Oliver. Indeed we do, a bit of a risk on day at this point. The dow reversing a small loss after the eyes and manufacturing number for the month of april came in slightly disappointing, but now higher, joining the s p 500 at session highs. More than half a percent, putting another intraday record high on pace for another record close. Keeps going in a bullish direction. Lets look at the stock driving the records for the nasdaq. Apple, amazon, and facebook. Apple and facebook are posting intraday record highs. Amazon on pace for record apple does report tomorrow after the bell and investors are looking for 2. 02 on 50 trivalley dollars in revenue but it represents more than 5 yearoveryear Revenue Growth and earnings growth. In addition, it is expected that apple is likely to announce a cash for more than 250 billion. Recode is saying that investors are hoping it translates into higher dividends. Amazon is seeing a tailwind from the big week and the strong firstquarter report. Shares are up more than 1 . Huge growth year. Were looking at excitations were top and bottom line yearoveryear growth of 45 . The stock is up 3 since all that and amazon put up strong quarters. Analysterg intelligence thinks that some of the numbers for alphabet suggest we will see strong mobile ad growth here. Not surprisingly come on todays strength of the nasdaq, wont be surprising to see that character the you could when we look at g up 6 and 7 . Yearly outperformance by about 9 , huge outperformance. Technology is leading the way. Lets look at a segment that we dont look at too often, the cruise lines. Strength here for all caribbean, carnival, norwegian cruise line. Norwegian is part of the nasdaq 100. A little bit of strength there. Im going to pass it back to you, vonnie, for breaking news. Bnp and rbss are said to have gotten subpoenaed in a u. S. Treasury probe of possible manipulation of the market. This is a going to people familiar with the matter. The Justice Department issued subpoenas last month according to 2 people who asked not to be named because the investigation is confidential into those banks. For those three banks did not immediately respond to requests for comment, and neither did a Justice Department spokesman. Oliver seeing a bit of a Market Reaction there. Vonnie lets turn to military policy and the fomc meeting this week. Policy makers are expected to talk about ways to shrink the Balance Sheet. It is a goal that could be messier than Janet Yellen Hoekstra joining us is than janet yellen hopes. Joining us is michael mckee. They have had plenty of time to think about how to do this. Does notthe fed it control everything it is going to do. It has treasuries and Mortgage Securities and corporate securities, if you start messing around with the amount of ,ortgage securities out there you will change the value of the securities and that will affect Mortgage Rates could when you change markets rates, you get different rights of when you change Mortgage Rates, you get different rates of repayment. The fed is not have total control over that. They cannot predict what will happen because they dont know where they will go from here. The treasury market depends not just on the fed, but overseas investors constantly react to news of the haven trade with money flowing in and out. And the u. S. Treasury has to that thehe treasury fed is no longer buying it if they got rid of them all the your it would be 400 billion worth. The treasury has to decide how it is going to handle that could we may get some clue on that on wednesday when the treasury puts out his new refining the free funding its new re announcement. Vonnie you kindly brought along with your copy of the fed Balance Sheet. 8207 in the bloomberg chart library. One question that is answered for us pretty much time they will roll off 2 together. Not like it will start rolling off treasuries and keep these on the books. Michael we dont have a formal declaration of that and that is one of the things they will be talking about later this week. Sometime later this year, maybe june but it may be september, an official declaration of what their policy will be. Would like toople attack both of the same time. There is a larger number of treasuries but they dont have as far to go with treasuries because they want a still fairly large portfolio good one thing we do know is there seems to be a consensus that they want to taper these and there will be a certain amount either percentage or dollar that rolls off on the calendar basis either monthly or yearly, instead of just getting rid of them all at once. It would be a huge hole on the treasury side with 400 billion coming due next year. Oliver michael mckee, economics and policy. Get involveddoes in figuring out how to do this. Is there an angle where you have to think about what the political side is in terms of what President Trump wants for rates . We have heard him say various things on rates. What could it mean on that as it plays into what they are going to do . Michael the fed wants to get this in place before january so it runs on autopilot, but for markets to reduce volatility