A very warm welcome to bloomberg daybreak europe, our flagship morning show. I am anna edwards. Thats a strong dollar. The bloomberg dollar index has sinceeen in existence 2004. No surprise when you look at the relative yields you are getting in u. S. Treasuries. To find a reason to explain the trends in the dollar, treasuries looking their most alluring. Wayef you have spent too much time with their bonds. The kind of movement we have seen is remarkable. That is your dollar spot index and you have the yield spread compared to the rest of the world and that is the highest level since 2007 and credit sweeps putting out a note saying the yield could go up to 2. 8 around mid2017. We are going to go, anna, are we taking a breather . Plenty ofill have analysis. It let us all about oil as well and bring up the risk radar. A lot going on in the anna. Here we have the price of a barrel of brent crude. Going on in vienna. Here we have the price of a barrel of brent crude. All of the saudis seem to want that. Yousef this is make or break. To make any going agreements like they had in algiers. We have a kind of followed trilogy in the last 24 hours a kind of volatility in the last 24 hours, incredible. Anna iron ore falling from its twoyear highs. 2016 quite good for the chinese commercial construction story and that was good for steel. Things looking different. Met trend. He concern about demand from china and the overall supply outlook. 2 5 of 1 . Up anna let us get the bloomberg first word news. Here is haidi lun. Former Goldman Sachs partners mnuchin is donald trump choice for treasury secretary. Trump plans to nominate wilbur and as commerce secretary, an announcement on the selections could come as soon as today. It donald trump lands to continue his auditions for secretary of state, according to a person familiar with the transition. He will bring back john kelly for a followup interview at trump tower in new york today. Romney,candidate, mitt had a second meeting with the president elect at a dinner last night. European Council President donald tusk has rejected a call from british lawmakers for him to act to protect the rights of compatriots after thats it. He hit back after being urged in that residents would not before to leave. He dismissed a claim that the European Commission is obstructing efforts to reach an agreement, causing uncertainty. The European Commission pot brexit negotiator commissions brexit negotiator for European Parliament approval means that any agreement must be concluded by the second half of 2018. That is according to a Government Official present. A spokesperson for the commission has declined to comment. Dei paschiy made the comment during it includes dropping debt and equity. An official from monte dei paschi declined to comment. The plan to create a Holding Company structure was presented as a way to improve shareholder value and address criticisms from activist investor elliott management. Benefitsould see big from such a split. Shares up around 38 percent this year. Global made, 24 hours a day. Stories on there top. This is bloomberg. Yousef there was not a lot of conviction in the u. S. Overnight still noticed check in with the markets in asia and see how sentiment is holding up. Juliette saly has the details. A little bit of a mixed picture coming through in asia. In your seeing good momentum coming through for most of the emerging markets. Singapore up 0. 8 . Sincengest winning streak 2014. Boasting weakness coming through in the shanghai composite today, down by 1 in late trade. This is in market. It has been in bull market. Weakness coming through from some of the electricity stocks today. Strength helping the kospi. The nikkei has closed flat and australias market closed by 0. 3 today. Juliette disappointing building approval numbers and australia but that commodity story weighing into that resource heavy market. Samsung hitting that record high. The highest level we have seen since 1975. Takata shares dropping in tokyo, 7. 5 . From a tweet from a japanese investor who is a player, very wellknown, and he says he had sold out of his big holding of takata. The Iron Ore Price at the top of the show, iron ore side from ant twoyear high, having impact on a number of those key iron or players. Ore players. On bit moreeeing a little momentum coming through in the currencies ahead of the crucial opec meeting. Thank you very much. Brent crude is hovering above 46 a barrel and differences between saudi arabia and iran weigh on prospects for a deal to cut production at todays opec meeting following talks with his algerian and venezuelan counterpart. The Iranian Oil Minister said his nation will not cut output. Set aaes ministers more positive tone. All options are on the table and will be discussed. Any decision we make it we make is inclusive. Yousef bloombergs annmarie theern joins us now on phone from indiana. We saw big moves overnight in brent and wti. Where is sentiment at the moment, especially given the ongoing rivalry and deadlock that appears to exist between saudi arabia and iran . Annmarie good morning. That is right. The rivalry continues. What is happening this morning is untraditional. Before the traditional opec meeting, ministers will be brexit,g for a working off the record, unofficial. They have not announced it. People close to the matter have told us. Meeting untraditional before a meeting. They want to see if they can come to any sort