Move we had early in the week and post thanksgiving. We are right back to where we were in yields, with the 10 year at 1. 83 percent. The dollar index strengthened poste jobs report. That said, it is still below 98. 2. 75 onachs is up news it may be close to settling with the Justice Department and other agencies on that probe into its dealings with 1mdb, the malaysian state Investment Fund. Nothing has been decided, and it may stretch into january, but low 2 billion would be considered a win for goldman. Guy i am being told the week Inflation Expectations component in the michigan data is the reason why bonds on yields have rolled over. We are back to 30 on the german tenyear. In terms of stoxx, we continue to be relatively strong. The other point is that at this point, it doesnt look at the fed is going to have to raise again next year. There might be diminished expectations for how high rates can actually go, and that could be putting a cap on rates here. Guy definitely a possibility. Of those factors on the table at the moment. But i think the market definitely sees a cap on the top end of the yield story, putting the fed back into play looks a bit presumptive. The market has definitely been pushing out what was already fairly tentative pricing of a cut next year. It was already kind of the back end of last year. Lets talk a little bit about where we were with the dollar. We will come back and just a moment and show you that. Lets get back to the payrolls. As stocks rally in the Dollar Strengthens, white house Economic Advisor larry kudlow us his take on those figures. Mr. Kudlow despite a certain amount of pessimism, the economy is outperforming expectations. Economic policies from the president are working. America is going back to work. I just think that is crucial. Now in london, globalmber, jp morgan market stretches. Market strategist. Is that number good for equities . Hugh i think it is. You seen a marginal pickup in wage growth, but that is still nowhere near, and my view, where it we need to be to bring the fed that can to tighten policy next year. So an environment of a strong u. S. Economy and ongoing central bank support i think is positive for the equity market. Guy a lot of people have got a weaker dollar in their numbers for next year. Looking at the data, the relative outperformance of the u. S. Economy continues to be really clear. Why would the dollar go down next year . Hugh in my view, i struggle to see it unless you see more of a bounce back in europe and japan. You need not just the u. S. Economy to weaken, but other parts of the world start to strengthen. That is what we had relative Dollar Strength this year, not because the u. S. Has stood out in the quality of its growth, but because other parts of the world have struggled to catch up. If the u. S. Remains a strong as it is on the data today, i struggle to see a much weaker dollar and 21 a. Vonnie dollaryen 2020. Vonnie how much stronger can the economy get if we continue to see wages stagnate . I am not saying they are not growing, but they are definitely pretty stagnant in terms of their growth. Hugh of course. This isnt an overly bullish outlook for the u. S. Economy, but one in which it is ticking along ok for 2020. Those nearterm recession risks have faded quite significantly over the past few months. This is only one single print in the data, and it was only a couple of days ago we were looking at the employment component and the ism surveys and starting to have a few more questions around the labor market data. It is important not to overreact to one single print, but really the u. S. Labor market and the strength of the u. S. Consumer has been whats holding up this expansion. Positive news from the labor market perspective, i do think bodes well for the gibbous economy. Nie how crucial is it, is well for the u. S. Economy. Vonnie how crucial is it, if at , for the economy, the jobs numbers . I i would ask becht would expect the business sector sit ido be more would continue to expect the business sector to be more sensitive. Up until this point, the consumer has been quite insulated. The way in which the u. S. Has structured their tariffs has tried to avoid those end Product Price increases. I think there is potential that if we were to see further trade escalation from here, it would start to play slightly more into the consumer story come about at the moment, it is very much Business Investment that has taken a run at this weakness. Guy if the u. S. Economy is this strong, will earnings pick up . At the moment, the earnings picture looks fairly bleak. Economy if the u. S. Economy reaccelerates, do we get a better earnings picture . Hugh i think analyst expectations are too high for next year. I think that looking at doubledigit Earnings Growth is probably to rosie for the u. S. In 2020. Probably too rosy for 2020. It is really trade that is going to dictate which way we move between the more positive or a weaker economic scenario in 2020. So the macro data is important, but the trade negotiations guy how much better with the u. S. Data be if we didnt have the trade story . Hugh thats impossible to tell. Guy significantly more . Hugh i think so. From the business part of the economy, that is where we have seen a slow down. It has been a manufacturing slowdown which has showed the brunt of the trade weakness. I do think the u. S. Economy would be stronger today. That being said, i dont think you can only tie this to the current administration. This is a policy which has broad support across the u. S. Electorate, and if you look back to the 2016 campaign, it was nifestosboth sides ma to take on Chinese Business practices, so i dont think it is totally reasonable to assign this all to the current admin the station. Guy hes going to stick around. Hugh gimber joining us from jp morgan asset management. Vonnie vonnie lets get a check of Global Markets. Heres kailey leinz. Kailey the risk on rally is picking up steam. All three major averages in the u. S. Higher. It could be the best day for the s p 500 since november 1. The stoxx 600 now higher by about 1. 