Transcripts For BLOOMBERG Bloomberg Surveillance 20170111

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 Trumps News 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 Point Nuclear 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 even download from your x1 dvr and watch it offline. Only xfinity gives you more to stream to any screen. Download the xfinity tv app today. 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. Lets get to the bloomberg first word news. The kremlin says in the league report on his ties to donald trump is a fake. It comes after u. S. Intelligence officials were said to inform the president elect about dance you reports that russia had compiled potentially damaging personal and Financial Information. Donald trump denounce report as they news a total political witchhunt. Income inequality and societal polarization triggered by political change could exacerbate risk in 2017. That is according to the World Economic forum. Action will be needed over the next decade to avert further volatility. Jeffrey goodlatte says the 10 year treasury yield topping 3 would signal the end of a three decade long rally in bonds, his if we takest said a 3 in 2017, by five bonds bull market. Phil growth record the benchmarks treasury would spell an end to the bottom bull market. To pay penalties the agreement with include a guilty plea raises the cost of the scandal to more than 23 billion in the u. S. And canada, but the 19. 2 billion they had set aside to resolve the dispute. Minister facing calls to disclose who manages her financial interest after revealing she had placed her personal investment in a blind trust. Her office said she used a wellestablished mechanism to manage her shareholdings to avoid a conflict of interest. Liberal democrat leaders said it is not opportunity for her to deliver on a pledge to have the worlds most transparent government. Global news 24 hours a day, powered by more than 2600 journalist and analysts in more than 120 countries. This is bloomberg. Francine thank you. Breaking news out of the u. K. , you mention data that was strong for the u. K. , industrial production, year on year, the figure much better than estimated, 2 . If you look at construction, the output of construction is not as good as expected that other data, better for manufacturing, industrial output, construction, a little bit below what economists had predicted. , 1. 2is a picture for pound 156 1. 2156. Lets talk about donald trump, he will hold his first postelection News Conference today starting at 4 00 p. M. U. K. Time. We will talk about trade wars. The friendshiped on the same day as Rex Tillerson. As we get in the negotiations with eu, article 50 triggered possible in march, what lessons could we learn from cameron and his negotiation with the eu that a lot of people say it was flawed and what theresa may can do a better job with. One positive and one less positive lesson, the positive lesson is, you could have made improvements and rely a little bit less on germany. The negative lesson, also may be played a little bit more hard to get and be willing to walk out later if necessary. The more difficult lesson is to understand the red lights in the eu really are red lines. When eu politicians stand up and say the freedoms are indivisible and you cannot have a market with a freedom of movement, that is not a negotiating position, that is true and the u. K. Needs to understand that. Francine thank you. Lets talk about Rex Tillerson. Know Foreign Policy that are than anyone because you have had to go to these countries deals. Deals. Deals. Signed Rex Tillerson is too close to Vladimir Putin, do you remember the date you got that award, what does it signify . Paolo it was in st. Petersburg and 2013, Vladimir Putin gave us the award at the same time. I would summarize the Rex Tillerson position, similar to mine, when you are the head of an oil company you like countries that have oil, you did opportunity like their leaders. Is a pragmaticn texas oilman and russia is an important place for anybody involved in oil. Francine is it different being a ceo and a business to being a foreign secretary, does it require the same skills . Iflo good question because you are in an oil business you know the world, you know the hydrocarbon world which is not the entire world. To be a politician is a different story. I am curious to see how Rex Tillerson will cope with a new job which is very different than what he has been doing so far. He has been a tough negotiator. He is pragmatic. He is useful in Foreign Policy but you have to be also smooth sometimes. I am expecting him to change if he wants to be successful. Francine and your world, you see politics come investment, we touched on possible trade wars. What do we know about how Vladimir Putin operates . An economy which is not doing great in russia, overall, will he try to take advantage of a relationship with the u. S. . Rupert from a european point of view, there is change, over the last since the annexation of crimea, an important dynamic where the u. S. Under the Obama Administration was a forceful advocate for a tough line on russia, sanctions, with the u. K. And the u. S. Holding the line with the European Union against many of those in the European Union who did not want the hardline, that dynamic will change completely because the u. S. It will be pushing from the other direction. That is an important strategic change from the point of view of sanctions and the europeanrussian economic relationship. For the geopolitical relationship, Vladimir Putin will think he had a pretty good year in 2016 and hope that will continue. Francine what is the main risk you see . You are right, he is the clear winner of 2016 overall, be the middle east or the election of donald trump. Are we prepared for this year . Moore surprises or are we jumping at shadows in terms of trade wars, a move in the market just a mood in the market that it will get worse . Paolo i believe the change in Foreign Policy that donald trump would try to implement will increase the Political Risk in the world. Changes are always difficult to implement. And russia, asia, china, in many more risky times than we have been living in the past couple of years. As far as russia is concerned, i believe that to keep russia outside completely in the cold was a mistake. I am quite happy of the fact that mr. Trump will change this position which will change dramatically in the next few months, the sanctions will disappear before the summer. Francine well donald trump reflate the economy . Turkish lira index the peso we will talk about that next come almost a great experiment on animal spirits, ceo to start spending their cash, will he succeed . Paolo the u. S. Economy under president obama is performing well. Donald trump is jumping on a train which is already running relatively fast. It will probably improve the speed of the trade trading that the u. S. Economy train but the u. S. Economy has been doing well. , ancine market moves turkish lira chart, and terms of deviation and a regression in the turkish lira, has been brutal, the yellow circle is when central bankers had to double interest rates, are we at crunch time the political pressure on Central Banks not to do anything is increasing but at some point that has to give. Rupert we have seen this over the last 18 months, similar to russia and brazil and 2016, markets will keep the pressure up until we see the central bank take some pretty aggressive action on rates. When that happens, we have seen that there is value when the currency starts to bottom from the emerging markets come there is a lot about you, whether in the currency or local rates in turkey for example. The markets are probing this and until we get action it will be a very bumpy ride. Francine your two favorite calls for this year . Pound, turkish lira, where would you suggest people put their money . Rupert bullish equities, particularly in europe. Data flow in europe is strong. Europe has catchup potential with the u. S. Equities. I think that is important. They will devalue in emerging markets, perhaps not in disease but we saw with russia and brazil, when you get to a point where currencies are bottoming at it looks the bleakest, the point there is enormous value. Mexico potentially the same but different because it is so sensitive to Donald Trumps latest tweets. You have to take it bumpy ride but turkey and makes in russia, there should be value. Francine thank you so much. Stay with surveillance, coming up, questions over russia expected to dominate the confirmation hearings for Rex Tillerson. More on oil, russia, donald trump, with my guest. Than twoittle more months after a referendum which ousted is Prime Minister, could it lead the headed for another nationwide vote . That story and talking more about donald trump and the transition with more, to get to radio daybreak europe, live on london. This is bloomberg. Francine this is bloomberg surveillance. Lets check in on the markets. Mark the ftse 100 rising for the 12th consecutive day. That is the record. Yesterday, 11 they winning run was the best since 2009. Yesterday, the ftse hit a record high for nine consecutive days. That also is a record. Is a record on the record straight and 12 would be an alltime record winning streak. A lot of records. 2 bent watch it, will lucky or unlucky . A lot depends on sterlings decline, we broke the key level today, 121. 23, that was the closing level on october 11, the lowest since may the eighth 1985. Which9 today come hsbc right here is the blue line says. 10 this year, the median the endless median beecast is 1. 25, will hsbc proven correctly and will sterling continue its decline . The october close is the key level today. Excitement today, shares samestore sales rising. 