Proposali think the has huge potential, and i think the challenges for the transaction of the exchange for services and so forth, today, still has lots of obstacles to be overcome, including that of security and privacy. Nonetheless, we look forward to observing and participating in this because i really do think it is the wave of the future. As senator tillis said, we are either going to be responding to it or actively involved and running from it. Thank you. Senator cortez . Senator thank you very much. We appreciate you being here and answering the questions. This is obviously very innovative for all of us and exciting. Have a couple of questions if you thought through some concerns many of us have. One for me is something i dealt with in nevada as the attorney generals the issue of Money Laundering. I know there is clear Regulatory Oversight we have now to address Money Laundering that comes in so many forms, but one is terrorist financing that moneylaundering supports. How will the Libra Association that it isnsuring guarding against any type of Money Laundering activity . Mr. Marcus yes, senator, and this is something i care about deeply, personally. The way we are thinking about protecting the integrity of the network from moneylaundering, criminal activity, terrorism funding, is not only by moving a ash transaction in the digital world, where cash transaction is where most crimes currently happen, and we believe if a lot of transactions move to digital, it will be better. The way we are applying them amount of programs is that as far as the calibra wealth is concerned, we will have strong identity because for every new calibra account opens, you will have to upload a government issued id and as a result, we will have aml programs on the calibra wallet. As far as the Libra Network is concerned, we will have a program as well, and despite the fact Libra Association will be based in switzerland, it will register with the fed and comply with practices. Senator im glad you brought that up because that was my question with the association, would it fall under the Bank Secrecy Act jurisdiction . Mr. Marcus the association will not actually touch consumers. It will just organize it. Senator who will be subject to be Bank Secrecy Act act . Mr. Marcus the calibra wallet and all the while its operating under that jurisdiction will comply with dsa, will have perform and aml programs, and we are engaged with treasury to make sure the setup of the not going tot only take a step back in terms of the secrecy and programs, but it because of the way we are implementing and configuring the network. Senator you are currently talking about getting signoff on how to address Money Laundering . Mr. Marcus we are. Senator i appreciate you providing more transparency around that. Let me just say, this is a new day and age. Cash andomes to carrying around a briefcase full of cash, criminals and executives dont do that anymore. What you are creating is an opportunity for them to engage in continuing moneylaundering and criminal activity. So, know that. That is one. To say we are owing to be activities is the one thing, but i want to see the specifics, so i appreciate you talking with us about how to address the issue. Another one that has come up is i sit on the Banking Committee here, and we have talked about sanctions laws. Policy communication and libra was on a podcast and asked how libra would react if the United States government required libra black list addresses in order to comply with sanction laws and the response was the association will not interact with any jurisdiction. It will instead leave that to the entities that provide an on and off ramp to libra, the currency. Can you clarify that . How are we supposed to address this issue when it comes to blacklisting and sanctions law . Mr. Marcus this is a question we are also engaged with the thesury department on, and one thing we have committed is that we will respect the travel result, perform the right check and including fact checks. This is true for the calibra wallets. I do not know in what context those comments were made, but i believe it may be because the association itself is not running anything. It is just coordinating governance, but the Actual Service providers that are going to be regular Service Providers will enforce travel rule and track checks, and ensure those who are subject will of course perform those functions. Senator i notice my time is up. I have further questions i will submit those for reference. Senator senator kennedy. Going to move kind of fast here. I will apologize in advance if i interrupt you. We only have five minutes. First, i will agree with one of the comments made. We need to encourage innovation. But i want to explore the underpinnings of libra. Can we agree a banker should be trustworthy . Mr. Marcus yes. Senator can we agree a banker should be honest . Mr. Marcus yes. Senator can we agree a banker should respect a customers privacy . Mr. Marcus senator, yes, of course. We are not going to engage in banking. Senator can we agree that ofebook you in the spring 20 16 knew in the spring up knew in the spring of 2016 that russia was attempting through facebook to disrupt the president ial election . Mr. Marcus senator, with regards to those events, we potentially moved to slow senator isnt it true your general and chief security knew in the spring of 2016, isnt it true that mr. Zuckerberg and your see cfo, is itndberg, new in 2016, also truly did not tell your board of directors, they did not tell them until 2017 . Until september 2017, isnt that accurate . Mr. Marcus senator, we definitely moved to recognize the activities happening on the