The president elect renegotiates. Peter navarro will head the National Trade council. Matt that will be interesting indeed. A lot to talk about today as far as politics. We will take a look at what the equities markets have in store for us. Features here show a lower open across the board for European Markets after u. S. Stocks failed to rally yesterday. That 20,000 market on the dow seems elusive. As is my jacket which i am looking forward to. Matt will make jackets for those who have not tuned in the week. Lets talk about what is going on in the markets. This was franc is up and some European Markets are doing better. The euro app against is up against the u. S. Dollar. Are seeing a lot of turbulence in these markets, a lot of speculative money coming in and out. 4. 2 . Nal down by we will talk a little bit about this market later on as we head toward the end of the program. Lets get caught up on what we need to know. Juliette thank you. Japan has approved a record 825 billion dollar budget for the next fiscal year. With incentive for companies that fall two line with economic policies. Businesses that make objectives such as raising wages and making child in elderly care more available will be rewarded. At the same time, shinzo abes cabinet should approve the biggest ever Defense Budget in the face of north Koreas Nuclear and missile threats and the territorial row with china. Expectation is growing that monte dei paschi may be bailed out. Lurell probably fail to sufficient demand. The debt swap with half coming from investors. They got the green light for a 20 billion euro bank rescue fund. New zealands economy expanded faster than forecast last quarter as construction boomed and Consumer Spending increased. Hird quarter gpd gdp rose the economy expanded less than forecast from a year earlier coming in at 3. 5 . The kiwi dollar traded at a near sixmonth low following the data. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. Is bloomberg. Guy another day passes and we have tripled trump action this time. First up president elect summoned the two largest u. S. Defense contractors to his resort in florida. Hes looked to the ceos of boeing and Lockheed Martin about cutting costs for both fighter jets and the new air force one. This is the f35 and the new air force one. We will get it done for less than that and we are committed to working together to make sure that happens. Able to get the president elect my personal commitment on behalf of the boeing company. This is a business that is important to us. Are trying to get the costs down. The program is very expensive. Icahntrump has named carl as a special advisor to help him overhaul and rolled back federal regulations to promote Business Growth and finally, the president elect appointed economist and china critic Peter Navarro to lead a National Trade council. The university of california irvine professor is the author up such books as death by china, a hawkish account of how destructive of force trend has been on the u. S. Economy over the past 15 years. Our guest is the global head of strategy and solutions at socgen. Let me ask you what you think this donald trump rally that we have seen. Aside from the news we get from him today, we have had an incredible resurgence in stocks, incredible resurgence in yields. Is it too much, too fast . The market has clearly priced a lot of the Infrastructure Spending that the trump president elect president elect trump has promised. It is clearly going to a level where a lot is priced in and the question is whether the congress and senate will increase the debt ceiling because the 1 trillion of Infrastructure Spending is a lot of money and it will require more borrowing. The he is putting carl icahn in do with regulation. One of the problems is secular stagnation. They seem to be moving away from shat had been ait traditional growth rate. In doputting carl icahn you think to do with the productivity story we have got in the United States, is regulation do you think where he will focus his attention to raise that potential growth rate . Guest this is a good point. If you look at unemployment, it is close to full employment and it decreasedwhich is very close. Ultimately, if the u. S. Economy is able to essentially create growth, we could see a much better path for corporate, profits, etc. The argument might not be relevant at this juncture if the fiscal multiplier are able to generate nominal gdp growth that is higher than what is expected. With david westin spoke Brian Moynihan exclusively about what donald trump means for the u. S. Economy. Lets listen in to what he had to save. Say. Riskier,sinesses are theyre more active, they are talking harder. You are seeing that go on. Youre seeing the other thing, is good and gas prices, for Capital Expenditures, that ought to help next year. Our clientselief of we talked to about Regulatory Burden is it will come down and that will help them do things more quickly. So all that they believe is good. Of thehat do you think comments there . I think he has a good argument and the point of having more managers who have businesses has is a new strategy to challenge the new status quo and i guess this is an opportunity to look at running government differently and ultimately, there is a lot to be seen as to whether that strategy can really create nominal gdp growth as opposed to just more borrowing and consumers not spending that extra crash cash the are given and winged back into savings. We have had the problem for a few years. Guy if we get aggressive fiscal spending and the Economic Cycle which is long in the twos, will we get rampant inflation . Well get more inflation than we have got now. That is what people are trying to figure out. Oe the path is to increase