theyre not thinking of it as a policy tool that comes and goes, but also, if they replace janet yellen or Stanley Fischer and there is somebody new at the fed , if they have the machinery in motion, it keeps going instead of just leaving the open question of how they do this again. The other aspect of it is fiscal policy of the Trump Administration. If we cut taxes, if they change the spending makes or do infrastructure that adds to the deficit, it has that much more that the Treasury Department has to sell, which will have another big impact on what the fed is doing. Vonnie and i was reading this morning that it may not be this automatic thing but at the same time, if you if buying treasuries push down rates, with the opposite not have the opposite impact . Michael the fed goes into this thinking mechanically that he would have the same effect. They got 15 basis points or so buying qe and they could get 15 basis points higher. They will not get rid of all the treasuries. When they started with qe, we had it in a hundred billion an 800ed we had billion Balance Sheet and it is now 4. 62 in dollars. They have to take it out to 2. 5 trillion because the amount of currency integration has gotten much higher. We not going down as far. The effect may not be as large. Vonnie one or two things to think about. Michael, thank you for that update. Michael mckee. Oliver lets get back to the Milken Institute global conference in Beverly Hills where leaders from politics, entertainment, sports, everything, have been gathered could Erik Schatzker is standing by with the ceo of wells fargo. Erik we will be talking about business and economy with tim of wells fargo. Thanks for having me. Erik lets start with something in the immediate rearview mirror. Quite an annual meeting you had a very exciting. Erik exciting for some good your chairman called the shareholder vote a clear message of dissatisfaction. He said the board has heard. What happens now . What happens now is continued dialogue with our shareholders. We have a direct level of communication with shareholders for the last year, in particular the last few weeks. As steve said can we heard shareholders tell us they were dissatisfied with the way the board handled retail sales practices before september. But we are going to do is continue to speak with them and tell them all things were up to in terms of making things right for customers and team members and rebuilding trust. We will continue that dialogue. Ie erik had it not been for warren buffett, five directors would have received less than 60 of the vote. I dont need to tell you those are not great numbers, thinking about it from a Corporate Governance standpoint. I know you have had a lot of dialogue with major shareholders. In the weeks leading up to the annual meeting and i suspect since then. Can you reassure them that the time will come for changes on the board, just not right now . We have been changing the board for the 30 years ive been with wells fargo good we brought on 2 new Board Members earlier this year, received 99 erik they did just fine. They did great. The other new director is me. We have three new directors receive 99 of the vote. We will continue to make changes on the board. 2 directors will be retiring over the year and we will bring on new Board Members to replace him. Vonnie hansel erik not until then . We will continue to die like and do things in the appropriate way. Erik i want to describe the macro accepted there is a lot of optimism they can to stock prices break into stock prices right now. Do you see the corresponding change in behavior by your customers . Have the animal spirits we see in Financial Markets been awakened in the real economy, or of the still taking a waitandsee approach . It is a mixed bag, and its a good question. With expectations from whether it is consumers, small business, middle market companies, they are very optimistic about the future. You cannot have a successful economy without that optimism. The firstd that, in quarter what we saw was very muted Economic Growth. We saw the gdp number. Some of that could have been timing engines of when some of the holidays were, tax returns and things like that. I think what we are seeing is a lot of expectations, cautious optimism in terms of decisionmaking. Having said that, we saw deposit growth First Quarter yearoveryear, 7 loan growth yearoveryear. There is positive economic momentum. Probably not as strong as expectations yet. Erik so what happens this is perhaps an even more important question what happens if the optimism is it met is not met by willingness to commit capital . It Equity Capital or coming to the bank and investing in the business . If that is the case what we will see is a continuation of 2ish percent growth in the economy did that is not terrible but probably not as good as it could be. If that could be translated into decisionmaking, we will see Economic Growth that could be in the 2 to 3 range. Erik we have all seen the outlines of President Trumps tax proposal. Secretary mnuchin is here talking about it today. What you like in it, what dont you like