Welcome to what will be a pretty intense show as we gear up toward that inauguration in about nine days from now. We have a new report from the World Economic forum on global risk. They talk about unemployment as one of the big risks. Inequality and increasing polarization. What they mean is the polarization of politics within various countries. Weve seen it with brexit, with trump, but also polarization in terms of various countries around the world. They talk about environmental risk. Not also talk about Society Keeping pace with technological change. We will speak to the chief author of the report a little as wen in surveillance also geared towards davos, which starts next tuesday. First things first. We will check in on the markets. This is european equities. I would suggest that most of the moves and the most important moves are going on elsewhere. It is currencies, but also the emerging markets. This is a picture we are seeing for the turkish lira, hitting a dataow ahead of the latest on its current account deficit. Exit in peso, 21. 77. Then we have to talk about oil. Weve seen production cuts starting from opec. Today, 50. 9 nine. Plenty going on in the markets, a lot going on in politics. Heres sebastian salek. Sebastian Jeffrey Gundlach says the 10year treasury yield topping 3 would signal the end of the rally in bonds. In his website, the ceo said, if we take out 3 in 2017, it is byebye bonds bull market. He reckons that benchmark treasuries above 2. 6 would signal the end of the bonds bull market. Volkswagen is closing in on a deal to pay 4. 3 billion to settle a u. S. Probe into the rigging of diesel emissions tests. The agreement raises the cost of the scandal to more than 23 billion in the u. S. And canada, billion vwhe 19. 2 paid to settle. A criminal investigation has ensnared the worlds biggest banks over the rigging of currency rates. The former jpmorgan, citigroup, and barclays employees are accused of using an online chat room to coordinate training of u. S. Dollars and euros. They are all living in the u. K. And would have to be extradited unless they surrender voluntarily. The u. K. s Prime Minister is facing calls to disclose who manages her financial interests after revealing she placed her personal investments into a blind trust. Theresa mays office says she uses a wellestablished mechanism to avoid any conflict of interest. The liberal democrat leader has said this is an opportunity for may to deliver on a pledge to have the worlds most transparent government. Local news 24 hours a day powered by more than 2600 journalists and analysts in 120 countries. Francine u. S. Intelligence officials have informed president elect donald trump about unsubstantiated reports they received that the russian government had compiled potentially damaging personal and Financial Information on him. That is according to a person familiar with the situation. Trump denounced the reports as fake news, a political witch hunt. Trumps nominee for secretary of state will tell senators at his confirmation hearing later that russia poses a danger to the u. S. And must be held accountable for its actions. Rex tillersons remarks are a sharp departure from comments by trump, who has called for a friendlier relationship with Vladimir Putin. Barack obama made his farewell address in chicago last night. The outgoing president made an embraceor americans to inclusiveness and preserve his legacy. If every economic issue is framed as a struggle between a hardworking white middleclass and an undeserving minority, then workers of all shades are going to be left fighting for scraps while the wealthy withdraw further into their private enclaves. Francine despite coming to power in the middle of the worst recession since the 1930s, obama presided over 5 million job reductions in the employment cap, one of the best records in the past six decades. The s p 500 has rallied since his first inauguration back in 2009. This comes ahead of Donald TrumpsNews Conference, scheduled for 4 00 p. M. U. K. Time. We are expecting an update from his Transition Team before that. Theres a lot of news out there on the markets, on politics. Lets get the thoughts of Rupert Harrison, strategist at Blackrock International, chief of staff to george osborne. Thank you for coming in. You have unique insight into what 2017 will bring. Politics, Foreign Policy, possible trade wars will dominate a lot of our conversations. Is this a reset for help politics operates . Rupert i think we have to separate two things. We are having more of these video centric these idiosyncratic events, and those are affecting specific markets, whether mexico at the moment, sterling, but at the same time, this is all happening while the data around the world, the underlying fundamentals, are Getting Better at a dramatic rate. You can get volatility from politics, but the data trumps politics if it is strong enough. That is the thing we have to keep our eye on. Rolle data started to over, some weakness started to emerge, that is a more volatile mix. Francine how do you quantify the Political Risk . What dold trump tweets, they mean in terms of policy . Hes managed to convince ceos to create jobs in the states. Will discontinue . Rupert we are getting our first indication today at this press conference. Is hes in a sense been quite lucky. Hes come to power at a time when this reflation negative in the u. S. , this big increase in confidence some of the data we track at blackrock, even before his election, cap intentions picking up, and his election has given a real boost to that trend. Youve seen extraordinary increases in corporate confidence. Be consistent with 5 growth in the u. S. I dont expect that to happen. If half of that comes into our data, this shortterm confidence boost could be the story for a while unless it gets derailed by seriously concerning