This translates into what politicians in europe too. This translates to the markets. Tom it was remarkable to see the Turkey Bombing and the ivory coast attacks come out the same time. It showed that trend of International Relations drifting into the markets. That will be our theme. Francine lets get to the first word news with vonnie quinn. Bonnie turkey is responding swiftly to that car bombing. It killed 37 people. Warplanes hit kurdish militant camps in northern turkey. No one claimed responsibility for the attack. Rebels carried out similar attacks in the past. Militants linked to al qaeda say they carried out an attack on a resort town in ivory coast. At least 22 people were killed. Its the first attack in ivory coast. Population is evenlys evenly split between muslims and christian. It was a political setback for Angela Merkel. The antiimmigration party had its best showing yet in three elections. Merkel fellangela across the board. A Police Officer it was killed in an ambush. That started a shootout that left the officer dead. Two suspects have been arrested. Donald trump is wrapping up his campaign in ohio. John kasich may be pulling ahead. Cap moved a planned rally from florida to ohio. His campaign has been overshadowed by growing violence at events. He blames activist groups and supporters of Bernie Sanders. We are powered by our 2400 journalists around the world. Tom thanks so much. Lets look what equities, wants, and currencies and this is ahead of the fed meeting. We will see this through wednesday. Right now, im going to call a churn to the market. Oil is a little soggy on friday. It continues today. I dont want to make a big deal about it. There it is. Lets reset. Below markets are 6 highs. 17,200, thats a big number for the doom and gloom group. Theyve been wrong over the last two weeks. Were nowhere near the 0. 5. Brent crude is of note. Francine european stocks are heading for a high after asia. There are gains of 6. 5 . I want to show you the 10 week high. Stocks are recovering. You mentioned oil prices driving events. I have the 10 year out of the u. S. Greater seen 2 2 . Tom francine has a great chart. Wednesday. T for we will have special coverage of the fed meeting wednesday afternoon. This is the two year yield. Here are the vigilantes. Up, down. Down, we cant make our mind up. Francine its been fascinating since january, driven by global events. Abovee higher, we were 110. This was pulled down by world events. Tom these are the fed meetings. What are you looking at today . Francine we work in tandem. This is the 10 year. This is yield forecasting. Its very clear that this is a huge, huge week for Central Banks. Mario draghi is pressing ahead with his grand monetary experiment and germany and japan are exhibiting reader influence on u. S. Treasuries. That yield may go lower. We will play out front. We spoke and he called it right. Tom the forecast is 2. 4 . The have been nowhere near that over the last five years. Vowing swiftkey is retaliation after a bomb takes 37 lives in the countrys capital. Al qaeda killed 22 people in ivory coast. Michael metcalf is with us. Also with us is jon ferro. Overall, this is huge. This is a country that is possible to the refugee crisis. No one has claimed responsibility for the attack yet. How unusual is that . The bombing,aw their positions in syria. He has certainly been adamant that this is part of what weve seen over the last three or four months. These kurdish militants in northern syria, they are to be clamped down on. His big worry is that we will see them claiming parts of turkish territory. Francine can we extrapolate that turkish politics have been difficult. It will impact what angle of merkels refugee policy is . Michael these politics are going straight to the core of european politics. He saw that last night in the Regional Elections in germany. Despite what we saw last night in germany and with the terrorist attacks, this will not dissuade merkel from her path to do a deal. The bombings are distinct from the refugee crisis. Tom i am confused from the basic idea, the ancient ideas. In the new politics that you study every day, what is the new world order in turkey . John its to get ahead of the game as quickly as they can. Its a very fluid geopolitical situation down there. Its very different to what it was 10 or 15 years ago when joining the eu was the lodestar of Turkish Foreign policy. Turkey is now much more determined to go its own way. He is going to get as much out of merkel as he possibly can. He knows that she really needs him, the refugee crisis is not an immediate threat to her, but its a big issue. He is going to get as much as he can. That is his guiding policy right now. Tom who are the allies of the kurds . John they have been reaching out to russia recently. I think we have the head of the syrian kurds in moscow warning against the risk of actually sending troops across the border to attack them in northern syria. That will be a major escalation. Liness one of the red that would get people very worried, if we saw Ground Troops across the border. As it standsooking right now. Francine there is a huge crossover between geopolitics and political europe and what that means. Were a look results into the kind of story we will be talking about next year ahead of the general election. Clearly, they