mark: we will take you from new york to london in the next hour. here is what we are watching today. exquisite interview with bank of america and chairman and chief executive brian moynihan on business enthusiasm after the trunk victory in the united states -- trump victory on the united states. julie: saudi arabia's budget deficit will fall next year, even with an increase in spending. and johnson & johnson's willingness to walk away. what got the two sides back to the negotiating table. we bring you the details. ♪ mark: have a look at where european equities are trading. stocks are lower. look at the first column of your function. down today for the third day. italy down by one half of 1%.

an interesting move in the fx market. sterling below. the first time since november. bureau gaining -- euro gaining today. ireland, belgium, portugal, italy. your final two columns. nokia shares are down today. they are suing apple saying they infringed on several mobile patents. apple agreed to license patented inventions in 2011, but it refused to extend those agreements so they are now expiring. this is rooted in nokia's demised as the world's biggest phone maker. it is now a phone equipment maker. it is tapping its portfolio patents as a source of income, rather than a crosslicensing tool to protect their products. in the third quarter nokia's tech unit generated about 40% of

the company's total adjusted operating profit shares. down.- shares are consumer confidence little changed this month. it is measured with household outlook. slipping to -23. if you exclude the sharp drop in july after the referendum, that is the lowest in four years. britains have a slightly more positive perception of their own financial. situation they are spending out of largely spending to hedge against faster price increases next year. fascinating bit of information about the u.k. economy, which leads me to inflation. this is the u.k. 10-year breakeven rate. expectations of inflation over the next 10 years. running out of

steam? investors in joinder best returns and five years. the breaking rate last week was the highest level since january 2014. sterling's declined boosting import costs lingers. more than double the return of government debt this year. 21% versus 9%. performance makes strategists see continued growth and returns. more likely the boe will have to slow inflation next year by raising rates. hike by thea rate end of next year or about 35% compared with 6% on september 30. that is the inflation outlook for the u.k. right now. how it has changed since brexit. 90 minutes into the trading day in the u.s. let's go to the market desk. abigail: we are looking at

modest declines for the major averages in the u.s. the dow and s&p 500 and nasdaq all lower. it is worth noting the nasdaq months ago put in its low for the session. it will be interesting to see whether this trading day does take on a true directional town, perhaps to the downside considering there are a series of lower lows. the day is young so we can go either way. that big story is down 20,000 -- dow 20,000. it is amazing considering over the last 30 days we have had the dow klein substantially higher, nearly 9%. it achieved 19,000. when we take a look at the last five times for the dow did achieve round number of milestones, the last 200 points of them relatively quickly. -- this suggests we should

see dow 20,000 happened within the 35 day record from back in 1999. perhaps that will happen today or tomorrow but who knows. maybe we are looking at something relatively new compared to the last 200 days. we are waiting to see whether or -- the water can boiler not. as for what is striking some of the big names, capital, ge, and johnson & johnson, apple is down for the first time in eight days. cleaning researchers reduced estimates for the june and march quarters. look at risks. they expect 2017 june and march quarters to be similar to what happened this past year. a pretty shaky time for apple as those numbers came down. big drags on general electric and johnson & johnson. talksn & johnson back in

with this was by a maker. -- biomaker. julie: i like your watched pot never boils analogy. courtney donohoe has more from the newsroom. courtney: state department officials say to u.s. officials were injured on the attack on the christmas market in berlin. the market open today with actor security. is confirmingter the fingerprints of the suspects were found in the cab of the truck. officials are offering a $105,000 reward leading to his arrest. chancellor angela merkel says she is proud of the german people's levelheaded response. she arrived at the federal criminal police office in berlin today for an update on the investigation. her foreign policy has come under for their attack as she prepares to run for a fourth can i get a term. took in one million refugees in 2015 and 2016, most

from syria and iraq. a vote on a un security council resolution criticizing the israeli settlements in the west bank has been delayed. that's according to officials with knowledge of the deliberations. earlier, donald trump called the resolution unfair to israelis, saying it was so many poor negotiating position. the u.s. has historically be to resolution seen as hostile towards israel. the obama administration did not say how they would vote in this particular case. the trump campaign manager kellyanne conway is heading to the white house. she will service counselor to the president. conway has said previously she plans to move her family to washington to serve trump, either inside or outside the administration. of security isck being investigated as a factor in fireworks market lotions. -- explosion. at least 34 people are dead and dozens more wounded. authorities say the death coal could still rise. several children badly injured

