♪ youe: we are going to take from washington to rome and cover stories out of the u.k., china, and south africa does next hour. italy's prime minister matteo renzi plans to quit after suffering a heavy defeat in his referendum for constitutional reform. we will look at whether a nude stability gives the ecb a new cause to expand this week. mark: the euro shook off earlier losses, equities climbed as contagion was muted. our investors getting better -- are investors getting better at establishing the mood sweeping around the world? julie: concerns china could be named a currency manipulator.

about 30 minutes into the trading day and abigail doolittle has the latest. about, globalked markets shaking off the effect of the italian referendum. abigail: we have big gains for the stocks in the usb at the dow, s&p 500, and nasdaq are all higher. offially there was a risk reaction, but really a declining reaction. ,f we go back to the brexit a big selloff, then a selloff and it reversed. the dow on pace for a record closing high. but the dow isng itsace for us fix -- for fifth week i. the s&p 500 and the nasdaq are reversing last week losses. at -- 2041.ok the shows the all-time record high.

two things, right here we have an area of consolidation. it appears the dow is breaking .ut higher the dow transports, a less followed index, is actually also trading at an all-time record high. would say that signals more strength ahead for stocks. taking a look at asset classes, we are seeing a risk on picture here. we have the safe haven gold trading lower. follows from that supply cut from opec last week. sellingwe have bonds off, this is represented with the two-year yield up sharply, four basis points. price trading in verse two yield. 6%you know work is showing a chance there could be a 50 basis point rate hike. a julie: perhaps giving more

fodder to the economic bowles. we had imf manufacturing crossing the tape, coming in better than estimated. and this expansion is the fastest clip since october of last year, the so-called nonmanufacturing is the service is part of the economy, the u.s. economy. it is about 90 minutes to the close of trading in europe. mark, what are you watching? shrugging off earlier losses. we were down about 1/10 of 1%. we rose as much as 1.6% and now 10 of/julie x/10 -- 1%. the margin at 60-40. the world's oldest lender, shares up 7.5%. the resignation of prime minister renzi throwing doubts

into the plans to raise 5 billion euros of fresh capital. now it has to sell shares, now it has to find an anchor investor. failure could forfeit a resolution. --'s put monte dei paschi let us put monte paschi in perspective. the have almost lost entirety of their value. the euro, a similar move. we saw a big push downward. dropping 1.5%. we are up to 1.07. is 1.0496,o watch

that is the close on march of last year. that was the lowest since january 2000 three. according to options prices, the odds of the euro weakening to parity are about 50%, versus 45% on friday. will the euro reach parity against the dollar? year yieldds, the 10 rising as much as 60 basis points. fell to straight weeks ahead in the referendum. referendum.the the gap has been shortening in recent weeks, but it is widening to one point 67% earlier. it was as wide as 1.79%. because the high, that high you see up there on november 24 was 1.888%. the gap is widening, but not as wide as it was earlier.

the pain being felt in the bond market. julie: we are going to talk more about the right -- about the reaction to that referendum. lisa parenti has more from our newsroom. we will pick up right there. prime minister matteo renzi is planning to resign after voters overwhelmingly rejected a constitutional reform referendum. that could open the door to the antiestablishment five-star movement, which is running neck and neck with renzi's democratic party. earlier, a commissioner spoke with bloomberg about the italian vote. >> is is this a referendum on the italian constitution -- it is a referendum on the italian constitution. he is going to resign as a strong prime minister who led reforms politically, economically, and socially. he downplayed the vote --

determine whether prime minister theresa may needs a vote from parliament before beginning talks to leave the european union. the u.k. attorney general says it may have a compelling need to control the terms of the brexit negotiation. endorsedd austria have a pro-european union pact. they elected former green party union leader -- he defeated the candidate from the far right freedom party. and shinzo abe will become the first japanese city prime minister to visit pearl harbor paid he will visit the hawaiian naval base with president obama at the end of the month. wednesday is the 75th anniversary of japan's attacks on pearl harbor, which led to the u.s. entering world war ii. global news 24 hours per day powered by 2600 journalists and analysts in over 120 countries.