of agreement before they sit down officially to try to decide if they are going to be able to make these cuts or not. Just this morning, coming up, speaking to the nigerian ,etroleum minister, emmanuel who will be joining us exclusively. Anna thank you very much. Hordernrton annmarie indiana. Vienna. She will be speaking to the Nigerian Petroleum minister shortly on the program. Yousef let us bring up our lena komileva. A big day for opec. How likely are we going to see an agreement there . Lena for the market, having to drilling oil 2016 prices in the context of a Global Growth worries and financial repression, essential bank dominance in financial markets, essential bank bankance central dominance in financial markets, the three largest opec producers economics of the Energy Markets in the last 15 months of negotiations. Regardless of the outcome today, the markets are facing a fairly binary outcome. We are looking at failure to reach an agreement with oil prices pivoting towards 30 to 40 a barrel or whether we get some form of agreement which leads to cautious optimism with 40, 50nsolidated at or above. What is clear is that ultimately, todays meeting will determine how quickly the Energy Markets reach a balance in 2017, whether it happens through market forces, renewed price pressures on highcost Oil Producers globally, or whether it will happen through an agreement, hopefully the latter. It is clear this is down to Political Risk. We have seen that is quite difficult to predict. Anna it is interesting to put it like that. It we could reach balance in the oil market because the saudis were floating this idea that maybe there is not a need for a deal here. Maybe u. S. Growth means well actually see more demand on the demand side of the equation picking up from a u. S. Perspective. Saudis on the right track . Lena it has been nothing less than painful. Wouldreally quite it clearly caused distress running toward the end of the year if we were to see a shift in the economics of energy, which could force a repricing into the broader markets, just government d prices, so coming into coming out of todays decision, we are going to see volatility, but going ahead, the optimism is that whether it happens through law prices, all through concerted action, we are getting closer to the point where the Energy Market is getting to a balance, so that should be a good news for the Global Economy. Yousef for there to be a meaningful impact, in terms of a Production Cut, you need to go way beyond one Million Barrels per day, given how much opec is pumping at the moment. Whered you see oil prices ranging at 2017 sort of topline . Lena i am a columnist. Have clear that oil prices been very much at the heart of the Global Economic debate so i approach from the position of a Global Demand side imbalances oiln the demand side, prices underbid oil prices and we are somewhere below that at the moment because the market is lacking confidence about how quickly we are going to get to this point. The fact that we have had that markets have been a reflection of fears the central bank has not done much to stimulate growth and the structural supplyside glut in with negative volatility growth. To answer your question, i dont really know. What we really need in terms of Global Financial health anna that would mean a lot. Thank you very much. Here are some highlights for your day ahead. Yousef in less than an hour, the results of the bank of englands annual stress tests ed by mark carney. Bloomberg users can follow all top. There is gdp out of india. The Ecbs Mario Draghi speaks in madrid. Half an hour later, it is his last appearance before the governing council. Maybe we get some clues as to where Monetary Policy is going from here. Anna today would be the last chance. Coming up next. We will be live at the opec meeting that in the nm. In vienna. We look ahead to indian gdp figures out later today. What impacts will Prime Minister the Prime Minister have on growth . This is bloomberg. Yousef url metlife pictures of seoul where millions of people are at a rally you are looking at pictures of south where millions of people are at a rally. No doubt the Political Risk will be one of the factors to watch out for as the ongoing stalemate continues to play out. Let us get the Bloomberg Business flash with juliette saly. Juliette thank you. Air conditioning manufacturer carrier has agreed to keep about 1000 jobs in an indiana factory that had been set to move to mexico. The decision marks a victory for president elect donald trump. Trump tweeted that he will travel to indiana tomorrow to make the announcement. The worldsreate largest supplier of Industrial Gases could be revived. It is looking at a new proposal from usbased a usbased company. Provideclined to financial details. A deal would further fuel consolidation in the industry and attract scrutiny from regulators. A company has asked its traditional 1000 australia share bonus for stocks this year. It cited the need to cut expenses in an Internet Post seen my bloomberg news. Year,ad been challenging in an environment of lower growth and lower returns. That is your Bloomberg Business flash. Thank you very much, juliet. Former Goldman Sachs partner Steven Mnuchin is president elect Donald Trumps pick to be the treasury secretary. They say trump plans to nominate billionaire investor wilbur ross as commerce secretary. Let us talk about all things tradeand the reflation