are connected. An issueoing to remain going forward. The one curious thing is looking at the market reactions so far and its been a solid stable market reaction. I think thats interesting. Francine they are looking at qe. Risk. Rkets are mispricing we are getting a policy response. There is a big debate and its raging right now. Is the policy working or not . Things like the reaction today. Uggest there is a degree if you have that combination of inna data and this attack february, it would have been a different reaction. Tom you are looking at the markets and international ations, after the rocky mario draghi excitement last anythingl this adjust janet yellen does wednesday . Michael i think it does matter. The really good thing about druggies reaction mario announcement, we knew the fed would be concerned about any kind of massive deterioration in financial conditions. There was a brief moment in february their financial conditions in europe and also a little bit in the United States look stressed. That is the kind of thing that wouldve put the fed off. The fact that mario draghi has removed that risk, he has under he has removed that risk, it takes away one of the things weve been worried about. Francine thank you so much. We will talk more about Central Banks. Institute ofe International Finance ceo. That is coming up at 5 30 a. M. Were going to talk about Interest Rates and negative rates and the impact on banking models. Tom good morning, everyone greeted good morning in new york city. Daylight savings time, we spring forward. I did it sunday at noon. Thats what we did. We got a shift in the light in new york. This is one of the great mysteries of the world, american daylight savings time. Nobody really gets it. Francine the u. K. Is two weeks later. Tom ive got to catch up. Quinn they are going to buy resorts in the u. S. The seller is blackstone group. They just but the hotels three months ago. Coronado is one of the hotels. Maserati is recalling 28,000 cars sold in north america. The drivers side floor mat can come loose and get stuck on the accelerator. Models. Cover two high minister cameron will announce a plan to lower help lower paid workers say save money. There will be a bonus on their savings if they set aside 72 a month. He will raise the minimum wage for those between 18 and 24. That is the latest business flash. Huge week for a Central Banks. Microstrategyof Michael Metcalf is still with us. If you look at the major Central Banks deciding this week, the fed is the most difficult one. There is so much qe out there from the boe and the boj, it pressure on the dollar. Michael i think its interesting. There are moments where the Dollar Strength has been seen as restraining the fed. The dollar appreciation has unwound a little bit. Thats because there are doubts about the ecb and the doj. Boj. Across the credit risk and that kind of stuff, some of the reasons why the fed should not have been tightening have gone. Ncing if you look at francine they want to normalize. The markets just dont want to believe it. The dollar rally gave a little bit of relief. Michael that makes the decision easier. Core inflation is above 2 . The labor market has improved. Ande excuses for delaying the debate that they had about the lane, i almost think the difficulty they had in the communication is they need to warn the market. The market is heading there. Its clear they wont shock the market this month. They just need to get that up. They are going to hike. The basic idea i have and it goes from your good research, janet yellen has to work within a global continuum. This is Michael Metcalf in his quote. Cocky mario draghi is not working in a vacuum. Is janet yellen ignoring europe . Ishael i dont think she ignoring. I think what mario draghi has done really helps her. If you look at the polls so far the pet easing out of china. There are some positive comments over the weekend. When you add that to what mario draghi has done, i think the policymakers outside of the United States are trying to remove their own risks. By doing so, they are removing the risks for the fed as well. Tot should allow the fed focus on the domestic situation. Looking at the run of data they have had so far this year, its arguably clearer that they need to tighten now. Look at Oil Prices Going up. Weve had this nice excuse of headline inflation. We know it stronger. We had that one fallback. Oil price weakness is reversing. The excuses for not going are getting smaller. Tom lets get out in front of our single best chart. I dont understand how central bankers control things. The japanese yen was proof that the bank of japan cant control yen. We saw appreciation. Can janet yellen actually control markets . Michael she can influence sentiment. I think there is no doubt about that. Is doubtsat move about the fed itself or in itself. If we get a steadier statement from the fed this week, they clearly go back to Forward Guidance. We saw from mario draghi how important Forward Guidance was. If we get that from the fed, rates are going up. We will look at that trend very closely. Tom Michael Metcalf is with us. Hour, Carl Weinberg will join us. With the Conversation Council of Foreign Relations. We will speak to the ambassador about the attacks in turkey and the ivory coast. From london and new york, bloomberg