Im Francine Lacqua in london. To our u. S. Viewers, happy thanksgiving. We still have a very packed show. In currencies, the dollar extending gains at its highest level in more than a decade as the stronger case for a fed rate hike ways on bonds, gold, and emergingmarket assets. U. S. Markets are closed for thanksgiving. We will keep you uptodate with the other market moves. The ecb has published its Financial Stability review. It goes through a little bit of what weve seen on the markets. They are looking at stability, saying the euro area banks have significant vulnerability. Ecb also saying there are sovereign debt concerns and they may return on Political Uncertainty. The ecb mentioning political instability and policy changes as increasing risk. They look at the things surveillance has also looked at. Monte dei paschi is meeting in siena. For more on the banks, we speak to the ecb Vice President , vitor constancio, in just over an hour. A meeting is underway at monte dei paschi. We will bring you headlines as investors vote on plans to safeguard the worlds oldest bank. We are 10 days away from that italian referendum. Juppe gets a final chance to salvage his campaign. Italysdays until crucial constitutional reform which could see matteo renzi quit as Prime Minister. Later on we speak to one of the most respected italian businessmen. Now lets get straight to the bloomberg first word news. President elect donald trump has urged americans to put the Divisive Campaign behind them and rally together. In a message for the thanksgiving holiday, he offered words of conciliation and unity. It is my prayer that on this thanksgivingthanksgiving, we bel our divisions and move forward as one country strengthened by shared purpose and common resolve. Sebastian lufthansas ceo says giving into pilot pay demands would threaten viability. They say the firm stands no chance of surviving if it accepts the workers requests. Germanys Economic Growth was supported by domestic demand last quarter. Gdp rose by a seasonally adjusted 0. 2 . That is in line with estimates. Government spending and private consumption rose. Conservative lawmakers have attacked britains fiscal watchdog after the office of budget responsibility warned that brexit would cost 60 billion pounds in extra borrowing. A tory mp said he wasnt buying what he called an endless slew of gloom and doom, adding that the prediction should be taken with a pinch of salt. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. Francine thank you so much. These are your markets. The dollar, the story to watch out for. The dollar surge weighing on bond markets. Topix is gaining. This is on the back of markets pricing it in. The dollar extending gains at the highest in more than a decade. Gold is actually on the other way. Japanese stocks climbing. Emergingmarket assets dropping. Would point out is what we are in terms of oil. At 47. 93. There seems to be a little confusion about what russia wants to do. We have that opec meeting next week. Watch out for any move in oil. Dollar surge continues. Officials see a strengthening case for a u. S. Rate rise. Lets introduce our guest. Rench chief economist great to have you. You look at politics and economics impact on the market. Our the markets getting thing right . Theres a reflationary hope on donald trump. Will he deliver . Simon i dont think he will. The selloff weve seen in treasuries i think will be contained. 2016,o the start of everyone was talking about the divergence trade. Everyone went weak in the knees. You saw everyone on their parity calls. We are back where we started the year. The dollar doing the job of the Federal Reserve, moving treasuries higher. The smart money is expecting the u. S. To lose control of its fiscal policy. A lot of the fiscal commitments on the spin side and the tax cut side just add to what has been a very poorly managed fiscal budget for the last 15 years. Therefore, treasuries really have to react to the fact that they are going it alone in terms of an expectation of growth. It will have to be with inflation coming through. Francine and if you are going to make America Great again, his words, not mine, then you are going to struggle to do it if the dollar is too high. Simon it is not serving his core vote, who really need not just the policy protectionism that really was dominating the primary and the election campaign, but also he needs a weak dollar to have the bottom equityrcing corporate back into the u. S. He needs both levers working to maximize the benefit. Francine is there any doubt in your mind that the fed will hike in december . Do they even care about the jobs report . Simon when we last spoke was a day before the november jobs report. Francine we were still data dependent then. Simon i thought we needed a negative number in order to change course from a december rate hike. I think the Federal Reserve now will have big question marks over their credibility if they reverse the situation. Never rule out the leftfield problem of european politics, but i dont think theres enough events. [indiscernible] i dont think theres material enough to derail what i think is a nailed on path. Trajectory,ongterm whether we are going to go on a trajectory of one rate rise a year. Francine pimco still expects three. They are, the markets are, expecting 2 next year. If the dollar is too strong, they might cool off. Simon i expect one next year. Francine 25 basis points each time . Simon thats right. This is because the u. S. Is on a path divergent to the rest of the world economy. The dollar is doing as it has fed,periodically for the doing the job for it, and will take the pressure off, will keep inflation under control, and will generate an automatic tightening in the u. S. Labor market. Francine we understand the president elect may have a heavy hand or would like to have a heavy hand. When looking at the fed, he has two appointments. We understand from