How long can the fed function with a depleted staff . The turkish currency hit record lows against the dollar. Matt we have breaking news on unifer which came out with a statement that it recommends all shareholders reject the takeover offer. They say it does not represent the full value of the company. Is saying that shareholders should reject the offer. We will be speaking of with the ceo of uniper. He says they will meet again soon but currently they recommend the shareholders not accept the bid. Than a half hour away from the start of trading. Lets look at futures. We have kind of a mixed picture but very little change. Even the you see red arrows the movementard, is very little in terms of futures. The ibex futures are down considerably. I see dax futures gaining slightly. If you look at the core of europe, you have mixed race. Trade. A look at the bund the three year yield three year yield came down considerably. Even though we had those failed Coalition Talks, it looks like we have sideways movement. Trading at 36 basis points. Guy some chinese data coming this morning. 1. 78 . Up by is in the turkish lira. Hitting a lows against the u. S. Dollar. The central bank having its hands tied behind its back by the president. The lira continuing to fall. Lets get a first news update. U. S. President donald trump hes designating north korea a state sponsor of terrorism. The move subjects the regime to additional sanctions and reinforces its status as an international pariah. Iran, sudanon , and syria. This supports hour maximum Pressure Campaign to isolate the murderous regime. Janet yellen has said she will step down from the board of governors once Jerome Powell is sworn into office. This allows donald to shape the banks leadership for years to come. Change is a longstanding tradition of president s nominating their predecessors pick. The ceo of at t says he will see the Justice Department in court after they block the merger with time warner. He reiterated that he would not sell cnn to appease washington. The new leader of zimbabwes ruling party has asked Robert Mugabe to stand down. Ask the latest move to mugabe to leave power. Be impeached if he continues to refuse to resign. The Washington Post has reported that eight women have reported that charlie rose has made inappropriate sexual advances towards them. Pbs have suspended production of charlie rose. Bloomberg, who has a distribution and production agreement, is suspending the show as well. This is bloomberg. Thanks ray much for that. Angela merkel has signaled that she is ready to call snap elections to break germanys clinical stalemate. What does the prospect of a new vote in eus biggest economy mean for European Assets . Ours talk about that with strategist. I misspoke slightly. Merkel herself cannot call the election. It has to be the president. It takes a really long time. How do you see the time aspect playing out . i think the reaction will come soon. You saw this last night. Very Late European time, this news broke. It implies that merkel would support new elections rather than try to push through with a minority governor. That hit the euro after recovered earlier in the day. I think the market has now priced that new elections are the most likely outcome. Thats not good for the euro. If merkel is not part of the lead form of the next government, that would be a negative europe. Slower anduld evolve we will have to rate closer to any election. You say, once we know we can move on. Her chief of staff was on German Television earlier today saying the priority for them is to warm it coalition. Indeed, that is the priority for the president as well. Even if some of the parties prefer election, its going to take a long time to get there area that there. I think theres a little bit of extra rex risk premium price and zero. Priced into euro. I dont think its going to be continuing having a shock value on the euro area i think the immediate pricing of this news has already happened. Now it will be more marginal until we have a definitive outcome. Coalition, a coalition minority, or new elections. I think the going to stop trading based on this with the euro. Guy does the Turkish Central Bank have the chops to raise rates aggressively . Mark the turkish situation is serious. Its all about signaling. At over 12 , its expensive. Investors have been told by the feddent of turkey that the is on the wrong path. That worries them. They are essentially forced to react of them are the rate hiking meeting. Investors are used to this in turkey. It happened twice in the last several years. I think will be volatile. But it will continue selling off overall until the next hype rate hike rates properly. Guy what does out of control look like . Where at nearly 4 . Mark i think back to 2006 will he went on 140 12 180. 141 to 180. 60 in the space of a few weeks area i dont think we are going to go that big. Turkey is one of the more horrible ones. The laboratory to the politics for a while. Turkey is one of difficult ones. People have worried about politics for a wild. Violent rallies back in the lira. They need to send a clear signal to the market that the central bank is in control. They can take measures when needed. When they send that message, the lira should be ok. Just over the last few minutes we can see the pound rising strongly against the dollar. 132. 