About that later in the program. They are both rising and watch the turkish data drop later on. The tape turkish stock market had a solid day bouncing back on the political concerns that we are watching at the moment. It is interesting to see the brazilian market bounce as strongly as it did. Lookmuch in play as we for the fed minutes. Catalonias president has said he will seek talks with the government and matured over the future of his region in spain. The announcement burress back from an immediately immediate declaration of independence. Is call for dialogue. Europe is afraid of the outcome if there is not ilog. The calls should be heeded. We need to open up a time to have dialogue with the state of spain. Donald said hent taxs to make changes to the form. He dismissed concerns that his public spat with senator bob corker would scuttle an overhaul. The framework they released last month has been criticized for adding to the budget deficit. Independent analysis suggests it would raise taxes for 30 of 50 making between 50,000 and 100,000 year. Be north korea appears to preparing to fire scout missiles. North korea is transferring about 30 skied missiles to a Maintenance Facility on the west coast. The movements are similar to an incident in march 2014 in which north korea fired 70 rockets. The occasion Prime Minister has stressed to president that the Iran Nuclear Deal is vitally important for regional security. They spoke on the phone yesterday with theresa may reaffirming britains strong commitment to the accord. This comes a few days ahead of the it announcement of whether trump will certify durants compliance. Theresa may has risked angering brexit supporters in an interview with nbc radio. She refused to say if she would in anotherve the Eu Referendum saying i voted remain for good reasons at the time but circumstances move on. What i did last time around was i looked at everything and came to a judgment and i would do the same thing this time around. Green tolddamien channel four news he believes the country is better off inside the eu. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. Matt thank you for that. The chief executive of the Worlds Largest wealth manager has signaled his bank is resolving it capital issues at legacy costs. Speaking exclusively to bloomberg he said investors need seek cash flow coming but back through dividends or buybacks. We asked where he had concerns about complacency. Across lots of classes, to be honest. More remarkable is credit i would say across the board. Across corporate credits and the [inaudible] investment grade. A lot of see i see a lot of complacency. Enough to cause alarm . That seems to go for much longer. It is too early to say that if this is alarming or not. We have to Pay Attention to that. Are you hearing from clients, what are they asking you for . Guest we see a little bit more of willingness to deploy cash. Changed from the beginning of the year. Our indicator is cash balances. There going down to mid20s. It is good news. More willingness to deploy money and invest money in equities that in bonds or any other asset classes. Still looking for diversification, the conviction level is not very high. You said diversification and one of the things we did not get to talk about is cryptocurrencies. Is anyone asking for more bitcoin . Guest some people. I do not think there is any meaningful desire by High Net Worth individuals to take big bets on this kind of phenomenon. Are they curious and what is your view on cryptocurrencies . Guess we believe that existing currencies may move to become more of a cryptocurrency, something that will make it much easier for intermediaries, clients to Exchange Services and pay for services. Isnot really believe there much room for the creation of new currencies. Thee is no real backing for credible issuer. Billionaires want to speculate with bitcoin. It does not look like it. It is definitely premature. The other issue is Monetary Policy. Impactportant late the the fed will have on reaching seeing. How concerned are you about leadership change at the Federal Reserve . I do think there is a sense of last time we had a change there was a high degree of continuity. If therebelieve is is any change. If there is a change i am not so sure that anybody has an interest to do something that is destructive. The market is already pricing the probability. There are expectations that you point,. 75 of a point hike. Probably in equity markets are in line for potential likes. I do not expect the fed to do aggressive, move aggressively. They have a nice path of exiting [inaudible] theyre going to be able to contract the Balance Sheets smoothly. There is a president who is not shy about sharing his fears. Are you worried about the independence of this fed Going Forward . Thisually when you look at kind of political intervention not only in this country but generally in the world, they may contrary reaction of people trying to show that they are independent. I do not think it is a smart move for politicians to interfere in central banking Monetary Policy. When you look at the policy is there anything does the prospect of a change in sight you . We are not overly focused on those kinds of leadership changes. The angle that matters for us is not necessarily Monetary Policy. If there is any implication to the oversight of the potential or centralt the fed banks are doing to our industry. Be taken and ito do not expect major changes. Kia interesting interview. We have another one coming up. At 1 30 p. M. U. K. Time. The dollar declined, the greenback halted the threeday fall. And fed minutes under pressure. We will take a look at what we can expect from the minutes and what we do in the meantime. That is next. The