Tot was planning to go modifys decision. Investors. Event that is just one that could multiply in many other cases. An Important Role in our Economic Development not only on the business side, sustained Economic Growth in mexico, i trust that will continue in the future. Thank you for joining us today. The governor of mexico. We will send it back to you. Thank you indeed. The year ahead 2017, a new era for two neighbors. We have a panel for the Economic Impact of desktop in mexico. Also, Erik Schatzker will host a panel and you can watch all of the events on your terminal. You do not want to miss that. You also do not want to miss the equity market close. Lets look at where they are right now. We saw the equities close off for a first a first monthly gain. 1. 1 , a u. K. Wn ftse 100. 8 . We see thepace, dollar retreating a little bit from a ninemonth high. We see a hybrid a high euro. Sterling rallying up. 9 . 12623. We have seen the decline for two weeks after comments from the brexit secretary and also dutch finance minister which means investors season a little on the prospect of the u. K. Retaining some preferential access to the eu. Seen sterling hit its strongest since the 11th today. Year treasury yields move higher again after the worst month for u. S. Treasury in seven years in november. You see 10 year yields in germany. Generally, moving up to the global bond rout. In commodities, brent hit its highest yesterday on the opec deal. 53. 88 per barrel at the moment. If we look at what is happening in the sector breakdown, you are seeing red and he much across the board except Energy Stocks up 1. 9 at the moment, on the higher oil price. As we look ahead to the italian referendum, the austrian referendum vote, what you are jumping to its highest since exit. Julie we are seeing a mixed dow tradingeen the at a record in the nasdaq down nearly 1 . Traditional industrial old companies, the s p caught in the middle. Groups on the move to explain what is going on here. Information technology is down almost 2 . We are seeing some weakness in apple. A report said the company is reducing its iphone 7 orders after an initial serve surge. Stocks continue to be weakened. , financialsaries are up today along with energy saw Energy Stocks. I want to look at the recent trajectory of those stocks. We have the S P Energy Index in white and both are quite volatile around the opec meeting as we get headlines ahead of the meeting. We have seen those Energy Stocks surge p or is up once again in todays section in reaction to the opec meal deal. Natural gas is having a remarkable run, at the longest run in years. To what we are we have seen an increase in the u. S. Dollar versus the peso. Now. Tock market is down at the mexican currency, we are seeing a move higher in the u. S. Dollar, still gaining versus the peso here. Thank you. Caterpillar trading was suspended over 2 just before trading was suspended. We will keep our eye on that. Courtney collins has more from the newsroom. Courtney donald trump begins with what he calls his thank you soared today. The factory in indianapolis 800 workers jobs in new mexico. Trump had made those jobs a part of his campaign. He later will hold a campaign rally. In moscow, putin made his annual speech at the assembly. An American Administration based,carry on relations mutually advantageous basis. Russia and the u. S. , we are interested in resolving the Global International problem in and ensuring courtney putin also said russia wants to build its own present and future without unsolicited advice from others. Governmentsponsored hackers have lost a series of attacks on saudi arabia in the last weeks according to people familiar. The attack three on computers as well as five other targets. Digital evidence suggests the attack came from iran. Two new studies on Cancer Patients with psychedelic mushrooms are being held with breakthroughs. Cancer Patients Experience lastinge and long relief from anxiety and depression when they are treated with the active ingredient in those mushrooms. These studies are in the new issue of the Journal Journal of psychopharmacology. Global news 24 hours a day. Im am courtney collins. This is bloomberg. Now onto the top story, the 30yearold all market in bonds looks to be ending with a bang. The global aggregate total return index lost 4 in november. Bonds in europe declined with opecss agreement to cut production with a prospect of higher inflation. Where is this creating opportunities for investors . The head of global aggregate fixed income, thank you. Great to have you on the program. You on the chart which shows what is happening the treasuries index. U. S. Debt being hit by Stronger Economic data. The expectation of red hikes on the fed. Further does this rate have to go . If you look at where the index is, it is back to where it theat the beginning of year. It is not necessarily the case the market will move at the same rate. We have taken away the deflation pricing at thee middle of the year. We have taken away the fears the bank of japan of the ecb forever cut into negative territory. We are back to pricing in on the two fed hikes. It reflects the fact that the thatt is not and what may due to inflation in the laborgiven that the market is at full employment. Being positive on the u. S. Dollar, higher Interest Rates, we think tax cuts, that duration is not attractive enough, and yields are not high enough yet, to make a Valuation Case for u. S. Rates. Higher the the dollar goes, the more that has a deflationary effect. Those that mean you really do think the market is not icy in the higher inflation . Click cs. If you look at the price of reflation over the next 10 years, it is hovering around 2 . The target is about two, which creates core cpi above 2 . The market is not really pricing a lot of inflation risk. We get the stimulus, the outlook of the u. S. Economy theld be growing, foundations are being built. The