1 . What is fueling the risk optimism today is the betterthanexpected payrolls report. 266 thousand signals that the u. S. Economy, most important lead to consumer, remains on good footing. Lets take a look at the intraday chart of s p 500 futures to see what impact that print had. We were cruising along in positive territory, but when that number crossed, we saw a sharp spike upward, and we have been adding to those gains as the session grows older. You are seeing money coming out of more safe haven assets like bonds. Bonds lower, yields higher. Initially on that number they spiked by as much as five basis points. We have recovered some of those losses, but of course, some of those higher yields are good for banks. We are seeing the likes of j. P. Morgan, bank of america rally by the better part of 2 today. Dow, 3m thein the best performer id a potential unit sale that could be worth about 1 billion. Big oil moving in a big way, up the better part of 2 for exxon and chevron on the back of opec production cuts. Vonnie thank you for that market check. Do remember the function gtv on your bloomberg allows you to rouse all of the recent charts featured on bloomberg tv. On what you missed and save your favorites for future reference. This is bloomberg. Vonnie live from new york, im vonnie quinn. Guy from london, im guy johnson. This is the european close on bloomberg markets. Here for first word news is courtney donohoe. Abigail at least four killed at in pensacola, florida at a naval base. It is the second shooting this week to take place at a naval base. And injuredt two another before killing himself at pearl harbor base in a wahoo in oahu. The government is processing up occasions from Chinese Companies buying u. S. Products such as soybeans or pork. U. S. And chinese negotiators have signaled that they may be close to agreeing on the first phase of a trade deal. A new Bloomberg Survey of economists say the European Central bank is done with cutting Interest Rates. That is despite persistent Downside Risks to growth. As to those with bonding to the survey say Monetary Policy will be on autopilot for the next two years. Global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. Im courtney donohoe. This is bloomberg. Vonnie thank you for that. Much appreciated. Saudi arabia surprised the oil market by promising significant additional production cuts the on what was agreed with fellow open plus members. Joining us . Fellow opec members. Joining us with more is annmarie hordern. Explain why this is such a major deal for the oil markets. Arabia reallyi coming out with the surprise at the press conference, not even at the meeting. We heard it from his Royal Highness prince abdulaziz, and his first opec meeting as oil minister. He says they are going to cut deeper, 300,000 barrels more than the november target, to about 9. 7 Million Barrels a day. We saw prices really pop because many people thought this entire cut was just going to be cosmetic, and that might potentially be the case on paper for the others, but saudi arabia is saying they are going to cut even deeper. That is, of course, going to price up going to prop up prices. Guy why is saudi arabia doing this . Annmarie i spoke to his Royal Highness, and he said that one of the reasons they are looking into 2020, and they want to make sure the market is well supplied. Right now we are seeing a bit of oversupply to 2020. That cut, he is saying, might be necessary. On top of that, i asked him, doesnt this open the door for cheaters to continue cheating . He says he got assurances from the other members that they will work towards their compliance, and says he never would have done the cut if he didnt believe them. I have to say, this was very well choreographed. It was a little bit of naming and shaming when the press conference happened. Nigeria and the Iraqi Oil Minister joint. That had never happened. I think that was a sign to the market the discussions here were serious. Vonnie you also got his reaction to the aramco ipo, so well done. He says that the crown prince was proud of the aramco ipo, and the oil minister also saw a diverse portfolio. Annmarie hordern in vienna, thank you. Guy lets get back and continue the discussion on what this all means with our guest to get a sense of exactly where we go next. Hugh gimber, Global Market strategist at j. P. Morgan asset management, is with us. The expectation has been the oil prices will struggle to go higher because Global Demand is not going to be there. If we continue to see data like we see out of the United States, is demand actually going to be better than maybe people think it is going into 2020 . Takeaway me, the main recently has been how stable prices have been. You look back at the issues in saudi arabia we had at the end of september, and really the market move was very contained. I think it is more today about the way in which producers can switch back on production very quickly and boost supply when they feel like demand is coming on. For me, well prices are kept in a relatively tight range. Guy i talk about the fact that may be demand next year is going to look better. When i look at the rest of the world, the data continue to not be very clever. Europe in particular doesnt look very good at the moment. Data out of germany over the last couple of days when it comes to the industrial sector has been quite poor. Weve also got strikes in france which may limit the ability of the french government to enact the kind of reforms it needs to do. Compare and contrast europe and the United States when it comes to 2020. There has been this expectation that europe, on a relative basis, is going to look a little bit better next year. Is that still the base case . Hugh i think