Transcripts For BLOOMBERG Bloomberg Daybreak Europe 20171004

Agreed on methodology. It is a step forward. It is a sign that we can make progress. Manus we speak with the russian president , Vladimir Putin, at the Russian Energy weak 2017. 2017. Rgy weak manus you are welcome to bloomberg daybreak europe. It is our flagship one show right here in the city of london. I am manus cranny. Anna i am anna edwards here in manchester at the conservative Party Conference. Yesterday we heard from the free brexiteers. We will hear more about frexit. Theresa may will take to the stage to tell the party to shape up, quit squabbling focus of the voters. Boris johnson seems to fall in line with the rest of the party. We need to check on the markets. The september swoon for the dollar seems to be being questioned. Manus it is indeed. The brexiteers, you we will interviews. Ur and this interview with liam fox at the trade and upon interview with liam fox at the trade. We will talk fx markets and sterling with david bloom of hsbc ahead of theresa mays keynote speech this morning. Lets talk about the markets because you mentioned the dollar but the bond markets, the biggest paying trade out there is in the bond markets. Traders are placing the biggest thats in over a decade. Goes. An index, up she they have increased their short as it since the most. All caps gores all categories, all of them have short positions. That number one headline, kevin walsh is the highest favorite to succeed janet yellen. Is he a hawk . Is he really going to be aggressive then yellen . Selling pressure has only just begun in the bond market. Lets talk about the risk radar. Weve got the private bank, david stubbs joins us. Lets see with the private clients think of the treasury market. Msci asia pacific is rising. Korea, taiwan are closed. China is rising to the highest level since january. Keep an eye on carmakers as well. Auto sales ratcheting higher on the back of the hurricane. The dollar is overdone. The debate, can that swoon sustain . Kevin walsh having criticized the central bank for being too lenient on the policy. 7 . Crude is down we are going back toward the 50 line. U. S. Stockpiles on gaining, gambling inventories. We need more action from opec before any kind of baseline can be put into this market. 49 50 is your trading range. Anna interesting to see that. That site getting so much attention. I wonder how much the betting market knows about something that is the decision of the white house. We will discuss that with our great guest. Lets get an update on the first word news with juliette saly. Juliette u. S. President donald trump has suggested the Government Debt accumulated would need to white need to be wiped clean. His comments came after a visit to the island where people have been without power and in many ites Drinking Water since struck. Cost will be as high as 60 billion. Ceo saysoblackrock the tax plan will expand deficits. It will be harmful to eliminate the state and local Tax Deduction in the plan is class unlucky to pass. I think it is going to have to be amended. Believer in the reduction or the elimination of the fact is, i think that that is quite harmful to some of the major states today. Juliette the British Government is growing concerned that it could crash out of the European Union without a trade deal. Refusal is stoking. Ears that time will run out brexit secretary david davis says he is aiming for good deal but warned the country must be prepared if negotiations fail. Meanwhile, the Northern Irish northernt keeps the u. K. Government in power Democratic Unionist Party leader were speaking to bloomberg at the conservative Party Conference in manchester. If there were to be a border between Northern Ireland and the rest of the united kingdom, we cannot have that. To be fair to the Prime Minister, she has been clear about that. I see some talk coming out of europe but that is just not acceptable to those of us who live in Northern Ireland. Juliette spain cannot believe that even as he attacked catalan separatist leaders to violating the constitution. Mariano rajoy is fighting to maintain control of the 2. 3 million catalans who voted. The catalan Regional Government has broken them credit principles and every rule of law and undermined the coexistence of society. The authorities have rejected the affection that will be night that will reunite all of the spaniards. They are reddening the social stability of catalonia and spain itself. Juliette global news, 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries. You can find more stories on the bloomberg at top. The regional benchmark index here in asia up higher for a fourth consecutive section consecutive session. You see the nikkei slightly higher. The broader topix nearing a tenure high next to a rally and tech players rally in tech players. You are seeing these financial stocks still continuing to rally. The hang seng while we are awaiting a Rate Decision from india today. In terms of stocks we are watching come i mentioned the National Players in hong kong, particularly the chinese banks continuing to rally. Having the biggest jump in five years and it is up by another 1. 