during the explosion are being treated in galveston, texas. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. i'm courtney donohoe, this is bloomberg. mark: president-elect donald trump is sending another strong signal to china. he is announcing peter navarro to the head of the newly formed white house national trade council. the adversity of california professor has been a frequent critic of china's trade practices. let's get more insight on economic relations with china from michael kelly, from pine ridge investments. thank you for joining us today. does the appointment of heater navarro send a really strong message -- peter navarro send a really strong message to the chinese and is in a message stable like? michael: will they like? no. but he is already sent kissinger to china.

policy i think of trump is remover the cartoons you took your child to watch. dual message, one to the parents and want to the children. navarro feeds into the space it will embolden that. we will get two messages that everyday kissinger was in beijing. he was tweeting very anti-china rhetoric. theink the message will be quiet message to china. not what is out in the media. mark: what is the quiet message? does it include, you are a currency manipulator. what is the quiet message here? michael: time will tell to be sure. in our view it is reciprocity. for many respects you can think

of u.s. policy since 1946 on trade as maybe we feel a little guilty with the u.s. and smith hardly and the great depression thing with trade barriers. 'snce then both party policies is we are the big boy and big girl and we need to move first and encourage trade. if we leave some short-term money on the table, that is ok if we treated long-term economics. that has been a big enabler to growing geopolitical power. differently, as does professor navarro. they want to look for shorter-term economics. i would guess through merkel does not lead short-term economics on the table. china doesn't, japan doesn't.

dealing in the same manner as your trade partners is unlikely to lead to an outright trade war. lull.s lead to a trade it is more of a cold war than an actual war. that is not good. a lull is not good. julie: bring you back to economics and markets. going tois trade lull affect your investing decisions? are you focused on more domestically oriented in the u.s.? michael: i think that is been a clear necessity since the election. it is after tax cash flows worth 8% more in the u.s. than they were before the election. for small growth -- small value companies, their tax rates are the highest. those after-tax cash flows are worth almost 15% more, large

growth companies about the same as before. there are three -- we have been in a post crisis deleveraging world where everything it has been slow. everybody has been negative. but the private sector deleveraging, which caused this slowness along with too much causesion, those asked of this slowness are now ending. you do need to be a little bit more optimistic on growth. much of that will not come from the u.s., more so than we would of thought. there are three big positives. lower taxes, push back in regulation. those three positives for the world are bigger than the trade lull negative. you have to be more optimistic. julie: when you look outside the u.s., the conventional wisdom has been a trump presidency will

not likely be good for emerging markets. outside of china you think are our opportunities. michael: emerging markets is a little too broad brush for us. to 2010 that from 2001 china created a glue that bound many very separate countries together in what we call the emerging markets. they shared a common face. that glue has been gone for some time. we think you can find tremendous opportunities in the debt market in brazil because they have tight money and inflation. those things are ending. you can find tremendous opportunities for growth in india. they have a little speedbump on their monetization program. countries, at select there is terminus opportunities right now in emerging markets. but broadbrush. higher rates.

there is too much uncertainty broadbrush. we have to wait and see. mark: your 2017 outlook certainly does not paint a picture of tremendous opportunity here in europe. if i am right, the take away is into words -- avoiding europe. is that harsh? michael: yes. team wemulti-asset roamed the world. we come up with two handfuls of convictions. we don't own everything all the time. we see the continent and the u.k. as well as a year of pause. the fundamentals are getting better, but the political uncertainty of what happened in the netherlands, we just have one uncertain moment after the other. and because you wrote is so linked to what happens to the is song markets -- europe

linked to the emerging markets we have to wait and see if the reciprocity does not translate to an outright trade war. that is our belief, but the uncertainty is so high i think the continent european markets will do quite well in 2018. by 2017 will be a year to cause. mark: thank you for joining us. great to hear your assessment of china. up, saudi arabia announces new plans to boost its economy which has been batted by litt -- lower oil prices. this is bloomberg. ♪