hinges visors from his advisers that he would make those appointments. He said he wants higher Interest Rates. Does he really . Keye does and appoints two positions, does it change your view . Simon i dont think it does. The majority of the fed remains quite dovish. I also think Donald Trumps comments around the fed preceded his election. Am i suggesting the president elect might be timing consistent . I think he was keen for the fed to get that rate rise and break of his election. Once he gets into the white house, and loose Monetary Policy supports his policy goals, he will be supportive of a dovish stance from the Federal Reserve. Francine simon, thank you so much. Simon french stays with us for the hour. Breaking news from monte dei paschi. We will get back to it later. Shareholder meeting has reached the forum. What happens is, they have to go through what they want to do in terms of the share sale, but they need 20 of shareholders to actually show up. We understand there were 22. 4 of shareholders, which means they can vote. Stay with surveillance. Plenty coming up, including brexit billions. Some lawmakers attack britains fiscal watchdog. We will break down the governments autumn statement. Plus, saving the worlds oldest bank. An extraordinary meeting underway at monte dei paschi. We will analyze the banking sector. Until italys crucial constitutional reform. We will focus on Political Risk in europe. This is bloomberg. Francine this is bloomberg surveillance. Lets get some corporate news. Sebastian salek. Sebastian advisers to donald trump are said to be exploring ways he can greenlight the Keystone Oil Pipeline on the day he sworn into office. According to people familiar with trumps transition, the issue is being discussed as the president elect looks to jumpstart Infrastructure Development and approve the pipeline. Is courtinge investors to raise as much as 2 billion for a fund that will buy stake in hedge funds. That is according to people with knowledge of the matter. They say the unit will aim to buy minority stakes in 10 to 12 money managers. Thyssenkrupp has proposed keeping its fullyear dividend stable. The management and supervisory boards recommended buying a dividend of 15 euro cents a. Hare for the period that is the Bloomberg Business flash. Francine thank you so much. Getting some breaking news out of south africa. Group, theylabor have huge powers, a little like labor unions in the u. K. Pre Margaret Thatcher and we understand south africas biggest labor group is backing ramaphosa to succeed jacob zuma. On the news just a couple you cannot, and underestimate how much power that group has, saying they back amaphosa. We will have plenty more on that breaking news. Equity markets up across europe. Lets head to the bloomberg for your asset check. Happy thanksgiving. Mark no trading in the u. S. , but the bloomberg dollar spot index is tracking. This is the gauge of the dollar against 10 years. It has risen since trumps speculation his policies will mean a quicker pace of Monetary Policy. Minutes from the fomc meeting say officials saw a case to raise rates, with some saying the hike should have in december. Asian currencies trading at levels we havent seen since just after the financial crisis. 2009. West level since since trump was elected, this gauge is down 2. 6 . Today, the rupiah in india, record low. You get the gist. Spanish gdp, big data today in line with expectations. 0. 7 growth led by Household Consumption and public expenditure. A year ago, the economy grew 3. 2 . Prime minister rajoy aiming to negotiate the budget for next year in a highly fragmented and hostile parliament. The u. S. Is closed today but i thought we will look at the s p 500. The blue line is at a record. The white line is the Credit Suisse fear barometer index, which has fallen since the day before the president ial election. It has dropped to the lowest level since february. Francine thank you so much. Coming up, is it all doom and gloom . The u. K. Chancellor has warned that grexit will cost 60 billion pounds in extra borrowing. We will discuss the outlook next. This is bloomberg. Francine this is bloomberg surveillance. Prebrexit lawmakers say they dont believe the doom and gloom being forecast by britains fiscal watchdog. The office for budget responsibility warns that leaving the e. U. Will cost 60 billion pounds in extra borrowing. Philip hammond presented the forecast. Todays forecast is for growth to the 2. 1 in 2016, higher than forecast in march. Growth, the obr forecast to slow to 1. 4 , which they attribute to lower investment and weaker consumer demand, driven by greater uncertainty and higher inflation, resulting from sterling depreciation. Francine lets bring the u. K. s Shadow International trade secretary, Barry Gardiner, and still with us is simon french. Overall, does it feel a little bit nasty . We have the obr forecast. They are neutral as far as i know. Then you have prebrexit lawmakers saying they are tainted. Is that youoint have to take the forecast seriously. Nobody is saying the forecast is going to be absolutely spot on, but it is a forecast. It is the mid estimate of where we are likely to be. Weve got to work to that figure billion, at the cost of brexit. That is a heck of a lot of money. Most people in the country would be saying, i thought this was supposed to be good for our economy. We were told before him that this is something we should do because it is good for britain. Francine without politicizing, and on the economy, and i know you are on the opposite side of the chancellor, what did you make of the statement . Barry im always pleased when a sinner repents. For the past six years, weve been saying we need to have investment in infrastructure, and this was really important, that we should barter borrow in order to invest. Have,lighted that they ill be at in a more limited way, decided to do that. I think that will boost growth in