4 today. Nissan under pressure. There are reports that it has falsified inspection documents. Nohad tried to reach out but commentary so far. Those tech players and focus in japan. Japan displayed the most. This is a report that its affiliate could be joining in for production of the next an 888on that could be million deal. Manus juliette, thank you very much. President and his advisers have that m the final list of the people they are recommending for people to lead the Federal Reserve. Two of the people are janet yellen remains as a consideration, and while there is no clear front runner, some have said gary and Kevin Walsh Gary Cohn and kevin walsh. Id stubbs is the chief congratulations on the new mental. Private banking. Lets get right into the fed. Gary cohn, walsh, powell are the contenders. And imagine this, this is the betting anna mentioned this at the beginning, is is the betting. warsh was the contender, would that be contrary to what trump wants. Note i know what people are looking at him as the front runner. Is what wouldon he do differently to anyone else not go he has seen he is seen as a hawk. He is worried about inflation. If you look at most those comments, they have moved away from zero which they already have. They started the drawdown on the balance sheet. Now in todays condition that he is a hawkish person. We dont know. The president has made it very clear that he wants low Interest Rates as much as possible. I think most people are going to take that. lets throw another voice into the conversation. How gary cohn is in the running in this list of seven contenders. Jeffrey has been giving his thoughts. One of the things that people see and was saying is gary cohn, the number two guy from sex would be the fed just from Goldman Sachs would be the fed chairman. Oo close to the bone it is one thing to have asked goldman people from 20 years ago, middle management, that the central bank of the number two guy at Goldman Sachs it is just too clubby. Manus anna how serious do , niceke the betting money little flutter on the side. Do they know something that everybody else doesnt . David i was joking with manus, how can anyone know in less you are in the know in the white house . Curry, andd extremely dovish member from the midwestern Central Branch of the Federal Reserve. Markets also worry about what it means if gary doesnt get the job. A clear globalist and the trump administration, a steady hand on a range of different topics. If he doesnt get the job, does it signal he is leaving the administration dots what does it mean for the policy agenda . Agenda . Coming out against the listening of some of the regulations in the financial industry. We are right in the middle of an exit from extraordinary monetary policy. Theres a case to keeping him on board. Manus you mentioned tax in that sentence. Lets talk about the text scenario. There is this debate as to whether the current form of this tax plan would be acceptable. There are various people said we got to change it. It is not going to be acceptable in its current form. Whicher of tests, one of the buyer tests, the senate. Oute to limit legislation it is not going to work in its current form. Problem. Ey have got a they want to cut taxes, cut rates but in order to make that revenue neutral, youve got to take something away, take a giveaway away, take a loophole is defended by constituents and they havent got enough to lose that money. On top of that we dont have a huge amount of detail. They left a large chunks of what any final tax plan would include. We dont know the whole picture anyway. It gets back to this ideological war within the republican party. You got some people came to washington to limit the scope of government, the to limit the to balance the budget. Increasing tax cuts and speed up the economy. Those two sides are going to be disagreeing. We think it is 5050 you get something. It is interesting to see that the market has brought some pressing back into the companys that would benefit from some tax reform. The market believes that something might happen. It might end up with a small tax reform or no tax reform and that is what we dont need. Manus the bond market is trying to process is it washington . Is it yellen . Is it powell . The other side of yourthe other not the private bank i should emphasize. [no audio] opposition in u. S. Treasury bonds. The most bearish since 2006. There are a couple of facets that play into the bond market. Looks as if the market is building up on aggressive fed. David what has caused this is a shift in sentiment. Much stronger than most people were expecting in terms of their predictions where Interest Rates would go. Tax reform and how it interacts with the fed. This is the thing, the fed doesnt believe there is much left in the economy. The fed doesnt believe you need more than 100,000 jobs a month to keep the Unemployment Rate stable. Cutou get a sentiment tax and that starts boosting demand, that is going to raise Interest Rates even more. Manus the market is underestimating the capacity of the fed. Look at the 10 year Government Bond yields. Where could we break to . That could our target for last year, a couple of quarters remain the same, 2. 