5 in the latest 15 week time, revenue topped projections. The general merchandise change after its acquisition last year, strong data from your morrison yesterday. Christmasian for the supermarket, these are the big three in the u. K. That are listed in the last 12. Onths, William Morrison over linksuestions with russia expected to dominate the confirmation hearings for wrecks tillerson, the choice for secretary of state and he was awarded russias order of friendship in 2013 after helping establish the oil majors presence in the country and the 1990s. With me is a former oilman who has also dealt with russia and , awarded on award the same date by Vladimir Putin on the same day in 2013, he is paolo scaroni. The experience of being awarded the order of friendship up Vladimir Putin on the same day as Rex Tillerson. Now,ing on the oil markets the big surprise of 2016 was opec finally after eight years coming to agree on production cuts which was driven by russia. Will they cut production and maintain their market . Cuttinghey are slowly down projection and Oil Prices Moving up slightly. To have oil prices at 55 a barrel rather than 45 a barrel makes a huge difference for countries producing 10 Million Barrels per day like russia or saudi arabia. Every time the Oil Price Moves 60,n 55, close to investments in america pick up in shale oil which will Push Oil Prices down. I am expecting for the next couple of years oil prices between 50 and 60, not much difference from this kind of range. Francine well donald trump help the oil business . Not about conflict of interest but deregulation, would you have been happy to be ceo under donald trump . Paolo we will see what he will do really. Be more on transportation that if production of shale oil because shale oil and shale gas are already deregulated. In general, i expect every action of donald trump will be to make america independent and low prices of energy. Francine thats it make we talked about sanction if there is a agreement between donald trump and Vladimir Putin, where does it leave europe . We worry about security of gas in the winter months, should we worry more or less about that . Paolo most of caught in middle europe has been against sanctions to russia for a long time. We have been europeans have been following the american position, as soon as the american position changed in terms of sanctions we disappeared, this will help the exchange between Continental Europe and russia because germany and italy are the two big exposures into russia. In total, i go to russia regularly, the combination of sanctions and low oil prices should have put in great trouble, russia but this was not the case. The russian economy has not been performing well but not very badly either. I am expecting russia to pick up exports to russia to pick up also and in general the european situation will improve. Francine you have met Vladimir Putin, is he always the smartest man in the room . The west seems to underestimate him. Paolo i met him many times because he is an expert on hydrocarbon, he made a thesis for his degree on hydrocarbon. It is more than a president , he is an expert. He has always been a very smart. My old story, personally, he and i in russia is that the russians always maintain their promises. Paper,ey sign a piece of that is a piece of paper which will hold. Putin asn as well well, he has been a successful do not see2060 and i why he will not be successful in 2017 as well. Francine thank you so much come out rothschild and cope, he stays with us and we will talk more about italian politics and eu reforms. Thats get to the Bloomberg Business flash. Controversial hinkley Nuclear Plant in the u. K. , the French Company will work with the british firm on the construction of the buildings that will house the two nuclear reactors. Airbus is one of 3. 8 though you dollar quarter up to 30 that marked familiar to people with the plan, the company is close to securing a major narrowbody deal from Saudi Arabian carrier. To thenson will speak coo of airbus at 10 30 london time. Dashers trading higher after the Third Quarter sales estimates, excluding fuel sales road rose a 10th of a percent. The u. K. Retailer says the market remains very competitive and the postbrexit boat devaluation of sterling remains uncertain. That is the Bloomberg Business flash. Months after referendum which ousted its Prime Minister, could italy be headed for another nationwide vote . The Constitutional Court considers a request for a trade union on labor market reforms. Lets talk about italy and the future of europe. When you talk about italy, asked about it by investors, what is your response come in the international market, there seems to be feared that the banks will still be down with not properly but if we did go to a vote, Something Like five Star Movement would become not a simple as that . Paolo elections are not called yet because we need to have another desk electoral reform, i am expecting elections in autumn of this year. We should be seen which kind of reform will take place. Everyone believes we will move towards a proportional system, similar to the want italy had for many years after the war. If this happens, they likely will have a Coalition Government made by Democratic Party and probably the party of berlusconi which will be similar to what is going on in germany for example. Living the populist movement outside the power. This is what most of the people are expecting. In the meanwhile, not expecting any major reforms in italy, the caretaker now government, not much more than that. Expecting not much more to happen until september of this year. Francine when will the economy get better, unemployment is high. The concern is that people do not have hoped. How do you reach that link . Paolo the economy is not doing that bad, either. The economy is growing 1 . Unemployment is still high but employment is growing which is a positive number. We are coming from many quarters of recession. Not in recession anymore so the situation is not very good but not very bad. I am expecting improvements to continue. We have a specific issue which our bags, scaring investors at italians. The problem has to be solved, my impression is that the government has been slow francine why . Paolo the government has been trying to find a Market Solution come in particular for monte dei paschi but this Market Solution did not exist. Since itlize does not exist, a Market Solution, there should be a state solution similar to what has been happening in many other european countries. I believe this will move ahead quickly. The delay has been painful. We need do you believe a donald trump plant in terms of Infrastructure Spending and it terms of giving people i do not know it a spur or energy to spend an energy in europe, we talk about reforms, does reform need to come with Government Spending . Paolo there should be more Government Spending in europe, eu finance because the italian debt does not allow to spend more on infrastructure. Something will happen but europe is still coping with brexit. It is a big distraction of course from formulating new plans for the future. Francine what is your main concern about italy . Paolo my main concern about italy is that populism is growing and a good reason, the combination of a globalization which has been too fast and of immigration which has created a general feeling and which people do not want to know anymore about left or right, they want to be against the system. Francine thank you for your bloomberg surveillance continues, tom keene will be joining me in london, we make our way to down most over the next week talking to richler guy from state street Global Advisors and talking treasuries, markets, currencies, i want to watch the pound. Emerging markets, to currencies you need to look out for, the mexican peso, a very close and direct link to donald trump and turkish lira, a new record low. This is bloomberg. ,rancine pressure on the peso weakness in the mexican currently persist ahead of a speech from donald trump which is at 11 00 a. M. Eastern and 4 00 p. M. London as unverified reports that russia is gathering information on the next commanderinchief. Double on capitals 10 year yields may reach 6 by the end of the trump first term, though process 2 2. 6 means the bull market is over and bank of England Governor Mark carney faces lawmakers again and theresa may considers a pledge allowing 3 million european citizens to remain in britain after brexit. This is bloomberg surveillance. Tom keene is joining us. Eu. D to figure out brexit, what surprises me is the weather, it is extraordinary, almost like april today in london, spectacular. Very different than what we see in Continental Europe. Francine it will rain. Tom it will rain for 40 straight but the item today is the press conference with the president elect. Francine we have not heard from him in an actual News Conference addressing reporters since july. Left it to the first word news. President obama said farewell to america by drawing a sharp contrast with his successor. He warned against turning every economic issue into a fight between the white middle class and minorities. If we are inma work unwilling to invest in the children of immigrants because a do not look like us, we diminish the prospect of our own children because those brown kids will represent a larger and larger share of america workforce. He acknowledged that despite his historic election eight years ago, his vision for the country will be the white house with them. U. S. Intelligence officials have told donald trump about reports the russian government has compiled potentially damaging information about him. That is according to a person familiar with the situation, cnn reported a summary of memos about the alleged gremlin observation, donald trump said it was fake news, a political witchhunt. Vw is closing in on the settlement at the u. S. Investigation it rigged isola missions tests, the german automaker will pay 4. 3 billion and plead guilty which would raise their total cost in north america to more than 23 billion. More than the company had set aside. Theresa may is facing calls to disclosed who manages her financial interest, she revealed she has placed her personal investments in a blind trust, the leader of the Opposition Leader democrats told the bbc the public has a legitimate interest in who runs the trust. Global news 24 hours a day, powered by more than 2600 journalist and analysts in more than 120 countries. I am taylor riggs. This is bloomberg. Tom lets look at turkey and mexico, the equity markets, one big church churn, futures is, oil a where it little bit south yesterday, 51. 