Chinese equities are definitely leading the game. You can see one of the main gauges gaining 2 . We have a little bit of dollar weakness. Pmi isr manufacturing beating estimates. 60. 6. We were in line with expectations. Check out any kind of movement in europe. Look at the german bonds. Coming up up at 11 a. M. London time. The present we going to his outlook for the rest of the year. That includes china but also iran. Midday, the former u. S. Treasury secretary joins us. Towill also be speaking microsoft. Lets get to the bloomberg first word news. In iran, the death toll has climbed. 20 people may not die to the demonstrations. In a rare share of displeasure with public leaders. The iraniandefended peoples right to demonstrate. Penceice president mike will visit each of this month. The confirmation came after israeli Prime Minister said its included in the schedule. Its feeling that speculation. Hence had plans to meet with egypts president. The visit was postponed until this month. Denmarks Prime Minister has the he wants to include governments plan for tax reform this year. , heis new years speech said the tax cuts will make it more feasible to work, which will bring more people to the job market. Prime minister has revived the debate about whether the Company Country can become a republic. The nation needs to have an honest, open discussion about the issue. Becoming a republic would require a referendum in order to make changes to the constitution. Well be joined by the former Prime Minister. English area and to coastal areas saw the biggest Housing Price raises. Scotland,to bank of it saw jumper 13 in 2017. As a was five times the national increase. The south coast saw the next highest gains. News 24 hours a day powered by more than 2700 journalists and analysts in more than a hundred 20 countries. Im Sebastian Salek and this is bloomberg. Francine thanks so much. Stated hetrump has has had a fantastic year. We are expecting a raft of data from the u. S. In the coming days. On friday it is the jobs report. Join us now is our director of European Research. He is the cohead of strategy research. We are run the beginning of 2018. What will the bring . Growth is ok. Inflation may be picking up. Overall, if you look at the social situation, it still not there. Christian in terms of Political Risks and political cohesion, i think the focus will start shifting away from europe right now. I see three pockets of Political Risk right now. I think one is in the u. S. One has to do with the possibility of some incoherent communication policies. Thats coming of the u. S. Of minister nation. , very important trade policies. I think this will be a key question. There is some sense of and certainty about how robust the u. S. Administration is striking general domestic and international politics. I think this will be a concern. Do withr risks have to south korea, of course, the news of the weekend was welcome, as well as the middle east. Are you worried about the possible rise of protectionism . Only going to some kind of global trade war . Risksne it is one of the it is one of the risks but i growth is as strong as it has been for a long time. We are optimistic on u. S. Growth. This year, europe is firing on all cylinders. From an economic perspective, this year, the big question is if the phillips curve will return. We see unemployment at record lows and lead to higher wage growth and into higher inflation that will then lead Central Banks to hike Interest Rates on the already have . That is the big question. Without link come back. Will that link come back . Three interestrate rises from the fed, what happens if we get 25 basis points . Does it make a difference . The hikes are one question, but if you look at the curve, thats one of the big discussions at the end of last year. If you look at the curve in the end is notong responding. Thats the yield curve flattening. Thats normally a pretty good indicator of recessions ahead. It happened in the past week. We analyze this in the paper. This is of course just market expectations. That is going to be the big debate. If we get more upset prices on inflation, that will lead to the long end going up and the steepening of the curve. We dont expect that. We see gradual increase in of inflation. Underlying inflation in particular. That should give Central Banks some comfort. It evert know of disappeared. It might be under a structural change. Francine it was pretty distorted. We also have to take into account that we are coming out of a multiple years of substantial upward gaps. Its really difficult to know whether completely disappeared or whether it went through a structural change. It will take us a lot of years until he really find out and have more conclusive evidence about this. I think we will see the phillips curve reasserting itself. I think growth has reached the point where it is very robust. The margins are showing the teeth of inflation. I expect, pretty much as you said, that we will see rapidly rising inflation. As markets are concerned, Monetary Policy relative to actual real growth are going to remain quite accommodating. Largely because Central Banks went through a big experiment with this quantitative easing. It has been uncharted territory and they are going to be very cautious in unwinding and going back into the default case of tighter Monetary Policy. This is my chart for january of 2018. His is a very simple eurodollar. Of yellow line is the level 120. As a little bit of a broadbased selloff in the u. S. What happens in 2018 for eurodollar . Christian i think is higher. This is been our view for one half years. We have been quite