certainly fillon performed well in the tv debates. that was a factor. in the last few days that caused some voters to vote for him. we could see the same thing happen with party socialist candidates. it does look like manuel valls will be the most likely candidate chosen. >> how about someone completely different, like macron, running as an independent. he's come out quite far ahead in some of the recent polls. >> right. i think what is complicated about this french election is we have this left-wing primary happening to choose a candidate for the party, but then some candidates have chosen to bypass this and run directly in the presidential election. even if he wins, he will be up against some formidable opponents, like macon in the center. he has a lot of buzz surrounding him at the moment. i would take a pinch of salt the poll that showed him as the most popular politician a few days ago. >> i have to wonder in macron's case, the fact he's somewhat on the right when it comes to his economic principles, but not so far as fillon. >> the fact that fillo

rather damning of francois fillon.e see one of us's cronies informing the syrian president is dousing aleppo in a toxic liquid and replies, "i will call you back in a minute." -- hundreds ofc european jihadist recruits are making their way back home. >> under the headline "back from jihad." some 200 french citizens have abandoned the battlefields of iraq in syria and are now returning to france. the return of these radicalized individuals is deeply worrying for french authorities. it is difficult to know how best to deal with them. do you simply try to find a way to imprison them or should the state push ahead with attempt to the radicalized them -- de radicalize them? has not saidond whether he will be running for reelection in may. one paper is convinced that it is only a matter of time. hollande.s >> you will be pressing forward for a second term. the papers sources claim hollande will not be taking part in the left-wing primaries. that is a decision that would wreak havoc among the french the premisedlly if or deci

le figaro has published a piece by francois fillon. haxie: it has. they accuse him of wanting to dismantle france's famous health insurance system, so this is really his response to that criticism. france's system of social security was once upon a time in the world, and under him it would be against "liberation" has been having some fun with this story. this headline reads, "now is the time for backtracking." on the francois hollande 2012 campaign slogan, "now is the time for change." all, just weeks ago, francois fillon promised a radical shakeup of the system. he suddenly backtracks on that. let's leave politics for an article you pulled out of "le about" an article discrimination in the workplace. >> when applying for jobs, there .s widespread discrimination -- we haveere sent more north african sounding names. all candidates, the fake candidates, were similarly qualified. 47% of the french sounding group got positive responses. that dropped to 37% among the second group. genie: when it comes to you and people in particular, they are hardly compe

and in france, how about francois fillon becoming president of the republic? it's a guess. yes. but the important thing here is not francois fillon, but that marine le pen is not going to become president. this is a prediction and a hope. or perhaps a hope first and a prediction, because we know we can't make predictions any more! and it's also, i think, the end of the french left, a bit like what happens in the uk. i predict, whoever it is, the french left candidate will clock less than 10% on the first round. i think they are in the wilderness for the next—generation. that's true pretty much across western europe, is it not to the centre left? it is, yes. prediction? now, i don't know where you're going to go with this! laughter i'm just going to cough and pass it back! it'll be an interesting year. what we learned this year is to expect the worst, and hope for the best. next year it's going to be the same thing all over again. in the united states, people are going tojust be amazed, i think, over and over again by what's happening in washington. outside of the united sta

fillon over in france would be a significant shift.eresting to see how the spending round develops from here and how the european military develops from here. all of that something vladimir putin is thinking a great deal about right now. we just had manufacturing data. a little softer on that front. over theess, the focus next few minutes will be on what happens in moscow. the surveillance team will bring you all of the latest. maybe we will get a chance to listen in. i will join the radio team as well. you can listen to bloomberg here radio now.n dab this is bloomberg. ♪ francine: oil soars above $50 a barrel as opec agrees to its first production freezing eight years. putin and the president-elect. the russian leader holds his 13th annual state of the union address. will he announce a u.s.-russian relations reset? and ending with a bang. 30-year-old bond bull market runs out of steam. this is "bloomberg surveillance ." welcome to the program.

fillon is a classical rightist.e's not an extremist and he's a very respectful man and nothing comparable with what could have happened in austria or with now the big vote in the italy after the referendum. but for sure in europe today, you have a lot of tensions, a lot of tension because of first the economic slowdown plus crisis because europe under delivered in comparison with the u.s. after the 2008-2010 crisis. >> in terms of growth and jobs. >> in jobs because for europe you still have something between 20 to 30% unemployment rate. for young people, it could reach 50%. that's our main challenge. second, you have a lot of the tensions in europe due to migration crisis and terrorist attacks. so all societies are under tension today. and that's the main cannon for europe which is how to address these new issues, how to deal with growth and investment in a new world with climate change and digital information and how to deal with security issues and preserve our open societies. >> why do you think trump won? you'r