and it . What i like about it is there is change could we have had the same tax policy for 30 years. The rest of the world has passed us by. You look at the comparative studies that show is being 31 out of 35 in terms of developing countries. Who wakes up in the morning and says lets be 31st . That is just silly. What i like about it is it tries to make us more competitive to the rest of the world. Lets make sure that our tax rates are fair and appropriate, which they should be, but make sure they are more competitive, so we can bring back the trapped capital outside the u. S. We can lower Corporate Tax rates. That means we would be able to return more to our shareholders and that would stimulate the economy. Erik anything in that outline you dont like . Well, it is not for me to decide. Erik you as a ceo, running a business, and by extension, an Important Role in the lives of all of your customers. Thank you, i appreciate that. Erik no, but that is why your opinion matters. What i like about it is they are trying to appeal to a number of different constituencies. You look at the middle class, you look at corporates, folks who can afford to pay maybe a little bit more. That is a good mixture but it has got to be ultimately bipartisan. Erik does it need to be revenue neutral . I dont think it needs three revenueneutral. Erik really . The change in the tax code will increase Economic Growth. That is important to appreciate with the changes were looking at. Erik what about unintended consequences . If you cut taxes, people have more money to spend, and that could create inflationary force. The questions will be raised solvency because the deficit and the debt the deficit is going to grow and get will grow as a percentage of gdp pretty quickly. One of the ways the deficit and should go or by more Economic Growth. What we need is more Economic Growth in this country. We cannot be as successful as we have been if we stay at 2 . If we get to 3 or 4 over time, that will be incredibly helpful in terms of reducing the debt because more folks will be employed and they will have more income and pay more taxes from even with tax reform. Erik lets talk for a moment about Bank Regulation. It has not been formally propose but it seems like you inside track on becoming the president s nominee for fed Vice President could do you like the idea of having human that job . Having him in that job . I dont know him very well. He is a very experienced a guy, appreciated by both sides of the aisle, very important. What we need right now is to step back and look at all of the regulatory changes that have occurred and say what is working, what is not. Erik what isnt working . What would you like to see him do differently than the man who nominally filled that position from even if not formally, Daniel Tarullo . What i would like to see is improved relationship between regulators and the industry, because i think we are at a common purpose and which is to meet future we are providing the right products and services to our customers. Thed be interesting addressee has enough capital, if you look at the amount of capital the industry has raised, we have the strongest Financial Markets in the world today. We have lots of liquidity. It would be great to provide that more often to our customers. But we want to have an appropriate dialogue with our regulators, and again, lets focus on what is working and what is not. Oliver yet erik he has been on record with me, as it happens, saying he does not like the volcker rule. Does it matter to wells fargo whether we have the volcker rule or not . Not in a large way. If you look at the volcker rule, it was focused on proprietary trading could we dont do that at wells fargo. That some of the unintended consequences of the volcker rule is too much focus on certain rules within the volcker rule and requirements that require us to provide a lot of information to regulators the probably isnt used as much. It would be great if we could reduce that just a bit. Erik good to see you. Tim sloan, ceo of wells fargo. We are here at the milken conference in Beverly Hills, california. I will be back, but for now, to you in new york city. Oliver great interview again. Erik schatzker at the Milken Institute global conference firstcheck on word news with Courtney Donohoe. Courtney republican congressional leaders want to focus on healthcare and tax overhauls have given into democrats on a spending bill. On 1. 