platform. Senator excuse me to interrupt but we only have five minutes. In september 2017, when Senior Management told your board of directors facebook also issued a statement. It said, yeah, the russians have tried to disrupt the election through facebook, but they have already spent hundred thousand dollars and that was a lie, was in it . Wasnt it . Mr. Marcus im sorry, senator. Senator that was a lie, wasnt it . Mr. Marcus i dont believe it was. Emma later, facebook align senator later, facebook admitted they had reached 126 laypeople, didnt they . Mr. Marcus no, senator, i believe the people who answer that question at the time answer to the best of their knowledge at the time. Mr. Zuckerberg was conducting his listening tour across the whole Country First was of 2017, when he feeding cows in wisconsin and having dinner with refugees in minneapolis, he knew about the russian involvement, didnt he . Mr. Marcus i dont know, senator. Senator he didnt say anything, did he . Mr. Marcus i do not remember the timeline, senator. Senator ok. Mr. Marcus in the spring of 2017, spring and summer, our Intelligence Committee in the u. S. Senate started investigating the russian attempts to disrupt the election through facebook. Facebook issued a statement saying there were no such attempts. That was a lie, wasnt it . Mr. Marcus i do not remember the timeline and i believe people have also answered truthfully with information they had at the time. Senator in june 2018, we found that facebook was using user data with device makers, a whole bunch, amazon, like yourself, samsung. Facebook did not disclose that to the user, did it . Mr. Marcus my understanding, again, it was not my responsibility or my team, that this was designed to enable those phone manufacturers to build integration within the facebook product to serve those consumers using these devices. Mr. Marcus youre out senator your algorithms are such that if i watch a video on a topic, im immediately shown videos on more extreme versions of that topic. We call that stickiness, is that correct . Mr. Marcus this is not the way the facebook platform operates today, senator. Senator but it did for a long time, right . Mr. Marcus senator, mark really led through the change. Senator wouldnt we agree on this that facebook has now become the major news source for many people, probably the major news source . Is that true . Mr. Marcus i dont believe it is. I believe more and more people are interactive senator 60 of their users say they get news off facebook as their primary source. And i really want your opinion that facebook has chosen to advance a set of values in which truthful displaced by been flagrant displays of [expletive] . Mr. Marcus i dont have an answer to that question, sir. [laughter] senator here is my last question, and i agree with senator toomey, i have Great Respect for facebook, but facebook now wants to control the money supply. What could possibly go wrong . Mr. Marcus senator, we will not control libra the currency or the association, and we agree that no company should control such a network or digital currency. Senator i would like a second round, if we could . To doan i would be glad that for senators if we have time. Senator smith . Senator thank you. Welcome. So, i got a lot of questions about this. You will understand the level of skepticism you see here, and i appreciate you being here to answer our questions. I want to try to understand better disassociation. So the Libra Association expects you to have about 100 founding members who together you say, well, we will make decisions about investment strategy, who isory compliance, in charge . Themarcus the way governance of the Association Works is that you have this council of 100 or more members that will make decisions and elect a board that will be five and 19 members, and that board will elect a managing director and the association will have a staff to perform the governance function that it is supposed to look after. Senator in the united senate, we also have 100 members but it is clear who was in charge, Mitch Mcconnell is in charge. Trying to understand chairman i am a chair. Chair crapo is in charge. Im trying to understand, will decisions be made on a consensus basis . I understand there is a two thirds majority. Help me understand how decisions get made. Mr. Marcus of course. The decisions are basically the structure of the governance is one where there are certain things which should be hard to importantd those are things to the spirit of how the network is supposed operate, the spirit in which the reserve is supposed to operate. I believe when it comes to the reserve, we will need oversight. Senator will there be a constitutional body of rules that would be agree to ahead of time that would guide the decisionmaking . Mr. Marcus yes, and it will be made public. Senator and how do you look at minority rights versus majority rights versus majority writes on the board . Mr. Marcus as it stands, the every member, will have equal voice. Senator what if there is a disagreement . Automaticallyy overwhelmed by the majority . Mr. Marcus it will depend on the type of decision. Not all decisions will need super majority. Senator so it seems to me possible on any board or group me thats, it seems to there is a big question about how every voice is going to be heard in this incredibly powerful association switzerland. In is this the corporate board, what if their conflicts of interest developed . Mr. Marcus we hope to avoid conflicts of interest, of course, but we have a lot of work to do between now and the launch. This is why we shared the paper early on, to get the feedback all thet to address concerns