came to the fact that it was the week

that trump got inaugurated and there was no populace. so a lot of people say, why do we care? if we do not have the person who represents the kind of anti-globalization policies and they came out to say that he may take over but he is there. tom: you will wonder if he will loot to the singler moment last year, by the speech of the president of china. francine: yes. -- we up, we will top will be talking about oil and the dynamic when it comes to shale producers and how quickly they can turn on the taps. ♪

>> this is "bloomberg surveillance." for the first time ever, publicly question of the jimbo -- airbus sales says the plane risks being shut down if the company can't win a crucial order from emirates. they are the only airline with

enough capacity to take enough to keep the program alive. ford says it is all in on electric cars at a detroit auto show. they will more than double spending and they plan to shell out $11 billion to bring 14 models to market by 2022. bloomberg spoke with the ceo. >> we have to play to win. there are markets where if we are not winning and we don't know how to play, we should be exiting. >> morgan stanley and goldman banks -- forng the the public offering. they have also chosen credit suisse and deutsche bank to work on the idea but no word yet on when the shares will be released. francine: let me bring you over to the turkish lira. we saw the currency's looking against the dollar as the foreign ministry criticized

policy in syria. we hear from the president all weekend saying turkish forces carried out an attack on the stronghold in the country and the turkish president said they will suffocate the army. they also said the operation against the kurdish forces may start at any moment. on the back of that, it has had an impact on the turkish lira. thatnk there is concern this puzzle will bring more tensions to turkey and to the region. was on morning must-read how the u.s. is distancing itself from a number of these countries. turkey is not a country where we associate with the full guarantees over the weekend but nevertheless, you wonder, given the 10 to will headlines that move the market, how does the u.s. fit in to provide some form of influence? i'm not sure you can do that.

proximity to the european union and i guess there is one person who would be the person who could mediate which would be angela merkel. tom: there it is. the turkish lira is moving and it is all against a much weaker dollar today. major currencies are advancing. let's not forget the u.s. markets are closed today. morning or weekly briefing, that would be the bloomberg businessweek. a simple question. are you missing out? stay with us, this is bloomberg. ♪ retail.

under pressure like never before. and it's connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. tom: thank you for being with us. francine lacqua and tom keene. right now we need the first word news brief. republicans in washington

still see the possibility of a deal allowing young undocumented immigrants to stay in the u.s. despite president trump's comments that the effort is probably dead. is part of a bigger debate over federal spending. congress has to pass a bill by friday. president trump is in a fight with the wall street journal over comments he made about kim jong-un. besides differ on what audio recordings indicate. sides differ on what audio recordings indicate. the palestinian authority president says they will try to replace the u.s. with other international players in peace talks with israel. abbas criticized trump for recognizing jerusalem as israel's capital.

the china banking regulatory commission has outlined its priorities which include examining bank compliance with rules, restricting loans for real estate developers and looking into wealth management businesses. global news 24 hours a day powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. u.k. construction company has filed for liquidation after failing to secure a loan for the government bailout. shares have fallen more than 90% since july. partyposition u.k. labour has called for a public sector contracted for a high-speed rail line to be brought back. is here.ett thank you for joining us on bloomberg surveillance. what do you make of what happened with carillion? >> here's a company with

billions of pounds worth of contracts any of them with the public sector which has clearly been failing for some time. three separate ceos in recent months. andes have been collapsing their debts far outweigh the value of the company. it was clearly in trouble and yet the government has continued to hand over more and more taxpayers money in additional contracts. today dave going to liquidation. it will have an impact on the workforce and supply chain including some very large companies. we are in partnership in carillion and on the public services. for example 50 prisons, 200 separate operating health service were being managed by carillion contracts. we need to take action fast

because events are out of control. if labor does become whatext party in charge would you do with some of these private companies that actually manage a lot of our public money? >> when it comes to public service such as prisons, hospitals and schools we think those contracts should be bought back in-house. we don't think the coast of profit at all cost should manage profithos at all should manage. clearly the administrators and liquidators need to move fast to protect as many jobs and contracts as possible. as we know that can take time. if labor was in office we would

not be outsourcing the scale in terms of billions of pounds into the private sector in this way. tom: good morning. i'm tom keene. i'm the ugly american hip. that you are a labour party that has to move to the middle and engage the united kingdom public. can you use an event like this liquidation to be a catalyst to party?broader labour >> our position on this is right in the center of political attitudes in the united kingdom. the truth is that most people are mortified when they discover that prisons are being run really for profit in quite difficult way when it's being paid for by the taxpayer and so many pounds of our money has been put in jeopardy. we think that is right in the

center of where the public are. when they hear of thousands of jobs being put at risk and services to our children and people who are ill they will be horrified. we think the labour party is right in the center. all is thehing of incompetent way the government has handed over contracts to a company which was quite transparently in deep trouble. in 2015 nearly three years ago the stock market was shortselling shares in carillion and it has been evident for some time this was a problem. it looks like it was an ideological drive to privatize everything that they could. we can't confirm it at the moment. brexit.estion on