5 with a small range. Wherefore he said they will hike again in december we have always said they will hike again in december. A couple of hikes next year. Im not sure we see the 10year yield getting above 3 , even before the end of next year. Balancebal central bank sheets start to shrink, that is when we might see the other side. Manus david, you stay with nana and myself. Daybreak, and little bit later on on surveillance, tom keene is in a conversation with Stanley Fischer before his departure from the road. At 6 30 a. M. London time new york time. Together in moscow for Russian Energy weak 2017. Vladimir putin will speak. [no audio] manus Spains King Felipe it is six has addressed the nation on the crisis. Trying to break up his country unacceptable disloyalty has no place in a democratic state. The catalan Regional Government has broken the democratic principles of every rule of law and has undermined the coexistence of society. The authorities have rejected the affection that united these bandits due to the interest the spaniards. Manus meanwhile the spanish president says the decoration of independence is a question of days. Lets cross to maria taddeo. This is a very significant intervention by the king, this is channeling moments of his fathers reign. That theficant is it king a step in . Maria a lot of people are saying why has it gone quiet why has he gone quiet . I was at the airport and everyone was listening to what he was saying. Such was the expectation. He came up blasting basically saying this is put at risk everything this country has earned over the past 40 years. Democracy, the rule of law, this act of recklessly it is unacceptable in a democratic state. To hearoing to continue this message from the king. It is going to resonate across the political aisle. Anna what does this message from the king mean for rajoy . Maria that is key. We have been talking about he has been under a lot of pressure. It has been difficult for him because it is a minority government. He failed to establish the socialists have [no audio] go into the want to article. It is difficult to see how the osition you got a question where some of the core bonds are trading in europe right now and indeed where some of the safe havens around the eurozone are also trading. Look at the swiss franc and see that relationship between the Swiss National banks policies and the ecbs policies. One of the fascinating things about future European Asset allocation is all of the dominoes that come off the ecbs change in policy whenever it happens. As it folds as it unfolds over the next 18 months. Anna we are going to hear from liam fox, the trade secretary. He confirms that a method for splitting the btu has been provisionally agreed with the eu. One that. This is bloomberg. Is this a phone . Or a little internet machine . It makes you wonder shouldnt we get our phones and internet from the same company . Thats why Xfinity Mobile comes with your internet. You get up to 5 lines of talk and text at no extra cost. So all you pay for is data. See how much you can save. Choose by the gig or unlimited. Xfinity mobile. A new kind of network designed to save you money. Call, visit, or go to xfinitymobile. Com. Manus it has gone 2 30 in the afternoon. 1 . Side, down that september swoon may be just turning into a shortlived number. Etsy was going on with these numbers. Lets see what is going on with these numbers. Guy good morning. The dollar is important. Lets deal with where we think stocks are going to go. [no audio] look what is happening with the gmm. There is the bloomberg dollar index, the expectation seems to be remained priced in. Lets put the fixer debate one side. I want to talk a little bit about what is happening with gold. Investors are exiting, the largest gold etf at the fastest pace since july. People are exiting their gold positions. You wouldve thought theres an expectation the dollar will go down. Lets talk about this next chart. Gold is flagging a post dollar from an inverse correlation. Expectationget an that we are going to get gold the dollar going higher. We got this extremely negative correlation right now with the dollar and gold. That probably means reverts. We are probably going to be seeing the dollar starting to rally. Anna, back to you. Lets talk about something that has been very topical anna lets talk about something that is been very topical. The European Union and u. K. Have reached an understanding of the methodology it will use to divide up. I expect u. K. Trade secretary i spoke to the u. K. Trade secretary, liam fox. Liam as we leave the eu, we have to agree methods of dividing up the amount of kuroda britain should take from amount of quarter britain should take. It is a sign that we can make progress on both sides. Anna we have heard Michelle Barnier that they say not much progress has been made to talk about trade next week. Also crucially to investors outside europe and there is pressure that says we dont have to put our money in europe. To know what our italian and german and french investments will mean in terms of access to the u. K. Market. If you becomes unclear what access will be then they may decide to go elsewhere. This is part of the problem. We are not conducting this negotiation in a vacuum. Where doing it in the context we are doing it in the context. Anna is it the uks decision to leave the eu. Liam we have been making offers. T is our decision is a right it is not as though britain is breaking away and doing something against the rules. We are doing something that had been preagreed that we had a right to do. The agreement says European Union on to give due consideration to