and get proper Regulatory Oversight and part of that, there is also going to be governance of the association. Senator i think these are really important questions. We are imagining this association headquartered in switzerland. It would have amazing power over the Financial Health of this constituents,my so i think these questions of accountability are extremely important. Let me switch topics a little bit. What is the longterm Business Opportunity for facebook here . Mr. Marcus senator, two business opportunities. One is really the ability for the 90 million Small Businesses and the many users on the pot on to transact with one another. As a result, more commerce on the facebook platform and our family of apps. If there is more commerce, there will be more advertising revenue for facebook, so that is one indirect effect. Senator more commercial activity on facebook equals more money for facebook . More money . Mr. Marcus yes, senator. The other part of it is if we earn Peoples Trust with the calibra wallet, and they decide to use it over time, we can offer partnerships like Financial Institutions and banks and other services that will be new sources of revenue. Senator so competing on wallets and getting a bigger market share. It seems to me, and i know im out of time, it seems to me that what facebook is really good at is figuring out how to monetize peoples personal data, not only directlya spec its but the ambience facebook collects from the many millions of activities that we take every year. What facebook is really good at literally, ong, that data. I have to say im not reassured by your statement that you cannot see any reason right now why there would not be data sharing between these platforms. I have additional questions for the record, mr. Chair. Chairman senator mick sally . Senator thank you. Mr. Marcus, i dont trust facebook, and it is because of the repeated violations of your users privacy, repeated deceit, and im not alone. As you know. In 2011, there was a dissent decree with the federal trade commission related to your privacy practices, so that is where it started with investigative bodies, but it has not edited, even act ended. Decree,er the dissent facebook is under investigation again. Facebook faced a fine of 5 billion recently because of your repeated violations of your users information. For example, without users permission, sharing personal Profile Information with outside Software Developers and selling that off. Data breaches. Allegations you repeatedly changed user privacy settings with no notice. The sec is also investigating events surrounding personal information from facebook. The office of attorney general the micek into authorization of facebook users and a mellow address is. And it isallegations one after another, after another. I dont trust you guys. Instead of cleaning up your house, you are launching into another Business Model with calibra, and you have got documents that talk about your privacy commitment from calibra. And that privacy commitment, you say that you will not be sharing account information or Financial Data with facebook or any third Party Without customer consent, so how do we know this is not going to change, and how do we know youre going to do that based on your track record of failing, violating and deceiving in the past. Mr. Marcus totally for question. I want to answer it in two parts. Know,rst is that, as you we have been working really, really hard on addressing the issues. Some of them you have raised. We have invested incredible resources and Election Integrity and privacy. Mark has made it his top we will continue to do that until they are addressed to satisfaction. On the reverse side, we have designed this network in such a way that facebook does not and will not control it or the currency, and there will be plenty of competition. I want to take a moment to explain why there will be a lot of competition. First, there is interoperability , so regardless of the wallet you choose, youll be able to pay across wallets, senator i dont want to get into the technical stuff. Im talking about the trust issue. You violated privacy in the past as a company, you continue to issues, you continue to change the privacy and roles without not without informing users. Yet, you launch a new product and you claim privacy will be protected, so how should users know that also will not change and he will not be violated . The core issue is trust. Mr. Marcus the point is it really that people can get all of the benefit from this Network Without using our wallet, and i know we will have to earn these People Stress for a long time in of them get the benefit wanting to use the calibra wallet instead of any others they have the choice of. Senator i know senator toomey asked the question, your privacy document said calibra will be transparent, offering customers controls using simple language and easy to find privacy control that detailed the Data Collected and what for. You are telling me, the user will not be able to have consent as to data being collected . Mr. Marcus im sorry, i dont understand the question. , youor ok, for calibra specifically say in your privacy document that it will be easy to understand controls on what data is collected, so will the user for their data being collected when the use calibra . Mr. Marcus yes. Senator do they have to consent to use libra . Mr. Marcus yes. Senator so there really is no choice. In order to use it, you have to use your data. There is no reason to opt out. Mr. Marcus if you want to use the calibra wallet, you will have to authenticate and upload a government issue id, and if consumers dont want us to collect government issue