you need some of these risks to clear for europe to get going, and you need a lot of them to clear at the same time. This has been the problem for many years. You hit one and another one pops up somewhere else. Where you do get a resolution on u. S. China trade, you do get a brexit resolution, then i think europe has a clear runway. But there are a lot of ifs before you create that pathway to stronger growth. Vonnie how much of a backseat does the ecb take in 2020 . Hugh first of all, for next week, i think there is little they can do at this stage. They have spoken a couple of times and really offered no hint at an eminent policy move. I do think at some point, they are going to have to come back to the table. If you look at their inflation forecast, already baking in the stimulus we had in september, we are looking at well below target for the ecb. I expect that to come through further when we get 2022 forecasts next week. Challenge lagarde has is there are no good options available at this stage. She is struggling to cut rates further. We are potentially starting to hit up against limits on purchases of more government bonds. Really, it is a difficult position where whichever option lagarde decides to pursue, there will be critics coming from some part of the governing council. Vonnie of course. Will she be as effective as mario draghi was for most of his tenure . Hugh of course, the reason she is there is because of her diplomatic skill set. It is that that she brings to the table that has led her to this role. Partially there is a role to play in maneuvering the governing council. I think more important will be shiftes role in this from Monetary Policy to fiscal policy. The expectation is that if europe is to bounce back, it will not be because of more stimulus coming from the ecb, but rather about fiscal stimulus coming. Guy people have talked about the impact that j. P. Morgan has in terms of flows across the atlantic. People have been waiting for big Asset Managers like you guys to sound the all clear for europe, that it is ok for u. S. Investors to start putting money to work. We have been hearing rumblings that this could happen. Theres been some evidence of it in the flow data, but we still have a eurodollar rate that reflects the fact it isnt happening significantly. What would it take to persuade people in the United States to put money to work in europe . Hugh when european markets tend to be strong, it is because you are in a cyclical recovery. It is that sensitivity to Global Growth which is typically higher in europe than in the u. S. It is quite a progress view if you are looking in europe as the place you expected outperform. In this kind of environment, would we are talking about fairly binary outcomes next year, i think it is fairly challenging to make a very bullish case for european indices, particularly given the composition as well. Think about the heavyweights, the financials as an example. Lower exposure to tech, the real strong story from the past couple of years. When allocating into europe, the index composition is another factor that is sometimes forgotten that makes making those headline calls slightly but occult. The have you factored in possibility that trade war turns its attention to europe next year . Hugh i think it is a clear risk. The best case in negotiations is that they continue to king the can to kick the can. In europe isaccess one of the key demands, and that is offly being declared the table. I certainly hope they continue to extend, and we are set here this Time Next Year talking about negotiations to continue. Vonnie in emerging markets, any interest in any of them . Hugh the challenge is they are what will react first and most aggressively if we see a cyclical bounce in the data. We are reluctant to be too negative on emerging markets because timing that kind of shift can be very difficult. To allocate to emerging markets today has to be a longterm view, and tapping into those stronger areas of structural growth such as china and india on a multiyear basis. I dont think now is the right time to be making tactical calls , looking at em equities on a single month or three month basis to try and time the pickup in the data, particularly given how sensitive this is to the trade negotiations, and frankly, how little insight most of us have on how those negotiations are proceeding. Guy it is going to be fascinating to watch what the dollar does. Thank you for stopping by. Hugh gimber, Global Market strategist joining us from j. P. Morgan asset management. Busy day. We will continue with more coverage. This is bloomberg. Guy from london, im guy johnson. Vonnie in new york, im vonnie quinn. This is the european close on bloomberg markets. Its time for your latest Bloomberg Business flash. Goldman sachs up 2. 5 percent after bloomberg reported that could end up paying less than 2 billion to resolve u. S. Investigations into its role in the malaysia 1mdb Investment Fund scandal. Analysts had thought the penalty could be higher. Bloomberg has learned a settlement could be announced as soon as next month. Learned industrial conglomerate 3m is exploring a sale of its Drug Delivery systems unit. It could fetch about 1 billion. It makes products including asthma inhalers and skin patches. In the first quarter, sales were down 11 from a year ago. That is your latest Bloomberg Business flash. We are seeing a nice bounce this friday. The dow is up almost 1. 2 . The s p 500 is up 1 , and so is the nasdaq. Nice moves higher today after the jobs report. Guy what im really surprised about is that volume is as light as it is this afternoon. I would have thought, given this really convincing story we have from u. S. Payrolls, that volume would be higher. Stocks are definitely higher. The main markets in europe definitely moving up. One factor worth bearing in mind is that we are seeing a pretty strong dollar this afternoon. The bloomber