62 is the level im looking at. Is that due to optimism that the britons will offer a decent amount of money to the eu and get on to trade talks . Mark thats a positive. Everyone is counting on the fact that trade talks can start soon. If they dont, Companies Might have to react and move their headquarters away from the u. K. I think they like that they are seeing some progress on brexit negotiations. The fact that the u. K. Is able to double their offer to 40 billion pounds, it doesnt quite meet the 60 billion euros that europe is asking for but we are getting close. There might be some compromise. This does play into the whole merkel story. One of the problems is that merkel did not seem like someone more willing to lead that compromise. Is involved in domestic politics, it might be harder to reach that copper mice. But that is why sterling has rallied. Theres some optimism about trade talks. I have the charts up. Where you sit . Does the curve keep flattening . Are we reaching the limits of this trade . Mark i think longterm it flattens more. This happens every single cycle. It flattens and that inverts. Inversion is not that strange in u. S. History. Im absolutely in the camp that this goes much flatter. Shortterm i have no strong views. Purely in terms of market dynamics, we could see a little bit of steepening. Even if the curve goes flatter, its a multiyear process. It may not reach zero for another year or two years. The point is, is a longterm process. I dont know where the next five or 10 basis points will go, but im in the camp that the curve will flat much further. Matt thanks ray much. Mark cudmore joining us. A number of issues. Bloombergs mliv strategist puts his thoughts, his trade ideas, not recommendations but his market observations into his blog. You can follow it on the bloomberg at mliv. Uniper has suggested shareholders reject an offer tum. Boredom from forham universe shares are trading above the offer price from boredom fortum. Unipers ceo meets with us now. Why do you think this is a bad idea . The offer price is simply not attractive. Its not enough for us. Shere is some unclear intention with what they want to do. Recommend that shareholders except this. I will meet with the ceo, which is quite normal. We will meet and try to have a constructive discussion. We will see where we take this from here. Imagine, even if it were not an outright takeover , the two of you working together in some other way . Are there areas of the business in which you could cooperate and create synergies without a merger . Its a bit of an unusual takeover situation. 47 of the shares will most fortum and up with we will see a change in their Shareholder Base so we should see in what warm we can Work Together and cooperate. We are looking at business in terms of hydro and nuclear. We will see what we can come up with. Would you prefer a different fire . What a different name make a would a different name make a difference . Right now we are trading at. 18. Ad. 18 23 we want to increase the free flow. Choose whatu cannot is happening. We need to work now from that basis. Germanuld you prefer a government that does not include the greens . In a business like ours, anditability credibility stability are the most important aspects. I hope that in germany we can government those who can manage our political future. Know. Ard to we would appreciate a new government focused on the future. The timeline of how many coalfired plants you get rid up and by wind is one of the things to negotiate. Whether or not they tried again with this coalition of go forward with a grand coalition, if there are new elections they will talk about that as well. What timelines you think is right . Er . T timelines right for unip the coal situation will happen because i do not see it in one else wanting to build new coal plants. Of how longquestion do we use the existing plans for. One should carefully look at the happen. Nd what would we need an increase in the renewables. That requires back of capacity. Capacity. We have a balanced portfolio of gas and coal and hydro. Happens, we will move the business and benefit from that. We want a strong, reliable German Energy market. Guy you mentioned a moment ago your concern about stability. The German Economy and the data about it seemed to be very strong. Do you think the german onernment will have a affect stability . You look atbility is only a few weeks. Looking to the future there is plenty of options for stabilizing there. The German Economy has shown incredible resilience. Instability there is a value. Im sure the German Economy can survive a couple of weeks or months without a ruling group. Thank you for being here. We are minutes away from the start of european trading. Lets take a look at stocks you should be watching. Easyjet has a positive outlook for next year. The market open is eight minutes away. This is bloomberg. Five minutes to go until the start of trading. A stock to watch, easyjet. Its a positive picture. Problems result of the of every linen and monarch. Here is what she had to say earlier. Ryanair has taken some capacity out. We bought a part of air berlin which is part of the consolidation. Its all good news for easyjet. The forward outlook is good. Nestle, also, that company said to be one of the suitors of celestial, the maker of teas and healthy, vegetarian foods. Push into thatto space. Agreco coming in with profits up. Their revenue rose 8 . Take a look at aggreko. Up 15 over the past three months. Minutes time, its European Market open. Futures are mixed. Not a lot of direction on the indexes. But individual stocks may be in play today. This is bloomberg. Guy good morning. Welcome back. We not expecting european equities to go in a hurry this morning. We are going to start flat. By toxx 50 pulled down as is the cac here in the dax which is down by. 1 . Policies is going to play a part in all of this. Some interesting stock movers out there that we are focusing on. Matt i think it is interesting to point out that the dax did not plummet yesterday after the coalition breakdown. If you look at the trends in germany, this is going back to 2008 showing the gdp as the bars here and the german Business Climate at the white line doing quite well. Back at low jobless rates, record high business confidence. Even with a caretaker government, germany can continue to do quite well. Guy ftse open. We are barely sing a budget in terms of headline numbers because we are not going anywhere in a hurry. We will wait and see with the dax does. European markets,. 