the future relationship. We think it is time to honor that part. Anna i was interested in some the comments that Philip Hammond made today. Perhaps Business Needs to do more to persuade some members of the cabinet about the need for transition. Are you one of those members of the cabinet . Liam we dont know what transition we only know what changes can be when we know what interstate is thats what in the endte is what state is. Ofthat happens for reasons logical ideology on the other side of the channel, that would be very unfortunate as it would be disruptive to europe. I want us to put prosperity of the citizens, the trade and the competitors is our priority, not politics. Anna that has to come first before conversations about instrumentation. Liam before we know what we are transitioning to, it is hard to say. I have no problems with tradition. Where leaving the European Union in march 2019. If we want to operate parallel agreementsagreements and rolls e sure there is no disruption [no audio] anna the trade secretary talking to me. He was using it as an example where there can be progress between the two sides where both sides see a need to make progress. Anna, that phrase, no deal is better than a bad deal, it did get a little bit of airtime yesterday. This comes down to david davis and what it was he said in terms of fairness and having planned these in place. Anna we heard from liam fox. He was blaming the other side. That is expected. No deal is better than a bad deal. Not because he said the cabinet wants that to be the case. There are people you can find who want to see no deal. The cabinet does not want that. It is just plans. Just the problem is they need to make more progress but they dont know what the definition of sufficient progress is. David stubbs from jpmorgan is with us. Lets bring him into the conversation. What is going on here, the inciting. Are you concerned that time will run out on the brexit . David absolutely some level of concern across the entire private sector and across the entire investment community. There is no deal in price and you have this tremendous cliff edge brexit. Under the surface, even though theres a lot of infighting, on the u. K. Side and on some the key issues, the discussion about transition deals on both sides is a clear positive for the market. I think it is a very high that clearer heads are going to prevail and theres going to be some kind of transition agreement and we will avoid that brexit. Year, the market is going to start to price some of this worry in. It has to. For now and one knows the real deadline is in this meeting in october. What is going to be driving is if you get around to late summer next year if there are no details, the market is going to start to worry more. Manus lets focus in on energy which has a chart ready for us, the bloomberg pound. It rallied between the middle of august and the end of september. It is on the turn again. The data is a little bit worrying. Youve got some of the Building Data coming in. This bank of england versus. Rexit debate will continue boris, dont forget boris. The data, what is the risk that the bank of england makes one of the biggest will seize of all opsies ofiggest whopo all time. David there is a risk that you will always be wrong. The Fourth Quarter of this year, the First Quarter of next year is far enough away from the referendum for the effects to fade in the economy be Strong Enough to paint the bank of england into a corner and take away some of the accommodations. Without being close enough to the 2019 deadline to freeze them into an action. This is a sixmonth period that we have now entered. I think they are going to hike in november as sterling is suggesting. The conception day for the the construction day for the Housing Market is strong. Risks, our with the focus around the London Housing the bank of england has signaled that they are going to move in november. Amy they may do something more in the First Quarter. We will wait and see. You are too close to the potential brexit. Manus anna. Anna you in manus or saying lets not forget boris johnson. Is not forget Jeremy Corbyn as well. The Labour Party Got a lot of mentions. They said that they are wargaming, what happened if they want if they won. Is that something that private clients are talking about are interested in it what happens the markets . David this is a subject of conversation among some of the clients. Im not sure theres an immediate level of concern. Theres a belief that i share that we are still a couple of years away from some kind of election. Only some people in the conservative party can bring theresa may down. Dp as well. It is likely she will see through whatever this budget process. We are years from way years away from an election. Whatever comes, if you get a corbyn government, i think there will be some significant market reaction. I dont think that is going to be classified as a run on the pound. The morehink some of colorful characterizations of what would happen i think we are going a little bit too far. As a move toward the election date, i expect clients to take some kind of preliminary action risk. Ill hedge that manus youve got to grow up and understand there is a likelihood. [laughter] just a passing thought based on personal knowledge. Lets talk about the risk. Liam fox in a competition with