policy announcements on trade or things that scare the markets. Francine what does this all mean for treasuries . We had this call from mr. Gundlach and he sees the 10year at 3 . We charted the liquidity index in white. If it goes down, it is more liquid. This is the picture for the u. S. 10year yield in blue. Will we reach 3 . Rupert i think it is going to struggle to rise. Some of the factors that have been around for many years are still there. Obviously he has jumped on this reflation narrative. You still have qe in japan. You have qe in europe. You have structurally low inflation in much of the world. It has been the dollar that has been more sensitive to changes in fed policy and expectations, and u. S. Yields have been more moving in line with the kind of global yield. Data is Getting Better slowly, but we dont have that big inflation pressure anywhere but the u. S. Francine where do you see dollar going . We need a chart which tracks threemonth volatility. Around here is when donald trump gets elected. It is coming back up a little bit. Line, look at the yellow it is the median volatility depending on the presidency. Rupert the dollar has been the big sensitive in a sense, this has been the mechanism for the u. S. Economy in terms of expectations for rate rises. We still have some of these constraining effects. The Federal Reserve, i think, will be happening watching what is happening in china carefully. Pullssue that led them to back in 2016 is still there. There are these upper limits to how far the dollar can rise before it starts creating global stress. We do have some idiosyncratic issues in the u. S. , tax reform, so if we get a border adjustment tax, that is a big deal to the dollar. Very hard to judge the probability. Francine what is the one thing the market is probably not focusing that much on, and we talked about fed replacements do you worry about who comes after janet yellen . Is it too early to worry about it . Rupert i dont worry about it. My experience is even people who complain about loose on every policy, you get into government, you dont want higher rates. This is now your debt and your economy. Politicians tend to have shorterterm intentions. I dont think theres going to be a deliberate attempt to engineer a more hawkish fed. The types of personalities that are likely to fill the slots are going to be different types from different worlds. You are not going to have another janet yellen. That is probably worth 25, 50 basis points just because of the Natural Inclination of the new appointees likely to be more hawkish. I wouldnt expect a fundamental change. Francine Rupert Harrison, chief macro strategist at black rock. We are getting breaking news out of the kremlin. We were talking about the fact that donald trump was told by his intelligence that the russians had compiled potentially damaging versatile and Financial Information on him. The kremlin denies that. They say the leaked report on ties to trump is completely fake. We will have plenty more on that. Stay with bloomberg. We will be joined from new york by Richard Haass, president of the council on Foreign Relations. About richardrs being touted for some kind of job in the Trump Administration. If you have a bloomberg terminal, you can follow us on the tv go, where you can watch the show and interact with our charts and functions. For ruperttle odd and i to see ourselves on screen. You can look at that onemonth volatility in u. S. Elections. Lets get to the Bloomberg Business flash. Sebastian bouygues has won a construction contract worth 1. 7 billion euros for the Hinkley PointNuclear Plant in the u. K. The country will work with Langer Rourke on constructions that will house the reactors. Airbus has won a 3. 8 billion order for jets from aviation capital. Of 2017. Ts first sale according to people familiar with the plan, the company is close to securing a deal from saudi arabia. Johnson will be speaking to fabrice bregier, the ceo of airbus. Sainsbury shares are trading higher after it beat thirdquarter sales estimates. Like for like retail sales excluding fuel rose 0. 1 . The u. K. Retailer says the market remains competitive and devaluation ofhe sterling remains uncertain. That is the Bloomberg Business flash. Francine thank you so much. Exchanges on centralbank policy are expected to resume when mark carney appears before the Treasury Committee today. His announcements before and after the brexit vote were heavily scrutinized by lawmakers. The government says it is now considering a pledge to allow european citizens in the u. K. To remain after the country leaves the e. U. This is in my view the issue that should be cleared first, or at least very early in the process, because there are a large number of people both in the United Kingdom and in the European Union will be naturally concerned about their continued position in their respective countries of residence. Therefore, it is important that that issue should be clarified, i would suggest, at a very early stage. Harrison,rupert strategist at blackrock, is still with us. He was chief of staff to george osborne, the former british chancellor. We keep on saying because you were former chief of staff because we are trying to work out number 10 and number 11. What do we know about what theresa may thinks . Pound falls when she says she wants to curb immigration. She said it in september. Why are markets not believing her . Rupert i dont think what teresa thinks has changed very much. Weve got to keep our eyes on the fundamentals of this negotiation, these two redlines she set out about immigration and no jurisdiction for the ecj. You are heading for full brexit, the new word for hard brexit. We are not going to be in the single market. There are details about which bits of the Customs Union you are in. I think theres a tension for markets. You