Final policy meeting of the year. Will janet yellen say anything about president elect donald trump . About 30 minutes into the trading day. Welcome back. A lot of record highs to greet you. The dow s p 500 and nasdaq are all trading at record highs. The dow is creeping closer to 20,000. We have the dow about 100 points, little more than 100 points away from the marker. On paper, the seventh record close in a row. Some real strength for the dow. The dow can gain to 20,000 today, it will be the fastest 1000 point gain ever. We take a look at thousand point gains here. To 11,000 ined just 35, the longest streak here back in 2007 to 12,000. Today, it will be a 21 day 1000 point climb. Stocks. Momentum for a big topic to certainly keep an eye on. As for the bonds, interestingly as we have stocks rallying, bonds are rallying a little bit as well. We see this with the today view of the 10 year yield. Price traits in verse two yield. This is ahead of the fed meeting tomorrow. We look at the wirp function 30 122. Btv we see there is a 100 probability the fed will in fact hike rates tomorrow at the som fomc policy decision meeting. Will there be surprises . There is an 8 chance the fed could raise rates by 50 basis points. It will be a big day tomorrow. Shop dow chart that you showed, a wonderful chart pair that is my favorite chart of the day. T wonderful chart we are the highest levels since january. Still down just by 3. 5 , records for all the three averages there. 14 below the record. We saw in april 2015 how the two have diverged since then. Health care, media leading the advanced today. It is all about one bank in europe. Italys biggest lender promises to raise 13 billion euros. It wants to sell off bad loans, boost probability, boost its capital level. The target is four point 7 billion euros in net profit by 2019 with a return on tangible equity above 9 and as part of the threeyear strategy, it wants to shed a an additional forthousand jobs as it aims annual cost savings. 11 higher today. Shares have fallen by 53 in 2016. Capital concerns and profitability concerns, can they be put to bed by todays news . A little later on banks. Love this chart. Banks covereuropean , the white line is the stoxx 600 banks index. The blue line is market financial index, essentially comprising cdss. The white line is rising. The blue line, credit risk is falling. Credit risk is falling. Credit spreads are tightening. You can see the peaks in credit risks in june around brexit and at the beginning of the year when there were china concerns. Bank stocks reached a january high last thursday after jumping 46 since julys almost five year low. Lets talk about big data today that came out of china. It had a Ripple Effect across the rest of the world. The stabilization seems to be holding, offering policy makers time to switch from stimulus word curbing financial risk. Industrial production climbed 6. 2 versus a year earlier in november ahead of estimates. That is the blue line. The white line is retail sales, climbing as well, 10. 8 last month, the biggest gain since december. Investment increased 8. 3 in the first 11 months of the year. The economy, the worlds secondbiggest, showing signs of stabilization. Vonnie thanks. President elect donald trump has picked exxon mobil Ceo Rex Tillerson to be secretary of state. A wide variety of reaction. Isdoleezza rice says the ceo an excellent choice for the job. Republican senator of florida says he has serious concerns about Rex Tillersons ties to russia. We are joined from trump tower , withn manhattan endorsements of the like from Condoleezza Rice and dick cheney, is it fair to assume Rex Tillerson will be a hawkish secretary of state . Aboutare learning more his foreign policy. Of supportng a lot from Condoleezza Rice and dick cheney. There are a lot of concerns about his business ties to , his close relationship to Vladimir Putin and the areian government, and we even hearing republicans like john mccain and marco rubio and Lindsey Graham who have said they have serious concerns. We expect to hear more about his foreignpolicy experience during his Senate Confirmation hearing. Those hearings will be in credibly tough because democrats and republicans will ask very tough questions. Honor to him by the kremlin. An interesting thing for the secretary of state to have received. That a foregone conclusion he will be nominated . Will he need some democrats that may be are not lining up for him right now . Toluse well, it would be hard to expect democrats to support picks,sidentelects given his ties to russia and all of the troubles concerning russian meddling in the election. I think republicans are saying they will give him a chance, a chance to explain what his foreignpolicy would be, a chance to explain whether or not he supports russia, whether or not his role of ceo of exxon mobil would translate over to his role as chief diplomat, whether or not he would change some of his policies once he becomes the secretary of state. A lot of that will come out during the nomination hearings. Right now, expect a very tough nomination experience. Reporting outside trump tower there in manhattan, thank you. Mark joining us on the phone is retired u. S. Army general wesley clark. General clark, thank you for joining us today. Gen. Clark thank you. srk does Rex Tillerson association with Vladimir Putin make him unsuitable for the role of secretary of state . Gen. Clark i dont think so but i do think congress has to ask tough questions and be reassured that he understands how to put americas interests first in this relationship. It is always a transition coming m one mind shed to another one mindset to another. Speaking on behalf of the united states. Rex tillerson is an honorable man, a patriot. No reason to believe he will not make the transition. He has got some Great International experience and background in leadership. One other thing to note. With the u. S. And russia relations, it is such a long way up. It is not a