the economy. There are other aspects of what was announced yesterday that are worrying. If you think of a marginal rate 63 , that is quite staggering. Yet that is what the chancellor introduced for those on universal credit, saying that as long as they only took back 37 pence in every extra pound they managed to earn, that was enough incentive for them. If you look at what hes saying for the richest 1 of the economy, he saying you couldnt possibly ask them to take less than 55 because that wouldnt provide incentive. Theres something deeply wrong with the structure of an economy that says 37 pence in the pound is enough to incentivize the very poorest, but not the very richest. Simon, first of all, i thought a quality was one of the big things theresa may put in her speech on monday, but at the same time, it is a tough line. They still need to attract investment in businesses. They do want to make a more fair society. Simon picking up on barrys point, the marginal withdrawal rates, moving it down to 63 , it is a distinct improvement from what the government inherited. When i worked at the time, there were marginal rates of greater than 100 on a lot of taxes. That is not to say that a marginal tax rate as high as it is is great, but it is the balance that government has to strike right now between fiscal discipline, particularly on current spending, and trying to provide what is muchneeded on the infrastructure side to make sure that not just is the Corporation Tax environment attractive, open labor market, but crucially, both the hard infrastructure and the soft infrastructure is consistent with running a worldclass business. Francine can we reflate the u. K. , a little bit like what donald trump is doing in the United States . Inflation is already going to rise. Simon we do need to be much more careful. The case for big fiscal expansion was when unemployment was at it percent, 7 , 6 . Now we are at full employment in the u. K. And the u. S. The case for stimulative fiscal policy is much reduced. Barry the problem here is, you can decide that you are going to put this investment into infrastructure to grow the economy, but if you dont have the skills to do it, you are not going to be able to grow those companies. Francine thank you so much, Barry Gardiner and simon french. Stay with us. We talk trade next. Speed always wins. Especially in my business. With slow internet from the phone company, you cant keep up. Youre stuck, watching spinning wheels and progress bars until someone else scoops your story. Switch to comcast business. With highspeed internet up to 10 gigabits per second. You wouldnt pick a slow race car. Then why settle for slow internet . Comcast business. Built for speed. Built for business. Ive spent my life planting a sizesix, nonslip shoe into that door. On this side, i want my customers to relax and enjoy themselves. But these days its phones before forks. They want wifi out here. But behind that door, i need a private connection for my business. Wifi pro from comcast business. Public wifi for your customers. Private wifi for your business. Strong and secure. Good for a door. And a network. Comcast business. Built for security. Built for business. Francine this is bloomberg surveillance. Im Francine Lacqua right here in london. Lets get to the bloomberg first word news with sebastian salek. Sebastian donald trump has urged americans to put the Divisive Political campaign behind them and rally together. In a message for the thanksgiving holiday, he offered words of conciliation and unity. It is my prayer that on this thanksgiving, we begin to yield our divisions and move forward as one country strengthened by shared purpose and very common resolved. Ceo says lufthansas giving into pilots pay demands would hurt viability. He says the firm stands no chance of surviving if it accepts the workers requests. European Parliament PresidentMartin Schultz said he will vacate his position to return to german politics. Schultz, who has led the european body since 2012, will. Un for a seat in the bundestag the move comes as speculation swirls over who from the social democrats will challenge Angela Merkel for the chancellorship. Little news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. Francine thank you so much. Monte dei paschi has been on the edge of collapse for seven years. The new chief executive has until the end of the year to raise 5 billion euros, seven times its current market value, and almost 28 billion euros in soured loans. His proposal faces shareholder scrutiny. A meeting is currently taking place. Lets bring in bloombergs managing editor for european finance, elisa martinuzzi. Also with us, simon french and Barry Gardiner. All, a sigh of relief. They needed 20 of shareholders to show up. Theyve reached that. What are the actually voting on . Elisa the shareholders are voting on this big recapitalization, unloading 21 billion euros of bad debt, and of course, raise capital to mitigate the hit from that, from those losses that will emerge. That will involve a combination of debt for equity swaps, plus straightforward share sales to what we think are going to be new investors. Francine i think we are just getting a little bit of breaking news from the ceo, saying the plan will allow the bank to the more solid. That seems pretty selfevident. What happens next . What are the chances of this not passing and not reaching their goals . Elisa i think the focus is going to be on how this plan will unfold over the next few weeks. Youve got a very rocky period. Youve got the leader for the italian referendum, which we understand is going to be quite critical on investor appetite for italy, and for banking stocks. This will represent a premium to the rest of the industry. Investors are going to ask themselves, what am i paying for here . Francine lets say it all goes horribly wrong. We dont know, so we dont want to speculate, but is it a Systemic Risk