id in the first steps, then of course they will not be able to use the service because we will be compliant to qac regulation. Mr. Marcus what is the visit senator what is the business . Odel of calibra you mentioned the interface of facebook that the more people are using it, the more people will stay on facebook and you can continue to collect their personal information and target them with ads and sell the information. Is that the Business Model. Mr. Marcus with respect, senator, that is not what i said. Senator but that is actually what happened. Mr. Marcus i will focus on the specific question you asked, which is that we have 90 million businesses. Many of them that grow thanks to the Facebook Advertising platform. They are able to reach new consumers, they are able to hire, and we believe that if they now had the ability to sell to more constituents across the facebook platform and more to thehave access products, the more commerce will happen. Senator wonderful public good you guys are committed to. That was extreme or sarcastic, thank you. Chairman senator . Senator thank you for being here today. Arizonans have heard a lot of promises from facebook about privacy. For example, facebook promised when they acquired whatsapp, they would not monetize our personal data. Two years later, they broke that promise and monetize their personal data. Theona is skeptical about program libra. The program goal is to reach the banking under banks, that it is important to realize those without a bank or credit card are more susceptible to scammers and predatory practices. The head of product, kevin wheel, told techcrunch on june 18 that there were no plans for the Libra Association to take a role in actively betting developers of all it, exchanges, or other related apps. Would exposeo vet people to scammers which is on accessible. Do you stand by his statement . Mr. Marcus first, i would like to correct something, which is that whatsapp is fully encrypted, so even though facebook does not have access to those messages, but to answer your question, i would say two things, one is that while the Libra Association will not get in the way it Developers Developing things, we will need, as an association, to find the right approach to ensure Publishing Services on the Libra Network has controls and the one thing i wanted to say was that Financial Literacy is really important and at the Libra Association, there will be granted and investments made into Financial Literacy, and as far as the calibra wallet is concerned, not only will we have Consumer Protections that will protect your constituents if they ever have a fraud issue, but we will make sure that there is an appropriate education in this product from the go the get go. Senator that was helpful information but does not address my concern. If libra posture is goal was to reach population to people who show a likelihood of being scammed, it could jeopardize their hardearned savings and financial security. While we are on the subject of scams, heres a hypothetical scenario. Lets say an unsavory app developer utilized in exchange based in thailand to ripoff in arizona and who is using a wallet arizonan using a wallet in spain. So which Law Enforcement or Governmental Agency in which country does the arizonan called to seek mr. Marcus that is an excellent question. The answer is that your constituents will likely use an american based while a provider that will have Consumer Protections and will make your if something bad happens to them. If this arizonan was using a wallet built in spain, with a still have access to American Recourse for financial problems . Mr. Marcus it will depend on the wall of Consumer Protection the same way today you have different Consumer Protections and Services Offered by different Financial Institutions and others. I believe it will be the role of the Libra Association to ensure there is proper education so consumers can make informed choices. Despite having legal and technical background in this room, this a difficult question to answer. You say they would likely be using american wallet, but if they are using a wallet that complicates the answer. Vonnie we will leave the hearing for now. Bloomberg subscribers can continue watching online go. Facebook up. 2 right now. Were into the european close. Stocks finishing up the day in european trading. Once again, scandinavian countries are in the red. The rest of europe in the green. It was an update for many stocks. And up day for many stocks. 3 . Ax in germany up as in piecing Deutsche Bank can pull out an overhaul. 6 . Ac 40 up well. Se 100 up. 6 as Deutsche Bank is up 4. 3 . The s p saying the erosion of capital ratios is modest and sustainable. Investors were waiting for s ps perfect. In france the worst performer in the cac 40 down for. 2 . Tire market data down 4. 2 . ,urberry having a fantastic day new collections and new creative director was a big hit. There was some question as to whether burberry would be embraced by china this season. Alone 124 just a few moments ago, barely above 124, the lowest it has been since early 2017. A no deal brexit back on the table. That is sending more investors to the exit, examines on a some of the Winning Strategies that investors in British Assets have been taking on since brexit has come back on the table. Lets have a quick look at how u. S. Assets are performing. The s p 500 down. 1 . The 10 year yield at 2. 13. Crude oil at 29. 