worstcase scenario is you are owning an asset with relatively good value. Attention lot of good if inflation does accelerate. It is about evaluations. It is difficult to look at the market and say higher in nation and reflation is fully priced at this age. We have not priced in much higher inflation. With the u. S. On market for the moment, we had a major rise in bonds and yields. There was not a whole lot of contagion. Could we get that kind of a move again and relax if we do now . Market seems to be fine with this. The thing we have not discussed is the liquidity market. That is the volatility you have seen over the past 12 months. Thinking we are going to see another sharp 70 basis points Interest Rate rise. I think it will be more looking at the Economic Data as it comes out, looking at the fiscal plans as it comes out as they begin to fit take shape and the market will be reacting to those, not necessarily feeding on itself in a frenzy. You see some Unit Movement on the european yields as well, though as much as anticipated. Alone,e next few weeks where are those attractive, if anywhere . That is a very good question. Our preference is owning assets that price these risks. Portugal, 3. 5 over government bonds, a lot more than france gives you 50 basis points over German Government bonds. The risk is difficult to anticipate because it is a binary event. Want to center your whole portfolio around an event you do not expect to be materializing. But that is how we are approaching it. Underrate in the euro. We will continue our conversation with you right after this. Stay with us. This is bloomberg. Counting you down to the european close, we are just about two minutes away. Quinn. I am vonnie head of global aggregate fixed income, we were just talking about Political Risk in europe and you were saying that was one reason to basically cut your exposure to the eurozone. Look here, draghis dovish stance has not stopped italian and bonds trading. There is an argument that european bonds, even if we get higher inflation and Economic Data, we could see the ecb tapering. If you are saying investors can be cutting exposure to bonds, does that not actually provide opportunity if everyone is following the logic . You have got this since the be any of november. You will see italian bonds have cheapened up even more than spanish bonds. Contrary to the chart there. For us, we have a conservative stance, italian bonds. If you get a good result out of the referendum, you can see the bonds rally. It is difficult to sustain a strong rally because the next step is to hope is on dutch elections and in french elections. The thing that could be the catalyst to start a very strong rally is the ecb, targeting more of their purchases of spain particularly italy. I think the likelihood is the ecb again has to react to the market. The pressure we have had in the market so far is not enough to raise real concerns about some kind of panic or crisis in europe that changes gear in terms of the bond buying program. To me, the risk reward is asymmetric. Spanishmuch prefer bonds to italian bonds. French bonds the time bonds. Ir the sector as a whole, think the risk reward is still asymmetric. The upside that you lose it and something happens on a positive note, is relatively low compared to the downside. Talking about the eurozone which you also thinks think investors should be shorting, is your argument that the weakness is inevitable if reflation trade is not priced in as you were saying. If so, when does that turnaround . Us, being positive on the dollar is a key part of the story and the question is what currencies do you want to short . Arguably, you should take a basket of them and not try to be too clever. Athink what youre looking are the Political Risks. We do not expect her to win the french president ial election. If she were to win, it would be a real moment that the they begin to break out again. After the brexit and trump, i do not think the market will be complacent. That will help keep the eurodollar relatively weak and it is a good way to protect yourself because if you price than the euro, you would expect to be weakening. Very briefly, we have got u. S. Jobs data tomorrow. Still extremely important despite the fact the market i think so. I think it just needs to be ok. If we have a big accident, then you know, it raise concerns. But even if that 100,000, i think it would be ok because a string of Economic Data, not just labor market data, suggesting the market is doing fine, one rate hike with a market fully priced will not derail that recovery. Miles bradshaw, head of global aggregate fixed income, thanks for joining us on the program. Vonnie news coming out of caterpillar now. Julie has all of the details. Julie thank you. Comments are made in a presentation caterpillar will be giving at a conference before credit suites the shares have just resumed trading just as you came to me here. It looks like they are heading lower. I am not sure if we have a chart of that but i will pull it up on the bloomberg. Down in thehares wake of the headlines coming up. Let me bring specific headlines to you. The company said the consensus estimate of 325 in earnings per share for 2017 is too optimistic. The head headlines on sales is too confusing. It says the 38 billion revenue forecast is a reasonable mid point expectation. The company says Oil Prices Remain volatile on a macro side and that oil prices are not high enough to drive substantial investment. Oil companies are among caterpillars clients, ordering equipment from the company here. The company is also talking about cost cuts, 2 billion in Cost Reduction for this year and cost cuts included a combined reduced function for people who ask for the company as well fewer positions overall. These are the headlines we have from the presentation at the Credit Suisse conference. The shares are bouncing around in the wake of the headlines