seems to be the talking point right now. The reflation trade seems to be something a lot of people are talking about in relation to president elect trump, but as you pointed out in your notes for us, this throws up lots of seemingly incompatible outcomes. What is the endpoint . Lena the remarkable thing is that for the past month, investors have been flocking into u. S. Equity yields at the expense of u. S. Bonds. Anna we have got the treasury chart here to illustrate that. Yousef again, that is over 50 basis point, isnt it . Lena which is extraordinary, indeed. To be fair, we expected a rise of bond yields to start all the way back in the end of the summer. It did happen, and it happened in the context of inflation risk premieres and with evidence that the major economies, the u. S. And u. K. And eurozone as well were holding up better in terms in theical figures it Third Quarter than anyone expected. When you combine this with expectations that Central Banks have reached the end of the road with the boj shifting away from quantitative easing to yield the targeting and the fed signaling they will raise Interest Rates and the bank of england facing its own limitations to more qe, it is quite clear bond yields were facing a onesided risk up. What is clear at the moment however is that the latest leg of this bond rally is basically driven by more of a u. S. Differential trade. That is important. Yousef is the worst over . You have said the bond market was looking for a catalyst. Donald trump offered to be the catalyst by winning that election. What direction does this bond market take from here . Lena i have not had enough because i have been behind the call that bond yields should be higher for a very long time. It has been a bit volatile. He has given the oppression of too much too fast. We are not nearly at the end. Ts our transition,re transition, term premier policyhe Central Banks of umbrella to a more normalized volatility, and the final is temperament or animal instinct. This is the most bizarre part of the arithmetic. On the one hand, the impossibility of the new economics that have completely defied financial gravity. Investors taking it negative yield and paying governments to hold their debt. On the other hand, the new new political economy which is basically political predictability and the fact that we have unpredictability. They have brought much higher future fiscal debt burdens. Anna you mentioned three ts, but you did not mention trump. It is more to do with yield differentials. Surely, some of that comes down to what trump might do and therefore, what the fed might do. It is hard to separate the fed from trump, isnt it . Lena the clearer picture for me is a new Global Financial location. Rates thefund Market Expectations of the policy rate have yet to meet the expectations or to price in the response to the debt pessimism that is priced into this spike in u. S. Treasury yields. We have a disconnect here. At one point, said fund futures they have embraced the possibility as was argued throughout the year, the markets have underpriced marketing this year. We have a conservative scenario rate hikes two priced and. That is two Percentage Points below where we were before the 2007. Yousef is the u. S. Economy healthy enough to handle higher yields . We got Additional Data overnight. To ther confidence grows highest level since july 2010, arguably encouraging. Are we where we need to be in light of where yields are heading at the moment . Lena there are two questions. One is, are the markets fairly priced . It is quite obvious that u. S. Yields have been passed for very long time repressed for a very long time. They have been hedging growth risks and set a policy normalization. The other aspect is, ultimately, the markets have been showing us yesterday, much better than expected revision to this q3 statistic, the u. S. Confidence figures you mentioned, the fact that all of the Economic Indicators have been consistent grinding down the u. S. Unemployment rate. That creates an incentive for the fed to start at least balancing the policy lever of the equation, otherwise we are looking at a scenario where we will ultimately usher in financial instability and bring forth the next crisis. It will respond to negative risk to growth. Anna thank you for your thoughts on a u. S. Plenty more from lena komileva. Yields up. Up next, more about oil. Differencesock as persist over a deal to cut production. Foro back live to vienna this exclusive conversation with the Nigerian Petroleum minister. We get his thoughts on whether iran and the saudis can get brought onto the same page. This is bloomberg. 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You are looking at a live shot of the imperial palace. The greenback is poised for it last month since 2009. Asian equities, mixed picture on the home. Let us take a look at the additional daybreak. It is available on your bloomberg and your mobile. With no surprise, starting oil. Opecs ongoing tussle. Failure looks set closer for the group as iran refuses to cut production while saudi insists itsit for operation corporation. Yousef the cover photo really its operation. The cover photo really showing the story. Why the seven leaders are expected to clearer the basic hurdle, the Autonomous Research group says rbs and barclays may earn soft fail for some of those tougher thresholds. Anna finally, daybreak focuses in on monte dei paschi. Th