♪

just about 13 minutes away. julie: from bloomberg world headquarters in new york, china julie hyman. -- i am julie hyman. mark: saudi arabia giving its first detailed look at a long-term budget plan. they have been hammered by falling crude prices and deficit standing at 11.5% of gdp. seriese implementing a of unpopular austerity measures. riad, what is the big take away? >> the big take away if they think they can get the budget deficit down to a surplus as early possibly as 2019. there may scenario think it will be 2020. they are hoping to achieve this by not necessarily reducing

spending, which they are focused on this year, by increasing revenue from the nonoil sector and from an increase in oil prices. mark: on the sector front, who is going to benefit from this budget? riad: we had austerity this year. contractors were not being paid on time. they said to have paid those bills. they cut back on subsidies so the consumer, the saudi citizen has less money to spend in the quebec on spending. as theyctation is implement support programs and as they have now paid the s in a set period, you can expect construction companies to pick up again. you can expect consumer spending to pick up again as the payments start hitting the economy. julie: the budget today seems

oddly in line with the strategy we've been hearing about from audi arabia to reduce the road -- saudi arabia to reduce reliance on the oil industry. whether any big surprises in the budget for you? riad: i think the surprise is the extent to which they seem to have managed to push down the budget deficit. is that it would go down to about 13%. they got it down to 11.5%, still very high. they are looking at about 9% next year in terms of a budget deficit. they think they can get to 7.7%. it is quite aggressive in pushing down the deficit. i think economists we are talking to are reacting quite positively to this achievement. julie: the economists you are talking to seem to think it is achievable, these targets at saudi arabia is setting? riad: they think it is certainly a possibility. i have to say the saudi's

themselves have put three separate scenarios in place. one where they see the deficit disappearing by 2019 and going to a surplus, one where they don't manage. the reason why they might fail to manage to get to a surplus is if oil prices don't increase, and two, if they fail to implement a lot of the programs they promised themselves and are encouraging the private sector and raising revenue by increasing -- implementing the 2018. if they fail to do that, then maybe they cannot achieve getting the budget deficit down to a certain level. mark: think you for joining us today, telling us all about the saudi arabia budget. joining us from our dubai bureau. julie: as we get a break, a look at what's going on with markets. we have got u.s. stocks falling back to some extent.

volume is low on the s&p 500. 23% below the 20 day average. we have got stocks in europe mostly lower. bloomberg. ♪

♪ mark: live from london and new york, i mark barton. julie: i'm julie hyman. under 10 minutes ago until the end of european trading. here in the u.s., let's head to the markets desk where abigail doolittle has the latest. abigail: we are looking at weakness in the retail space. including the department stores macy's and kohl's. we have luxury retailers trading lower, including coach and michael kors. michael kors is at the lowest since may 31 of this year. behind this is likely a plunge in the traffic we're seeing in

the holiday shopping. we have a great chart that shows this. this governor north american retail traffic. it shows over the last three months we're seeing traffic for retail really drop for all segments, including retail luxury and apparel. the biggest drop for apparel. really weighing on the retailers. blending -- bloomberg intelligence says this is the trend they are seeing. as for a segment with an retail, that is also trading lower underperforming others, toymaker's mattel and hasbro both down for their second day in a row. this as npd group says sales traffic as measured by dollars is down 9% for the toy segment. this is the sixth week of the holiday segment. we are going into the end with some weak trends in the retail sectors. julie: better get shopping. mark: i have done all mine. in europe we are five minutes

away from the end of the thursday session. stocks are lower. it is quieting down ahead of the holiday period. volume 30% below average. sterling below 1.23. the first time since early november. euro up against the pound. let's finish was bonds. stocks are falling. what are bonds doing? germany, spain, italy. the close is four minutes away. this is bloomberg. ♪ ways wins.