21 on american oil. Back in new york, the fixed 11. 49, a grind it down, 10 level , extraordinary and frankly would signal this dow 20,000. I know francine will dive into mexico, turkish lira not only week but is chronically and persistently weak. Now for ugly path right the red depreciation and i put it zero depreciation and i put in brent crude. Francine same chart, it mirrors yours and we do not speak before the show, this is the picture for european stocks, the only thing you did not talk about, turkish lira, mexican peso front and center and crude. The crude cuts have started in january from opec and nonopec. Tom the leakage of crude oil currencies, the consequences of a currency depreciation, i stole of course we brought it over to the bloomberg terminal. Here is oil, brent crude and white, from the beginning of the year brent crude in white, like west texas intermediate, you adjust it to the number of dollars per barrel to the number of turkish lira per barrel and they are pretty much in sync. It all unravels labor day of last year, september, this is the expense to importing turkey of oil. One of theills things that kills the turkish people with the evaluation depreciation. Francine speaking to the former chief of staff come at blackrock, he mentioned what the central bank has to do, what the Russian Central Bank did a couple of years ago. This is my chart about treasuries, we spoke yesterday and someone said a 10 year treasury yield topping 3 would be a signal the finish of the three decadelong rally in bonds. In blue, u. S. 10 year yield, iste is actually white u. S. Government security liquidity index. It is good to link them to see what this year has in store. Sebastian is the senior fellow for International Economics at the council of Foreign Relations. Yes chief Investment Officer of state street Global Advisors. A have assets under management of about 2. 4 trillion. Let me start with you let me go back to treasuries. This big rotation we have seen that started before donald trump got elected, how far will it continue . What will allow it to continue is more clear on fiscal policy in the u. S. Fiscal policy can be pretty loose. The political dynamics between donald trump and congress do not point clearly to a really loose policy, particularly this late in the economic cycle. Unless you do see a clear sign that that physical looseness will happen, i am not sure there is far to go this year. Francine what kind of sign . He has promised one trillion in spending, if we did 10 of that, will that be enough . Whilewill have to wait a to see how the arm wrestling dread fires in the next quarter. Tom sebastian is with us, congratulations on your book on greenspan, we will talk about be fit in the next block, doing so well that the financial times, spectacular. Everybody is saying politics trumps all right now. I do not buy it, the markets are the markets. You are the prism of international relations, do you buy the idea that politics can really adapt and adjust to markets . One of the surprises has been how the elephant in the room of politics do not have market effects that people wasict, donald trump expected to be bad for the market but we had a bull market, brexit was supposed to be disastrous in the short term for the u. K. Economy in the shortterm because people expected future uncertainty and bring that into the present, markets responded, we see that in the currency but nowhere else. Tom you and i saw in november how the markets seized and then in turn right around and how much are we losing now . The volatility, do we expect this to continue . Just a whole new regime of volatility across all assets . Same regime, times where it is low, the mood indexes very hot, you will see spikes because you will have news bursts, theresa may talking about a hard brexit which had an effect on sterling short and sharp, micro you will have short bursts. Francine a clean brexit, hate the word hard brexit, did you not get the memo . I did not get the memo. Francine the problem, semantic, where do we get back to economics because politics, markets move, on things theresa may say it but we knew that, markets at certain points in time to to ignore it. When we go back to fundamentals instead of trying to figure up through tweets what the policy will be . Sebastian take the u. K. Example, the provincial times published a survey of Economic Forecasters and ask them relative to a year ago before the brexit vote, do you feel optimistic about brexit . People remain as negative in their assessment of brexit longerterm as they were before. The shorterterm reaction, especially from consumers, has been to say, that is politics, i do not understand politics so i will ignore them and spend. , politicaltterm effects do not necessarily feedthrough as people expect. It does not mean that Political Uncertainty because of breakfast brexit will not be a drag on the real economy on longerterm. Tom remember the romance of 20 or 30 years ago, every other day a strong dollar policy, is that where we are headed . A strongersite, dollar affect but not a strong dollar policy, in the 1990s, of rubin, set our policy is a stronger dollar, the dollar has depreciated, when ronald presided, his policy was the plaza accord in 1984 and 1985 and reverse it. The policy is different to where the dollar is moving. Tom what is the effect this time around . I believe there will be some fiscal stimulus coming through because i think that one thing the president and the congress to agree cant agree on in the United States is cutting taxes. Agree on in the United States this cutting taxes. The fed will tighten which will mean a strong dollar was stalin trump will hate and wanted to be weaker. The actual stronger dollar but policy will be to weaken the dollar, donald trump tom i love the distinction between effect of policy and we will continue through the hour with our two good guests. Later, the president elect is set to hold a press conference, 11 00 a. M. New york time at 4 00 p. M. In london, that will be most interesting. From london, this is bloomberg, stay with us. President obama if every economic issue is framed as a struggle between a hardworking right middle class and an undeserving white middle class and an undeserving minority, then workers of all shades will be left fighting for scraps while the wealthy withdrawal further into their private enclaves. Tom from chicago, the president , sums of the president should have given a speech from the ofl office, i like the idea going home to chicago, his prerogative after eight years in office to give a farewell address. It was really something last night to see that come it harkens back to George Washington in history of going important speech terrifically important speech. Francine many president s in history but what he was so good at doing is capturing a moment. Also giving love to michelle obama, a lot of people were moved. Europe, where probably most of the people are saying he has gone that it from the oval office but it is very american, joe biden said he wanted to go home with his wife. Very human. Of the motion as he spoke the Vice President , we are honored to have sebastian from the council on Foreign Relations d richard. D does the market care about the political ballet . I understand about the politics of brexit that do we care about the political ballet in washington or do we hold it . Richard we should care because the decisions about policy will affect growth in short order, and 2017 and 2018. Any policy mistake or model will be seized on by markets. They are focusing on what fiscal picture looks like come hell obamacare is unraveling, the sector affects that would have appeared not just ballet, entertaining as some might find it, it is very important. Francine we need to look at the relationship between donald trump the ceos he has been tweaking about, domestic and International Going to trump tower, will this continue . Sebastian if you are the ceo you have to deal with the president , that will continue, of course. The issue more is his relationship with other government institution, does he respect an independent judiciary and Federal Reserve . Businesses will try to of course be close to the administration, they always are. Tom on friday we attribute bill gross and my colleagues spoke of industrial policy and what donald trump is doing with wenta, etc. And mr. Gross to italian industrial policy of the 1920s in mussolini, it was quite a moment to finally talk about some form of light fascism if you will within industrial policy, do you detect that within the United States, is there a risk of a harmful industrial policy . Absolutely, tried to make rules about business and when you can invest abroad or not and what the rules are, if you do that by tweaking and singling out individual companies because they have a factory in mexico, that is a terrible way to make policy, you have to have a transparent rule of law based level playing field. Francine it is working. Politically perhaps but not substantively, businesses have to make decisions over the latest tweet, that is terrible. Tom because of time, i want to talk about germany coming out of the war and what you observed as a child, but we do not have time, we will do that another time, you have a fabulous book capturing the moment of the fed. R we had a 1951 moment where we risk fed independence, will we go back to truman and the yelling and screaming in 1951 . Janet yellen or yelling and screaming . [laughter] the story to remember from the treatment time is the fed chair from the depression and the second world war, truman said in 1944, chairman, i know you want to make the fed independent, i do not like that, you will not be german anymore, they said i will still be a governor, is has not run out, he stuck there and drove the famous fed treasury accord of 1951 which reestablished independence on the backseat. Tom risk right now . , pressure on the fed from donald trump is a real one and i think janet yellen faces a situation where she will not be reappointed chair and Stanley Fischer will not be vice chair. They should consider remaining being on the board of the fed as a government thats governor and exerting influence. Tom thank you so much for a short visit, looking forward to speaking to you in new york and london again. Later today, in our next hour, the world in disarray, Richard Haass of the council of Foreign Relations, he has been discussed to be within the Trump Administration. A little bit to talk about this morning with ambassador halls. Haass. Stay with us, this is bloomberg. Francine tom keene and francine in london for a week and next week we will be live from that most. Davos. Tom anyone striking . Francine the strategy conference underway in frankfurt and strategy recommendations for the year ahead, matt miller is there with matt miller is there. Here with the chief european economist, let me ask you about the european economy, we have had a weaker pound, a weaker euro, Lower Oil Prices, shouldnt these things because for European Growth . Shouldnt it start to pick up now . We are expecting still above trend of about 1. 