57 a barrel. If we had the next screen and some of the stocks on the move in the United States, we will see the transport stocks are hunt, ain particular jd glimmer of hope to truckers. A glimmer of hope in the report. Concerns about demand and pricing. Jpmorgan and goldman of more than 1 . Lets get to that. That is what we are concentrating on today, jpmorgan, Goldman Sachs, and wells fargo. Oining us is Alison Williams a little bit of a better reaction today. Powerhouse Balance Sheet but still problems with margins. Alison we are three through 30 in terms of the bigger we are three for three in terms of bigger u. S. Banks. Jpmorgan bringing down their guidance, and wells fargo missing the estimate. I think the more negative thing for wells fargo is the expense side of things. They kept their guidance for this year and talked about coming into the higher end of the range and flat expenses next year. With the top or revenue environment, what investors want to see is the ability to bring down on cost. That helps citigroup yesterday. Jpmorgan reiterating their cost. Goldman sachs is a different story. The equity trading revenue for that business coming through and that is what investors are happy to see, as well as better fees. Vonnie there is volume and there is rates. What is the outlook for volume when it comes to Revenue Growth . Alison on the volume side of things, we are continuing to see deposit growth. We see some pickup and deposit cost. That was concern yesterday with citigroup. , healthy growth we saw today at jpmorgan, on the loan side of things, that is something we are looking for in the outlook. The consumer continues to be healthy in the u. S. On the corporate side of things. From the investment banks, we are hearing sentiment is resilient. We are hearing in general a positive tone. The question is will we see the execution, will we see the execution come through and will we see the execution in terms of loan growth in the second half. Vonnie we did see looser restrictions this quarter impact the result. Where did that happen most and what did banks due to take advantage of those restrictions . Alison one area where low growth has returned his wells fargo. They have a restriction in place in terms of their assets caps but some return to the auto lending business is an area they have pulled back on in the past. The headline view for all of the banks relates to the Net Interest Margin and the lower Interest Income you, and what the banks are factoring in. Said they are factoring in one rate cut later in the year. Jpmorgan, two or three cuts. That more conservative assumption in your estimate might give investors a little bit more comfort. The other thing i would note is in terms of technology. That is something we are hearing from wells fargo in terms of talking about their costs. They will not sacrifice tech spending. Goldman sachs called coming down Goldman Sachs comp coming down and that is helping their bottom line. Jpmorgan saying that will not sacrifice check spending. Vonnie some of this banks of been changing their profiles. Takeaways from the changing profiles . Alison in terms of Goldman Sachs, the story is how much are a moreifting to being massmarket, having these massmarket businesses. They are closing the United Capital acquisition, that will expanded mass brokerage, they are also expanding on the consumer side of things. The apple car is something we will be hearing more about. That is the bigger transition going on. Vonnie thank you. Alison williams of bloomberg intelligence. More later this week. Meantime, members of the European Parliament debating who will become the European Commission president. Joining us from paris is bloombergs maria tadeo. This is not a slamdunk. We are expecting an interesting vote. Explain to us why. Maria thats right. We know this will be tight. Senior sources at the European Parliament told me it could get tricky for bond or line four von der leyen. Anything before 400 votes would mean she gets the nomination but this is a weak majority and this is a week commissioner. Everyone will be waiting to see whether or not she gets the nomination, which in principle she should, but also that threshold, can she make it a 400 votes . On ave seen von der leyen charming offensive, promising a Progressive Agenda to try to get cross party support. We know her issue, and the fundamental problem behind her nomination is the fact that she did not run in the european elections. We are told for weeks that the next head of the European Commissions would be someone who run in the elections, who participated in the elections. That would give more transparency to the european institutions. She was someone who came up as a lastminute suggestion put forward by Emmanuel Macron, another backdoor deal cut between the french and the germans. Clearly that has annoyed people at the European Parliament where there is really resistance to von der elleyen. Vonnie has there been campaigning . What does it look like in the weeks leading up to the vote . Aware thatis very the way she was appointed or nominated has created tension. The parliament in europe has promised it would have a bigger say, they would have more power and would be involved in this decision. It is what you had with Emmanuel Macron and angela merkel. Leaders were locked up for three weeks, a 19 day summit, and his name came out of the blue. Not many people outside of germany know who von der leyen is and she has been on a charm offensive, promising a gender balance coalition, promising she will own the promise of being European Union of being european. Social democrats were so close to getting the job but ultimately did not. A lot of that will depend on whether they decide whether the best option is to block the nomination. There is no plan b. We are waiting for that vote to happen in 30 minutes. Vonnie if it does not go ahead, if there is a blocking of the vote, what