2 is where we are opening this morning. Manus cranny come over to you. Manus they are three dominant forces, merkel possible quality to go back to the country. Preparing to go to battle over time warner. Yellen, a trumpesque federal reserve. Yellen proposes that she will no longer be a part of the fed. For spaces for trump to feel trump to fill. You mentioned the dax, 25 record closes in 2017. It was a clever day in euro and in the dax. The markets do not believe that this geopolitical risk is going to temper the bullishness. If you have less than a month to run in trading between now and when you seen a wind down just see a wind down in volumes, would you not be tinted to take a wee bit of money off the table. Just in case . This is a comparative of some of the indices out there. Small stocks of europe have been the belchers of 2017. Large caps and the midst of. It is the heart land of europe. 9379, the Third Quarter so the misses saw the misses. The small caps, can they continue to grow. Something went wrong with chart number three. Should we do it live . Why not . Opening nope, that is not happening. I will leave you with a view of the gilt markets at the bottom of your screen. Technology, guy. Technology. Manus, thank you very much. It is trading down as strongly as it is. Xp, on a run to see executive with stocks are going. Compass groups is chit is trading down. Utilities also showing signs of weakness. On the upside, a couple of u. K. Stocks, specters trading higher. The departing ceo of easyjet, she seems to be leaving with a little bit of a tailwind in terms of the story. The stock is rising. The company she is going to come up 2 . 2 . S going to, up matt lets talk about Angela Merkel p its she would rather face as a merkel. She would rather face voters again. She is certain that new elections are the better way. I have no plans for a minority government at the moment, so we have to wait. A new election is one way. The minority government is another. That would be something to be thought of very carefully. I dont want to say never but i am very skeptical. She ands would be the better way new elections would be the better way. Matt joining me now, stephen macklowsmith. Even if she would prefer elections, shes got the president pushing for coalition. He is going to mess he is ftp. To meet with the she has to go through three votes in parliament before president can call a new election. How is this uncertainty is affecting the European Business im not surehen because we are in the middle of a negotiation so you had the results of the german election which were inconclusive. Them a senior hand in the negotiations. Issues with merkels policies but to a degree with ftp. You havesically saying a patriotic duty to make this work because this country is entitled to stable government. German politics is a very centrist spectrum of political parties. Merkel is a master operator in negotiations and coalitions in the past two governments. She is putting pressure on the ftp and saying if you want to get to the elections, fine. Lets see with the voters think of the fact that you have on negotiations. Matt it does look like it is going to cause that much of an issue the mystically over the medium issue domestically over the mediumterm. What does it mean for mccrone or Prime Minister may what does it mean for Prime Minister may . N, Prime Minister stephen supposing the new coalition discussion starts and results in an agreement, then fine, you have a government. If you to know elections and ms. Merkels hand is strengthened calmly go back to negotiations. Youre likely to have essential coalition in germany. You are burning up time. It would be nice to have some substance some certainty. From a brussels point of view, yes, it would be nice to have clarity about future direction of germany. That clarity will come. Theres that ms. May, visit phrase that clocks are taking on negotiation. It would be nice to have a German Government with a policy on u. K. Exit from the you. Yet to go with the instructions that were given to mr. Barnier. Guy of the markets are good at trading politics. The reaction, are we seeing the right one . The answer is no. The markets not good at pricing politics. Stephen ok, so lets take a step back. One of the things in politics is normally that changes in government really result in major changes in policy. Had we had a National France government in france, that would be a major change in policy. If you get a coalition, it doesnt make an enormous amount of difference. Guy what if Angela Merkel doesnt head one of those coalitions . She has been the chancellor for 14 years now . Guy yeah. Stephen she has brought a great deal of stability during that period. You might have a generational change of leadership. Matt that is a good point. Some people that we spoke with here, including the deputy head of a very Important Bureau that watches the Marshall Fund bureau in berlin said that maybe merkel doesnt move fast enough on issues. She is a steady hand and people love her for that. If you got new leadership, you can see some real deeper integration in europe. The you think we need that . Does the market care if we get Banking Union finished and deeper european integration . European minister finance . Stephen i think it would make a great deal of distance deal of difference. Traveled worried to change radically, that would make a difference. If you think where people are investing at the moment, im not whether it is going to be european minister finance. Greatrection of travel is with europe works slowly. The direction traveled on Banking Unions is clear, the next thing they need to grapple with and the capital markets. In the mediumterm, it would be corporates. Getting agreement on the finishing of the Banking Union which would include deposit insurance scheme. It takes a long time. 13 if i may euro investor. The currencies of a factor. It this where the pressure stress to manifest itself . Is this where the pressure starts to manifest itself . Stephen potentially. Currency is clearly a facto