bad thing to start off with somebody who has a personal relationship with our potential adversary. It is not that that is going to change the balance of interest or the course of the activity, but it is a better place to start than with people who do not know each other or who cannot get along. In that sense, it is a good pick. Obviously, there will be tough questions, but im intrigued by the choice. Mark is it too early, or premature, to be talking about the unwinding of sanctions toward russia given his nomination . It islark well, i think premature to talk about that because i do not think sanctions auld be unless there is quid pro quo and that has to be progress in normalizing the situation in ukraine and reversing what has happened in crimea. Is exactlyillerson the right person with mr. Trumps backing to get that done. Ceo has saidxxon if sanctions were to be lifted, the black sea drilling could go ahead. With that inform his treatment of russia at all or would he be completely impartial when dealing with russia . You comek anytime into government, you bring the knowledge and experiences of the past with you. He will know of an aspect of russia, he will know the geology, the economics, the he will have those particular interests. We have got to give him the benefit of the doubt. This is a smart guy, he has been the leader of a huge organization, he knows how to negotiate, how to study the issues, how to present a case. When you give him a different portfolio, he will take that portfolio and we hope he will do a great job with it. He has got the potential to do it. Think we will count on congress to ask the right questions and lets give him a chance to do this. It could be a fresh start for our relations with russia. I think we would all like to see that. Clark, whatral would your hope before the Nato Alliance under secretary of state tillerson were he to beacons confirmed . Now clark it is essential because the moves that mr. Putin made has sent shockwaves throughout europe. People are very concerned and i have been to the baltics. We do not want these governments destabilized, we do not want investment cut off. We need that investment in there. I am hopeful mr. Trump and mr. Tillerson will be able to someure mr. Putin, reverse of those policies, turn off the threatening actions that russia has taken, and restore harmony without giving up anything on the part of nato, which is, after all, just a way of reassuring these countries. Mark how do you view president elect trumps attitude to foreignpolicy so far, as patterns emerged with china due to the telephone call with the taiwanese president and the whole one china policy seems to be under debate. How do you view and how do you will president elect trump go about foreignpolicy in the next four years . Think President Trump will challenge conventional assumptions. I think he will push on the boundaries of what conventional thought has been. He will look for different angles to bring advantage to america and strengthen americas interests. That is what he said he would do during the Election Campaign and we have to take him at his word for that mark . That. Mark thank you. Coming up, we will continue the conversation about exxon and Rex Tillerson. In the next hour, in interview jonathan, blackstoness global head of real estate. This is bloomberg. That is what we call a dreary beauty shot, an oxymoron. Live from london and new york, i am mark barton. Vonnie i guess it can be beautiful. Not always. This is Bloomberg Markets. President elect donald trump says he intends to nominate next exxon Ceo Rex Tillerson for secretary of state. Joining us now on the phone from president an bremmer, and founder of the eurasia group. I think one of your most recent tweets on this matter really says it all. Tillerson is at respected ceo but the question is, what values or priorities do you want driving u. S. Foreign policy . Decide those . Donald trump or Rex Tillerson, should he be the nominee . Be i think they will similar. Lets face it, if tillerson had been appointed by obama as secretary of state, i think it would not have been a problem. I think people would have said, a good counterpoint. ,bama did not know the leaders and obama certainly focuses on a lot of things that tillerson does, multilateralism rule of law and human rights. Together, i think they work well. I think the issue will be that trump himself is a very transactional leader who does not care about the values, likes the strongmen. That is very similar to what you would expect from the ceo of a big oil company, even a successful one, perhaps especially a successful one. The russia point is particularly interesting. Trump has been surprisingly positive about russia. It is not just obama has messed up the russia relationships and trump wants to normalize it. This is despite the fact the cia has now said there is direct evidence of russian hacking the election. Trump does not want to see the evidence. The fact that russia itself will be such a political issue, especially when obama ordered a comp has of intelligence review of russian behavior and that comes out, it does not mean he itl not be confirmed but could become a much more politicized question for a lot of people in congress. Apart from the confirmation hearings, lets ask the question, will russia be his First Priority . Huge deal is with russia but also saudi arabia, iraq, and the kurdish areas of the note of the north. Is it fair to assume he will begin with russia . Ian it is fair to assume if you compare him to any other ceo, his relationship with russia is by far the best. It is his biggest relationship, the one putin has respected the most. Exxon mobil has been quite savvy oftenrategic, quite directly antiamerican kremlins, we have been very successful. But it is not only their experience across eurasia and ,entral asia, for example across the middle east. Im in dubai right now. I have been speaking with many leaders today. Positivefeel much more that the trump