anna talked about global investors. As you said, the checkbook looks grand in this country. It is about fbi and it is about cash it is about it is about fdi. Private investors their proclivity to buy u. K. Assets, businesses to invest, has there been a change . Privateyou are settling into the of the old role, what is the feedback . David theres a lot of concern over the choice that this country made. I have often found trying to explain it to clients around the region, before what to discuss what to do about it. A lot of this is in the rearview mirror. That caught a lot of peoples attention. At the moment, people are watching and waiting. We do have a lot of those inherent strengths appear. There is a belief that the finance ministry may shrink a little bit. There is still desire for it to have some exposure to the u. K. Culture, to london. There is a schooling aspect. There is plenty of interest in the future of the u. K. , but that interest will turn to greater view onif we dont get the relationship between us and the European Union. We are going to be waiting quite some time. Manus theres some be more than one transition period. David stubbs, he stays with us. If youre traveling and from work, you know what to do. On your digital radio. Talk about the pound ahead of theresa mays speech. Can she do to the pound what you did last year . E are live in moscow we have president putin on bloomberg today. He joins a panel. The u. S. President plus the idea casting because that. Puerto ricos debt. This is bloomberg. Manus welcome back to bloomberg daybreak europe. Lets get to russia. Vladimir putin will be taking part in a special discussion moderated by bloomberg in moscow and he will be joined on the opec secretary and others to talk about the oil market and the future of russias economy. The panel will be chaired by john fraher. Looking forward to this panel. It is going to be an Exceptional Group of people. What are we going to learn when you sit down with mr. Putin this morning as the geopolitical world really swirls around. John president putin has been one of the most interesting people to speak to on the international circuit. He has a very particular worldview which we will be getting into. Important to remember that this is an Energy Conference and so a lot of conversation in the beginning of the panel will focus on these opec cuts. Will russia extend the agreement with opec . We will be talking about the threat to Traditional Energy posed by the revolution we are seeing in a renewable energy. We will be talking about the middle east which is a region very close and important to the global energy. Anna john, good morning. You mentioned the agreement that russia has with the opec. Effectiveness . Benefite cuts seemed to everybody. The oil prices is well above 55 a barrel. President clinton wanted to the election season next year probably pretty happy with that. There are deeper concerns about the oil and gas industry in russia from shareholders. From a lot of the investors who are here, the argument is russia really doesnt get as much money as it should. Doesnt operate these countries as these companies as efficiently. There is an incredible statistic when you look at rosneft 100 billion in acquisitions. Questions toious be had about the state of shareholders. Whether there is a better way to run those companies. Manus putin is hosting the saudi king this week. Is there a sense that he is becoming the new kingmaker of the middle east . Have bloomberg wrote a story we pointed out that president putin will be aware of the attempts to think you can be the puppet master of the middle east tend to be doomed to failure. History is littered with historical figures who thought they could do that. It is clear that russia, a lot of things go through russia now in the middle east, whether it is the iranian deal, the kurdish referendum or whether it is the war in syria. There is a lot of things that cannot get done without the cooperation of Vladimir Putin. The saudi king is here because theres a lot of business on the table. Russia is really a very important player in the middle east. Manus john, we wish you well. Enjoy that panel. It is going to be one of those exceptional memories. Jonathan ferro, our executive editor. Ferro onthan bloomberg tv. That kicks in at 11 a. M. This morning. President trump suggested that puerto ricos Government Debt may need to be wiped out to recover the damage caused by hurricane maria. The island declared a form of back see this year. Island declared a form of bankruptcy this year did david, when you read this story about trump, while some people are wall street will have to take some pain, we thought we would look at who might take the pain. This is a function on your bloomberg. Who are the biggest bond holders out there . Larry fink has an interest. David im happy to see we are not on the list. Manus i hope stubbs is not on the top five. This invokes one of those moments where the president of the United States says, wall street is going to have to suck it up. These kind of events, they dont come along very often. The emerging markets are very hard. When you look at the puerto rico situation, playing havoc in many different directions. David there is a whole range of issues, budgetary being one of them. Youre more than 10 billion package it with seen all of the