5 Going Forward because it is above trends, we take some solace in that. The problem is, trend growth is too low, trend growth in our opinion for the euro area about 1 , reflecting a week demographic but all the structural problems we know so much about. Why cant European Growth be stronger . It has been supported in the past by the weakness of the euro and falling oil prices. These are events that in big picture, they took place two or 2. 5 years ago and even though given the inflexibilitys behalf in europe, they feet to stronger growth with some lack. They feed to stronger growth with some ;ag lag. The impact of the weaker euro and Lower Oil Prices is quite dissipating rapidly, we are looking to the emergence of some selfsustaining momentum in some parts of the euro economy, notably germany and spain which have done several forms, getting reductions ineing unemployment in spain which is boosting Household Income and a leading for strengthening of consumption, at the same time, the countries that have been laggard in reforms, france and italy, they are countries who are still dependent on policies. Given the scope from Monetary Policy to provide rates have been back in the impact of asset purchases has reached its peak. We are looking to more physical policy support in those countries to sustain demand. , tom what about shopping keene is in london and will probably stop by paris, he will go into a store on sunday, i still cannot do that in germany. Europeans do not like to spend money, do they . I think that is true but although by german standards, they may be quite weak in terms of their willingness to spend in the anglosaxon way. We are seeing sustained consumption expansion on the back of the fact that real wages are rising and unemployment is low. That is an important element of the resilience of the economy, changes we will see in france, in a world where there are a lot of challenges for europe, economic and political, it is easy to be dismissive of the scope and evidence in many countries. Myself i have described france as laggard, the reforms in the labor market, other Structural Reforms we talked about in the second half of last year have to go into effect and may lead to benefit in the coming months. Matt i have to toss it back, i do not know if tom can get a chateau in switzerland, i will toss it back to you. Francine thank you, this is bloomberg. Tom good morning, from monday is a bloomberg surveillance. We will be at the World Economic Forum Meetings here next week in davos. Uneventful week in london but to new york city for first word news coming here is taylor riggs. It was Barack Obamas last performance in prime time as president , he is the farewell address in chicago to draw contrasts with his successor. He called on americans to preserve his legacy by embracing inclusiveness. Ama every economic issue as framed as a struggle between a hardworking white middle class and an undeserving workers of all shapes shades will be left fighting for scraps will be wealthy will draw further into their private enclaves. He says donald trump has been briefed on claims russia is compromising information has compromised as compromising information on him, u. S. Intelligence officials have an subsisted reports according to some that the government compile potentially damaging personal and Financial Information, donald trump had a response in which you are, great news a total political witchhunt. He holds a News Conference today which you can watch live beginning at 11 00 a. M. Eastern. Donald trumps choice for secretary of state will tell lawmakers russia poses a danger to the u. S. , confirmation hearings today for Rex Tillerson. He has been criticized for his close ties to russia and president Vladimir Putin. Have chargedors three former traders at the heart of an investigation into the regime of currency rates rigging of chrissy rates, they for in u. K. And did work jpmorgan, citigroup, barclays, an indictments say Biggest Online chat rooms called the cartel to manipulate prices of currencies. British authorities have decided not to bring charges. Global news 24 hours a day, powered by more than 2600 journalist and analysts in more than 120 countries. This is bloomberg. Francine onto Corporate News, airbus its first deal of the year, 35 jets from aviation capital. The move comes despite concerns that 2017 will be a tough year for aviation on slowing sales and growing backlogs. Guy johnson joins us live from the airbus annual conference. Over to you. Guy thank you. A little fact to start, airbus employees employees 1000 people in alabama, making airplanes in the United States. Does that change the politics . Good morning. As i say, 1000 people in mobile, alabama, does that insulate airbus from a donald trump tweet . Right, new president is you are supposed to support the u. S. Economy and u. S. Jobs, a matter of fact we anticipate because we decided a few years ago to invest massively in the assembly of airplanes and we started the operations last year. We delivered 17 aircraft to American Consumers and are really on track to move to four aircraft per month by the finish of 2017. We deliver on our promises and we create american jobs in mobile alabama. are you planning to meet you president elect . , perhapst personally tom will have this opportunity but i think the president has probably other priorities to do with. Guy he seems to be focused on Corporate News at the moment but he has met bernardo know, is there a grapevine among the french executives that they talk to each other about what they learn. Not yet but i am sure i will talk to him and he will debrief me. Toare extremely sensitive value. We have decided four years ago to invest in america, not only because it is a big market for us but this is the biggest place to be regarding aerospace. We create jobs. On top of that, you do not know that we are probably procuring more u. S. Equipment then our competitors, boeing. Our biggest supplychain contributor is american suppliers. Afternoonll see this the handing over of an aircraft to iran, do you think that may cause political problems for you in washington . I do not think so because we got the international agreements, licenses, especially the licenses from the u. S. Administration. This was quite long of a process but we went through it. ,e abide by all regulations international, european, and of course american. Guy do you expect it to be more problematic . An issue for licenses to deliver commercial aircraft to iran . We are International Player and iran is a good market and will be a good customer for us and boeing, we create jobs, we continue to apply with international our market is not europe. Around, we supply a lot for america. We will see how it develops. We intend to continue the way we proceed, talking to the European International and american administrations. Guy lets talk european politics, airbus is a paneuropean company, you make this aircraft around the continents, different parts and hamburger and other places, and incredible operation to do what you do, Marine Le Pen is not a paneuropean politician, have you modeled what affects a victory for the french elections and what it could mean for you . We have a lot to do, you are right, we are deeply rooted in europe and we are international, just referring to our 1000 jobs in mobile and we are very pleased to be in china. Beyond that, we have to face political environments and political decisions. , we aree the u. K. Talking about the french elections because i have no Crystal Globe to tell you who will be the next president in france. We have brexit, what will be the impact of brexit . What is important for us is that we are deeply engaged in maintaining our operations in the u. K. And what counts this two parameters do we have friendly environments from a business perspective, i believe in the u. K. It will remain business friendly. Second, what is the Worldwide Growth . Our market is directly coming from the Worldwide Growth come in other terms, if the growth is about 3 per year worldwide, we will achieve 5 growth. You save the a380 program without creating new engines . The best way first of all is to continue to convince our customers that such a large aircraft come instead of being seen as a commercial risk, is a huge opportunity, 60 having flown are ready to make additional efforts to change their plans, flight dates or to pay more to fly on it be playing. Flying on the plane. The error does the market is for bigger aircraft and we have decided to go down from two per month to one per month, reducing our costs, not worrying unduly on our profitability. We have to improve the aircraft as we do on each and every family but for that we need better market conditions. Whether keene wonders on longhaul flights as ive sitting over the Pacific Ocean, are four engines better than t wo . A380 is better than any other aircraft in the world. You. Back to francine do not know what to make of that, great interview. Tom political answers, you know he has been asked that question, this is a big deal, four engines over the Pacific Ocean is what we are used to and airbus when they are leading technology