vocal that the dollar has been overvalued. Ubstantial and the eurodollar has been undervalued. Presentede market was with an unprecedented event of quantitative easing. Regarding of what has happened, fair values around 125. I think were going to gravitate towards these levels. I think this will be further supported by incoming flows back ino the eurozone that leave 2015, dictated by draghi. Searching for higheryielding. Think, the big question as to whether this will prove an obstacle for inflation, one has to ask why the euro is rising. Its not rising for the wrong reasons. Its rising because fundamentals are good and the numbers keep coming up very robust. It may act as a headwind for inflation but all the other elements are going to act in favor of higher inflation. Thanks so much. You both as they with us. Stay with us. Robust growth in china. The nation pushes into 2018 with a strong outlook. Later, bitcoins hangover. Kicks offcurrencies the new year with a combo. What does that going to do next . This is bloomberg. Economics, finance, politics, good morning everyone. Im Francine Lacqua in london. Lets get to the Bloomberg Business flash was sebastian. Sebastian bp is set to take a charge of 1. 8 billion following tax changes in the u. S. While the longterm prospects willositive, the change affect in the shortterm term. They invest more in the u. S. Than anywhere else in the world. A chartered flight killed a major figure and for family members when their charter plane crashed. Said the companys former chief operating officer in europe will succeed him. Executive Bruce Steinberg and his family armand 12 people are dying costa rica. For memories of the family from florida, another american, and to looking crew members also died. Ray dalio describe steinberg is a wonderful man. Thats the Bloomberg Business flash. China has entered 2018 with robust momentum. Manufacturing pmi rose. A property tax may be delayed until 2020 while the currency strengthened the on six and a half per dollar for the First Time Since september. Our correspondent joins us from hong kong. Happy new year. One of the three main concerns what are the main concerns that china will have in 2018 . Happy new year to you as well. It seems is going to be an important year for china. What they are trying to do is financialsk in the system. They want to curb overall debt. They want to tackle Balance Sheet lending and shadow banking. Thats one area theyre going to look at. On the other hand, they want to clean up the environment. This is after decades of growth. They are trying to bring it all together. While not allowing the wider economy to slow. They can pull off this balance is important, not just for chinas economy but it will also be important for the rest of the Global Economy. Should worry about a property bubble and deleveraging anymore than we did last you . By all accounts, both of those are High Authority list. The worry list. They seem to take in the front of that market without tipping over into a deeper situation. Real estate is one of the biggest drivers of activity but they have managed relatively ok. Properties for living enough for speculation. The companies that rely on state at the risk of putting thousands up for work on the put a blind eye to the zombie companies. They are getting the balance right but if they truly want to convince the world that they have their debt problem under control, they have many months of hard work ahead of them. Francine what kind of messaging are you expecting from them in the first part of the year . It seems to be right now that they are sticking to the script that they are in neutral territory. There is no doubt that we will see more tweaking of the money markets. We saw a tweak after the fed raised rates at the end of last year. We will probably see more meddling towards the lunar new year. Theres plenty of liquidity flowing around and the like. In terms of the main benchmark Interest Rates, there is no indication they will between king that level. Indications not to expect any move until later in the year. Momentions are for the they will be sitting on the sideline or be doing some modest weeks at best. Think is so much. Bloombergs chief asia economics correspondent. As quebec the Christian Schulz and Unicredit Vasileios GkionakisVasileios Gkionakis. China manufacturing versus pmi is pmi and see blue white is china manufacturing. You can see them be as one, which is comforting. Chinesen we expect the economy to grow by about six and a half percent this year. Holding up quite well. We see in terms of Monetary Policy they are going to be quite easy. They will follow the fed to some degree to stabilize the currency. They will talk a lot about the revelatory tightening. That is the key. Especially from the market perspective. Will that tightening not spillover into the larger economy in a larger degree . We think it will be fine. We think investment will slow little bit but that should be offset by stronger consumption. That as the chinese move to that territory of tightening, it could result in Balance Sheet lending mechanisms. ,e would say in that case chinese authorities could ease elsewhere. They could cut the reserve ratios for instance. Economyto support the if there is any glitch in this tightening. Francine thank you so much. Irang up, well talk about and this death toll as Security Forces and protesters keep clashing for the fifth straight day. We are live from charon, this is bloomberg. The death toll in iran has climbed up as protesters and forces. Ators clash with lets get the latest. Will this lead to some kind of revolutionary situation . I very much