3ors have a great trillion measure that would keep the government in operation through september and in projects most of President Trumps priorities, including money to Start Building a law on the border with mexico. President trumps chief Economic Advisor says he thinks republicans have enough votes in the house for an obamacare replacement bill. He told cbs news that there could be a vote this week and the provisions of the Health Care Bill still are not clear. Israeli Prime MinisterBenjamin Netanyahu has criticized the wednesday plan meeting between President Trump and palestinian. Eader Mahmoud Abbas netanyahu spoke at a ceremony honoring victims of terrorism, and he called on abbas to quit doling out money, saying to fund piece, not murder. Elon musks spacex launched a sensitive mission for the u. S. Military today. It carried a satellite into orbit for the National Reconnaissance office. Nine minutes after launch, the rockets first stage returned to earth. It is key to spacexs vision of making space travel increasingly affordable. This was the companys sixth Successful Mission of the year. Global news 24 hours a day powered by more than 2600 journalists and analysts in over 120 countries. I am Courtney Donohoe. This is bloomberg. Vonnie all right, courtney, thank you for that. A lot more ahead from the Milken Institute global conference, including an interview with u. S. Treasury secretary Steven Mnuchin. That interviews coming up at 11 40 a. M. New york time, 4 40 p. M. In london. Later this afternoon, an exclusive interview with the citadel ceo, ken griffin. His interview at 2 30 new york time, 7 30 p. M. London time. This is bloomberg. Vonnie lightbank from bloomberg World Headquarters in new york, i am vonnie quinn. Oliver im oliver renick. This is bloomberg markets. Vonnie time for the biggest business stories in the news right now. Money managers that oversee almost half 1 trillion ceo has been fired, and 94 members were ousted. Residentr World Bank Robert Zoellick will be chairman. It was time to put new leadership in place. Manufacturing in the United States expended less than forecast in april. The issa Manufacturing Index showed that orders and employment pulled back. That it indicates that manufacturing is settling into a more sustained pace of growth. And expended by the most in a most three years. 21st century fox and Blackstone Group are teaming up to make an offer for tv station owner tribune media. According to people money with the situation, blackstone would fund the bid and foxwood continued tv stations through the joint venture. Paytv operator, dish, reported firstquarter revenue that missed estimates. It puts pressure on the chairman to strike a deal capitalizing on billions of dollars he has a community. That is your Bloomberg Business flash for this hour. Oliver u. S. Treasury secretary Steven Mnuchin is speaking on a panel at the milken conference in Beverly Hills. He says that growth can actually pay for tax cuts and he would like to support for democrats. Interesting headlines as we look at him talking about tax reform, time it will take for the u. S. To get to the 3 gdp growth to finance tax reforms. Past outlines into details, potentially. Vonnie he reiterated he does not want to finance Infrastructure Spending with debt. Interesting to see how many partnerships can be got going or trillionwould fund, 1 to three regional and dollars infrastructure package. Three chile dollars infrastructure package. Oliver it says it will be severed from tax reform, that they dont want to roll those together. A quotation that twitter was getting excited about banks could thank him for the rally, thank him for the rally in financial shares. Interesting perspective on how they view what has been happening in equity markets as a result of the policy. Vonnie 2 other headlines trump pleasing free and fair trade and growth and tax elections will pay for the ideas they have. They are very controversial ideas. You can follow along on the bloomberg. We will be asking about the headlines. That is coming up at 11 40 a. M. New york time. Later this afternoon, an exclusive interview with citadel ceo ken griffin, 2 30 new york time, 7 30 p. M. London time. This is bloomberg. Live from bloomberg World Headquarters in new york, im oliver renick. Vonnie im vonnie quinn. Lets take a look at how markets are performing today. Abigail we are looking at bullish action for the major averages here in the u. S. Actually the dow just starting to flip unchanged again but it had been slightly higher, slightly lower trade bit of a wishywashy trading pattern from the dow. S p 500 and nasdaq both higher. The nasdaq putting in another intraday record high. Followss trading action weekly gains for the major averages last week, the dow last week put in its best week the performance for the year. Some of that couldve had to do with anticipation of President Trumps rollout of the tax plan and the actual announcement of that plan, a big rally around that event. Some of the most tech stocks in the United States include apple, United Health, verizon, along with wells fargo. Many of the stocks are trading higher. All of these stocks are trading higher today. Apple and United Health putting in record highs. What makes this standout, there are some experts and analysts who are saying that the trump tax plan was a bit light on actual details, and after it was actually revealed we had stocks trade sideways. Lets hop into the bloomberg and 5618. Look at g vtb this does appear to be the case. This is out of the election and bolivia, s p 500 and white. Right here back at the end of last year, we had the most tax stocks trading higher by 11 relative to the s p 500 by 6 . The idea is investors expected that a trump tax Reduction Plan would help those companies. Huge