francois fillon could go up against another right-wing candidates in the second round of the elections. a to stop that from happening and defend france's social model, he says the left needs to unite and hopefully will unite behind him. anchor: now he is actively disliked by the west wing -- by the left wing of his own party. how is he going to overcome that? valls has a difficult job. --is seen as to pro-business too pro-business. i spoke to a few locals in the tower where he was mayor. he was an extremely popular mayor. since he has become prime minister he has drifted too far to the right. that is something he is really going to have to work on. he's going to have to persuade people like that he is a true left-wing candidate and values left wing values. he is up against several other candidates. there are candidates who are taking part in the january primary. it is an uncertain moment for italy, where prime minister matteo renzi says he is stepping down after he lost a referendum on constitutional reform. the country's youngest ever leader stated his political future on winning the

he wants to stand against francois fillon. he said he wants to protect our social model and make sure we can stand together as a nation again. he wants to bolster education. >> who do we think will succeed him as prime minister in france? >> that is still to be seen. a couple of candidates that are being named in the french media includes the current interior minister. it is unlikely that francois hollande is going to bring him in. he is likely to bring in somewhere -- someone close to him so that someone else in the party, including manuel valls, does it have more influence. >> lisa, thank you very much. after more than six months of fighting, libyan forces say they have taken full control of syria -- the city on the border of syria. the troops mainly from the western city of ms. rodda began the assault in may. is resisted using suicide car bombing, snipers, and improvised explosive devices. the longtime uzbech prime minister has been elected as the country's prime minister after the death of the countries strongman. he was a

candidate and conservative candidates and according to all the polls the a face-off one and francois fillon so the a major task to find a candidate and be a contend.e that can >> mark, thank you very much. cross to the united states where donald trump has started his so-called thank you tour. he took to the stage in ohio in his first imagine public his election.ce at the start of his address some a led for the need to unite divided nation. he returned to the brash tone campaign.d his he bragged about the size of his victory and criticized the y. the crowd chanted build the wall and lock her up fact that donald trump says the wall could be part fence and he has no desire pursue criminal charges against his former rival hillary clinton. surprise de the announcement for his choice for defense secretary as former mattis.james andrew hillyer has the details. u.s. president-elect making a key announcement in style.l trump at a rally packed with loyal support e supporters. we are going to appoint mad dog mattis as our secretary of defense. but we are not announcing it until monday so don't tell an

. >> about francois fillon and the right-wing primaries -- both the spectators and the musicians are convicted criminals. gallery?to go to hello? everything set? >> yes. 1 -- 2, genie: it certainly takes a lot of people to get the news out to you around the world. joining me on the set for my business desk is charles pellegrin. how long have you been here? charles: seven years. genie: brexit is high on the agenda. there was quite a splash made. saying that the u.k.'s negotiating posture was not conducive to a smooth and orderly brexit. he implied britain wanted to have its cake and eat it, too. many have all the benefits of the e.u. without the obligations. philip hammond stressed that it was in the interest of the e.u. to offer the u.k. the best possible deal when it comes to market access because most e.u. companies rely heavily on london for financial services. hammond did not exclude having to continue paying into the e.u. budget. dark of going into a negotiation, we are prepared to with ourny structure european partners. that in the end, we will only do is important's interest.

that is fillon, who would threaten the social model in france, and marine le pen will do is standing protectionism. you said it was the biggest threat to the country, so he thought apparently that he should not stand again for president next year to give the socialist party chance really in the election. brent: does it have a chance? reporter: according to the polls , no. whoever becomes a candidate in the primary elections will not stand a chance to get into the second round of voting, it seems like. it looks like a candidate from the republican party and marine le pen from the far right will get into the second round and face each other. brent: the picture the world has right now of france, post trump victory and post brexit, the far right, the extreme right is on a roll. when you say that the decision by prince of all lawns to not run again -- hollande is going+ to confirm what people around the world think about the situation in politics in france? reporter: it means he wants to prevent marine le pen from becoming president, he seems to think that is there is a strong socialist c

is thes fillon front-runner followed by marie le pen. the fourth man would not even be valls. have 9% of the vote meaning that the fourth man could even be the communist party candidate. anna: it could be a crowded field. thank you very much. us return to our guest, alberto. it could be crowded. there could be various names on the left. we know who will be on the right and the center-right. what is your best case for what happens in france next year? >> when you have gaps in power in inequality and stagnation an economy for a long time, this creates fertile ground. is, we are worried about marine le pen. problemas a equality and an immigration problem. policy leaders have been complacent. there is a story about the titanic where the captain told everyone to abandon ship. some passengers remained in the warmth of their cabins. they preferred to stay there. i think that is the level of complacency that some european elites have been showing in the last years. inclusiveed are fiscal policies and growth measures, not just quantitative easing. there are not too many months to do th