devastation in the keys. Now you have the puerto rico issue which comes into an economy and a debt situation that is already extreme the fragile. This was in the macro issue before the macro desperate for the power grid was destroyed before the power grid was destroyed. The economist wave a magic wand and get people to pony up the money by canceling the debt and what you can do is pass the relief package to congress. I would imagine that is the more conventional route but we are not seeing a conventional president. And edwards, join the conversation. Anna perhaps not. I like the trump impression. Weak dollar has been part of the em story, has in it . September saw different different. Devised the em trade these moves in the dollar . David this is a fascinating subject. The militia is strong dollar hurts emerging markets. We are slightly less positivesu. The. We are adding to emerging markets in different ways. The Volatility Fund in some of our strategies. Also in our market and for such a, overweight some em debt. The key message for emerging markets is that are characteristics of todays emerging markets which allow them to perform better in a strong dollar environment then currencies are very cheap, almost under some calculations. Look at equity markets, the less you rely on foreign demand, they have been in the past. If it structured that issuance and the last decade, it has been a lot is concentrated on dollar. Maybe todays em can deal with a strong the dollar. Anna david, thank you so much for your time. , thank you for joining us. Up next, heading to the fed. Trump aides are expected to deliver a short list for the next chair. We will discuss. From eu agreement and we agreed on methodology. Make a sign we can progress and both sides choose to do so. We speak with the russian president Vladimir Putin in moscow and Russian Energy weak 2017. Good morning, very warm welcome to the program. I am anna edwards in manchester. Inus i am manus cranny bloombergs European Headquarters in london. We have some breaking news to get through. Tesco have delivered their profit numbers, first adjusted operating profit. , the estimateunds was for 700 703 million pounds. In 2. 1ket had penciled 2. 5 . Bea on thet operating level. Tesco are on track to cut their costs but this is the headline that shareholders are sure to be most heartened by. Tesco is restarting the dividend. We have not had one for three years so that is going to be good news for mr. Lewis in the team. The slump in the pound has pushed them to raise prices but they did not go as much as their rivals did. Isis around industry have been rising by 3 . Themption of the dividend, pencil and was 703 million pounds. We will talk to the cfo a little bit later on. Team at 8 45orning a. M. Lets talk about markets. We have the number one headline which is all about the fed. All about who might take over at the fed. Youre seeing equity markets pretty much roll a little bit haver in the opening, we the dax coming back, they had a day off yesterday. Theyre playing a little bit of catchup. It is readjusting for yesterdays trade and london down by 1 8 of 1 . This is the risk radar. Radar, asian equities are higher. Index thehe china highest since january. The hang seng is on a threeday role. Carmakers driving higher. Posting youre seeing a rise in the asian stock. Or is he just another man that could be running the fed . Criticizing the central bank for trying to do too much with monetary policy. Is talking about the prospect of a deficit for the current tax plan. And just skimming hitting toward 50. You have the higher u. S. Stockpile. Ubs are saying that opec led cuts need to be prolonged to support the prices. Lets have a look at the bond markets. The cattle and crisis Catalan Crisis harrowing the spanish people. This is the german yield moving, seeing a slight drop in the yield and youre seeing the spanish Government Bonds heading in terms of the yield at 1. 7 2 . Those are your markets. Quick update on the markets, lets turn our attention to bloomberg first word news getting uptodate with juliette saly. Juliette u. S. President donald trump has suggested that the Government Debt for puerto rico would have to be wiped clean to recover from the devastation of hurricane gloria. People have been without power and in many cases Drinking Water [inaudible] summon puerto ricos government estimating reconstruction cost would be as high as 60 billion. Is British Government growing increasingly concerned that it could crash out of the European Union without a trade deal. According to officials speaking on condition of anonymity. The blocks refusal to discuss a packed until it is satisfied with terms is stoking fears that time will run out. Yesterday david davis said he is still aiming for a good deal but warned the country must be prepared if negotiations fail. HasNorthern Irish party vowed to resist any efforts to create a border with the republican republic of ireland after britain exits. Alan foster speaking to bloomberg in manchester. Were to be a border between Northern Ireland and the rest of the united kingdom, [inaudible] we cannot have that. She has been clear about that. That is not going to happen. You see some talk coming out of europe but that is not [inaudible] for those of us who live in Northern Ireland. The intervention comes as they premised or is fighting to maintain control after 2. 