would you be for a second referendum or not? >> we have had a referendum on brexit. it was quite clear that the people. would you be for a second referendum or not? wanted to leave. clearly we have to wrestle with the consequences of that decision. clearly there is quite a lot to be done to get the right kind of deal for our country and all of our partners in europe and north america and elsewhere and on that there are differences between herself and the government. we have accepted the decision of the referendum. francine: thank you, jon trickett. joining us now is a labour party member of the house of lords. we have quite a lot to talk about. on brexit are going to see a violent brexit outcome? a clean split with the eu? >> at this moment it would be very difficult to put your money

on either outcome. we are going to have to look very closely at what happens over the next month. in response to your question to jon trickett about is there likely to be a second referendum , labor has had to play a very inficult role in all of this that membership of the labour party is probably 90% in favor of remaining in the european union. people who normally vote labor who swear there is a question mark as to whether they are vacillating now on their vote to leave europe. they voted many of them to leave europe. the narrative is it was really because they were in pain over their own economic circumstances and they directed at europe when says it'sremy corbyn really government policy that has done this. labor has had to dance between those aspects of the potential

vote. its own membership who are very much remainders and its potential voters who might become alienated if they are seen to trample over there referendum. francine: if there is a referendum is not necessarily a different outcome. >> absolutely not. what is interesting would be, i would guess -- and i'm not part of the inner sanctum -- if negotiations were coming to completion around october it looked as if the deal was not going to be very good for ordinary people then i think at that point particularly if i am alsoe out saying skeptical about europe but i think this is such a disaster i really want us to revisit this because we could be making than you get ar second referendum. with all the uproar in the united states how does labor get

to the middle ground? rediscoverd to they need to rediscover tony blair and gordon brown? >> i thought your question about onillion was actually very point. people are-class also suffering. it's not just working-class people in britain. middle-class people are suffering. their money is not stretching. they're watching the children coming out of university and not getting jobs. are seeing the housing crisis for the next generation. there are a lot of people in the middle class who are very anxious about what has been happening under austerity and not very happy with the government.

they look at carillion and think they're her -- here are a lot of jobs and small businesses. we had outsourcing to outsourcers. they kept going down the line and some of those small companies are going to really suffer because they will be at the bottom of the list. tom: i am guilty of this. i'm going to china, i get the fancy plane in, the fancy car and the fancy hotel and i say london is no different. i go to the big fancy hotel next our offices and i say i have been to london. the rest of the united kingdom are they engaged in the daily brexit debate? francine: i will bring you to blackpool next time. >> i think there is a certain amount of brexit fatigues taking place actually. on and on.gging

negotiations very difficult to follow. not a particularly user-friendly topic. people are letting it wash over them. that is right from the perspective of the economy. predictions gloomy from the treasury gave us the impression that everybody would stop spending money. have wanted people to get on with things and the economy grew a lot more quickly than many people thought in the months after the referendum. francine: people felt left behind. sitting here in these beautiful bloomberg offices, the idea that the economy seems to be looking sitting better coulde short term. let's be honest. it's also not what is being felt by people. think that is another taughtsty that is being

because they are finding that their money isn't going far enough. taught because they are finding that their money isn't going far enough. they can't afford a lot of the things they used to afford. they haven't seen an increase in wages for 10 years. francine: how do you change that? worldwide we are at the lowest level of people in poverty that we have ever seen. look at the number of jobs being lost because of all of this. we need to be addressing those that have really come out of the austerity policies. if we actually started building houses, putting the infrastructure back in place and free nationalized than there could be jobs for people. that could be appealing to working-class and medical class voters as well. tom: you have a critical perspective on this. you were commissioner of the national commission for education a few years ago. between therent now challenges of education in the united kingdom and those --toric agents polarities

ageless polarities 20 years ago? >> higher education in britain is really good. it expanded hugely in that window -- period. want to get as many people as possible into university who had the skills. it has brought about debt and many of the people coming out are not getting the professional jobs that they imagined would come. they are coming out and driving prettybs were working low level jobs. they imagined they would become doctors and lawyers. see many people training in law and they will never be a practicing lawyer. something different has happened. having university education on its own doesn't do it. what the upper middle classes do is get their kids to do a masters degree. you have to have multiple degrees and ordinary working-class folk can't afford that.