market open 18 minutes away. This is bloomberg. Guy 15 minutes till the equity market open. The s p marches toward record highs again and again. We are talking very much about the relationship with u. S. Tax reform, are the two interacting . The stock market is a concern from four richard faler. He is the professor who won the nobel prize in economics and spoke to bloomberg yesterday. I do not know about you but i am nervous and it seems like when investors are nervous, they are prone to being spooked and nothing seems to spoke the market. As you said it just crawls up slowly but surely. Thaler, nobel prizewinning economist. We are waiting for the notes from the fed to be released. To be nervousing about, will they be overshadowed by the nomination of the next fed chair . What am i doing with my time as for the minutes, how should i be preparing . Mark there is one of the big issues for turkey, the external deficit balance. Tradinga. M. Has been incredibly strongly led by asia. Asian stocks have done well. Of thethe fed itself one big issues were looking at, we are not expecting major surprises because where there was a fed conference afterwards they are at a binary point. That means any small surprise could set the trend for the next few weeks. Matt i wonder about the catalonia issue, if we see a big gain in ibex futures. Is thisom this pop, full thing over, are investors going to go back to ignoring it like they were last week . Back tovestors may go ignore it. In the samee are situation we have been in the last couple of weeks. There is no conclusion but it is not going away, it is not resolved. Were looking at a deferred declaration of independence. There are major unless there are major concessions. They have not given any sign they want to give concessions. The situation will head to a big stir up. We are not that sure it will come to a head this week or even last week. I do not think the situation has changed that much. Maybe we can be more confident that it is not likely to come to a head next week or the next couple of weeks. Investors should not ignore it, they should keep on the radar but not trade just now. Guy i am looking at the tail risks surrounding this, how do i position for those . Out of money positions i could take on, what are details looking at, how should i play this one if i need to put insurance in place . Mark with the privacy oig not want to recommend specific traits, volatility is very cheap at the moment. The risk ofo get option. The base case is this will be fine. Spain cannot afford catalonia to separate and they cannot afford any major concessions because that might incentivize other people to try the same trick. There is too much at stake in this will be resolved. If there is separation or if is adoes stir up, this negative story for the euro, for european bonds and spanish bonds. Not the base case. Matt speaking of independence and volatility, cranfield writes on the mliv blog about the euro jumping abovey the threemonth header. The european consul will meet october 19 and 20 and they say brexit negotiations have not gone far enough for the u. K. Has not gone far enough to advance their cause. What do you think about the euro pound rate here . Storiese fundamental for the u. K. Is very negative from the macro fundamentals and the political story surrounding it domestically and with exit. Brexit negotiations do not seem to be going well. Sentiment is negative and expectations are low for brexit. It is easier to get a positive than a negative surprise. Expectations are rockbottom. In that regard regard, the base case for the sterling is negative. The larger surprise if there is a positive surprise and even though embrace hike is priced for november if the bank of england delivered it will be a boost for sterling. You how much attention are paying to the tech story and what is happening with senator corker . K it will be as simple absolutely massive for markets. There is a much priced in for it. If there is tax reform it will be a massive boost. I understand the market is skeptical. There does seem to be massive thesion not even between bipartisan divisions but in the Republican Party itself. At the moment it is looking unlikely we will get touched for a. There is a little bit of high price, the market started trading that story. There is a reaction function either way. If this has been killed completely that would be a negative for stocks and assets. You saw that dollar trade only because of this issue. The even bigger reaction will be if there is tax reform passed because that is not expected at the moment. Guy thank you very much indeed. Mark cudmore joining us from the mliv chief team. We are anticipating in 10 minutes time the market open and currentaccount data out of turkey. It is expected to bounce back. That is the survey line there. We are anticipating that will see that, what is interesting with the brand and the turkish lira. Both trading strongly this morning. We are minutes away from the market open. We will take a look at the movers we are expecting. Singer, the conversation is next. The open market open is minutes away. This is bloomberg. Matt the European Market six minutes away from the start of cash trading. Lets take a look at the stocks to watch. Ubs is one and maybe watched banks across the sector but ubs especially because of our exclusive interview with Sergio Ermotti in which he said the bank is where you want to be as far as the capital cushion and as far as legal costs are concerned. It is time to start paying shareholders back with about if they have more than 13 capital ratio they want to get 50 of their profits back to shareholders. That is their policy through buybacks or dividends. Watch ubs stock. Lets look at the anr for smith and matthew. What is interesting here is you can take a look, there is the price target. Price that has come up sharply over the last few months. The prices, as you can see, the little red bars here. There are more sales coming into the market. It will be interesting to see i get if they get reversed. Heres your fair value. Spain a softening but it is up by one point 4 at the get go of trade and i suspect it will be beat to the high trade. The market open is four minutes away. This is bloomberg. Guy a minute to go until cash opens. We are expecting an increasingly positive start. The spanish market trading strongly pure you can see the ibex up by 1. 