another interesting development is the centre—right candidate francois fillon for the french presidential—russian. he has queried whether the west should still impose sanctions. he met angela merkel on the fringes of a meeting in brussels this week. we could be looking at a situation in france next year where we have a pro russian president, either if the centre—right candidate gets in, or marine le pen. we also have a pro—russian president in the united states. and he may have been elected partly because of putin. the leaks obviously came from putin, and the false information which got put into the ecosystem. even if he wasn't elected, his relaxed attitude to hacking with the cia saying... it is unprecedented. it is unbelievable that he has not only been negative but he said he does not trust the american intelligence agencies to give a fair assessment of what is happening. i agree that his own position on his own intelligence services is odd. not odd! his position on russia per se is odd and his position with his own intelligence services is deeply worrying but i see no evidence that ru

we learned this week the republican candidate will be france will feel -- francois fillon from the conservativean party. he calls himself a thatcherite, so a reformist conservative. night,other hand, last francoise lalonde, the sitting president, surprisingly ,nnounced -- hollande surprisingly announced that he would not be running next year. the first time a sitting president has not gone for a second term in more than 50 years. it is starting to become clearer what happened. the polls suggest it will be illon and marine le pen going to the second round. alan crawford, breaking down the latest news on france and looking ahead to the austrian presidential elections. coming up in battle of the charts, although small caps on been a big winner since the election, investors are starting to brace for declines. this is bloomberg. ♪ vonnie: it is time for our global battle of the charts, where we look at some of the most telling charts of the day and present them to you our viewers. you can always access these on your bloomberg. kicking things off in new york is our stoxx reporter joe p oley. >> today

. >> so, when you see somebody like fillon win in france, again, i'm struck by the fact that he has thews but one of them is he is very prorussian. why does the european union have to have sanctions against russia and why can't we get along and unite with russia and fight terrorists, just what trump said. >> he has this old friendship with vladimir putin that goes back to the time when they were both prime ministers. and more profoundly, idyelogically he believes it is time to look back and build bridges and help it in syria with all kind of extraordinary ideas like helping hezbollah on the ground. he goes that far. you see this extraordinary thing where, in fact, the power to which the left turns throughout the 20th century despite human rights is now the power to which the right turns despite human rights abuses. it's an extraordinary shift and one we haven't quite seen coming. and suddenly you're going to have a security council that is decidedly pro russian. >> and, you know, this is happening in the context of a new ideology almost. leaders poland all talking about illiberal democr

the program of francois fillon, who is considered conservative, right-wing programs may be instead oftreme views on social issues with the european union. vonnie: turning to president-elect donald trump's latest cabinet picks. tom price is slated to be the next secretary of health and human services. price could possibly oversee the repeal of the affordable care act next year, one of the top legislative or days for republicans. >> this is a congressman that was also a supporter of donald trump. he did appear at the gettysburg address of sorts, with vice president elect pence as well as trump. i'm sorry, outside of philadelphia. they talked about repealing obama care. and obamacare was a big reason why many midwestern states went for donald trump. david: breaking news, the president-elect's cabinet is coming together. steve and wilbur ross confirmed for the cabinet. joining us now from washington for an update on the transition is our bloomberg political reporter. >> they are being put in place as we get an idea of how the trump administration is going to be treating foreign trade deal

the current presidential front runners are marine le pen and the republican, francois fillon.unite the left. can he? >> unfortunately, probably not. he cannot unite the left because there is a hard left around one tebow in france. the question is whether he will be the candidate for the socialists. he has a good chance. in one way i find it reassuring , that at least the sort of leading candidate of the centerleft is a reformer. france seems to be yearning for reform, but the centerleft field seems to be splintered. alls and then the independent probably the , centerleft does not have much of a chance to make it into the final runoff off of the presidential election anyway. mark: german chancellor angela merkel was reelected as the christian democratic union chairwoman with 89.5% support as the delegates. it is the lowest level support she has received in her chancellorship. >> it is not a great result for her. i mean, to get less than 90% for the first time since she has been a sitting chancellor at a time when she has absolutely no opponent is a very poor result. on the othe

in market terms, fillon is the front-runner. we were not talking about him a year ago. he will be the surprise. >> what is your outlook for the euro? >> will break parity sometime next year. how aggressively we do that depends on the first quarter. if we get political uncertainties that may push us over the edge. i don't think the ecb will taper. i welcomed mario draghi po's policy. it's not the same as the boj program, but i know ten-year jgbs won't go wildly everywhere. >> if we get to 3% on the ten-year you could start to see some real problems according to liquidity according to some. do you think that's a possibility and do you agree with liquidity fears? >> yes and yes probably. i think we could get up to 3%. that's a bit further out. i think we've already had a bit of a flash crash in the u.s. treasury market going back a couple years. the liquidity in the treasury market is low. it's the most liquid market. even their liquidity is lower. we've seen the pain trade as yields have gone up. there's been losses on bond investors balance sheets. if we do see yields pu