happens in that scenario . Aria that is a huge nightmare that is a big problem. Many of the officials i spoke to in brussels told me we do not want to think about this because the reality is there is no plan b. It has never happened before. A nominee has never been rejected by the European Parliament. This is the result of three long days of negotiations. Everyone deployed a lot of their political capital. Emmanuel macron was happy he got a french speaker at the European Commission. Angela merkel would lose the german head for the European Commission, that would be of outlook. Not many people know what would happen next. European leaders would have to gather again and put forward a name in a few weeks. It is difficult to see who else would,. Up. Ou else would come sense every other option was tested and did not work. Vonnie a question on christine lagarde. We got work she samiti her resignation to the we got word she submitted her resignation to the imf. She says ive made this decision in the best interest of the fund as it will expedite the process for my successor. How do she beginhow do she begio become ecb president . Guy maria this is a job that is almost treated separately. We know mario draghi has to leave. You can see why this would be tricky for the rest of the nominees. For many in europe, this is one package. They tell you you have to look at this as one unit, nothing agree until everything is agreed. Leyen does not go through, that is a problem for christine lagarde. Would make things shaky for europe. When it comes to lagarde, she wants to make it clear there is a separation content between the time at the imf and the ecb coming up. Vonnie lets check where european stocks have settled. We know it has been a positive session for the most part and we are settling higher. The ftse 100 up. 6 , led by burberry which had again today after collections from the new creative director proved popular in china. The dax in germany up. 33 . Deutsche bank the best performer there after a positive , whichment from s p 500 said its capital ratio erosion is fine. It is modest and sustainable. The cac 40 up. 6 . A few decliners, including michelin. Talked about week tire markets data in june. That impacted that stock. All told, a fortunate day in europe. This is bloomberg. Vonnie live from new york, i am vonnie quinn. This is european close on bloomberg markets. Lets check in on first word news. Heres record group to here is retail sales did better than expected in june. That indicates sales were already healthy before an expected Interest Rate cut. , if you backdrop cars and gasoline, sales were up. 7 . U. S. Factory output also rose more than expected. June thanks. 4 in to a solid gain in Motor Vehicle production. That suggests American Manufacturing is rebounding despite trade tensions and a global slowdown. A highlevel u. S. Delegation may had to china for trade talks. If those discussions are productive, Steve Mnuchin says he and Robert Lighthizer will go to beijing. Expects china to announce largescale purchases of American Farm products soon. Global news 24 hours a day, on air and tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. This is bloomberg. Vonnie thanks. The chances of reaching her brexit deal anytime soon seem to be getting worse according to european officials. A meeting of cheap european negotiator of chief negotiators was one of the most challenging in the last three yields last three years. Talks will become more hostile under the next british prime minister. Joining us is bloomberg editor emeritus, his next column is how some investors are looking to beat the odds, it is about britains savviest investors. What makes them savvy . Matt living with manmade and natural disasters, which is another way of saying since the brexit vote, what they have done is perched their holdings of u. K. Equities or invested in the barest essentials, which are known as consumer staples, things like beverages and food. Those have done very well since the referendum june 23, 2016. Vonnie it is not just equities. If we look at the british pound, it is up 15 since the brexit vote. Matt the pound has had the biggest shrinkage in eight years. Leading a good indicator of confidence in the u. K. , which has been missing. Reflectedhe way, is in what is known as the buyers strike on equities. People have not been investing in u. K. Equities since the vote and the reflection on that is the u. K. Market overall has been one of the worst performers in the global market. Than a year, it has been trading in a range. We have talked to more more people who say it could go to 1. 10. That was the latest we heard from Stephen Moore of hsbc. That would be a no deal scenario. Today it did drop low 1. 24 because the no deal scenario is looking more likely. Tell us about Winning Strategies you have discovered. Matt you look at it two ways. One is from a global perspective. Among the publicly traded funds based in the u. K. , the one that has done the best has invested mostly in the u. S. And china, and in the u. S. Mostly in california and has completely avoided u. K. Holdings. Did away with them in 2016. The second is homebased, domestic, and the focus their has been on the focus the focus there has been consumer staples. Those are the products people need regardless of the climate, peace, and, war, airplane crashes. That fund is doing well because it has focused on things you need regardless of what happens around you. Vonnie when you talk to these fund managers, are they waiting for october 31 to dive back in when there is more uncertainty . It may not be october 31. That is just the next matt been robots polar aths polar ben rog Technology