this is bloomberg. mark? let's stay with our big story today. investors coming back to terms with prime minister matteo renzi's pending departure. a decision to quit his post after his proposal to rein in the power of the senate was emphatically rejected. let's get to francine lacqua as renzi plans to hand in his wreck is -- hand in his resignation. what we understand will happen this afternoon, matteo renzi will one last time meet with his cabinets, and then he will formally go to the president of the republic of hand his will resignation. nobody knows what happens next, will askhe president someone to form a new government, either a technocratic government or a government that he thinks is an option to get the majority in

parliament. names floatedee around. we don't know whether he will announce the successor this evening or maybe tomorrow or maybe it may take one or two days. this is how it happened because the referendum was rejected by 60%. about 60% of the 70% actually voted against the referendum. and unlikely matteo renzi will play any part in this new government. they need to get the staffs approval by the parliament. reaction thist morning. euroy markets are up, the going up after an initial fall. is going back to levels

that we saw on friday. so the market reaction is fairly muted. mark: one of your guests telling you earlier this is now a banking story. what does this mean for a delete's lenders? -- for italy's lenders? first of all it will put pressure on the commissioner and other banks. you are in political turmoil or political limbo, and we don't know who will be the next prime minister, it may make some investors shy away from taking part in the increase. is unclear whether they will be able to raise that amount. i spoke to the first time he was talking to an international network. it was the first time he has been talking since being named

ceo. for the moment he says the referendum doesn't change any plans for unicredit. feel unicredit is a strong bank and italy is a country with a lot of potential. let's focus on the medium to long-term and not be bothered by the events of the night. francine: just to get back to the vote -- june: ouster and ask him -- go ahead. -- i was trying to ask him -- go ahead. julie: getting back to the general vote, we have an interesting maps look -- interesting map looking at the various regions and what voted how. it looks like tuscany went for yes.

but overwhelmingly we saw a no vote across various regions in italy. it is not like you are seeing a geographic split. it does seem this vote was overwhelming. francine: it was overwhelming. what we have been trying to figure out is whether this was really a no vote for matteo renzi and his government. a lot of commentators were telling me if you look at the southern part of italy and because the unemployed are so much larger in number than the north, it does feel like in those regions it was more of an antigovernment protest. the five-stard of movement concentrating his efforts there. where go further north, the situation is the terms of economic growth is a little bit stronger, the conversation could .lightly till -- slightly tilt a vote because they were

concerned it would limit too much of the power of the senate, therefore giving the prime minister too much power. i think that is different. whether you see it at -- that is the difference whether you see it as a populist vote in certain regions or in other regions you see it as a vote against the consolidation of power. julie: coming up u.s. stocks are climbing as -- a chief equity strategist at wells fargo funds management will join us next. this is bloomberg. ♪

♪ mark: from london and new york, i am mark barton. hyman paidi'm julie

as we talk about a sense of relief appearing to dissent over global stocks, take a look at italy's referendum having a smoother aftermath in the u.k. vote to exit the eu and president donald trump's victory. following back near its lowest level since august, even in the wake of that referendum. our markets becoming more immune to political risk? joining us is john manley, chief equity strategist at wells fargo funds management. what is going on here? at investors getting better anticipating these shocks, or sort of more immune? have never career i been hurt by something i saw coming at me. we saw this coming at us i think markets are good at discounting things, knowing what is going to happen. the shape of the reaction was

the same, down initially and up again. italy has a strange political history. i think they will work through it and i think that is what the markets are saying. you think there is a divorcing in some of these cases from the political and economic? in all of these cases the perception seems to become the effect on the economy will perhaps not be as dire as anticipated. john: i think that as well put, that is exactly what is happening. we on wall street sort of do things. when i think the ramifications and repercussions are something the politicians may do are known and discussed, they tend not to happen despite all the rhetoric. me this rally has

legs and then tell me who is going to lead it higher. this is the s&p 500 industry group peterson the truck -- industry group. since the trump victory -- companies types of continue to lead the way? what is the upside from here? john: the upside is we are going into the second half of the second phase of a normal bull market. in the beginning there is the push phase where the central bank is pushing money to make the economy better. they do that until it works and it seems to be working right now. then the money gets pulled into the equity market because fundamentalists are clearly getting better. i think we are entering that right now. i think the market value is fairly overpriced. i think those kinds of companies can do well. that's the kind of thing that drives markets. function,oked at ig

the s&p is 18.4 times estimated earnings. the five-year average is 15.8. how can that be fair priced? john: i disagree with those numbers. i look at earnings expectations over the next 12 months it markets around 16.5, 17 times. the next 120.3 over years. i realize we are getting to diminish a -- we are getting to to -- wea desk getting are getting to minutia at this time and point but i think you run the risk looking at profitability when you me to look at valuation. julie: obviously the push phase of the bull market was very long, unusually long by bull .arket standards does that mean we are going to get a compressed segment here?