performance, the same thing for much of last year into the beginning of this year. After the Trump Administration failed to put through a Health Care Bill, less confidence that a trump tax plan would be put through anytime soon. We see the two are moving closer together. Last week ahead of the revealing of the plan, the highly taxed Company Started to outperform by more than 1 . Now that we have that somewhat we arelight tax plan, looking at basically flat performance once again here for the s p 500 and those highly Text Companies within the s p 500. Oliver it has been interesting to watch the pattern for those trading. Abigail doolittle, thanks so much. Trumps new tax plans pitch to the middle class, but not the wealthy. Critics suggest the opposite. We are back with bloomberg chief washington correspondent Kevin Cirilli at capitol hill. Of desiretill a lot for details within the white house, the tax plan. What do we know know about who will benefit the most just from the outline we have been given . Kevin there were some disappointments that there are not enough details in this tax policy plan and its widely being perceived as a conversation starter of sorts. I just spoke with the senior aide, a republican member who is against the border adjustment tax. I can tell you that there are new political battle lines being drawn as we speak. The house ways and Means Committee right now is meeting behind closed doors in a private meeting about tax policy. All of this is really just the beginning part of the conversation. This is a congress that was still very much like the past Health Care Policy reform, ahead of tax policy. That is also dominating much of their attention here as lawmakers set to return to session this afternoon. Vonnie where are the conversations taking place . Who is talking to whom . Is it the note of obstruction sounded in washington, or will they hammer something out . Kevin thats a good question, vonnie. I spoke with the senior aide, House Speaker paul ryan. There are some rumblings that we could see both this week, the white house for a much like that. There is still division and tension between the conservative House Freedom caucus and the more moderate tuesday group or the Freedom Caucus seems on board with macarthurs amendments, which is that being a more moderate proposal. Moderates are not entirely sure that this is the best deal that they can get. These conversations are incredibly fluid, as we have learned, simply because what happened on friday, other being rumors, there would be a vote on saturday, for it to be an true. Then you have a situation where Vice President mike pence saying on the sunday show, we might not knock this out until the end of the year. We are hearing this morning that the white house wants to have a vote on wednesday. This is a very fluid situation. Oliver some of the figures for those potentially higher earners within the economy. The tub tax rate would have been roughly 40 . Now that will be 35. 35 . It is believed as you have reported that that will be going as well. That would tend to benefit those higher earners within the investment community. Is there any possibility that perhaps theres also going to be for those additional friendliness to the higher theers, or will conversation be focused on how to bring in the middle class . Kevin i think both. I think in terms of focusing on the middle class, this is a president who campaigned with a populist message and was able to solidify workingclass voters to rally behind him and join, redraw the republican coalition. On the issue of Corporate Taxes, i would note the president and white house are proposing 15 Corporate Taxes. However, there is some discussion behind the scenes that rate could increase to Something Like 20 , simply because they are saying that they want to have 2 or 3 Economic Growth paid for. Once you actually start dealing with democrats and even republicans, some folks arent necessarily buying that stat rate could go from anywhere from 50 to 20 . Oliver Kevin Cirilli, our chief washington correspondent in d. C. Vonnie Courtney Donohoe is here with Margaret Courtney in washington, there stands a California Law that bans licensed therapists from working with children to change their Sexual Orientation from gate is straight. The justice rejected and appealed us of the measure violates religious rights. Todays decision leaves intact a federal Appeals Court ruling upholding californias 2012 first of its kind law. The measure prohibits a form of counseling known as uote, conversion therapy. In washington, housesenate negotiators have reached a budget deal the rejects most of President Trumps wishlist for the 1. 1 trillion dollars agreement would keep the government in operation through september. Republican leaders vowed vowed to democratic demands to illuminate policy restrictions. The measure does not include money to Start Building a wall along the border with mexico. The Trump Administration is preparing to roll back some nutrition standards for federally subsidized school meals. At his first major action in office, Agriculture Sector in was planning to announce changes he says will provide regulatory flexibility. School nutrition directors have said many of the standards are unworkable. Tear gas police fired at protesters during a mayday workers march. Demonstrators threw gas bombs at security forces, who then fired back. No word if anyone was hurt. This years march include call for voters to prevent far right candidate Marine Le Pen from winning the presidency in sundays election. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. Im Courtney Donohoe. This is bloomberg. Ahead, we will bring a special coverage as we go to the global conference taking place in Beverly Hills. We will be sitting down for an interview with u. S. Treasury secretary steve mnuchin. This is bloomberg. Vonnie live from new york, im vonnie quinn. Oliver im oliver renick. This is bloomberg markets. Lets get back to our breaking story. Bnt, rbl said to get subpoenas in u. S. Treasuries probes. Bloombergs reporter has been covering this development and joins us from washington. We know the Justice Department for about almost two years has been looking into whether or not theres any type of rating in the markets of u. S. Treasuries. Treasuries, specifically in the trading of securities, the head of treasury options. What we reported this morning was that several banks have been subpoenaed recently, last month, as part of this investigation. The banks that we disclose today have been subpoenaed, bnp, rbs, and ubs. Vonnie what exactly are they being investigated for . Being investigated the Justice Department began as a pretty broad look at whether there was manipulation in this market, similar to what prosecutors found in libor and currency rates are they took a bride look to see broad look to see in terms of collusion and any type of fraud, whether that was occurring here. Now that we are seeing subpoenas, that usually is an indication that prosecutors are sort of now come up with the type of theory for potential for a potential crime. It doesnt mean they found any crime at this point, but now that they sort of entered a new phase. Oliver do regulators need to see a profit made or some kind of a value gains by the folks they are looking at, or is it enough to say they are talking in ways they shouldnt . They could bring a case without showing that some type of profit was made. A lot of times those types of cases will be difficult to make in court, in front of a jury. A lot of times, if they will go as far as to actually bring a case we do know most of these are resolved before this evidence is presented in court. I think it all depends on what that evidence is that they have. We know that chats and talking among traders is something they have used in a lot of cases and are looking at here. There beould implications for these banks beyond the obvious accusation that might emerge . Im thinking about things like primary dealerships with the u. S. Treasury, or any other sort of restrictions that might be placed upon them. Tom i think that would all depend, at the end of the day where this takes investigators. Obviously they have been in this space for a couple years now, know, as we know, some of these cases take a while to play out. It would all depend on the evidence that they found as far as high how up the food chain any of this information went. Particular looking at securities options, obviously there are a lot of big lush bracket banks and beyond that participating, is there sort of sift through this information what is the timeframe they will be doing this over . Tom we know theres almost nearly two dozen primary dealers, and a lot of the investigation information has been in this space. There have been several civil lawsuits filed by investors, sort of making allegations of manipulation. Those cases still playing out in the court, still havent moved passed a motion to dismiss stage. So, even though we are kind of two years in, theres still a lot of information that both prosecutors and outside firms are sifting through. Oliver Tom Schonberg in washington. Thank you for helping us on that breaking news. Vonnie time for the Bloomberg Business flash, a look at some of the biggest business stories in the news right now could u. S. Consumer spending stalled in march for the second month in a row to find that the biggest part of the economy may take more time to gain momentum. Meanwhile, one measure of inflation fell below the federal reserves 2 goal. A big transaction today involving two canadian pipeline companies. The outstanding shares of verisign. Shareholders of Warren BuffettsBerkshire Hathaway meeting this weekend in omaha. Theres no indication that a takeover is on the immediate horizon. Still, the recommended cash at hand on berkshire would conceivably be enough to manage a transaction with the 100 billion price tag. Bloombergr latest business flash. Still ahead, an interview with treasury secretary Steven Mnuchin coming up. Checking markets, we are not seeing too much movement. Currency wise we have plenty of action. 13643,adian dollar at and the mexican peso is stronger today by 4 10 of 1 . Oliver in the u. S. , equity markets. Volatility down again, the vix at 10. 