5 . Keep a firm eye on what is happening with the banks. Thent to show you ecoscreen. Turkish current accounts data about to drop. It is a big number, one of the factors the lira trades around you look at the survey. Big gap there. Matt. Matt i am just looking quickly at the ubs chart i have got here, g btv 1162. It shows the share price in white compared with the Credit Suisse share price and purple and a basket of investment banks in blue. Thes normalized from beginning of the year. Keep that in mind. January firste, this year, ubs has underperformed Credit Suisse. Be the day that ubs gained some ground. Guy the equity market open. We should probably bring this up as well. I want to see this data dropped during flight problem with that. Let us show you what is happening with the monitors. Up. Us let that load the ftse 100 trading positively. The cac 40 is expected to open up. Let us wait for the ibex. 1. 6 . Good. The current account data is dropping as well. Let us see how you turkish lira is reacting. We will show you numbers in a moment. In the meantime, let us go to nejra for the details. Nejra i am starting with the gilt market open which is happening right now. Looking at the 10year gilt higher by some two basis point. 1. 38e at 8 . Really, that is where we are seeing most of the action. If you look at the stoxx 600, we are of by some not a huge amount of movement in the equity benchmark overall. A mixed picture looking into the Industry Groups as we dig into the imap. Financials outperforming. Following closely behind. On the downside, energy and industrials underperform. I have a focus with my next two charts. This is the biggest etf tracking spanish stock, msci. Yesterday on optimism that some sort of deal with madrid would be reached. Back fromwas coming the brink. The Trading Volume was at 700 of the 90 day average. We have been seeing outflows from this in the few days previous. ,ooking here at financial etf this is the msci europe financial etf assets and really catching up with the ishares, u. S. Financials. One interpretation of this is investors have been getting ingly positive. Guy, matt. Ejra. Thank you, n this data has come in better than anticipated at 1. 24 billion. The prior, 5. 12. Just revised title. The number certainly better than anticipated. Whats move on and show you the reaction is. There is not very much. The market clearly feels this is something that may be consumed by the political story. Let us talk about what is happening with individual stocks. Take a look at the Spanish Banks and other spanish stocks. Here are the banks. This trading up by 4 . Nephew trading up 3. 5 on the back of the elliott means. Santander is trading higher. Anticipated, a stock play on the ibex is driving this market on the upside. Matt miller come over to you. Matt i want to talk about what is going on over in spain. Catalan president has held off on the glaring immediate independence from spain this by saying he has a mandate to do so and saying he would yesterday. It follows warning crisis could morph into an economic crisis. We propose for the parliament to suspend the effects of the declaration of independence so in the coming weeks, we undertake a dialogue without which it is not possible to reach an agreed solution. The spanish Prime Minister rajoy willano address them imminently. Response yetny from the government . That is right. Yesterday night, the Spanish Government did come out and say that this is completely unacceptable. We do not care about the fact that he suspended the republic. Catalonia was independent for 10 seconds. This is a step too far. How tough will they go in catalonia . That is still in the cards. If the government wants negotiation, they are not going to get it. The bottom line shows how far will rajoy go now . Guy the ball is definitely in his court. Limbo,s of the state of region, province, whatever, currently finds itself in, what is the timeline and how will the people react . That is a great question. We have been talking about this for days. He was being pulled from all sides. Moderates saying do not do the lateral 48 hours. The market is reacting to that means. On the other side, we get radical saying you obviously did not deliver. I want to show you something. This catalan newspaper, it says Catalonian Independence now you see it, now you dont. You get people nothing and celebrating, and 10 seconds later, everyone is crying. A lot of people on the ground were incredibly frustrated. They got a republic for 10 seconds, and that was it. You very much indeed. Maria joining us out of barcelona. We see exactly how the day progresses. We are indicating the market trading higher on equities. Steen akerson joins us jakobsen joins us now. Steen it reminds me of the brexit. I think it is a constitution crisis. This is about the setup of the parliament in spain which is where the region is sitting. Madrid is fighting this. That is where the solution will be. Constitution changes difficult. Guy why do i worry about this . I have the ecb hoover during of everything it can. Up everything it cant hear you