john: the markets tend to react to changes and i think there is closeensus out there, to consensus. the profitability is too high. i think the profitability is high. i don't see any of the strains has people saying we need to have a recession because we haven't had one for so long. recession's sometimes happen, but they happen when excesses buildup are usually because the federal reserve decides they want to avoid those excesses proactively. i don't see either happening at this point in time. it's a little bit like saying my plane should have arrived 20 minutes ago, i'm getting off even though i'm at 5000 feet. we have to be rational and logical. been 20 years since greenspan's famous irrational comments. similarities between now and 1996 when it comes to over exuberance? john: i hope so.

remember, it was a question and it was classic alan greenspan trying to figure out what the truth was. it is hard to know when we are overly exuberant. overok at so many things our shoulders, summoning things that happened that when things start to go better we ignore them. until i see that enthusiasm, i think we are on fairly safe ground. julie: chief equity strategist at wells fargo funds management. mark: coming up on bloomberg we are going to get the state of the media industry with some big interviews at the media conference. 11:30 eastern, 4:30 london. chairman, and also mark thompson will be our guest. busy day. this is bloomberg. ♪

♪ mark: the sun is the sending in london. i am mark barton. julie: let's head back to abigail doolittle. she is looking at bank financials leading the gains. we have bank of america, citigroup, and jpmorgan trading sharply higher. jpmorgan is hitting a new record high. in the dowd high today. interestingly we do have a bit of a contrarian call coming out of the investment bank. analysts saying you want to book gains at this point. in etf up 10% from the election bid investors are loving these banks. behind us, the move higher in yield. we had the 10 year yield up 10 basis points.

this is also true over europe. 4723. we have the ftse bank index in white. yield. we have the they are trading in tandem. despite political uncertainty over in europe with the brexit and italy, we do have banks and yields climbing higher. much yieldse how are going higher and influencing sector movement. -- sector movement, we take a look at the financials versus the utilities. financials have powered higher on this big move up in yield. as high dividend stocks have become less attractive to investors as rates rise. pretty interesting inverse relationship to take a look at there. mark: still ahead on bloomberg over 130 shopping

centers in 100 20 countries. how the holiday shopping season is shaping up around the world. this is bloomberg. ♪ ways wins.

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a rainy new york and london, i'm julie hyman. mark: one of the rare occasions london is sunnier than new york. young elisa parente. in oakland authorities now say 36 people died in a fire at a late-night dance party. firefighters expect to find more bodies in the ruins of the warehouse. up to 100 people may have been inside the building. engineers has of handed a victory to protests who wanted to stop an oil pipeline in north dakota. ioux tribeng were fighting for their water and cultural side. developers can still seek an alternate route. donald trump has filled another spot on his cabinet. ben carson has accepted his offer to become secretary of

housing and urban development. the president-elect says they have just tested economic inner-city.he israel's prime minister benjamin netanyahu wants to talk with donald trump about what he calls the bad iran nuclear agreement. netanyahu says iran has become more aggressive since it was signed. it the worstled fuel ever negotiated. in south korea opposition lawmakers may have enough to to impeach the president this week. her popularity shouldn't -- popularity rating have sunk to single digits. global news 24 hours a day powered by more than 2600 journalists and analysts. i'm elisa parente. one of the largest

shopping center owners in the u.s. was created after regency agreed to by equity one. the combined company will own 429 properties around the country. is the chairman of an international shopping center developer and largest shareholder in equity one. thank you for coming in. why did this deal between equity one and regency makes sense -- make sense right now? >> it tells you more about the need to consolidate. the combined entity would own more than 400 shopping centers in the core markets throughout the united states. it's going to be one-of-a-kind. create more diversity, better

pricing power and a lot of synergy. julie: figure better right now in particular? apartment apparel department store -- >> asset classes somewhat protected from the internet. more than 50% of our income comes from services that cannot be rendered on the internet. you cannot go to see a doctor on the internet. not yet at least. more resistant than other industries. the size we have created gives risking to those entities gives us more access to more retailers being able to