doubt it. Surprising,ts are because they are rare. They have been happening in different cities spontaneously and the grievances seem to be quite similar. But i dont think the size and scale is anywhere near we have to bear in mind that iran is 80 Million People and by most accounts, i think at the very most the numbers of people coming out are in the tens of thousands. I was in downtown tehran where bute was a lot of people, there are far outnumbered by Security Forces. Its nowhere near that. I dont think its even about a revolution. I think what is happening right now is a series of anxieties about the economy. Certain sections of the population are coming to the fore and are manifesting themselves in this way, a certain demographic in irans society. Francine are they protesting what is happening the economy . Yes. Initially, these protests began on thursday. They were antirouhani. They were against economic policy. Now there are many people coming out saying these are organized politically by ronnies opponents. They seem broader against the political system in iran. Francine thank you so much. We will be back and have plenty more throughout the day. Andext, we talk europe leadership with Angela Merkel. This is bloomberg. Retail. Under pressure like never before. And its connected technology thats moving companies forward fast. Ecommerce. Real time inventory. Virtual changing rooms. Thats 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. Francine economics, finance and politics. This is bloomberg surveillance and im Francine Lacqua in london. Heres Sebastian Salek. Sebastian the protest across the country over the last five days will die down within a few days. The secretarygeneral of the National Security council acused saudi arabia of waging social Media Campaign to take advantage of the protests. The demonstrations broke that last week, starting in the holy city, and a spreading to other parts of the country, including the capital. Mike pence will visit israel and egypt this month, despite speculation he delayed again. The confirmation came after an Israeli ForeignMinistry Spokesperson said the visit is not included within the visits of higher level dignitaries in january. Pence had plans to meet with israels Prime Minister in december, but the visit was postponed. The Prime Minister said he wants to conclude the plan to tax reform this year. In his new years speech, he s aid the tax cuts will make it more feasible to work, which will help ease the countrys labor shortage. The country could become a republic after Queen Elizabeth dies. Gauge publicull opinion, saying the nation needs to have an honest discussion about the issue. Becoming a republic would require a referendum to make changes to the constitution. Joined by the former australian Prime Minister. The biggest house price increases in the u. K. Last year. According to the halifax division, southwest england saw a jump in 2017. Sub the next time with prices rising 11 . Global news 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries around the world. Im Sebastian Salek and this is bloomberg. Francine we are just getting manufacturing figures and they are worse than expected with manufacturing flowing more than forecasts for the month of december, falling to 56. 3. The forecast was 57. 9. This means it is retreating from a four year high. If you look at the longterm trend rates, we seem to be in expansionary mode and that does not seem to be slowing down too much. If you look at some of the things leading up to this, it could be a little bit of the pound may be, it could be some of the bank holiday falling. Overall, i would suggest its due to. Brexit uncertainty. Lets get back to Vasileios Gkionakis. Christian, the u. K. Manufacturing, that growth, slowing more than forecast in december. Is that something we should worry about, or is it something that could have been expected . Christian its a bit disappointing. We have the first phase of the brexit negotiations in december. One might have expected that u. K. Businesses would respond positively. They havent. But all sorts of things can happen. Perhaps the anticipation of a deal is already priced in for november. There was a little bit of nervousness from that. We shouldnt forget that. I wouldnt read too much into this. The u. K. Is underperforming the eurozone in manufacturing, and thats a sign that brexit is u. K. Ng because the manufacturing should be outperforming, which it isnt. Thats the clearest evidence that brexit is having an impact. Francine manufacturing is off which would be, more expensive, and then you assemble them here. Is there not a flip side to what the pound is doing . Christian yes, that could have a positive impact in the long run. In the short term, costs are rising. Everythingnce, made in the u. K. Should be more competitive than in the euro area at this point. U. K. Manufacturing has had a longer period of growth than the eurozone because the recovery has been longer here. That should trigger more investment, and it isnt. That again, has to do with brexit uncertainty. Francine im looking at europound, currently at 1. 88907. U. K. Assets go from here . It is very difficult. Ive been saying this for the last six months or so. Right now we seem to lack valuation clarity, for sterling u. K. Assets. Kk. It makes it difficult to find fair valuation ranges. Thats why, one of the reasons, although we remain very pessimistic on Economic Outlook hasthe u. K. , we think a lot theady been priced in and market will remain cautious about trading on the downside. Having said that, i think we are at the lower end of the forecast, as far as u. K. Growth is