have seen a little bit of volatility but not a great deal of volatility. This is a huge half for spain. They are moving to percent, 3 three government bonds are moving a little bit. Steen one of the reasons we have seen the catalonian government step down is companies are now actually physically leaving catalonia and going to spain. That is what is going to be determining whether catalonia comes to the table. The blame is on both sides. Make no mistakes. Spain, madrid, famous for not wanting to confront this issue. He has not even been to catalonia. Both sides meeting to address it. It is a constitution crisis. Hence, for the market, it is not even that relevant. Ecb is at sure the least happy that the euro went back down from 120. They dont want to see it get much higher than that or at least not with any speed. Is this a dip to buy . Can we assume that catalonia does not secede from the federal Spanish Government and that the euro continues its climb higher . Steen i think the euro goes up independently of what happens in for whatever rises in the streets. He is becoming more competitive over the last three years. The euro is heading higher, the dollar is heading lower. The u. S. Is on a path where everything in terms of trump policy is betting on the fact the dollar absolutely. Matt having said that, i assume you are optimistic that there is no real crisis here . , has beenn, you know difficult to hold together, even for, well, it has taken a dictator to hold it together. The Basque Country still wants to leave. The catalonians want to leave. Or are a few others who would not mind getting out of spain either. You are assuming in buying the euro, it is going to hold together without a problem. Steen with all due respect, you are over interpreting. They want more independence. Think this is really going down to what i stated earlier. Is set the constitution up and the parliamentary system works in spain is the regions only have access to become senators who have very little power in terms of what happens with politics in madrid and spain. You need to change these countries. You need to step down and deal with this issue. Spain it needs to be standing together. It is an issue that has been there for many years, but it needs to be dealt with by revision to the constitution in my opinion. I am kind of torn between two stories in europe. One is that there seems to be a drive driven by paris to take you up another step forward, and that is what investors are listening to up the moment. There is positive news in terms of the data which is quite solid at the moment. They look at mr. Macron, driving his story forward. I have seen the dutch government form. It has big elements of euro skepticism within it. I listened to Wolfgang Schaeuble talking about his view of how european debt should be treated in terms of bail and. Ilin. I am looking at eastern europe. There is plenty of reasons to be skeptical. Steen there is a huge amount of Political Capital invested. This is summer for european politics. I think, the u. K. Was expecting negotiation with the u. K. You have the u. K. Dealing with europe. To that extent the key really is, and maybe this is for match to answer. Who will become the finance member of the fdp . Relaxed and cool to a lot of these European Countries relatively to what they have been indicating is their stance on the weaker european economies and the dutch forgiveness the Debt Forgiveness that is for us to happen. Guy Steve Jacobson same with Steen Jakobsen staying with us. 11 30 p. M. Rview, u. K. Time. The fed firmly in focus today. Says he sergio massi expects a smooth contraction of the feds balance sheet. We will bring you more of the ourceos thoughts from exclusive interview, next. This is bloomberg. Guy 15 minutes into the cash session in europe. A live shot from the spanish stock market. Look at the ticker at the top of the screen. Rising really quite sharply. In some ways, historical legacy. The world is long forgotten, but nevertheless, nice to have the place we can probably stuck exchange rather than being in the ether. Madrid. Rket up in that has faded a little bit. 75. 35 for the ftse. Dax, just cleaning to positive clinging to positive territory. Stoxx 600 trading up. 1 . Matt. Matt let us talk more about banks right now, specifically ubs. Sergio ermotti says he does not expect the fed to move aggressively, but in an exclusive interview with bloomberg, the chief executive says it is not a smart move for politicians to interfere in central bank policy. Not overly concerned. At the end of the day, there is a change thating was a high degree of continuing. I dont believe there is any change we need to see. If there ishange a change, im not sure anyone has to do something constructive. The market is already pricing the probability. Threepectations with quarters of a point in the future. Probably equity markets are blind to this kind of potential. I do not expect the fed to move aggressively. They have a nice path of being able to exit by just, you know, the fact that a lot of the bonds willhold expire and they be able to contract the Balance Sheets smoothly. One of the wildcards is a u. S. President who is not shy about sharing his views on Monetary Policy as well, if that occurs to him. Are you worried about the independence of this fed Going Forward . I think that, you know, usually, when you look at this kind of political intervention, not only in this country, but generally in the world, they may the contrary reaction of people trying to show they are independent, and therefore, i do not think it is a smart move for politicians to interfere in the central banking Monetary Policy. When you think about that policy specifically, is there anything that excites you, the