give them a greater offering. create synergy to two economies of scale. if you run across i-95 corridor in florida we have shopping centers on each exit. it's got to be cheaper to manage them together and so on and so forth. i'm in london so i forgot to ask you a european centric question. you've got a solid presence. hot and what's not right now in europe? >> what's hot is the nordic region. her dominantly sweden and norway -- predominantly sweden and norway. not so much finland. europe poland and the czech republic are doing well. germany is doing very well. we don't have any presence in italy so i cannot give you the

news of the day. marketly speaking in the and by the way russia is coming back. at least the new normal is normal now. and you don't have a presence here in the u k. you've got the weak pound. you've got low rates. you've got a relatively strong economy. could you be dipping your toes into the u.k. market? >> it is conceivable. we paid a few visits and talked to people. my gut is telling me it is a bit too early. wethe next couple of years believe there might be an opportunity in england.

england was notoriously expensive for many years. reason we could not find a good entry point so far. maybe it's changing. to ask you about the holiday shopping season. obviously the grocery food business is less variable. what indications are you seeing about it strength versus last year? >> it is definitely stronger than last year. we have seen it all over the world. .t's not just in the u.s. it's canada and europe and brazil. shopping andeople i'm sure that online shopping went up as well. our foothold has increased quite dramatically this holiday season so far. julie: where are you seeing the traffic?

stores anded grocery doctors offices. where else are used in the traffic? >> you see a lot of traffic going to the discounters. if 70% of the global population are going to be living in cities by 2050 what does that mean for your business? what does it mean when you have such a high volume of footfall. how is the industry going to have to adapt to that? >> e-commerce is going to eat up a lot. you have a lot of inventory that people are not aware is dead already. look at the major department stores. this is inventory getting ready the market come to and become a vacancy at some point. it's going to --

be repurposed into another form of retail or something else. it can become a school. it can become -- many things can be demolished and become a residential spot. there's going to be more redundancy. we asked shopping center owners will have to put much more into the shopping experience. it's going to be more about entertainment. it's going to be more about food, people gathering. not so much just about the shopping. shopping will be somewhat incidental to the experience itself. mark: i've got to ask you about resilient. last month you agreed to buy a stake in -- excuse my pronunciation. it's one of the highest and malls in sao paulo. why is brazil such an interesting bad for you? bet for you?

>> people are not paying as much attention as they should wouldn't talk about brazil. it's a true democracy. it went through a major impeachment process very peacefully. which tells you the strength of the democracy. rule of law improved dramatically in brazil. people who are untouchable to her three years ago -- two or three years ago we have seen what happened with the impeachment. bettere of law is far and this is a growing economy. 200 million people with population growth of 1% a year. there are only three countries in the western hemisphere that growing population wise. canada, the u.s. and brazil. that's what drives retail.

brazil has been going through major recession and everybody wrote it off. julie: thank you for your time. weighing in on, the outgoing italian prime minister. this is bloomberg. ♪

julie: you're watching bloomberg. i'm julie hyman. mark: i'm mark barton. italy's political future is

uncertain as voters reject a constitutional referendum. -- pierreinci ways in ghs in.ci ways in -- -- 12 years after life in south africa. julie: italy has fallen into political limbo. the prime minister is resigning rejected as constitutional reform referendum he supported. italiana referendum on politics, the italian constitution. enzi was a strong prime minister who led stroh economic

-- strong economic reforms. donald trump has a warning for u.s. companies moving jobs to other countries would be a very expensive mistake. companies that move manufacturing out of the u.s. would face a 35% tariff when they bring products back into the country. to reduceid he plans taxes and regulations on business. volkswagen will take on uber as it tries to bounce back from the emissions scandal. will initially focus on ride hailing and car sharing. it will roll out in two european cities next year. testing out self driving cars in japan.

the automaker hopes to use the technology by 2019. julie: time for our bloomberg quick take. life for all. that's the campaign slogan that propels nelson mandela and the african national congress to power in 1994. 12 years later more than a quarter of the workforce remains unemployed. 22% struggle to put food on the table. enforced segregation has ended but wife's household -- white households earn more than black ones. many doubt whether the anc can deliver that progress -- promised better life. jacob zuma has lurched from crisis to crisis. his scandals lost the anc its majority. the issue came to a head in november when government --

government ministers led a charge to oust him. africa's credit rating is approaching junk status and the public school system is ranked among the world's most useless leaving millions of youth without marketable skills. became a british colony in 1902 following the anglo boer wars. enforced racist policies. endured decades of economic sanctions and armed struggle before the government agreed to free nelson mandela in 1990. the anc has won a majority in every election since. can point tot successes. the poverty rate is down. life expectancy is rising.