3 voted and thens Regional Police force a guard orders to prevent the ballot. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. You can find more stories on the bloomberg at top. Japan closing out the session fairly flat on the nikkei. The index at a twoyear high, the broader topix nearing a twoyear high. Benchmark indexes higher for a fourth consecutive session but you have china, taiwan, south korea code closed and a big rally in banking players today and india in focus ahead of the r. B. I. Rate decision. No change expected to the cash rate. In terms of stocks we are watching, have a look at automakers in japan, particularly nissan. On reports it falsified inspection documents to make it seem as though authorized inspectors had checked the vehicles and this after the recall this week. You have property stocks in hong kong looking good, Chinese Developers are listed on the index andenterprises Cathay Pacific also a strong performer, a little bit off the highs of the day but it has been upgraded to neutral. At ubs he was previously a sell by the analysts at ubs. And hong kong 13. Manus thank you. , his advisersp have given him the final list of ofir recommendations candidates to lead the Federal Reserve. Two of the people are said to be janetrrent fed chair yellen remains under consideration and why there is no front runner while there is no front runner, hes looking at gary cohen and the former fed board governor and the Current Governor jerome powell. A broad church to choose from. Global headis the of currency strategy at hsbc. We get to your report in just a moment. Le economics. Lets start with the fed. He said, do we really care who leads the fed and should we care whether it is a hawk or dove . The institutional framework of the fed is so entrenched, it is so strong, does it really matter, is bernanke dovish or bearish, what what isnspan, they do appropriate at the time. Come on, this is not like a one roost, this ise the Federal Reserve bank of america. Come on. Morning to you, very good to see you. Insightsnyone have any , that is the tricky thing. Thing we ares the putting by the wayside. We are putting politics by the wayside. We start to look at economics were trying to secondguess a lot of these political aspects, impossible. About lets talk longlived economics. You talk about the structural and thitical period d the cyclical period. A cyclical paradigm . David this is the possibility of le pen. Although we worry about politics its impact on the market is diminished and what we are worried about now i think about now is which central bank is sequencing has changed. We can arrange rates in a few months time. Canada has done it, the u. K. Is in the process of doing it. Am hungry for, i who is next. Theyre going to capitulate and say unemployment is low and wages will not pick up. We want to buy the aussie dollar that you have sweden and norway entering into that camp and the kiwi. I love those currencies right now. Anna things that david loves, there is the list. Toan attempt to put politics one side although it can be tricky we have seen the dollar rally on the policies, it is about the fed but also whether there can be a delivery on tax reform. Where do you see the dollar heading in the general sense, what is your call . David we have the dollar a little bit down but in the daytoday basis where you worry lan, you are getting a move in the eurodollar. I am talking about the egg trended moves. All the politics is having an impact but not a massive impact that we saw if you look when trump got elected in november. The dollar when skyrocketing or when we worried about the french election. You are right. On a daytoday basis it matters but it didnt it is not automatic. Manus theres one group of ho doe about the w not believe in the rally on the dollar. Arehighest since 2013, they fading the move and selling into s, they are is believing disbelieving of an aggressive fed. David you can see the big move in the dollar in 2014. In december 20 15 if you look at the lou lined, by the time the fed raises rates the dollar is finished. In 2014 and was 2015 and it has gone sideways. In last year with trump and a little bit of down. You want to traded on a is 2 day basis, there here and 3 there. There is no big trend in the dollar at the moment. New and different will happen and will get excited about that but for the moment it is dishwater. There is no big dollar. What there is is idiosyncratic countries. Local beats global. Manus is that why you have gone for i like aussie . The aussies were job owing ja wboning the currency lower. The Unemployment Rate causing wages and then you wake up and rates are going to raise and the currency goes down and that is kind happen. Curvee seen the phillips disease go around the world like in the u. K. , if it falls below 7 you raise rates. Ok, six and five. We will talk about who is going to capitulate next. David bloom stays with us. Been moderately well behaved this morning. Great conversations to be had across the bloomberg expect spectrum. Conversationtoone with the feds vice chair Stanley Fischer before his departure. That is today at 11 30 a. M. Coming up on the show, and i been busy in manchester speaking to the dep leader. Keeping an open border with the ireland is a redline. President Vladimir Putin speaks to a Panel Discussion as part of the Russian Energy weak. That is on bloomberg at 11 00 a. M. This is bloomberg. Manus it is 7 18 a. M. In the city of london area lets check into your markets. 