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,ravel and leisure lower today but still down for the year. not even for a day, not even half a day. we are down for the year. tuesday we were at the highest level since the end of last year. three days of declined. one of the big movers, gainers up as much as a .2%, j&j. exclusive talks. because wenating heard, according to people familiar with the talks for them to buy the swiss company. they are back in the table. if it loses out on this one, it will be the second loss. shares lower than they were but syllabi 3.86% -- but still up by

8.3%. -- still up by 3.8%. they could be the biggest nationalization in italy for decades. reducing the systemic risk shared by 6.7%. earlier they were down by 9%. this year they are down by 86%, worth of your 488 million euros. italyof households in holds bonds. it is quite a phenomenon. this chart highlights it very well. household bond holdings from 2012 through today has come down euros toom 342 billion 162 billion euros. households don't own as big a proportion of bank bonds as they did in 2012. nordea bank themselves -- nor do

banks themselves. we still them have details. we're still awaiting the latest news on monte dei paschi. it seems like it is failed according to people familiar. that means of bailout and nationalization. however you want to deem it, it is on the way. julie: in the u.k. individuals don't hold that many corporate bonds, right? that is quite unusual. mark: it is an italian phenomenon. julie: in the u.s. we see a similar trading pattern to what you see in europe. we have another down day, depressed trading volumes ahead of the holidays. the dow and s&p each off. the nasdaq down a little bit more, half of 1%. if you look at the groups on the move today, you have a divergence. a little bit more red on the screen been green. telecoms and energy shares that are higher, dragging down real

estate and consumer discretionary. materials and financials. we had all that economic data today in the u.s. third-quarter, gdp, durable goods, spending, income. all of that equaling a higher dollar. not by much. getting 1/10 of 1% less and also equally higher rates. the 10 year yield is up to 2.55%. crude oil prices also rising today, up about three quarters of 1%. let's check on the bloomberg first word news. courtney donohoe has more. courtney: praise from vladimir putin for russian troops at the annual end of the year meeting with the defense ministry. saying russia's military might is now stronger than that of any potential foe. his annual televised news conference is set for tomorrow. the marathon event lasted three hours in 2015.

this year's event was delayed by a day so he could attend the funeral of the russian ambassador murdered in turkey. former nsa contractor edward snowden has remained in contact with russia's spy services since arriving in russia three years ago. the heavily redacted report did not provide proof of its accusations. three years ago he revealed the government efforts to hack into the data pipeline used by u.s. companies to serve customers overseas. he fled the country to avoid prosecution. in france, national front leader is having a hard time finding cash. she needs $21 million to fund french presidential and legislative campaigns next year. her problem is that the national front russian lender has bailed. they have look for backers in countries including russia because frank -- french banks

are refusing to provide funding. -- a delicate line recess -- restructuring and deutsche bank. the bank is trying to restructure some of trump's roughly $300 million of debt as part of an attempt to reduce any conflict of interest between the loan and his presidency. this comes as deutsche bank negotiates a multibillion-dollar settlement with the department of justice from mishandling the sale of mortgage bonds to other banks. the obama administration is officially in a post-9/11 era registration system for immigrant men, mostly from muslim countries. this comes at a time of growing international terror fears and president-elect donald trump's suggested he could ban muslim immigrants from the u.s. the administration has not been using the program since 2011. global news 24 hours a day powered by more than 2600 journalists and analysts in more i am120 countries. courtney donohoe. this is bloomberg. mark: thank you very much. more on our closing interview

with brian moynihan. bloomberg david weston asked him about the u.s. economy, specifically if he is seeing a fundamental difference in the economy rather than just a recent market rally based around hope. bank of america having a decent size customer base and seeing $50 billion in credit card index card spending grow 5% year-over-year and growing faster, those are all very good things. that means the economy is in good shape and making progress. the difference after the election has been in the business side, the enthusiasm that the world is our oyster. enthusiasm and midsize companies that they feel there is more that is going to get done, they feel better about the process -- prospects of regulatory

environment with their business, the final demand. that will take time to actually come through. -- theaneously the consumer confidence shot up. you and i own a company, we can decide to do something or not do something. build a factory. if we feel better, we will do it. if we do it, that means was -- what was happening before, i feel people are saying let's go try into happens. david: are you seeing it specifically in the mid-level landing? -- lending? brian: we are drawing more on our lines, which means we're putting the money to work. it has the followthrough because it is six weeks since the election and the timeframe is relatively short. people look at how much attitude is important for that group of companies. for big companies like us we have to be swimming over it in doing something tomorrow.