. >> bill mentions francois fillon in france. this coming election in france is a very important one because he is pushing the most aggressive free market reform that i have seen come out of a french candidate in my lifetime. you just never see that in france where they have socialists and the right is almost as socialist as the left. that's an alternative to the blood and soil nationalism that marine lapin is pushing. >> it will be a key election in that respect, paul, because here is the paradox of populism. by and large it can be summed up as people saying, i'm mad as hell, and i'm not going to take it anymore except when the government starts suggesting that they pair back, say, labor regulations and rules that protect people. and at that point, a lot of these mad as hell people say, whoa, wait a minute. i'm not giving up any of the stuff that protects me. let somebody else take the burden. >> i'm not giving up my entitlement payments. >> spain, italy, france, it has been the same thing reflected. so that election will be ver

instead, we saw francois fillon win. referendum taking place in italy that you mentioned. prime minister rensi has said if it doesn't go through he will resign. that leaves the space for potentially pepi degreo who's the leader of the opposition, an entertainer, a populist. this is a narrative we're seeing playing out over and over again. we have an important election coming up in austria. again, it looks like someone quite far to the right, a populist, may also seize the momentum. the european union is facing its most serious existential crisis since its inception and what it speaks to on a broader scale i think is what we saw here in the united states as well, which is a ground swell movement, a shift in the zeitgist and it is a tetonic shift in the way people feel about the establishment and their unhappiness in the way their country is moving. >> arwa, you're based in istanbul but you're traveling the middle east all the time. what was the reaction when the people you're working with heard that donald trump would be

concern about, you know as the french election between the second round between marine le pen and fillonoing to be very close? will they do go all in the dutch -- will it do well in the dutch election? that will affect european spreads. where it has been this year the we have to donk the opposite and 2017. manus: you have italy over germany at 200 basis point. robert parker: the ecb is still doing 60 billion a month. is it going to narrow any further? . manus: ok, bob. theresa may,nister up next, she says she is looking at all of the options of brexit were to they'll. a big speech in the new year. more ahead. and, 20 billion. ring the bell. 20 billion euros, please. something for the weekend. cash,minister asking for just a precautionary measure. we hear what the finance minister's take is. plus, the dial is just a stones throw from 25. economic adviser says it is primed to hold casts -- cash, scale back risk. that is just the start. stay tuned. this is bloomberg. ♪ ♪ >> at it is 6:20 in london. cloudy skies for hong kong as they hung saying goes trading higher. almost two thirds of one

sony: in terms of the actual outcome, i think that that is still likely to be a president fillon. share of marine e could increase. the relative importance of security issues, the relative importance of immigration, etc., could be much higher as a result of the berlin attack. every single attack that happens on european soil over the next few months will feed into the elections, will stoke up support for the far right. but more dangerously, will almost certainly lead to -- as perhaps the zurich attack might have been -- reprisals against the muslim immunity. in this way lies trouble and conflict. we need to find a way of managing this. we will definitely have more attacks. but i think together, europe will manage to keep the far right out of political power. guy: let's walk back along the line. thierry remains in some ways the epicenter of this story. storyia remains the epicenter. we saw this incident where the russian ambassador was shot dead in ankara. when we look at how regional powers are playing the serious story and trying to make their voices heard, and impose their will

>> it might be if from fluffy on -- it might be if francois fee fillon winds. equidistantn has with the united states and russia and france somewhere in the middle. she will challenge the european union. she already announced that france would pull out and exit the european union, similar to the brits. if she winds this election, we will see a threat to all conventional wisdom with a totally uncertain outcome. host: jane, republican line. welcome to the conversation. caller: good morning. how does the fact that trump owes money to foreign banks assess the policy of those governments? follow the money here. i am very concerned about that. they have a leverage over him. that is a very good question. i think everybody is concerned about that and i was one of the reasons trump received a delegation from japan in the under one of those foreign politicians who were first to congratulate him and andhe asked his daughter son to join the conversation because he has a private interests besides the policy interest. i think the first good step is the he reject things from

the consensus-- seems to be that fillon will make it through the second round , and consensus views forhey're worth -- i don't think that necessarily solves france's problems either. there is a bit of a schism. in that sense, i think italy is the weakest link. john: even more broadly, i think the biggest risk is a breakdown in support by the political elites for the euro. right now that support is rock solid. if you've got a government anywhere in the continent that broke down, that broke that france,s in italy or in that is the bigger long-term risk. that is pretty much unshakable faith in the euro as the pillar of the european economy. someone gets elected and that starts to break down. francine: i remember being briefed by jean-claude juncker, saying he's never seen so little commonality among nations. that should make investors worry a touch. thank you so much, john and george. bloomberg's execute of editor for international government and george magnus. stay with "surveillance." plenty coming up. opec agreeing to its first production cut in eight years. renzi -- report card. italia