prospect . Of a change that excites you how would that benefit your business . We are not overly focused on those kind of leadership changes. The angle that really matters for us is not necessarily Monetary Policy per se, but just if there is any implication to the oversight of the fed is doing to our industry. Takenth there seems to be , and therefore, i dont expect any major changes. Matt that was Sergio Ermotti speaking exclusively it with julia chatterley angela weber. Someone else weighing and joel webber. Another one weighing in, paul krugman, speaking exclusively with us as well. Krugman gave his thoughts on kevin warsh. Paul fray while, the bedding for a while, the betting was for kevin warsh, former fed governor record and isk quite consistent. He has been wrong about everything. Matt still with us is dean yeah ates in is Steen Jakobsen saxo bank. The main question is not are they want to raise rates . The market expects them to. Are they going to do it two or three times next year . But rather who is want to be the next fed chair . How important is the question and what is the answer . Steen it is more important what about thisrman does inflation debate which is still going on. It could be a woman. The 1970s. In krugman was educating himself. The model has not changed over that time. Owndel by which their research is told to be inferior to all other predictive models of inflation. We have inflation targeting with a model that does not work in the fed. Having said that, i doubt kevin chairman, be the next because the one thing going for him up for us is that his fatherinlaw is a very good friend of mr. Trump. I do not think he can control him and i would be very disappointed by kevin walsh recently. It if there were he reverse engineered all of trumps plan to get the job at the fed. I dont think thats bigs to independence. We are going to get a nonindependent chairmen are woman again at the fed. The real issue remains inflation. Matt you mentioned a rule, first of all, and i do not know which rule you are talking depending on what the inputs are, the fed rate is way off. Zero neutral real rate and inflation target of , we, and by that measure are too far up to what rule do you think the fed should be looking at as far as inflation is concerned . You have to go all in on productivity. Growth at the end of the day, which is the political atmosphere, the political parliament is trying to get, is growth and full employment. Full employment comes through growth. Relativity. It is to focus on how to get the u. S. Back on track to get the of the structure investment increase in the r d in the space, and doing that. We are offering tax cuts. We are offering ways of mingling. Productivity is the call that needs to be had. Want to be all about how they abandoned the two Percent Inflation targeting and moved to Something Like productivity as the main target. Guy how do you do that . How do you actually practically make that happen . Steen you saw to some extent already with qe. , qe wasemember everything. Academic papers were saying qe only works if you have fiscal support of it. So then they started abandoning qe. What you see is what you already see. Throughn targeting using the phillips curve is not working. Gradually, they dug medically except that is not the fact and then move you up to something else. The problem in the premise is how do you come from productivity . Very difficult. You need a research paper, it up by nick approach a dogmatic you need a dogmatic approach. Communicate ato reaction function that allows people to calibrate their decisionmaking around that. Steen that is the big risk. The big problem with the communication policy is you put yourself in a corner. Leaving the corner means implicitly that you were wrong. They were wrong. They know they are wrong. The market is always fading whatever inflation target they have, right . Int is how you make money fixed income. The fact of the matter is, similar to what trump needs to say is there are economic laws that work or do not work. Productivity equals growth. Growth is what drives jobs. Alternately, you need to go back to basics. I am so naive and blueeyed and of to think that ultimately, we get there. Always, always, it comes through the academic side of things. Guy the attention. Reader papers. Steen jakobsen is going to stick around. Here is Sebastian Salek. Sebastian it plunged again after it admitted it suggests data was falsified. Iron ore powder. Corporate scandal has seen more than one third of the companys value wiped away, shaken consumers, and attracted the wrath of regulators. It may also play a role in the countrys snap election. Finland has agreed to sell ceramic tech to bc partners. To valueaction is set around 2. 6 billion euros, including debt. They beat out bids from other firms. Singersre paul Elliott Management, has taken a stake in smith and nephew. It is not clear how much the owns or what it plans to push for at the company. A representative the climbed to comment, and a Spokesman Says it does not comment on rumor or speculation or the identity of our investors other than those publicly disclosed. That is your Bloomberg Business flash. Guy. Matt i am going to pick it up from here, sebastian. I want to cross over to nejra cehic and get a closer look at the stock market for the midcap movers. Bejra you just heard se talking about elliott building a state at they built a state of over 3 . A german engineering firm. It said this in a statement. We are seeing the reaction is up 7 , rising the most since 2009. At one point, it was higher by more than 9 earlier. This is ge a group, one of the best performers on the stoxx 600. Downside, on to the since 2013ts lowest and is dropping the most since november 2016 through this is a danish company. It cut its year Revenue Growth forecast. First half underlying revenue down. Coming through that obviously the market is reading negatively in todays session. I am looking at providence financial and we have reported extensively on the challenges. Own 9. 