many have lost patience as political turmoil overshadows efforts to boost investor and business confidence. can read more about south africa on the bloomberg. that's your global business report. mark:mark: the reflation trade s been driving markets. earlier today on bloomberg surveillance tom keene asked brian belski whether this has room to run. continue to focus on inflation. stimulus plan but trump is talking about is really a shock to the system. we have seen a lot of diminishing returns for monetary policy. >> how do you respond to people who say the market discounts the

future? reactive and we have seen too much of a move in certain industrials. tothe end of the day we need start to see the fundamental realities of these type of things. thanks to all of oppenheimer funds. david gura and i visited friday. this is the amount of reflation we have seen in the five-year review of inflation. we are nowhere near repricing to inflation. how do you link bond dynamics into my equity 401(k)? >> we have seen a really nice move. we need toof the day start talking about this great rotation out of bonds. the longer we see yields higher we see some of our clients start

to see negative rail rates return. focused toole are much on this move. things are not linear for a long time. i think december is going to be a little bit quieter. they are watching the minnesota vikings. they are miserable. they are also miserable because rates are going up. the boat has left the dock on those low yields. how will they respond? >> they have to start growing again. they have to start spending money. day people arehe missing what the platform is all about. with respect to the less regulation. >> regulation takes time. i think the market is going

to get ahead of regulation before it's going to get ahead of tax cuts. the regulation thing hits right away because margins go up expenses go down. and earnings can go up a lot faster. that was brian belski. julie: still ahead, trumps twitter tactics. the president-elect takes a fresh swipe at china on social media. this is bloomberg. ♪

mark: live from london, i'm mark barton. julie: i'm julie hyman. this is bloomberg markets. donald trump has gone after china again on twitter. us if it did china ask was ok to devalue their currency

, heavily tax our products going into their country? we are joined by bloomberg's international government executive editor john. this tweet was in response to criticism of trump for taking a call from taiwan's president. china has had the one child policy for decades now. there has been a lot of talk about how big a diplomatic brouhaha this will set off. president yet. what do we make of all of this? >> that's a very important point to make. they could have chosen to express alarm and outrage at what president-elect trump tweeted. very much the word out of beijing is that he is not

president yet and perhaps he is being badly advised. they are doing everything they can right now. julie: this is pretty much in line with what trump promised going into the election. that he would sort of speak truth to power. hard to find folks outside of china who defend that one china policy. china are served of looking through a lot of that noise. what they see or what they would like to see in donald trump is a dealmaker, a pragmatist. there is a lot of noise but they would say that is a politics. media toe state run spread him over the weekend as shrewd trump and refused to believe someone as shrewd as this would risk a trade war. that is the hope if not the

expectation from beijing that he will govern other practices. mark: does this show the need for trump to nominate a secretary of state as soon as possible who can advise him and maybe explain his thinking to foreign governments. >> that's a very good question. for him tovery keen appoint a secretary of state. someone who can decode trump for the rest of the world. even if you did get an articulate secretary of state the question would still be out there to what extent could you believe what the secretary of state says? that gets back to president-elect trump's entire communication policy. tweets extent are his official administration policy and to what extent is it just noise?

that's going to be a huge challenge over the next four years. what he really believes and secondly how much of that will actually be translated into policy. huge problem be a for policy makers and executives and people like us over the next four years. julie: thank you. john is bloomberg's international government executive editor. reaction to up, italy's constitutional referendum. end oftes away from the the monday session. it's only monday. stocks are rising after falling earlier. bonds are declining. this is bloomberg. ♪

mark: it's 11:00 in new york. i'm mark barton. julie: i'm julie hyman. this is the european close on bloomberg markets. ♪

mark: we will take you from new york to rome. we will cover stories out of brussels, the u.k. and washington. are watchinge today. italy's prime minister plans to quit after suffering a heavy defeat in his referendum for constitutional reform. also look at whether renewed instability gives the ecb more cause to extend qe this week. julie: the government's case against holding a vote in parliament. we will look at all of the arguments ahead. acceptson president-elect trump's offer.