5. Volume muted. Mayday in europe. Mark barton and the rest of his european peers out. In europe it is also a celebration of labor. Oliver i will check my myopic american narration. This is bloomberg. Vonnie live from new york, im vonnie quinn. Oliver im oliver renick. This is bloomberg markets. Vonnie earlier today at the milliken global conference in Beverly Hills, california, Erik Schatzker caught up with the former berkeley ceo bob diamond. I think it just has been a chief solid chief executive at barclays. He has brought to light that there is a very strong platform in retail and commercial banking and berkeley card. Barclays card. I am biased that Barclays Capital is the leading u. S. Competitor leading competitor to the u. S. Investment banks, and he will have to work through that. I think hes done a terrific job of leadership. I think hes the perfect person for barclays right now. Environmentgulatory is different and britain. One of the ways its different is that british regulators can enforce a fitness cause for ceos, if they deem the ceo unfit to run a bank, they can remove him. You believe theres a risk they would do that, the regulators would do that . I think he is the right person for the job. Its hard to protect yourself into what other discussions are going on. He is the right person for the job. Erik brexit clearly is a headache for traditional banks, because as we now know, several of them have to move thousands of people to offices in the eu to continue doing what they do in the european union. How are you looking at it . Can you look at it differently because you are no longer part of that traditional banking world . Bob i think brexit will create far more challenges than people expect today. Chances of there being disruption in the markets is very high. If you think about the european banks, the big trade french banks, Deutsche Bank and germany , italy, the size of their derivative books in london, and most global banks have been using london as a Clearing Center for the derivative for decades and decades. Theres an infrastructure, a regulatory infrastructure. Andhey get subsidiarized their passports get taken away, there are tens and tens of billions of capital required to support those books books. To take those books back to italy or germany or france where there isnt the clearing infrastructure or regulatory infrastructure, this is one of many examples people havent thought true. Brexit will be very disruptive. Erik you see a lot of dislocation. The reason i want to press on this point is because there seems to be emerging the view that maybe the european banks have hit bottom, that this Capital Raise that Credit Suisse is doing may be the last recovery step out of the crisis. I take it you dont see it that way. We eight years on, or see great opportunity in europe great when you think about banking and you think about european banking wherefore two or three decades we have been thinking about global is good, universal banking is good, the model the seems to be working today is not global. Its national or regional. The model that seems to be working isnt universal in terms of products, it is focused on selectivity. How do we react to that . We acquired a bank in greece. We are acquiring a brokerdealer in the u. K. Platform. Have a u. K. We think focus and selectivity, whether it is in retail or commercial banking or what we traditionally think of as investment banking, is probably the more appropriate model today. So, you wouldnt do in europe what you are doing in africa, which is building a pan african bank. Sharing costs, sharing the backend. Bob absolutely. But its africa. His africa the right choice for a global bank to be acquiring banks in africa or for an african bank or middle eastern bank. Its a regional play. It has the focus and selectivity in africa of focusing on retail and commercial banking. Erik Bank Regulation in the United States seems poised for an easing. Will that create opportunities for you to make investments here . Bob our first two investments were in u. S. Financial institutions. Southwest securities, the leading standalone business, u. S. Treasuries, agency mortgages, its grown substantially since we invested. I think the u. S. Platform is very strong. Weve also had opportunities for some of the larger Insurance Companies who are looking to take risks out with a higher and higher capital requirements. We think the u. S. Is a great place to be investing. Erik what im trying to do is get a sense from u. S. As to where. You have capital to allocate, either that you have or you can raise. Do you want to be allocating it more here, more in europe, more in africa . Whats the mix . Focus in ourary developed Fund Activity is looking at the u. S. , u. K. , and europe. 