3 one of the worst performance on the stoxx 600. This seems to be largely on the fact that barclays has downgraded it to underweight equally. Guy thank you very much. . What will cause the next recession will it be the credit impulse or will we be saved by these political cards . Next. Matt madrids move. An cabinet has convened for emergency meeting. How will it react to last nights move by the catalan president to a declaration of independence and seek now, weions . Any minute will gain insight into september the fomc meeting tonight. Will the notes be overshadowed by the fed chair news . Ready to splash the cash . Ceo tells bloomberg exclusively that capital issues are fading and the bank is on a good path. Share buybacks. Welcome to Bloomberg Markets the european open. I am a long guy johnson and bloombergs European Headquarters in london. Guy let us talk about where we numbers these through the rally we have seen in the madrid market. The banks have been the trade this morning. 600 and the ftse 100 flirting with the flat line. The dax is not much further away. The madrid market is the real standout story. It is interesting. The mliv guys are talking about the fact that this is as good a scenario as we would ultimately get. Going to be interesting how the day progresses. There is a Cabinet Meeting taking place in madrid right now. We will see what the results look like this afternoon when we get a statement. The other thing i mention right now is what is happening with the dollar, turkish lira, trading back down towards session lows on the back of the current account data. Not a big move. Probably a more dominant future. The current account story, very important. Back to Steen Jakobsen, ceo of saxo bank. A lot to talk about. Let us talk about where the fed goes and we kind oftickeed that bob and the kind of ticked that box a little bit already. Let us talk about what is happening in the real economy. One of the things that is happening in the real economy is chinese are focusing on technology and trying to drive technology. It is a big part of the next Economic Cycle we are going to get announced in the next few days. How do i play that cycle . Is it through the solar story, the Technology Story . A productivity story well see developing there as well . Steen clearly, general to gain the productivity. 20 to 30 of the productivity of the u. S. This debt situation they created for themselves is to grow the productivity side. That is why the fiveyear plan has embedded into it a Huge Technology drive, one of the Largest Research and development in the world. Moredelivered 10 times packages and amazon those on a daily basis. You have the batteries, the electric car industry going on, with remedies for the government. Dont forget, in china, the number one social issue is pollution. You deal with that by going you let divide. Guy this is something you and i were talking about during the break. We certainly, increased pretty dramatically. We go to the Component Parts of it, the turkish lira. And you take a look at the holdings, do i want to be picking winners . Playing tesla, etc. , etc. . , and see the stocks here then, if you go into the allegations, you can see as well the chemical engineering, it plays a big part in the allocation as well. It is very hard to understand who is going to win and why they are going to win. How do i make this work for your portfolio . The Combustion Engine coming out, at the time, there were 6000 from brands. We go down the production line. Having 6000 different components, it is interesting about what you have on the boards chemicals is 50 or a talking about engineering, skills, dealing with it. , batteries, is basically having the combustibility versus the stories of energy because we have two pair the system. That the next path, the next devolution and technology, is combining the soft data with manufacturing ability and engineering. A very productive one of ahead of it. Etfs beautiful because you get the exposure geographically and in terms of what goes on in businesses in the world. They must be winners. You have rwe in germany. They are not ready yet, but they will be the big winners. That utilization of the great goes up. Imagine the scale by which they can derive some profit from that. Matt on that note, earlier, you said electric cars could be the pollutionthe problem. Most of them are powered by coal burning plants. Throwinggh you are not a lot of nitric oxide and Carbon Dioxide out of your tailpipes when you are going down the road, at night, when you plug the thing in, you are firing up the big, dirty coal plants around china. How does that change, and how do you make money on that . Steen absolutely true, but what we have to realize is that in every Technology Challenge we ever had, and this is that we need more alternative energy. ,hen there is enough demand there will be so much money thrown at the issue, we will have a solution which is cleaner, better. The economics of alternative energy will be working in favor of this. That is basically an issue of money and talent working at this problem. The winner is it is the old world. It is the power networks, utilities that have the ability to transform the spirit classically, it is going to be the Chemical Industry and others that work with batteries in the likes. Before, there are one Million People who want to be part of this trip, but it is very difficult. Matt but you are saying you think basically, when solar, nuclear, come in to replace coal and dirty power . Will i think what we sealver the next 10 to 20 years is less and less will come from energyonal resources of and alternative energy will pick up because the economy of scale, the costtitiveness of of production will come significantly down by the vast amount of money already thrown at it and more money is incoming, because, i mean, look in germany. 