will stayre:, paul with us, so does peter dixon from commerzbank.kets. we will see what our guest, paul schmelzing, says is the worst in history. plus, the president-elect has a keen interest on tweeting. and in the next hour of "surveillance," we will break down what the president elect's first news conference in six months means for investors. for more, tune into radio daybreak live in london. this is bloomberg. ♪ ♪ francine: this is "bloomberg surveillance." i am francine lacqua right here in london. let's check in on your markets with mark barton. ftse 100 index, yes, after 12 consecutive days of gains, a record, the ftse is falling. .nlucky 13 for the ftse it rose by 3.25%, the top five performers, by the way, all mining stocks. all but 19 on the index rose. since rsi, as it has been december, don't forget, 10 of those 12 were record highs, which itself was a record in itself. up, big news today, shares by as much as 5.7%, the biggest gain since july. deliveringing sales, a confidence boost to this retailer, which is had a pretty tumultuous yea

commerzbank visiting us in hong kong. could be the yuan next big shock to come out of china.e are looking at that and finding out why. that is on the way. ♪ mostad: the world's tightly manage currency, but yuan investors think we will see an exchange rate solely determined by market forces. ,e look at the reasons, and ok present the case for the free-floating of the yuan. >> it might sound crazy, but there is a case for it. china has been fighting gravity and had to deplete reserves and keep conditions tighter than they would to defend the exchange rate, which is not a great idea when you have a slowing economy. the free-floating will not be that bad, china has massive foreign reserves, a large trade surplus, and inflation is low, so why don't you just let it go? rishaad: of course, but is there anyone seriously contemplating that could happen? surveys of strategists, positioning in the options market, it is not the base case right now. after all, we know china tends to take things step-by-step. it is a bit of a crazy idea and that it is highly risky and you do not know what

for some reaction let's bring in peter dixon, senior economist from commerzbank. good morning. pleasure to have you with us. you were looking for a number closer to 52.5 to 53. are you surprised by the strength of that data? >> in a way i am . bear in mind that construction is a volatile number. we see more volatility in the construction pmi than other sectors. so i tend to look at the trend. the trend is upwards. if you look at the ons data on construction output it's rather weaker than other sectors of the economy. >> when we look at input price component rising to the highest since april of 2011, this is similar to what we saw in the manufacturing data with price pressures rising. is this starting to be an area of concern? >> it's a canary in the coal mine which suggests the collapse in sterling following the brexit referendum is going to have an impact upon inflation in the uk over the course of the next 18 months. we have not really seen it heading to the cpi figures yet. but coupled with the recent rise in the oil price we will look at much higher inflation throughout the

the commentary from commerzbank's this morning, was saying that they expect the central bank to raisebasis points. that is not what is needed at this point. if you're going to stop inflation, you're going to have to look beyond 50 basis points. most of the analysts, commerzbank, they don't see that happening unless we get a currency crisis that forces the central bank's hand. francine: thank you for that. we are back on set in london with hans recker and michael lewis. when you look at the lira, it depends on the move, right? doesn't force the turkish --tral bank to reinforce rethink their policy? >> we have the potential instruments, currency intervention you have been mentioning. as well as the central bank and its monetary policy approach. when we're talking about high-yield emerging-market currencies, and the turkish lira here is not any different from others. it is driven by yield differentials. when you have a central bank that will stay accommodative and you have local inflation rates going up, and those are driven additionally by the exchange rate, you get into a vicious price