42 minutes until cash starts to trade. Markets looking for clear direction. There is the catalonian kingtion going on and the of spain has intervened warning about the disunity caused by separatists in catalonia and to buy has finished the day down by 0. 5 . Anna edwards is in manchester chasing politicians. Anna. Anna i do a lot of that. Theresa may is due to make a speech in manchester late this morning. She is fighting to fortified position. R leadership arehern irelands dup inping to run things parliament. I spoke with them about the red line. Was around doing what was right for the National Interest and the whole of the u. K. We do not like talking about red lines but one of the key elements of what we are trying to do after we leave the European Union is to have no internal borders the between parts of the u. K. If there were to be a border between Northern Ireland and the rest of the u. K. , that would be a redline for us. We cannot have that. The Prime Minister has been clear about that, that is not going to happen. Some talk coming out of europe, that is not accessible for us who live in Northern Ireland. So much of our trade is with great britain. 72 going to the rest of the u. K. And it is a very important issue. Anna the other things that people consider to be red lines, the transition, those are less crucial to the dep. There is this particular point that you are articulate inc. I welcome the clarity that the Prime Minister has brought to that issue. I think it is important that we say we do not want to get to the edge and we are all out of the European Union and there are difficulties round that but she thereen very clear that is the possibility of leaving. It is not just about things being prolonged for two years but in fomenting the will of the british people at that point. Years is thenk two maximum . I think it is a sensible length of time. Others have talked about five years but i think three years as of time. E period anna this is being seen as an study and whate it means to that trade environment. Are you hopeful that you can get overnge of heart or policy in the u. S. , are you hopeful for change . It is a complicated issue. Put in aed when boeing complaint to the department of commerce in america over the sale of airplanes to delta. Not useugh boeing does those types of planes, it is tod first who are involved understand how that can happen. Taken by the department of congress and what we need to concentrate on is finding a negotiated solution out of this. We have been working closely as you would expect with the Prime Minister and her team and also through them the canadian ernment and the barnier bombardier themselves. Bombardier is a critical part of in economic infrastructure Northern Ireland and therefore it is important that we sustained the jobs in belfast. Eileen foster speaking to me there. The bank of england is part of the story and the pound but in terms of the policy where do the various brexit scenarios leave the pound . I was looking for sterling to go lower and a got that completely wrong. I am happy to tell you. The mistake we made i believe is we concentrated on politics. As i said longlived economics, the bank of england said they would raise rates. When they said that sterling harley moved. When they said it sterling has gone rocketing upward. For the moment, politics is by the wayside. Of course it matters here and there but the big move from 120 52 135, that was due to the bank of england. Politics is a sideshow for the moment. In your noteste that the bank of england is so zealous to raise rates that it could ultimately turn out to be part of their ongoing, this is integrity. And this is about not believing they are doing the right thing. David the idea is when canada raise rates people do not say when are the going to cap cut . There is something wrong there and it the political influence will come back next year. I still have sterling falling toward 126. Politics will make the comeback but we are concentrating on the hard probability that the bank of england will raise rates and the reason were looking for that is like every other central bank they are predetermined and they have told us what we are going to do. Trichet, we doto not know what they will do. This is a complete change in the sequencing. No meeting is a surprise anymore. When the fed raise rates in december price that in now. It is fast and furious. The euro is trade weighted, you get to see the backstory. Taper priced in . This is the trade weighted euro. You are telling me the ecb will do something in october. Lets move it on. Thes that is the top of dollar. Drifting sideways. They goes one of four to 120. You are looking for the big bucks and the big trade and the big trend, it is over. This was david bloom. Is up next with guy johnson. Guy good morning and welcome. You are watching them berke markets. This of the european open. Cash trading will start for european equities in 30 minutes. Am guy johnson matt miller is off this week. Trump advisors are said to have given him a selection of a few names to chair the fed. Speculation is ranging from kashkari to powell. We will get Stanley Fischers