administration, nomination,he someone they have known over time, then you see from the european or asian allies, did badly under obama, and they are hoping that what trump has to say about islam when he was running was just for show. Look, they will see if they are being naive around that or not. It does not surprise me. Political risk is your thing. When it comes to trump globally, what is the best Case Scenario from a global perspective and what is the worstCase Scenario and what are you betting on . Scenario ist case he does not do much on foreignpolicy. A lot of talk and rhetoric, but actually reality stays fairly similar to where it is right now, and the focus is domestic. He has a lot of progress people pro growth people. They focus on infrastructure, the size of the government, simple fine tax code, reducing Corporate Tax code, civil fine regulation, and people believe in the u. S. Economy and that makes them popular. The worstCase Scenario is what you have seen from him on china, for example, there is a lot of volatility, he does not get rid of his companies, and their are that is the way you get trump to do some business with them. Able could lead to some unexpected confrontation. China in particular, you have got a big problem that really rattles the market spirit one thing you have to recognize is six months ago, the likelihood of the u. S. Being involved in a direct military conflict with another major power, it is essentially zero. It is not high cost now, but if you want to talk about worstCase Scenarios given what we have seen with trumps conversations with taiwan and iran and his reaction there, you have to recognize that is in the mix as a possibility. Clearly, the markets have to price that in. Mark this year was the year of trump, brexit, the italian referendum no vote. Could 2017, excuse the pun, trump 2016 when it comes to political shocks . Beat the impact of trump and the end of the tax americana. It is a geopolitical era, we are now entering a massive geopolitical obsession, recession, in the postwar era. I do not think you can beat that. U. S. Deterioration of policy influence has been coming pretty steadily since the 2008 financial crisis. Trumpss election speeds it up. Many things can happen in 2017. , thank you bremmer for joining us today. Two markets, another day, another record. Three major averages hitting alltime highs. The dow inching closer to the 20,000 mark and the s p is rallying. Now 6 since the u. S. Election. Our next guest is waving a big cautionary flag to investors. Later, the target for 2016, 2267 with less than two weeks or roughly two weeks ago in the year. Yes. We are walking a little bit of a tight rope here. ,ooking at the next year or so i think the market is rightly focused on this growth pick up. We have been starved for growth the last few years. That is completely understandable and i agree with that. What we are more focused on is valuations are high valuation multiples are high. Historically, those multiples have come down. Vonnie we get the rate increased tomorrow. There are various interpretations of how the down plot looks, how the projections will look. Is there anything that will cause the s p to go lower now given that we are in a trump rally . Ben as we are moving tonights year, we see these expectations moving no Earnings Growth in the last year or two to something close to 10 . I think there is upside to that. But historically when the fed has been raising rates, valuation multiples have come down maybe 10 a year. I think that will be somewhat less this time around. It is a pretty benign cycle. Is the fedsthat target. They are doubling the pace of the cycle. I agree with the growth expectations but valuations are higher than normal. I think you have to be a little bit cautious to that. Overweight u. S. , focused on commodity rather than trade there. You raise japan to neutral. I am looking at europe. You are staying cautious. Why is that . What is behind your caution . Places are looking for globally where earnings will surprise. Positively in the u. S. Emerging markets. I suspect they surprise negatively in europe. The only way europe looks attractive or valuations look attractive is if you get a positive surprise to earnings. That looks unlikely to us given the extra narrowly high levels of Economic Policy uncertainty that you have, historical levels. Raised china to overweight and we had dated today confirming the stabilization of the economy but we are approaching the oneyear anniversary of chinese jitters. Various markets highlighting unease in china yesterday. Could we see a repeat of 2016 and early 2017, the china jitters rattling Global Markets . Ben inventor investors are very cautious. The margins are extraordinarily low, growth is pretty robust, investors are underweight, currencies are reasonably cheap. , but i think the risk reward for emerging markets next year looks pretty attractive and the selloff you have seen in the last few weeks has maybe given everyoneportunity to who missed the first bit of this rally today. You are Still Overweight Energy and materials. Our thanks to ben laidler. Still ahead, the fed starts its twoday meeting. When a rate hike is a foregone conclusion, investors will be tuned into Janet Yellens comments. Live from bloomberg World Headquarters in london, im vonnie quinn. Vladimir putin says he is prepared to meet donald trump at any moment. Include according to an interview, prudent says there are no problems from our side. Putin says the meeting between the two leaders is more likely after trumps inauguration in january. s nomination to be the next secretary of state is being praised by Condoleezza Rice, who once held the post. Meanwhile, General Electric ceo jeff says tillerson has a groundlevel view of the nations most important relationship. Not everyone is so enthusiastic. Republican senator marco rubio of florida says he has serious concerns about tillerson. Rubio earlier expressed reservations about his relationshi