surveillance. Francine its monday morning. The clocks have changed in the United States. Tom got a little bit confused, but he showed up on time this morning. Its time for my morning must listen. Exit brexit yesterday. Its not a political game. This is the biggest decision facing this country for 50 years. People will be affected. Its not you and me. We will be long gone. Wales. Be the farmer in their future depends on an open and engaged britain. Its about their future, not about ours. Francine this is all about political play. Its difficult to see what it will look like. Who will suffer the most . Michael thats part of the problem. Its the uncertainty. Try to model what might happen, there is a wide range of estimates. You can look at the economic studies. Some say we are better off and many say we would be worse off. Yes, there is a concern about financials. On the trade side, we are looking at 60 of our trade with the eu. There is a great deal of uncertainty. Francine we lived through 2008 rid of with this be a shock 2008. Would this be a shock . Michael the liquidity would be very short term. He did not think it could happen. Scenario, we leave. There would be a twoyear amount of time are we negotiate the exit. Which scenario do we and upton . And upton . Is it the norway on model . Francine thank you so much. Ofing up, the institute finance. We will be talking about banks. We have a great chart. Have recouped some of their losses. What does he think is behind the move. That is next. Tom we welcome you to our surveillance monday. German the twoyear weaker and oil two days in a row of a bit of soggy notice. Ellen zentner will appear on surveillance on Bloomberg Radio. News fromd with peeling back from three fed rate increases to one. She has provided Global Leadership in caution on how the federal act. Francine, this is really important. They have come back to that one way to increase with a vengeance. Francine i suspect it is a lot to do with what mario draghi did theh pushes yields for european union. Tom lets continue this. To first, lets go word news with vonnie quinn. Vonnie millions join in of the biggest protest in in brazils history demanding for the removal of the president. South brazil is mired in the worst recession recession in more than a century. Partial ceasefire in syria since the end of february. The u. N. Hopes negotiations will lead to an agreement within six months, full by elections a year later. In the gaza strip, disco children were killed. The attacks were in retaliation for rockers rockets fired at a Israeli Border town. An amtrak train derailed in southwest kansas. The railroad says 20 passengers were taken to the hospital. Flooding has damaged more than 5000 homes in louisiana and mississippi. At least four deaths have been reported. Francine we are joined by the former director of the institute of International Finance, thank you for joining us. Half, last month and a european shares in banking two andell by around a a half year low. What was behind the panic . Are you concerned that we are seeing something a Systemic Risk that is being mispriced . Charles first, it is a pleasure to be with you and tom. I think the concern about the european banks to ride from a number of factors. The persistence of the ecbs move in negative interest territory has wrought base concerns about the ongoing profitability of european banks. They have had a struggle buffeted by their own weaknesses and also the constant pressure of rebuilding capital and liquidity. They have made considerable progress, but some banks have nothing able to do so. At the same time, you see the continuing flow of regulatory penalties being imposed on some of the larger european banks which raises basic questions about their Business Model. Italywas an incident in which has raised concerns about european banking. In local investors for small italian banks has set a bit of an alarm bell. Everybody for example we had that Deutsche Bank on cocoa story and now Deutsche Bank is back up, significantly. Nothing fundamentally has changed from midfebruary. Charles i know the market is in one of these phases where there is a huge amount of sentiment and i think the anxiety levels were so great earlier in the , because you had this confluence of events earlier in the year. You have continued turmoil in disarray inast and the european management of the immigration problem. Also, the markets effort to adapt to the first move in december all push this process. Charles i like how you mention those derivative instruments of Deutsche Bank. Here is normal for Deutsche Bank and here is that crisis in confidence. The good rebound in those socalled cocoa bonds. Is the sweat factor right now among boards of directors of major european banks . In the media. Ead to the board of these directors have the message . Francine i think that they do charles i think that they do. A set of board of directors which is focused on not just survivability, but rebuilding and reorienting Business Models for the longterm. There was considerable reluctance to a depth of Business Models to the new realities of regulatory reform, capital liquidity and leverage requirements as we move into the second half of this decade. I think we have seen a suite of new management into some of these banks. We have a new set of board of directors. It