20 billion euros in a lecture vacation. They are going to electrify the whole line. All these companies are going to be having one focus only, electrification. There will be shortages and challenges, but the amount of money, the sheer size being thrown at this issue, will create what is not being here today. That i am hearing a lot of people talk about in the u. K. When they are referencing the labour party is understanding the risk the governments offer. And nationalization and the whole process of and we see it again this morning with often trying to control pricing. Isnt there a risk i need to worry about when i think about some of this stuff . Very incumbentbe on government to make sure they regulate this process. On the side of the consumer rather than the company. We are seeing germany. Aggressively when it comes to its power. China doing the same. Japan has them the same. The u. K. Is trying to figure out what it is going to do. The counterparty risk has really buffeted some of these operators over the last few years. Steen there are two opposite risks here. There is one risk which is the counterpart, but in terms of the price structure, as more people commit to alternative energy, you have a propeller on your house, and you connect to the grid. So you go off grid. That is a risk as well. The utility dont forget all the cars will be charged at a time when there is no utility. Power play and are built to have capacity. Make a cup of tea. That is what they are before. In the u. S. , you are implementing better resources so it goes down dramatically. The bottom line, you have less you have less. There are countertrend, i agree. The fact is, these are running at capacity. 50 of the capacity. That is the most expensive one. They have the standby capability that is what cost the biggest amount of money. Guy cars become batteries and you actually your car becomes you park it outside. When you put it back into the grid steen think about it. You are having small doses in the u. K. In the new building regulation, the state 5 of New Buildings have to come from alternative energy. People put a propeller outside the house. Imagine if you have technology that actually did something in terms of reconnecting and storage of the battery . I think that its meant to be the drive. Guy joining us from saxo bank, is the cio. We will discuss theresa mays latest comments that have caused controversy. Which way which he voted there was a second referendum . The answer to that one, not forthcoming. This is bloomberg. Guy 43 minutes into the equity session, let us get to some of these members. Nejra cehic. Nejra i showed you gea group earlier. This is about pulsing or possibly Elliott Management. Gea group gaining after trading yesterday. Elliott management built a stake of over 3 in the company. Smith and nephew now, this is according to people familiar with the matter. We heard Elliott Management has built a stake in this company as well, but it is not clear how y own. He this is smith and nephew. According to u. K. Disclosure rules, they are required to report a shareholding that exceeds 3 . We could perhaps surmise from that. It is lower than that. We are seeing smith and nephew gaining 2. 7 even while it is not clear how much elliott owns and what it plans to push for the company. This is all according to people familiar and according to bloombergs reporting. We are seeing a bit of a general relief rally in spanish assets. After the close yesterday, fitch upgraded to be be be from to bbb. Both of these stocks, two of the biggest gainers in this session. On the downside, one of the i. Rst performers is mond see, down 8. 3 at the moment after they said rising costs and unfavorable currency moves with the full earnings come in below expectations. Matt. That,thanks very much for nejra cehic, with your movers. Let us get to Sebastian Salek with your first word news. Sebastian. Sebastian catalonias president said he will seek talks with madrid over the future of his region in spain. The announcement was back from an immediate declaration of independence that threatens a constitutional crisis turning into an economic one. There is a call for dialogue on the subject across europe because europe is afraid of the outcome if there is not dialogue. Those calls should be heated, so we need to open up a time period to have a dialogue with the state of spain. Trump has saidld he plans to make changes to his tax plan was in the next few weeks without giving any details. He dismissed concerns about a public spat with corker would cause an overhaul. This last month and has been criticized for adding to the deficit. The ceo of ubs has said the worlds wealthiest individuals are staying on the sidelines when it comes to cryptocurrencies. Sergio made the comment in an exclusive interview with bloomberg. People are more curious than willing to invest. I do not think there is any meaningful desire by High Net Worth individuals to take big bets on this kind of phenomenon. Sebastian global news, 24 hours per day, powered by 120 countries. This is bloomberg. Guy, matt. Guy thank you very much indeed pure theresa may angering hard brexit supporters with her comments on the you ks exit from the european union. In an interview with lb see radio,she refused lbc she refused to say she would leave the e. U. If there was another