with three engine manufacturers, rollsroyce, ge, trying to convince us that i am going over the pond and the big pond with two engines. Im looking out the window going, ok but they are doing it. A beautiful answer, a great interview. Francine if you are the airbus coo, are you concerned donald trump starts tweaking boeing tweeting boeing, with the seriously spur competition from anything outside, if you manufactured outside the u. S. , you lose out . It is a question of rule of law, you have to rely on the legal system and environment and deal with these tweets as they come along in context of the legal system that exists. That is a factor that will be unwelcome. Tom we will talk about management of money. Coming up later today on Bloomberg Television and on Bloomberg Radio, the secretary of state nominee mr. Tillerson of exxon mobil, an important interview in the night 00 hour, look for a today. This is bloomberg 9 00 hour, look for it today. This is bloomberg. , there is oneumb to and have been worried about frigid temperatures in davos. Thank you for exploding fahrenheit and celsius explain fahrenheit and celsius, i have been looking at celsius and thinking was very bright and has been dressing for arctic cold. Francine he is expecting to show up tom and ugly american this morning. Francine zero degrees fahrenheit is 17 celsius. Chill. Dress for Arctic Francine you look like a cosmonaut. Lets talk about the World Economic forum next week, just release the global risk report. It says trends such as rising income inequality and societal polarization trigger political change in 2016 and warns that this could exacerbate global risk. If urgent action is not taken. We are with the head of Global Competitiveness at the World Economic forum. Richard lacaille is still with us. , the headlight is extremely strong, underemployed, under threat. The main risk is having a society which are divided, you see with brexit and donald trump , how can a leader in unified their country . A task for a real leader which requires a lot of measures that will decrease the polarization between and reaching out to the community that has been disaffected and it did not feel like they are represented in the political debate over the past years. Over the past year, we have seen more of a pragmatic debate, many pragmatic solutions, Many Political debates were more focused on Real Solutions and less on the emotions people were experiencing. They the switch from right medic. From the right medic pragmatic. Dovetailing with your important report, my slogan this year, populism trumps davos. What we are seeing in the netherlands and in french elections, you speak of increasing polarization of societys. S man and woman solution to this, how do you translate that to the people out there . Davos have the discussions. Ill be incorporating everyone in terms of the solution we are looking at, we are looking at in particular addressing income inequality which will be one of the major focuses. Tom and the u. S. , senator sanders and mr. Trump Reigns Supreme and donald trump to be trophy, a populism that is not represented in daovos. What will you change to address populism within davos . Many leaders came on a populist tickets. Francine a shameless plug, we have a panel on populism, this is what tom is trying to get to come on wednesday morning. Tom it is a regime shift. Francine i know, will it feel different this year, will davos feel different in the risks we will talk about will not be in the room . I think it will feel different this year, i expect it to feel different although many of the leaders who are coming came on a populist ticket so people will be in the room. We do invite elected leaders. , you willrd lacaille observe this from a distance, how does the will to Economic Forum state relatives and given the upper of populism, what do you need to hear from the will Economic Forum . Richard only the open strokes of populism, no coherent economic response tom true but we have had an effect, try fifth avenue in new york city to see the adjustment. Richard no effect on those who voted for something different. And no plausible economic story that will lead to a considerably better outcome. In terms of investors who should focus on the fact that this is a could point davos us in another direction, gets free trade, putting the brakes whate trading system and we have lived with for the last 2030 years which would be really bad. Francine i was keen to talk the other onesks, was the environment dominating the global landscape, risk, with the Incoming Trump administration, there will be less sustainability, friendly. You also worried that society is not keeping up with the pace of technological change. Who will lose the most in this . Environmental risk, no signs there will be a reversal in any way with a Trump Administration, it needs to come in and we will see what happens. Meetings have not shown a decrease in commitment to the Paris Agreement at least some initiatives happening now as well from the private sector in order to address some of the environmental risks. Not concerned in a major way about the environmental risks. Maybe the change in journal will not be fast enough. We need to have more action to address the environmental risks. On track and not reversed. On the societal and technological issues, there is as threat there is a threat that technology has such a profound impact on the economy and society. Many of the populace debates, that we may work hard to benefits explain the benefits of society and guard against the risk for better governance tom thank you so much, with the World Economic forum. Head of their Global Competitiveness risk forum at the World Economic forum. First, come back but this afternoon in new york, 4 00 p. M. In london, president elect trump will have a press conference, 11 00 a. M. New york and 4 00 p. M. In london. This is bloomberg. Tom good morning everyone. From london. Lets get to the business lash in new york, here is taylor riggs. And ended to the three decade rally in bonds could be near, he says if it goes over 3 you could say goodbye to the vulnerable market and produce a 3 yield will likely be happening measure. More job cuts at walmart, according to persons familiar with the matter, hundreds of persons of limited this month as the Worlds Largest retailer. They have been looking for ways to cut costs went rising wages are happening for employees and the cuts will hit the Human Resources department wall street journal says which should be outsourced. Francine thank you. Lets bring back lets bring it back to brexit, theresa may considered a unilateral pledge to allow 3 million european citizens to reside in the country to remain after leaving the eu. With us is Richard Lacaille at state street mobile advisors. If we leave the european living here to one side, this is not the issue now, though it would give people confidence. Lets go to my chart. How much more weakness will we see in pound . The blue dotted line is the projection of hsbc, with a clean brexit goes to 1. 10. Richard brexit depreciation but a lot depends on the news flow but if you get the indication of a clean brexit and we have yet to see the benefit of sterling feeding through to the economy at this point. Fx market will test sterling further but it is a cheap currency. It has been through to performance of the economy. Francine you look at the ftse and it is at a record. On the back of Commodity Prices and cheap currency. Free pricing the ftse based on sterling which is logical, you may see more of that, what we are waiting for is an improvement based on sterling getting cheaper. That would counteract this send in the gears affect of trade, chip questions, and the margin effect that could have at the company level, Profit Margins will decline with trade areas. Tom your expertise is quantitative finance, everybody focuses on black swans, where are the white swans for the United Kingdom . China is an area many people are watching, in plain sight, the credit bubble needs to be gradually diminished. As soon as the government is doing that, it sees adverse impacts. It is a problem how they get from a to b. And time is short. These changes need to happen quickly. There needs to be a soft landing but that is one of her biggest grey swans. Francine what it happen this year thats what it happen this year would it happen this year . To the back end of this year. Francine coming up, we speak to Richard Haass, council on Foreign Relations president who has a new book out and we will talk about donald trump and his relationship with china and talk about the immigration and world trade. And also theresa may and donald trump, is it a unique kind of friendship . This is bloomberg. Farewell torning, quiet. Emerging markets mexico and adapt fasthey must to currency depreciation. Farewell, new york city. Hello, washington. The president elect in the press. They will meet to tweet. Farewell, president obama. Ofhard haass on the crisis the world order it is a world in disarray. We are live from our World Headquarters in london. I am tom keene, with francine lacqua. An eventful week. All eyes are on the inauguration of donald trump. Francine today will be one of the most complicated hearings. There were interesting things to say. Tom and the russian thing and the news flow will be extraordinary as well as lets do the data check right now, which is an emerging market tone. Lets get through this quickly. Euro, i dont care. Nymex crude, 51. 18. Weaker oil over the last 48 hours. The vix, 11. 