the pace at which is raising Interest Rates. If you had to look at the rest of the world, there is still a lot of deflationary pressure out there and a lot of that pressure out ofs being exported emerging markets and asia to western economies. It will be interesting to see whether the investment budget is approved by congress because it requires more debt and leverage and number two, the fiscal multiplier, whether that investment does create into more job creation, more spending by etc. And there is a lot to be seen, it is not a given situation. Guy thank you. Talk through what is turning out to been interesting week. The full monti. An anchor investor remains elusive. We will get the latest ahead of that looming deadline. The equity story tomorrow. And loyalty pay. Offeringe carrots. And gray is the new black. They still pose a significant risk to the market. Find out why 2017 could be the year of the grace juan gray swan shop. The opening minutes away. Matt welcome back. 16 European Market open minutes ago. Youre looking at a live shot at the brandenburg eight and apparently a crane building some sort crane building some sort of christmas bleacher said, i believe, for a concert maybe, of sorts. Lets get to the Bloomberg Business flash with juliette saly. Juliette actelion has announced new exclusive talks with Johnson Johnson about a possible takeover. Johnson johnson said it ended negotiations with the swiss was said tod sanofi be in advanced takeover talks. Finlandbased company has filed complaints in germany and texas but apple says nokia is theirng to license patents on a fair basis and is using the tactics of a pay got a troll to attempt to extort money from apple. Shares have fallen yet again despite record run for super mario. The new mobile game plus download rate is the fastest in app store history with 40 million downloads. It is available on apple devices and is initially free in 140 countries. The 10 fee to unlock new levels twisty and some reviews have been less than going. Alibaba has in labeled a haven for knockoffs. Four years after getting its name removed from the list. The u. S. Office of the [indiscernible] had a high level of counterfeiting and piracy. It suggested the decision could inee influence by influenced by politics. Guy thank you. Lure sufficient demand for the Capital Raising plan. They said in a statement yesterday that so far, no anchor investor has shown interest in the recapitalization plan. Still with us, our guest from socgen. Italy, the banking sector, and its politics all very closely intertwined at this point. Investor, is a state bailout of monte dei movei anything that should the dial . Does it speak to something more significant that is going on in that part of the eurozone . Guest this is a crucial point. If you look at the italian Banking System, were looking at 310 billion of nonperforming loans. It has been documented over the past few months and years and the issue with italy was not a massive bubble, it was low growth for too long and a lot of these good loans ended up being bad loans. It you do get the situation [indiscernible] is where ifs. This they are bailed in and not protected, that could create more populism and negative reaction to the eurozone concept and create more political instability. An agreement between the eu and the government to make sure it does not become an italian cavettsituation and ray with the rest of the european Banking System is required. There will be a level below which some of these Retail Investors are protected and 100,000 euros might be the level of savings. That could be essentially safe above which you will take losses. We are looking at is a symptom of a low growth economy that is moving in the wrong direction. And the gap between what is happening in germany and italy is getting wider and wider. It is a legislation issue as much as the recovery of bad debt is an incredibly slow process, close to a decade in order to get through. Youre left with these problems that means you cannot understand and that of the book is what is putting investors off at the moment. The italian banking sector, the economy is a black box people do not understand. They do not understand what the bank oaks look like. It is hard place to invest money therefore. Guest a lot of it is discounted and this is one of the reasons that the referendum was the last opportunity for matteo rented to reform this bicameral system where you have the senate and the house that killed the decision process of moving forward. If you look at the variations in terms of multiples, they do tread a distressed level. They have to be in the price and Going Forward, what is happening in my mind is the darwinian process of evolution by Natural Selection of res. The sector should heal itself overtime and we could be in a much better situation in a few years time. What about the rest of european banks . Is italy just a massively different situation, is monte dei paschi a different situation than the rest of the banks in europe . Guest absolutely. If you look at the scandinavian banks they might they have a much fairer return on equity. Recapitalizedve Balance Sheets a lot quicker. You could make the case that you will have dispersion within the sector over the next two years. This is reflected in some of the priceperformance but Going Forward it is important to make the case that multiple is a function of return on equity and the costs. The volatility of earnings is still priced to be too high by market. We could see a rerating of a riskyriven by a lot less Banking System given the amount of recapitalization that has taken place in the sector over the past two years. We are minutes from the European Equity market open up. We will look at todays potential movers. When