thank you, helena kennedy. radio london and of course our digital product worldwide. stay with us. from london, this is bloomberg. ♪

francine: good morning. this is bloomberg surveillance. tom keene dropping by for the week before we both migrate to davos. metals have been rallying

on the softer dollar. as spot palladium has jumped to a record. still with us jonathan loynes. whate trying to figure out commodities are ahead. demand is quite strong. the share price for a lot of these mining stocks is not quite getting the same. >> certainly we have seen a rally from the dark days of the end of 2016 where we were trading right at the bottom of the cycle. it is still fair to say that they are not discounting swap price for a lot of these. look at the link market. market. they are generating really

significant amounts of cash for these mining stocks. -- capex isvels that low levels. of quantum we invested in the last cycle we just set ourselves up for the next downturn or do we actually learn from the cycle. francine: how do you invest smart? >> this is a situation where mining assets are invariably wasting assets. you need to constantly replenished. it is a capital sector. we need to invest in projects in sequence, not in parallel. we can't go back to spending $20 billion for every single mining company as they all attempt to bring online a 90 million ton project.

and they all want to do exactly the same thing. tom: exactly. you are an expert on this. does anybody have humility anymore? you and i remember the certitude of the australian conglomerate. this company, that company. do they have a new more humble attitude about the dispensing of capital dollars? >> that is the $64,000 question. everybody is talking about klein oftrying to claim the mantle the legendary ceo of rio tinto when this was regarded as a paragon of capital discipline and smart investing. everyone is referencing back to that time and the question is who will actually demonstrate that kind of commitment. name?ill you give us the

>> i like ivan glasenberg. i like glencore. they will not invest in name? >> these mega-greenfield projects. tom: is that because they are a traitor platform? element in that because they have to be in the market every day. they are there as a traitor. they do understand the impact of the decisions they make and what happens when you stop bringing some of these megaprojects online if you just stop pushing the price of this commodities down. that certainly does enforce discipline. over at rio tinto -- i know there has been this discussion of lithium acquisition. time and again his language is pointed in the same direction which is discipline, focus, value.

wherek we ought to point we can begin to say the industry perhaps has learned. francine: some of the rivals actually pay much higher dividends than they do. is that a concern? and they are still invested in quite a large coal business despite growing environmental concerns. dividends, the policy they've got out at the moment is a minimum in terms of investor calls at the end of last year. glencore is always going to be acquisitive. they're going to pursue bold on acquisitions where they see that making sense. anddifference between m&a capital organic growth is that m&a doesn't change the commodity price dynamic. tom: what will change the commodity price dynamic is a better global economy.

i believe you talked about a u.s. blowdown. is this as good as it gets for the global economy? it probably is. 2018 is going to be another decent year. there's reasonable momentum. tom: that's why he is all excited. >> we are not going to see the same synchronization we saw last year. have the u.s., u.k., japan and eurozone all growing. emerging markets china and russia doing well as well. you will see that picture begin to fragment a little bit. we are already seeing signs of china slowing. tom: what is your sanford for this year on commodities? for me it is supply-side discipline. as long as we have a positive demand we're not going to have the same kind of view that we had on the demand side.

where have the u.s., u.k., japn and eurozone all growing. has been cut sequentially since 2011. demand growth -- there and a situation where they are masters of their own destiny . francine: look at the trends longer-term, what are they using? >> we have written reams on the green economy. at all of those kinds of aspects you do see a shift in the material balance. it is more focused on things like cobalt.

it's all sort of copper intensive. the coal, away from iron and steel. tom: thrilled to have you with us, aldgate -- paul gait. francine: we saw a little bit of movement on turkish lira after recep tayyip erodgan but use the of establishing an army of terrorists on its border in syria. what exactly is going on? we did see and hear fighting talk from president erdogan over the weekend and he ramped up the rhetoric this morning. >> that's right. turkish president erdogan has just accused washington of establishing an army of terror along the turkish syrian border. with those comments erdogan was referring to syrian kurdish , ky d and ypg which have

both backed by the nuts states in the fight against islamic state. , ky d andbasically these commea clear sign that turkey and the u.s. backed kurdish forces in syria are moving closer to an open confrontation. tom: within that open confrontation and the immediacy have seen the last 24 hours maybe back into the weekend what are you trying to observe in the tuesday and wednesday this week? himself has erdogan said a military operation against the syrian kurdish forces can start at any time. week during the weekend he mentioned a time frame that corresponded roughly to a week. if there going to be any military operation obviously we start quite that to soon. tom: thank you.

this is expects the unexpected. something can come out of nowhere within the international relations frame this weekend into davos. you wonder what the surprises will be. francine: it will be interesting to see if the surprises will have an impact on the fed and will be ignored by the rest of the asset classes much like 2017. i am excited to have you here in london. we will talk a lot about the and u.s.rexit politics. and our theme is globalization 2018. tom: very good. thank you for joining us. tomorrow u.s. markets open as well. from london, this is bloomberg. ♪

>> from bloomberg's london headquarters, i'm anna edwards. welcome to bloomberg markets.

they are the top stories we are coverage from the bloomberg and around the world the unloved dollar. the greenback falls for a fourth day trading at a four-month low. welcome to bloomberg markets. trading in the united states today because it is the public holiday martin luther king day which means we are broadcasting live from london today. the dollar weakness is the big theme of the morning. heading for its fourth day in negative territory and we have seen five weeks of weakness for the greenback. global