every day we have to figure out a way to make more money, get more efficient, generate more revenue, take more expense out, apply more technology. midsize companies can make the decisions are from the because they are privately held. when they are excited, that is good for america. david: part of your job is being a macroeconomists to understand what is going on. a macro risk manager. what are you anticipating in terms of the economy under donald trump? what do we know, what don't we know, what are the questions on your mind? brian: let's be first. we have been avoided research team in the world for six years in a row. david: congratulations. brian: they have the u.s. growing around 2% next year, an increase of what this year which was 1.5% to 1.7% range. it would be a step up. that fundamental belief of

has not changed a lot since the election. we believe the economy in the u.s. will grow and the economy of the world will grow and it's more on the upswing. it picked up and fell off this year and we think it is back up. part of that uncertainty has been handled by the markets and by people predicting outcomes which is pretty interesting. the brexit, the time referendum, the french, election the u.s. election, all that stuff evil thought if it happens, they will be huge disruption. the market was disrupted for a few hours but he came back and life goes on. there is tremendous capability and size behind this. year.sses are first -- friskier. the oil and gas bills this -- the rate is coming up and that's

good for capital next year. the belief of our clients about regulatory burden is it will come down and that will help them do things more quickly. although that they believe is good. there are other serious concerns. labor is trickier than people think. getting the right labor in the right place at the right time on the right train is tricky for people. it is the right jobs than it is a lot of wage pressure. we have to do a lot of work to make sure people train. the sole difference that happened last six weeks is enthusiasm. if that follows through, it will be interesting. david: your research team, the number one research team, has not taken their gdp growth numbers up in response to donald trump. have the markets overreacted? they reacted as if gdp will grow faster. brian: this is one of those

questions you always have to ask. they took theirs down a little bit in the first half of the year because of uncertainty around tax reform. people will slow down to wait to see what happens. i'm not sure. it will be interesting to see how they think about that going forward. oh, that is to be so positive that it actually freezes people. when people think tax reform is coming, they will wait because they think might lose an advantage by doing something now. there is always uncertainty. factors are gone now because the market's reaction to the election in the united states, the reaction the brexit sure if you can

say any presidential candidate or elected president to be doesn't have the same problem. there is a series of things in and prioritized. repatriation, immigration reform,, affordable care act and things like that that people are focused on. that is always the trickier element. there was a great deal of alignment between the senate and the house of the presidency that will help that through. these things get harder when you get down to the brass tacks. -- brass tax.

the market's enthusiasm is at least going to try, and we have to see the follow-through. mark: that was part of our exclusive interview with brian moynihan. julie: coming up, the takeover battle surrounding the swiss biotech company continues to talksp with this was it with johnson & johnson. we have the latest next. this is bloomberg.

♪ mark: this is the european close of bloomberg markets on bloomberg television. biggestt some of the business stories in the news

right now. j.p. morgan chase chief jamie dimon says voters around the world have been on a mission to change. they've embraced the chance to hit the reset button on their leadership in a wide-ranging interview with megan murphy. he weighed in on populism and changing government. >> a lot of he saw in america and overseas, i want a change. they want a wrecking ball brought to these companies. they were necessarily voting for the people, they want something very different than they have seen. a lot of us are sympathetic with that. we want things to be better. ultimately yet have faxed an analysis and details to make that happen. mark: parsifal interview on bloomberg businessweek the brief tonight at 9:00 p.m. eastern only on bloomberg television. ipo's double and triple

in 2018? that's according to greg becker, chief executive of sbe financial. a snowball should washington and wall street failed to cooperate. they serve 65% of u.s. venture firms and half of all vc-backed companies. that is the latest bloomberg business flash. julie: in a surprise twist to one of the biggest potential health deals with biotech company actelion, they have turned back to johnson & johnson for exclusive talks about a strategic transaction. the move is an about turn. it appears the sideline rival -- gary hopkins is joining us, bloomberg's reporter. this was indeed a surprise. it went across the other day and it was surprising because they had broken off talks. how common is this they have