you should Pay Attention to. And Johnson Johnson back in talks. The open nine minutes away. This is bloomberg. Matt we are minutes away, six and a half from the european open. Lets get your stocks to watch starting with actelion. It has been a rocky week for their romantic situation. It was linked to Johnson Johnson and then they broke up and sanofi was the new suitor. Is back in talks with Johnson Johnson. Does this leave sanofi out in the cold, will we see a complete purchase, will this be sensitive partnership some sort of partnership . For investors they do not believe the real purchase will come at the 275 or more level. Guy it is amazing but you can understand why the market was skeptical. Thiswere saying seeing unstable situation that we do not understand who will be ending up with home. Fascinating story. Matt the major shareholders. He does not want the money. Why would you think a deal would get done . We will talk about that. Guy it depends what you think your product cycle is going. Are you peaking out, maybe that is the time to exit. Will be theschi story. It is the credit story from just about every angle but it looks as if according to the italian papers that we are very close to some sort of bailout. The debt swap closes, the equity story is tomorrow. They are not getting close to that. We will watch this one. That is the one your number. Were down by 86. 5 on a oneyear basis. You go back further, this is a stock that back in 2005, 2006 was trading up there. That is where we are now. It will come back and talk paschi and italian banks and what is happening with actelion. Certainly tong out be a lovely one lively one. Is four minutes away here on a slightly misty morning in london. This is bloomberg. Guy good morning. Welcome, you are watching Bloomberg Markets european open. I am guy johnson. We are moments away from start of european trading. Matt has your morning brief. The deadline day for worlds oldest bank, and reports from italy suggest Italian Government members will confirm today that they are going to bail out monte dei paschi. How will the news reshape italys politics . Sanofi sidelined. And his exclusive talks with Johnson Johnson. Triple trump. The president elect renegotiate government contracts, and Peter Navarro, the outspoken china hawk will have the National Trade council. Guy. Guy matt. Many people not out there desks this week. We are going to be dropping in terms of the volume. The markets on the equity front are calm right now. Not much of a movement when it comes to european equities. Ftse 100 north of 7000. Down by 0. 1 . Similar story for the cac and the dax. Seeing aess, we are mild weakening as we await the end of the year. Most books closed by this stage. The devil is in the details. Here is manus. Manus in the United States, they did not want to touch 20,000. That has got psychological reverberations. Equity markets though. Financials down by 0. 2 . Are we underpricing . The potential contagion from banca monte dei paschi. Dying and birds of 2016, people are away and the propensity for real vitriol the reaction in the markets is lessened. Equities are lower. 20,000 has not been touched in the u. S. They may have a bailout to deal with. Hong kong is in a correction territory. Oil, one optimist out there. 2018spent 1 million on calls with an expiry at 100, so that is a nice sort of speculative position and is not rock the open interest. Volumes in the Energy Market are lowest in almost a month. 70 could be on the way. How do you take the bulk of the cante dei paschi the ban monte dei paschi . Blackrock in with me this morning. He will see france go from 45 to 75 on political risk. You may see italy moved by a similar matter. Indeed, if there is some kind of movement. Im off to global radio. Good morning. Here areom radio and some of the stories we were focusing on. Actelionan and j j and j j at the negotiating table. Receipts jumped 11 . We are up 6. 5 at the european open. 229, just about, swiss francs. Sanofi gaining as well. We saw sanofi gain u. S. Shares as well. It was in advanced talks with j j came backe and. Investors saw it was offering a little too much, not just with the 275 a share, but also with contingent value right. I wanted to see how monte dei paschi opened as well. The big question is, are we going to see that state rescue ies,italian treasur taking a 50 stake in monte dei paschi . Investor has shown interest so far although people with knowledge of the matter saying the bank is probably going to fail to raise that 5 billion euros. Guy. Guy actelion and johnson the negotiating table just a week after ending earlier talks during previous negotiations. J j made an offer to around 260 a share. Is according to people familiar with the situation. Serafino joins us now. Why have surprise and they come back and made a deal . Is a big surprise. You almost never see this where these Companies Announced a week or so ago they were not able to come to a deal and talks were over and sanofi jumped in and that process seemed like it was pretty far along, and yesterday, out of the blue, after the european stock market closed, you have the announcement that they are back in talks with j j. Was theof actelion cofounder of the company and he has never been eager to sell it. He has been approached and has not been interesting in selling, so he seems to be driving a hard bargain, and apparently, sanofi was not willing to pay the price or agree to the structure he wanted. We dont really know for sure, but that seems to be the case, sanofifi and actelion and actelion ended their talks. Matt are you expecting an outright sale of actelion . Is that the kind of arrangement we are all looking for or could some other Strategic Partnership be worked out . Phil you