Fund is a good example of the view that england is getting smaller. This fund has been focused on technology for a long time. If you asked him today what do you think about the u. K. Market, do you think it is cheaper than it has ever been and therefore a great buy, he would say there is nothing i like about the u. K. At the moment. I do not have to make that call. Vonnie i would urge everybody to read this column, how savvy british investors are being brexit. Our thanks to matt winkler. This is bloomberg. I dont know why i didnt get screened a long time ago. I kept putting it off. What was i thinking . Ok, mr. Jones. Were all done. I told you it was easy. With life line screening, getting screened for unknown Health Conditions is so quick, painless and affordable, youll wonder why you hadnt done it before. So if youre over age 50, call now and schedule an appointment near you. For just 149 a savings of over 50 youll receive a package of five screenings that go beyond your doctors annual checkup. Ultrasound technology looks inside your arteries for plaque that builds up as you age and increases your risk of stroke and heart disease. After all, 4 out of 5 people who have a stroke, their first symptom is a stroke. So call today and start with a Free Health Assessment to understand your best plan of action. So why didnt we do this earlier . Life line screening. The power of prevention. Call now to learn more. Vonnie Franklin Templeton fixed income cio has an upbeat view of the economy that convinced her to go against the grain. She joined me with a view on her contrarian call. What we have said is 2. 75 by year end is feasible and if we continue to see the data we have had today, on the back of just the data you could easily get to three. If i look at where the u. S. Economy was last november, the last time we crossed three, we are not doing that much worse. The same time, the bearish call is pretty lonely on wall street, particularly since the fed tilted dovish. Was that not a lie in the sand at which point you decide we are going in a different direction . Sonal i think as soon as the market tries purely to predict the fed as opposed to actually looking at the underlying data, it is a risky place to be. Now it is a pure moral hazard call. What you are saying is the fed is going to deliver to the market. I think the fed will, despite the data. I think the fed has backed itself into a 25 basis point cut at least. The idea that because the market is anticipating additional rate cuts, the fed has to deliver three weeks ago the market was anticipating 100 basis points plus this year. Data comes and these things change. Vonnie are you investing based on what you think the fed should do or what you think the fed would do . Sonal that is a very good point. What the fed should do, as you would know at this stage, is do nothing. I do not think the fed will do that. However, being squeezed into overvalued assets does not seem to be a good way to go forward. What will we do . We will remain cautious. Asset is rising because of overvaluation, there is a limit to how far you want to buy into it. The further you buy into that overvaluation, the riskier your position gets. Whene would you say that the fed cuts 25 basis points, it will be a mistake and they will have to reverse or everything will adjust . if it is an insurance cut, they can easily reverse. No one is calling for rate hikes next year. If you get the underlying data we are getting, i see no reason to believe the fed will not start hiking or reversing the insurance cuts as we going to the next year. That is not something which anybody is talking about. I think we should be. Vonnie the argument is based on Economic Health. Youre seeing Economic Health and the United States and the labor market in the last payrolls report played out that theme. Consumption, manufacturing, investment, they are all at risk from the trade war. How are you factoring the trade war into your models. Sonal we have been looking at the trade war i will call a trade skirmishes. There has been no war. This is an uncomfortable truth. We have talking about trade since 2017. There has been distinct trade skirmishes. There has not been a war. Trade tensions are here to stay. It is not matter who is running the show. At this stage, it appears globally trade tensions will be with us for a long time. I do not think that the trade tensions in and of themselves will have a material impact. A are going to have impact on specific industries, specific parts of the economy, but not at a macro level. Desai, Franklin Templeton fixed income cio. 152 billion under management there. Power,p on balance of former Wisconsin Governor Scott Walker joins. And unity in the republican party. That is at 12 30 eastern. This is bloomberg. David from bloomberg World Headquarters in new york, im david westin. Welcome to balance of power, where the world of politics meets the world of business. On the break today, Kevin Cirilli on capitol hill on the Senate Hearings on facebook getting into cryptocurrency. Anna edgerson on president trumps brouhaha with four firstyear members of congress and strong retail numbers in congress and what it might mean for the fed. Kevin, is facebook making any progress in persuading the senate this is ok . Fact the topd in democratic on the committee calling Facebook Libre delusional, saying facebook cannot be trusted to protect any consumers in the United States with regards to the digital currency, libra, they have launched. David marcus, the companys Top Executive says he is going to be working with facebook as well as u. S. Regulators. Until they get to some type of consensus, then they will wait to