50. A weaker peso, and much weaker turkish lira today as well. Brent crude, weaker. Francine i want to start with the turkish lira hitting a new low. There is a lot of research out the turkishg about lira, about how something has to happen for the central bank to react. Equities are down a touch of for that News Conference with donald trump. Raw materials up. You mentioned crude oil. Remember, crude oil, you see a lot of the cuts by opec taking effect now. Lets go to first word news with taylor riggs. Taylor barack obama returned to his adopted hometown for his Farewell Speech as president. There ismericans nothing wrong with a healthy debate over issues. Pres. Obama democracy does not require uniformity. Our founders argued, they quarreled, eventually they compromised. They expected us to do the same. But they knew that democracy does require a basic sense of solidarity. Taylor the president warned against turning activity against turning every economic issue into fights. According to people familiar with the matter, u. S. Intelligence officials have unsubstantiated reports the russian government has damaging personal and private information about donald trump. The president elect tells a News Conference today the president elect holds a News Conference today. Meanwhile, trump prospect to be secretary of state says that confirmation hearings again today for former exxon mobil ceo Rex Tillerson, who has been criticized for close ties to russia and russian president Vladimir Putin. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries, i am taylor riggs. This is bloomberg. Francine . Tom . Tom in washington, kevin cirilli, who has weeks and months and quarters of experience with the president elect. The news flow is extraordinary. Twitter last night was absolutely original. When the press today asked the president elect about russia, what will you suggest will be the response from mr. Trump . Kevin two things. He will double down on the tweet that he tweeted last night regarding these new reports about this unverified intelligence briefing. I think he is going to be combative with the media. The second point i would raise is that i think he is also going takeve to make a point to what Rex Tillerson is going to say at the confirmation hearing for secretary of state and say that he is not going to have to oh anything to russia. He has to walk this fine line in terms of going on a bit of the offense with the press, but also taking more of a tough line and a tougher stance with russia. Tom this is going to be extraordinary. Francine so you have the president elect and the person he wants to be secretary of state presumably not necessarily on the same page. One has to look past russia because he needs to be confirmed, while the president elect continues to support russia. Kevin they are maybe seemingly not on the same page, but behind the scenes the transition forces that i have been speaking with as late as last night as all of these developments were breaking are telling me they believe everyone is on the same page, and that you are seeing a more cohesive message and trying to win over and hes the concerns of people like senator the mccain, and ease concerns of people like senator john mccain, who has taken a critical rhetoric in regards to russias ciber meddling in the election. Tom i say this with Great Respect for the washington media. Press withina normal behavior, or do you begin to see american and white press beginning to adapt and adjust to this original president ial discourse . Kevin already i think we are seeing signs of adapting and adjustment to this to the president elect and to the apparatus surrounding him. The media. Ot just in look at the markets. I remember on the campaign trail when a single tweet about the economy there would be significant market reaction. Of course anytime he is tweeting about a specific company, you do isice that the market reacting, but those reactions, i would argue, has since been recalibrated and readjusted as we approach closer to january 20. Tom kevin cirilli, thank you so much. Francine more investors are now trading out the rhythms to track trumps tweets. He mentions a company and they sell. What if he says something nice about them . It is complicated. Tom it is, located to say the least, which means it is a good time to speak with Richard Haass with the council on Foreign Relations, who has been working diligently on a wonderful new ook, a world in disarray. Congratulations on a world on disarray, looking at the crisis of the old order. When you finish up this book, were you rewriting were you writing a new book . Richard when i have people read the first draft of the book, several people said you are awfully negative. By the time the book came out, no one was saying that anymore. Tom i want to go to a quote in the back of your book which is absolutely fabulous. It is amazing, ambassador, how you got out front of the Great American debate. I am going to butcher my latin here. Is that the ultimate risk here, that we have an executive branch that will do its own thing . A real riskis because the United States is the ultimate foundation for the world, and an awful lot of countries gauge their own behaviors on us. If we are suddenly judged to be unpredictable and unreliable, we run the risk of creating what i would call a selfhelp world, where everybody else wakes up. And rather than deferring to us and how the United States might react because they can no longer predicted, they decide to take matters into their own hands, in some ways the way the Saudi Arabians did when they invaded yemen. We do not want the South Koreans and the japanese having their own policies on north korea and china, or the North Koreans having their own policy on russia. If the United States is not steady and predicable, we cannot expect those who have historically relied on us to continue to do so. Francine help us in trying to understand what 2017 american foreignpolicy will look like. Richard the inbox that will greet the 45th president is about as daunting as it comes. Look at the unraveling middle east, a europe that is unimaginably unstable compared to where it was as recently as three years ago. North korea on the precipice of having nuclear weapons, with weapons that can reach the United States. You have a rising china and the 19th Party Congress coming up this october. You mentioned the uncertainty, the lack of rules and disciplines for dealing with cyberspace. We could go on and on. The entire Global Trading regime is in disarray or worse with the demise of tpp. You have to navigate all of this against the backdrop of a campaign and the transition that is simply added to the uncertainty. My advice on a lot of this is that a new administration should not begin by shaking things up any more. They have already inherited quite enough uncertainty for anybody. Isne is foreign to foreignpolicy decided by a tweet . Donald crucial because trump labeling china is manipulating foreign currency or tweets about russia do you need something more official to provoke another country . Richard when i studied at oxford, twitter had not yet been invented. You are going to have an administration very soon. You have hearings today for Rex Tillerson. He and general mattis and others will be in a place where they can appoint their entire teams. You will have an interagency process. The challenge will not just come from the president s intensity to use social media, but you have any number of Power Centers in the white house. You have a chief strategist, a Senior Advisor in the soninlaw , a National Security advisor. That you have a cabinet orchestrating all of this. , sole stay on the same page there is no daylight between a secretary of state halfway around the world and the president with the spoon in his hand. That is going to be a real challenge. Tom this is a wonderful time to speak to Richard Haass. We will continue this discussion. , histoday, mr. Tillerson confirmation hearings in congress. We will look for that in the 9 00 hour. We continue with ambassador haass, a world in disarray, a mustread on the new world order. Tom it is most eventful in washington, d. C. , kevin cirillis washington, d. C. Good to speak with kevin about the changing of the guard. We say good morning to you from london and new york. Francine lacqua and tom keene in london. Joining us from new york, Richard Haass on the council of Foreign Relations. , aas an important new book world in disarray. Ambassador, mr. Tillerson will speak. I hear the old guard of the talked about as being part of this administration. Have you been contacted by mr. Tillerson, and would you feel comfortable joining this administration . Richard the short answer is i have had several conversations with people in the administration, including mr. Trump, general flynn, but not at all about serving in the administration. It will be about how to operate the National Security process. I have not spoken with Rex Tillerson, and i think it is a long journey, shall we say, between where i am here and the possibility of my serving if indeed i were to be asked. Tom some would say the Trump Administration needs an old order represented by you. I think of Nicholas Burns at harvard. Should the gop and their foreignpolicy establishment, dead set against mr. Trump should they forget about that and get on board to give us a more measured foreignpolicy . Richard as we were just discussing, i think the world in many ways has served the interest of the United States well for the most part over the last three quarters of a century. It has been an extraordinary time for this country. So i am not in favor of disruption for the sake of it. The voicesestion is arguing for elements of consistency and pragmatism, whether they are going to be welcome and whether they are going to be needed. Francine we talked a little bit about the book on the broad level. You talked about china, russia, and Rex Tillerson. Is the one key ally that the u. S. Cannot afford to lose . Is a china or is it someone else . Chinad i would not call and ally, but it is the single most important relationship the United States has. When you think about the for when you think about the 21st century, it is the one relationship of such consequence. Not picking a trade war with china instead focusing with china probably more than anything else on north korea, trying to head off what could be the greatest Global Crisis of the moment. More broadly, i do not think this is a moment in which allies play the same role they have historically, because so many relationships are not purely friend or purely faux. Or purely foe. The dynamism will be challenging for diplomats, who get up in the morning and put on their pants and shoes and will not be entirely confident about what is coming into the inbox each day and counting on others to