coming out. We will get you updated on the stock throughout the hour. Vonnie a little negative twist there on that news. Thank you. Coming up, how will the opec deal impact the stateowned oil giant . Already, Financial Difficulties and declining production. Hosea Antonio Gonzalez next. This is bloomberg. Live from london, county down from the european close, just about five minutes away. Vonnie and i am vonnie quinn. We want to go back to the year ahead 2017 summit in the city. Were taking oil this time. The Group Bloomberg mesko joined joined by as very special guest. Carlos that is right. Thank you for being with us. Thank you for the invitation. Just learned yesterday there is an agreement from opec to cut production. What is your reaction to this decision . I think it is a positive development, for the public finances. We have already seen a reaction in oil prices, about three dollars yesterday. Today, there is another three dollars, and we are around six dollars. Of freshld be a breath air for public finances in mexico. Probably a good thing. Production is going to be below what they were producing. Now they are deciding to cut products in venezuela. They just do not have the capacity to permit to produce more . You have many players for the opec and nonopec players. Are hard toeements come by. Where we hadement a decrease in production was 2008. It has been quite a long time since opec decided to cut production. I think it gives an idea that the atmosphere is conducive to further agreement. Positive thing. It is always difficult to maintain and we will see how the because opec are the Major Oil Producers but not the only producers of oil. It is hard to say exactly, but i think it is a Good Development for the oil market. Lets talk about mexico now. This is particularly important in regards to the opening of the sector. For the first time, they will offer next monday deepwater feels here is some of those very close to the u. S. In the gulf of mexico. You are joining forces, with chevron. Do you have any idea how many deals with them . Yes. Were joined forces with chevron field. This on the is the most important part the fact that the field was put on the block and we put it as part of the block the main difference between this and the is a fields is that this production field. It is not an exploration field. The projects, instead of involving a couple hundred million dollars, were talking of 11e development billion. It is a very large project. It has almost 500 Million Barrels of reserves. Is an important field, and it would be the first time in history it has a joint venture in the upstream with risk involved. I am nervous but i have high expectations. I hope for the best on monday. How soon will we start seeing who will be the other company . Artner very quickly. The investment takes place very quickly and the production takes a few years. Asexpect investment as soon 2017. We have worked quite a bit on the field. It is a production project and not an exploration project. The work can be continued relatively quickly. Production in which year do you think it will start and at what level . And 2023. Etween 2022 it gradually increases. I cannot remember that number to the daily production. It will depend on how it evolves. But it is a substantial field. Lets talk a lot the other areas, probably a bigger headache for you. We spoke in april, you were talking about the importance of finding partners fast to sell some of your assets, for your upstream assets and downstream . Know you already hired bank of america to try to find buyers. Are seeingr hand, we how refineries in the u. S. Are having a hard time to find buyers. How confident you are at that they will find somebody who is willing to buy a stake in a refinery or a refinery system . If you do not find anybody in the shortterm, what is the plan b . I am confident for various reasons. We stated it in the Business Plan. First, mesko presents an attractive market in two dimensions. Is the sixth largest gasoline market in the world but it is a growing market and with the exception of china and india, it is the largest growing gasoline market in the world. Ant in itself makes it interesting prospect. There is also the process of the liberalization of the price of gasoline, which also provides an interesting opportunity. Interestingly, geography matters. Wealthhas access to the and the pacific. Well,y say to yourself, the u. S. Does as well, but there are 3000 miles in between. In mexico, there are 200 miles in between. To give you an idea, south of the only full scale refinery is in mexico. It makes it an attractive market. I am optimistic, but we are working very hard. It will not be easy for all the reasons you mentioned. Hopefully we can find a partner and increaseerate the efficiency of the operations. It will be difficult and it will not be an easy process. I think there are important issues that make it attractive. You took the helm of the company just in february and that is one of your main goals, to improve efficiencies. Heard in another interview a few minutes ago on there is a race for a downgrade and that matters a lot because it is probably the largest almost every year, the largest insurer in latin america. You that you are could avoid a downgrade . I think we should stick to our things. He should worry about the Interest Rates and the money markets. I can say the following. We have been in close contact with the rating agencies and perhaps most importantly, as is said in the business land, today, stable finances, that is a long way from april. We have done a very important budget adjustment, a very large one. Today, there were questions about whether or not we would be able to do it. With confidence today that that happened. Were almost at the end of the year and we managed to carry it out. We can also say the government took the measures to support the balance to improve the balance so a longterm str