referendum. I voted remain for a good resume at the time. Circumstances move on. I think we should all be focused on delivering brexit. Delivering the best deal. How would i vote in a vote now against a different background . International background, economic background, potentially. Cannot know. Jeremy said he voted remain in the referendum. He was the chief advocate of remain. He says now he would vote for brexit because the Economic Predictions did not come true. He said he could change his mind. I do not quite understand why you cannot, seeing as you are the Prime Minister leading us into brexit. I am going to deliver brexit for the british people. You cannot tell me that you would now vote leave in the referendum . I could sit here and say i would still vote remain or leave, just give you an answer to the question. I am being open and honest with you. What i did last time round was looked at everything and came to a judgment your it i would do exactly the same this time round. He Still Believes the country is better off inside the e. U. The times piece in this morning talking about the fact that the chancellor of the exchequer is not budgeting for a hard brexit. Interesting movement taking place here after such dominance over the last few days. Of saxokobsen, ceo bank, still with us. What is your view of what is happening here . Steen in u. S. Terminology, can gartner kindergarten. It is difficult to see what kind of stand she has overall. A member of times they expected the u. K. To be split down the middle on this issue. Minister of the interior yesterday saying they were not able to deal with a hard brexit. I mean, the hammond does not want to do a calculation for how much cost there will be for a hard brexit. Clearly, the u. K. Does not want to leave. The u. K. Is becoming ever more week in its ability to evermoreweak in its ability to in its abilityk to negotiate. Of timethis extension until things settle by nature rather than decision. Guy kindergarten. We will leave that one alone. I am joking. [laughter] steen wasnt it what they said about the whole politics . Guy yeah, anyway. So buy the pound . How high does ago . Steen i have been doing this for a number of decades. Guy just pick a number. Steen sterling below 140 overlong periods is very difficult to see. 140 is the ultimate rate by which the u. K. Is still competitive and the Global Investors show faith in the u. K. Market. What is increasingly happening when i turn around in the world is people are starting to understand the u. K. Is not just breaks and thinking bricks banking. You have all the telecommunication companies. You have the highest concentration of phds per capita. There is a lot to say for the ability to adapt. This country has never not been willing to stand up and deliver when they need to, so full of faith in the u. K. Matt all right, thank you so much for joining us. Really appreciate your time. Jakobsen,n, steen from saxo bank. Elliott setting its sights on europe. Pulsing is crosshairs. The activist investor buys stakes in two new companies. This is bloomberg. Matt welcome back to Bloomberg Markets european open. I am matt miller in the german capital of berlin. Activist investor pulsing or is. Paul singer his hedge fund, Elliott Management, added gea to its portfolio. It took a stake in the british , knees, ande hips shoulders good with us now is ruth david. Ruth, what is elliott game plan as far as smith and nephew and gea . He is not disclosed it yet. The way the u. K. Takeover rules, it is similar to germany, if he crosses 3 , he will have to make a disclosure. We know smith and nephew is one of those companies that has been on everyones takeover list for so long. We have the news of the ceo stepping down at the end of 2018. A campaign for his success. Theirts have been saying organic growth targets are not that high. They actually trailed the rival, which has been the most talked about name when it comes to a combination for smith and nephew. We are not sure what he will be doing, but we imagine that some of these obvious targets are ones that will be coming up in boardroom conversations down. Guy if he does not do it, will somebody else do it . It is interesting he is building stakes. You wonder how europeans will respond to this. Will the Management Team absorb this information as a we will do what youre looking for . Or will he say go away. He has had a mixed bag of successes in europe this year. He was talking about selling businesses, and now, we are hearing that is happening in the u. S. You had akzonobel, where they said we do not want to be taken over by the americans, and they stuck to that dance. Influenceu want to the business, by the business. Companies, unlike their u. S. Counterparts, have not seen activism of this nature. This year has been unique because of the trade. When youre talking bhp and nestle, they are not small companies. They are being heard, which is new. Guy definitely new. Ruth david, interesting stories. Durham tech, another one. We have got Great Stories coming up on bloomberg. Today is going to be dominated man, charles evans, joining us at 1 30 p. M. London time. 8 30 in in new york. We will be talking about what happens with the feds Economic Cycle. Stay with us. Of next, it is bloomberg surveillance. Matt and i are off to bloomberg radio. K europe yo have a great day. Francine madrids move. Rajoys cabinet holds an emergency meeting as spain is ready to negotiate. Is december a done deal . Investors look for hints. Could Financial Stability trump inflation . And ubs back on track. The ceo signals an end to capital issues. I believe we are in a good pass. We are almost there. Actually, we are there. We will start to see the cash flow coming back through dividend