work with us. Francine you have definitely not been called by the Trump Administration or the trump team . Richard we have not even had a conversation about the possibility of my serving. Francine if you were to be asked, what advice would you give the trump team on china . Richard i would say the finessing of the relationship between the United States and china and taiwan has worked very well. This is the most powerful National Issue in china. We should continue to finesse it , not focus on chinas internal developments. We should not take a trade war. They are not manipulating their currency. We should focus on the south china sea, on north korea, and various global issues from cyber to climate change. Being on the same page with china would make a real difference. Tom on page 95 of a world in disarray, you speak on nato and the wisdom of nato enlargement. Help me here with the old order, the trump order, and mr. Putin. What is your prescription for the discourse with russia . Richard i would not enlarge nato further. I see no candidates in ukraine or georgia. I dont believe that would make any sense. Treatr. Putin, i would him with respect, but we also need to be tougher. I would do more to help ukraine. I would be open to sanctions relief for russia, but only in exchange for meaningful changes in russian behavior. Tom this book is going to be a treatise on international relations. Richard haass, very simply here you are teaching a group of kids in school on the pivot. Where do we pivot to next . Richard we need to stay involved in the world. It matters what happens out there. There is no such thing as local anymore. Borders do not count for a lot. I would keep the focus on asia. That is where the people are, where the wealth is. That is where the 21st century, the history of it, is going to be written. Tom a world in disarray. I think this is the right book at the right time, a treatment of the jumble that is Foreign Policy. Saying when hes started writing, people were saying, you are way too pessimistic. Tom we are going to turn to technology in london. Too much to talk about, scluding the president elect proclivity to get out on twitter. From london, this is bloomberg. Tom bloomberg surveillance. On economics,bout finance, and investment. My inability to figure out centigrade. It is all there. Joining us from london, he is with edward hyman of evercore isi. They have a terrific conference coming up. What a great time to speak with ken about the president elect and twitter. Every time donald trump eets, yes go, i think a star as what it does for twitter in terms of overall traffic and overall monetization, i do not think it has much impact. Francine but it would mean that it is not going anywhere, right . There is concern that if they lose too much they may have to spin off. It is the trump channel. Ken i think it shows its power. When you look at the number of when you look at the power that twitter showed during the election, it is clear the power of the medium overall, but i am not sure from a monetization standpoint it makes any difference right now. Tv go you can get this normalized chart on facebook and twitter. Facebook in the light blue, twitter in white. Down, down, down to that massive underperformance. You have a hold of this. Will you see revenue that makes you more optimistic . Basically you are at a point where you are not really growing. Where basically seeing the same thing in the next year. What happens beyond that . . Om pricing is simple, right they are dressing this thing up to sell . Ken they are certainly cutting costs. With two rounds of restructuring, that will hopefully get the business to a place it can look more attractive on a multiple to earnings, etc. But for right now, it still is a fairly highpriced stock without any growth included. Francine how can they monetize it . We have been exploring how Donald Trump Tweets on a stock, the stock goes down. Ken to some extent, he is tweeting on twitter. That is how he gets the message out the door. From there, you have everyone else picking up picking it up and expanding on it and creating something that is more consumable for the broader public. For twitter to do something more in terms of creating public that can allow longer message that can maybe incorporate video, make it something that people want to engage with the platform directly, then, sure, there is the opportunity to monetize. Francine thank you so much. This is bloomberg. Wow, x1 has netflix . Hey, drop a beat. Show me orange is the new black wait, no, bloodline how about bojack, luke cage oh, dj tanner maybe show me lilyhammer stranger things, marseille, the fall in the same place as my basketball . Narcos, fearless, cooked the crown, marco polo, lost and found grace and frankie, hemlock grove, season one of. show me house of cards. Finally, you can now find all of netflix in the same place as all your other entertainment. On xfinity x1. 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 even download from your x1 dvr and watch it offline. Only xfinity gives you more to stream to any screen. Download the xfinity tv app today. Francine beautiful london, london city. A little bit later on, we will thee mark carney governor of the bank of england, being quizzed on his plans. It turns quite ugly quite fast. Tom very good. No question about that. Sterling holding on. Right now, to first word news with taylor riggs. Taylor president obama said farewell to america last night, drawing a sharp contrast with his successor. He warned against turning dark enough he warned against he warned against turning every economic issue into a fight. President obama also acknowledged that despite his historic election eight years ago, his vision for the country will leave the white house with him. U. S. Officials the russian government has been said by u. S. Officials to have compiled damaging information against donald trump. Trump tweeted that the reports are fake news and a total political witchhunt. Volkswagen is closing in on a settlement of the u. S. Investigation into the emissions test. The german automaker would pay would plead guilty. British Prime Minister theresa may is facing calls to disclose who manages her financial interests. May revealed she put her personal investments in a blind trust. The bbc has been told the public has a legitimate interest in who runs the trust. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more i am taylorntries, riggs. This is bloomberg. Francine . Tom . So much. Or, thank you he is just off the bus in new york city. Is in new york city. Vegas, and in las am in a room and i say, tell francine i love her, and he figures out how to tell is it going to work . Ken it is a very big deal. We spent time understanding better the technology, how important is voice overall to what we are talking about with technology. It is probably one of the things we will cover tomorrow at the conference. We are at the beginning stages of this. It is almost how we are thinking about modeling search so many years ago. It is extremely exciting, very scalable. Tom that is my point, it is scalable. There are eight ways to go here. But in terms of search, does it begin to impinge against google . Does it wait for them to get in the door there . Ken it does a bit. When you look at amazon, that many of those searchers are going to be retail searches, charging pers transaction not that google will not figure it out. Who will certainly figured out the monetization of mobile, which was a challenge for them at that time. For now at least, when you look at what amazon is doing with alexa, and not only in terms of selling it within echo and its own devices, but opening it up to businesses and through its cloud web services, you are seeing a vast adoption of it. You can basically talk to alexa from many points in your daily routine. Francine how many people do that . As well, but i do not use it, i play with it. This is the point, that it is great and people who are very interested in tech will want one of these, but tom and i will we be able to use it . Ken i do not see it reaching the saturation of the smartphone, but i think what we will see is the integration of alexa. If you think about the intersection of the internet of things that we hear about an artificial intelligence, those two things coming together so that you have things that are smarter, that can listen to you and make your life easier, it will be an operating system to pull that together. Just the way that google launched android and android got used by all kinds of manufacturers, that is one way you can think of alexa gaining traction. It is very exciting to think of right now, and it is early. Francine i do not want to be a skeptic. Tom but you are. Francine getting traction is what . One person intent having it, or one person in five . i would say at one point by 2018, 30 of our transactions will be through voice. Why echo how comfortable is it why . Is faster to speak it than to type it. Seen a chartnever like this in the history of security analysis. This is amazon 15 years ago, and then just a linear moonshot. Slope matters, and that is a gorgeous slope. Company, if i look at a these15 billion, do distractions move the needle for amazon, or are they just the dalliance of mr. Bezos . At amazon,ou look right now the operating income is at about 5 , clearly much lower than googles. But when you look at the businesses that amazon is moving in and the investments they are making, it is very similar to googles. Amazon is trading a third trading at a third of what google does. These investments certainly depress the margin line, but what we are seeing again and again is that they actually are having positive results. I think people believe in the investments. They are very excited about aws and amazons video product to some extent. And retail continues to be a juggernaut for them. Francine do you care about grocery deliveries, fresh food . Box to deliver things that are refrigerated. Now,at this point right you need to understand the data in order to deliver the performance. In anyou wait too long of these areas we are talking about, then someone else will move in and gain a head start. Their