get these occasional political reminders of direction. In between that, the data has been holding up better than people expected. And you get periods of political calm, people expect pound is a bit undervalued. Maybe the bank of england is going to have to shift. People get brought back to earth with a reminder that this brexit is still real and we are heading for full brexit. Until the tension is resolved, were going to see this pattern play out again and again. Thecine we are expecting Supreme Court to rule on whether theresa may has to invoke article 50 through parliament. Does that make a difference on anything . Rupert i think that judgment might be pushed back to the end of january. You had all the justices involved. It might take some time to coordinate. I think that is not the main thing to be watching. It is not a total distraction. They might put some constraints on how the government can go forward. Ultimately article 50 is going to get triggered, i think on time, in march, and we need to focus on the realities of the negotiation. I think we will stay in the phony war period until after the elections. Francine what does it mean for the ftse . Last time you went on, we decided to look at ftse in dollar terms. Ftse minuswe did the the commodities. Ftse at a record high, the full ftse 100. Rupert amazing chart. The ftse 100 is not a u. K. Index. Firstly, the sector composition is kind of heavy commodities and mining. Also, the currency composition, most of these particularly these commodity related companies, most of their earnings are dollar were nonsterling earnings. What the white line is telling you is theres still an enormous amount of uncertainty about the mediumterm commodities. Uncertaintymous about the economy. Hold that thought. Francine hold that thought. Rupert harrison from Blackrock International stays with us. Up next, we are live at the Goldman Sachs global strategy conference as the bank outlines its economic views and strategy recommendations. This is bloomberg. Francine this is bloomberg surveillance. Lets get to the Goldman Sachs global strategy conference in frankfurt. The event is outlining the Banks Economic views and key strategy recommendations across maine Asset Classes and regions. Matt miller joins us from there. Met . Thanks very much. Im here with christian hill, foral head of equities goldman. Lets start by talking about the big news today. Headlines from a number of highprofile investors, bill gross, jeff good luck, telling the bell for the death of the bond bull market. Do you agree that this could be the end of the bond bull market and we will see maybe 3 treasury yields this year . Christian we dont think this is the end of the bond bull market. 3 , inecast is around line with market consensus. I think what is key is the speed at which we go there. We think the speed wont be accelerated. It will be a moderate increase in yield. We will probably see 3 , but not much higher. At the end of the day, debt overhang will constrain policy normalization. Theyre so much debt outstanding in the world. Weve seen the impact on dividend stocks. Central banks will also want to prevent a major market shock. We see a more moderate, realistic market outlook. Not really that negative, even for fixed income. Matt when you talk about debt overhang, policy constraints, you are talking more about centralbank policy. I wonder what you think about Donald Trumps policies. Were going to have the First Press Conference with the president elect today. You talk about infrastructure, spending, tax reform, lower regulations. Are these benefits that the market has seen as positive all pricing already . Christian as you mentioned, tax reform, that will be positive. Infrastructure spending, that will take time. , which also deregulation weve seen in the financial sector. Weve seen a massive rally. That hasthat probably been priced into the market. Theres still some upside. Globally, in equities, we see here. 5 upside from having said that, i think, technically, weve seen some of the equity markets in the u. S. Overall, i think it is positive for the markets. We will probably overshoot and and healism coming in will need to see if he can implement these reforms. Matt you point out something i heard from a number of your colleagues today. Equity markets are kind of choppy. Weve seen this optimism priced in. You are the global head of multiasset strategy, so you are looking across assets. Where do you go if not equities . Christian we like equities, but we also like currencies, for example. We see the dollar going towards parity over a 12month horizon. Going into dollardenominated assets, also on the fixed income side, can be interesting. U. S. Fixed income is interesting. If you go into emergingmarket debt, you can see attractive yields and still earned 3 to 4 on an unhedged dollarlong basis. We wouldnt recommend local currency. Maybe optimistically in countries like mexico, but overall, i think going outside and going global is a big theme. Currencies,ntioned emerging markets. Im thinking peso, mexico. You said local currencies, not yet, but eventually is that going to be a discount . Christian i think there is discount, certainly. I think the devaluation has been overdone. There is certainly risk associated with that trade. It is not a strategic one. But it could be interesting. Matt christian, thanks so much for your time. Head of global, asset strategy for deutsche. Back to you. Francine thank you so much. Up next, trump, russia, and the oilman set to become the secretary of state. We will get thoughts from a former ceo who dont with putin during his time at an oil major. Paolo scaroni joins Rupert Harrison and i. This is bloomberg. With the xfinity tv app, anything with a screen is a tv. Stream 130 live channels, plus 40,000 on demand tv shows and movies, all on the go. You can