50 50. K it will be the u. S. Has a very effective regulatory environment. You can get things done pretty quickly. I think in europe the opportunities were kind of at the point of capitulation for many of the european banks. If we can just resolve the issues around nonperforming loans many people are focused on the banks in italy. The economy in italy needs strong banks. Bey need banks that will investing, that will be lending. Until we get the nonperforming loans off the Balance Sheet, thats not going to be happening. Vonnie that was the barclays ceo bob diamond speaking to bloombergs Erik Schatzker earlier from the military conference in Beverly Hills. Turning back to the Trump Administration, lets to talk about after lawmakers settle on 1 trillion 100 thousand dollars, to avoid a u. S. Government shutdown, when he of the many topics that will be disgusted at the milliken conference this week. Lets head to discussed at the milliken conference this week. Lets head to Beverly Hills. John is with a special guest. By special guest is steve mnuchin, treasury secretary. I thought maybe we could begin with that deal with congress. Is it just a case of kicking the can down the road, i do you think you got enough stuff out of it . No, first of all its important to keep the government open. I think theres many aspects to the deal that are very important, including a significant increase in military spending, which is very important to the president , and significant money for border security. John you dont think you gave way too much . People talkeduts about art there. And the wall is not being built. I think it was important to have an interim budget that kept the government open, and then well focus on what we want the real budget to be for next year. A lot in the plan depends on growth. You say you think that if you raise the growth in america to 2 to 3 , that is worth 2 trillion over 10 years. Sec. Mnuchin it is. John what do you say is the biggest risk to that not happening . I think there are a lot of things that we need to do. Is one of them, sweeping reform in a tax plan. Middle income tax cuts, making businesses more competitive. We also need regulatory relief. Too many businesses are held back for making adjustments because of access regulation. We also need fair trade. Somen we just get through of those, firstly on the deductions youve done a lot about getting rid of most of the deductions. When you have hung onto his mortgage interest tax relief. Rid ofople have gotten that. It plainly distorts a lot market, pushes money towards property. Why didnt you choose to target that . Sec. Mnuchin the two things we talked about keeping our charitable the ductions, which we think is important for social causes, and the other is the mortgage interest deduction. The big part of the American Dream is to own a home. Political reasons rather than economic ones. Sec. Mnuchin not necessarily political. Homeownership is important, its a big part of the economy. Housing finance is an important part of creating Economic Growth. Which ones do you want to target . Q talked about doddfrank being too narrow on finance. Do you want to look much larger . What is the broader aim, particularly with finance . And financial services, we are looking at everything. We not just looking at doddfrank. We are looking at every single thing impacting, and weve had hundreds of people comment. We have reached out to big banks, small banks, finance companies, all different types thateas of the economy impact credit. And we are determined to make sure we have proper regulation so we dont put taxpayers at risk, but we also dont have overlapping regulation, we have clarity. Banks and Insurance Companies know what they can do. What would you think about a much more sweeping reform that dealt with this . When we come out with a report, the first part of it will be in june, there will be certain recommendations that we are making that could be done at the regulatory agency. There are certain things they can be done by executive order and theres certain things that will require legislation. But theres a lot we can do without just looking at rewriting legislation. And thats one of the things we are very focused on. Let me ask you a bit about china. You talked about a deal with infrastructure, we will try to spend a huge amount of money. China is one of those places that once to invest in america. How comfortable are you with the idea of china being able to invest in things such as our Nuclear Plants . Sec. Mnuchin we had a very productive meeting with the chinese at maralago. We agreed to move forward on what we are calling the comprehensive economic dialogue. We agreed and are working on 100 day plan where we can begin to have meaningful impact on things that make sense to work together. The United States is the most open place to invest. The only thing is that we have a process that, for National Security reasons, we can block investments. That will be something we will continue to do to make sure we protect our National Security. You said the National Security might not be enough. Would you like to see that a bit broader . I was in china the other day and people were talking about maybe buying paramounts. It is hard to claim that as an issue of National Security. Is that something that the American People would like to hang on . Sec. Mnuchin theres a lot of tools we have. There are certain things where it could be exp