outcomes are going to work better and they will be able to deliver better product performance. They want to make sure that all of the businesses that they want to win at, that they are there now. Where do you buy and sell on amazon . It is our top pick. We did in outlook piece a few weeks ago, and it is our top pick. Tom do you think the grizzled, just off British Airways flight look is good for ken . At the absolute back end of the 747. Francine tom is really into fashion. Tom you look great. We really appreciate ken sena coming in, from evercore isi, from their conference in london today. Francine coming up, we will hear from president elect donald trump, with a News Conference. We are taking bets on how long that News Conference will last. Tweet us ideas. This is bloomberg. Francine live pictures from new york. This is not manhattan, this is queens, tom. Beautiful, gorgeousity. Now lets get straight to the Bloomberg Business flash with taylor riggs. End of a three decade rally in bonds could be near. It is predicted that a 3 yield is likely this year. According to persons familiar etihad wants to buy superjumbos. Walmart, hundred jobs will be a limited this month at the Worlds Largest retailer. Walmart has been looking at ways to cut costs. The wall street journal says that the Human Resources should be outsourced, according to some executives. Francine lets bring it back to brexit. Has tomter may keene really wants we are joined by rob carnell. How much are you expecting to find out in the next two to three weeks about negotiations about transitional agreements . It is very clear theresa may wants control on immigration, and so then we start negotiating. Rob she cannot have both. That is the simple problem here. Until they evoke until the invoke article 50, and there will have to be Supreme Court judgment on that and whether or not parliament will have to get involved. Until then, i just do not think we are going to hear anything terribly concrete. Francine if we have a clean , a real brexit, what does it mean for the pound . Does it go lower . Rob yes, it it does. Quite a lot. We have a substantial deficit that needs to be funded by an awful lot of borrowers putting money into the u. K. Natureere is a political to it. Bring up the chart here. We have shown this since june 23. The purple line up top is simply goods and services. The money flows are down below, and it is ugly. Rob carnell, how much will this be mr. From how much will this be mr. Cartys focus mr. Carneys focus . Rob it will be one of the things he has to look at, but he has a whole bunch of things he has to look out over the next 12 months. One is inflation, which will rise sharply. Does he tried to raise rates to keep the capital flowing in and stem inflation . All the indication is that he tries to keep things ticking along. Tom that is the trilemma. The what is your interpretation of how the bank of england acts versus other Central Banks . What is unique about what mr. Carney will do . Rob what they have demonstrated in the past is that they have more of a growth focus than an inflation focus. Typically, they do not worry too much about the currency. So the currency goes, inflation will go, they look through that. They will see it is a temporary shock, perhaps a longlasting temporary shock. Tom where are you on sterling . Where is sterling going to go if he lets it go . Rob it is going to fall quite a long way. Isncine inflation he looking through it and you are suggesting he is right to do so. But if it hits 3. 5 , people will start feeling that here it people start people will start feeling that. That will affect Consumer Spending. Rob it is going to affect Consumer Spending this year anyway. Is goingantime, there to be a lot of newspaper articles saying there is a real wage screens a real wage squeeze. There is a real standard of living problem. Is the political response to all this economic mumbojumbo. Francine you try to negotiate to the best of your ability. Is there something theresa may needs to learn from David Camerons negotiating skills . Rob David Cameron actually got, on the face of it, not a particularly bad deal. Everybody hated it at the time, but it was not enough for the people who went out and voted. The principal thing they wanted was control over immigration. That is what theresa may is going to develop. We will lose access to large chunks of francine in five years, what does london look like and what does the u. K. Look like . Rob in five years, a lot can happen. Europe can reinvent itself. London is pretty good at doing that itself. Period of be a reckoning and of substantial pain at the time. Tom we will come back with rob carnell and get the fed. He has been a fed watcher for many years. Later this morning, in new york, in washington, actually, mr. Tillerson his confirmation hearing as secretary of state. That will be something. Look for that in the 9 00 hour. Radio and television. Good morning. Odd markets. There is a quiet. Equities stable, the vix lower. This is a huge deal for dollar, mexico. Further deteriorated, and turkish lira is worse. 3. 88. It was 3. 83 earlier this morning. There is an unraveling in these two nations. Francine coming up shortly is bloomberg daybreak americas, with david westin, jon ferro, and alix steel. David, you look at the crossover between big oil and politics. David exactly right. There are several big stories, but one of them is the confirmation hearings as we look at the second day, the Rex Tillerson confirmation hearings. We have john hofmeister, formerly the head of shell. We will talk to him about what Rex Tillerson is like and what he will be like as secretary of state. Senator frome, the south dakota. This is a much more important job given the economy. Tom david, thank you so much. From london, he watches the fed. Rob carnell is dedicated to being the fed watcher in the city. He is with ing, their chief international economist. E knows the fed has changed within the debate over the future of the fed and the reality of fed policy right now, are they linked . Is the discourse in the fed the same as the discussion about when they are going to raise rates . A good question. There is clearly a lot of questioning about what the fed looks like in a years time, whether the nature of the fed, whether its independence is going to look the same. The new regional fed president is coming in. Strongppear to be no hawks on the regional side, but they were never really in control. Francine i take myself back to where we were january 11 of 2016, and the fed was saying one thing, and the markets were pricing in something completely different. At least this time, the two seem to be more alike. Rob they are heading in the right direction, or at least in the same direction. At the moment there is perhaps denial is too strong a word. The fed promises to do stuff and it does not often deliver. This time around, we have a lot of fiscal stimulus possibly coming. Tom lets go to the single best chart now. We had we have shown this. Dot chart. You can see the disappointment. Up, up we go, to the new elevated trump reflation. Is that a yellen reflation as well . Robin i am not so rob i am not so sure. Really what this was all about is the expectations that the fiscal spigots are going to be open. Perhaps there will be deregulation and tax cuts. We have seen that Small Businesses love this. It is off the scale. People do think tom but that is a political statement, isnt it . Francine and lets go back to that. I do have a chart looking at Small Business and the conditions and how they see it Going Forward. This is critical. If you break it down, you have business expectations, hiring, and jobs. It does not follow through or increase as much as business expectations. Rob the thing that has really been missing i think the labor market looks all right. Really been missing from the u. S. Has been investment spending. That is possibly worries about taxes, policy, where regulation is going. All of those things at least appear, if you believe the rhetoric, to be heading in the right direction. See fiscal do not spending coming through imminently, that could take a while to come through. That brings investment back up. Francine thats right, animal spirits. What does that tell you if you have trade wars, or even if you have tariffs going up . A lot of these Small Businesses export. And they import. The supply chain is not what it was in the 1950s. Rob there is more exporting. There is much more exporting going on. Sebastian joined us in the last hour with his wonderful book on alan greenspan. You are the ultimate fed washer the ultimate fed watcher in london. What happens if the feds ways to a quarter point, quarterpoint, quarterpoint psychology. Rob we have a different situation. One thing we have not seen, death by a thousand cuts, has been the wages side. Wages are now picking up. That means it needs to move. Tom critically, do we see inflation pop in the u. S. , in germany . Francine, you mentioned earlier, u. K. Inflation popping. Is that the surprise for this year . Ab i think it is going to be theme, definitely, across the g7. The next two months, we will see some substantial changes in headline inflation. ,f we watch that very carefully and that starts to nudge up, the fed has its work cut out. Tom rob carnell of ing, the secondmost important interview of the day. We will continue on Bloomberg Radio with him, david gura and myself. Look for mr. Trumps press conference. That is at 11 00 a. M. This morning new york time. This is bloomberg. Jonathan from new york city to our viewers worldwide, im Jonathan Ferro alongside david westin and alix steel. It is a countdown to the truck News Conference. The first unchanged session on the s p 500 since january 1977. The cable rate touching a 1985 low. 120 17. It at treasuries yielding 238 on the u. S. 10 year. Alix its like straight out of a movie. U. S. Intel agencies tell resident trump about unsubstantiated reports that the russian government compiled damaging information on him. The kremlin and donald trump denying reports ahead of trumps News Conference later today. The stage is set. Former exxon ceo Rex Tillerson facing a tough