come. and start again. gary: it is pretty rare, especially when companies publicly said the are stepping away from talks which is what johnson & johnson did last week. to do this kind of about-face is not very common. it represents, and are reporting suggests a willingness to return to the table if they got exclusive negotiating power. that does suggest they are no longer in the talks. julie: why would actelion favor johnson & johnson over sanofi? jared: there was a hangup apparently with sanofi with contention value rights, which has to do over payouts with pipeline drugs down the road. johnson & johnson has a substantial amount of cash. if you're talking about a deal, that makes a lot more attractive to the person on the other end. julie: sanofi wanted to make some of these payments to

actelion contingent on drugs, experimental drugs proving successful jared: we have not gotten a clear yet. there was some reports in the past that maybe not even entire company takeover but just some sort of transactional relationship, or maybe just getting some drugs. some of that we do have to see it play out. yesterday they said a possible deal they were returning to talk about. they did not get to specific, but both companies did issue their own statement saying they are back talking. mark: it might not be an actual takeover? from is, the earlier offer johnson & johnson has got the said to be discussing $275 million. is there a knockout price? ceo has been

reluctant when it comes to selling his company, hasn't he? jared: in the past he said he wanted the company to remain independent. but he has not publicly come out in the recent weeks and given an update on that position. the independent push from him in the past is what led to speculation that it might not be the entire company sale but something else. mark: how much of a close is they missedthe -- out in august. two out of two. is that a big blow to the shareholders? jared: it is considered a below and a disappointment -- blow and disappointment. they will have to regroup and look to something else. the medivation deal was a big miss for them. when you look at what johnson & theiron is doing,

pharmaceutical site has really been growing lately. it is their bread and butter for a lot of the company now. we will probably see a big push from that. julie: thank you so much for talking to us on the latest actelion, johnson & johnson and sanofi. mark: battle of the church. investors have an alternative to stocks again, especially as valuations rise. this is bloomberg. ♪

♪ battle of the charts. let's look at some of the most telling and compelling charts of the day. what they mean for investors. you connect with these charts on the bloomberg by running the function featured at the bottom of your screen. kicking things off, julie hyman. julie: i was inspired by a chart

you look at yesterday earlier in the week when you look at the emergence of volatility. we are seeing very depressed stock volatility. at the same time on and currency volatility is still relatively elevated. kind of a curious divergent -- divergence. stock investors are complacent as bond and currency traders are more concerned. this is a chart that shows the underlying volatility. it is not necessarily the case. this will set the s&p 500 three-month volatility versus the vix at its current level. other words, what is the projection of the volatility. this is a seasonally slow time -- traders in terms are expecting volatility will go higher. the gap between the three-month out and current volatility we see here has been going back to the summer of 2012. even though it is low right now,

it looks like these stock traders are expecting to catch up with the bonding currency volatility. you can see this chart on bloomberg. mark: beat that one, abigail. abigail: my chart has to do with the idea that for such a long time we've been hearing the idea that stocks are the only game in town because the yields are so low. they've been going in stocks, really driving these up. that 10ls with the idea year yields on the rise provide an alternative to investors. we see that the 10-year yield is above the give it in yield on the dow by about 20 basis points. it's suggesting that could be competition from another asset class for investors. you can find my chart in the bloomberg. separating you to is nih

impossible. the stock futures over four months relative to one month. also over a four-year high. it is similar to what you are saying. because julie started up by saying i was inspired by mark's charts, those words, you had me at inspired. i don't know what you guys said after that. that did it. julie: now i always know how to win in the future. mark: that is how you win in the future. well done both of you. julie takes it by a whisker. that is the european close. bloomberg markets america continues. ♪

welcome to bloomberg markets. ♪

david: from world headquarters in bloomberg, from flint, to berlin, to moscow. the bank failed in his last ditch effort to bring in private capital. you will get why this could spell trouble for bondholders. mayident-elect donald trump have a $300 million conflict of interest with deutsche bank. this could be a very delicate situation given ongoing negotiations between the bank and the department of justice. bank of america ceo weighs in on how potential changes to banking regulations could lead to large returns for his firm and the rest of wall street. highlights with our interview with him next. we are halfway into the trading day. here is a look at the markets. abigail: stocks were basically unchanged earlier that we are looking at the kleins now. declineseins now. -- now. it does feel a little bit like more than unchanged.