is not going to be easy because i think the next decade will not be an easy one for global banking. As global trade has receded, Global Finance has proceeded and one of the unintended effects, which in my view has gone a bit too far, has been to Global Finance and some of the global banks have suffered as a result. Jpmorgan, from the beginning of the crisis, were with their outperformance, but in other banks that could be there. How is that separation going to narrow . Do you have an optimism that these dogs can recover, or is the only answer a 1930s combination . You will see further consolidation in the european banking community, there is no doubt about that all stop i do think that you now see a course being set and you focused specifically on Deutsche Bank which is a much more pragmatic and realistic course than we have seen a couple of years ago. This course focuses on a more limited Business Model. I think it is a credible Business Model and i think they will have to judge as the experience unfolds over the next 12 to 18 months. I do believe that you can see some of these larger banks reorient themselves and ship their Business Model and not not just survive. If there is a briggs it, some liquidity trap in the european markets, no one brexit, some liquidity trap in the european markets, created moreas probability of liquidity gaps then we had, five years ago. At the same time, i think the stress testing that has been pursued has been rigorous. I am concerned more about the anxiety of investors who look at with these small, italian banks. I am as interested in anyone in protecting the taxpayers of europe and the taxpayers of america, but sometimes we hang onto that as a politically oriented goal, when we should realize that we need to preserve stability in the Banking System. Are we sowing the seeds for an unexpected shock . I think the framework has added resilience to the potential of another lehman moment. I think the issue we are dealing with now is Chinese Exchange rate policy and will the u. S. Be able to sustain recovery. Tom help me with banking jargon. What is a bail in . Is that we did in the u. S. In 2008 and 2009 . Charles what has happened is there has been growing at a growing consensus that in the event of a future lehman, we must ensure the taxpayers do not suffer the pain, that investors and the stock investors and Equity Investors suffer. While i share the desire to protect taxpayers, i think some of this have has gone too far. They basically prevents Government Support in the event of the of a bank. In circumstances where perhaps government should be allowed to step in. Insurers that being a act Equity Investors and the aheadlders take the hit of taxpayers and i think while that may make sense as a general proposition, i think will we have are excessively rigid rules which can snowball in market anxiety. We will continue. Surveillance,berg Ellen Zentner and Morgan Stanley, moments ago, zentner went from three rate rises to one. Stay with us. Francine tom keene is in new york and we have a lot to go through. Finance, economics, macroeconomics and politics. Three states going to the polls. It was one of the most crucial german elections and also a test for merkel. We go to berlin with hans nichols. This was significant because this was a test for merkels policies on refugees all stop refugees. Mores results are negative than we expected, 24 in the former eastern state and yet there has been every indication from the cdu that they are not going to alter their proposals, their policies on refugees. Whether or not it has any meeting in changing merkels positions or her partys positions, it does not look like it. All we know is we have a new reckoning and that is you have some very popular rightwing parties that did very well at the polls. Thatine is any comfort the cdu parties actually distanced themselves from the opendoor policy . Hans there are two schools of thought. One is that by running to the right of merkel, that these candidates actually did worse than what it than expected because they were pretending to be more conservative if you wanted a hardline position. The other is, yes they moved away from merkel on refugees and what have done even worse have been not made that move. Both of them are counter faction and it is hard to make any sort of adjudication on which one is right. It seems to me there is a very percentage that is not like merkels policy on refugees. Tom the u. S. As well, one of the common themes is the turnout in germany was massive. What does that signal to you . It signals that the alternative to Deutsche Bank is on the move. I think it is different from the tes because the af date unemployment is at 4 , where the economy is humming and we are 15 butry well, afd got that is where edu got their biggest decline. That is with the economy booming. Here in germany, we dont have wage stagnation and the yawning gap between the 1 and a 1 and the 99 like we do in the states. Thank you so much for that briefing. Us s delauro with charles dallara. What is the establishment left, afterght or this weekend that we had in america . Charles there is a growing sense of concern in america, not only about whether we have framework that can produce compelling candidates, but also about the growing disturbance is that are surrounding some of the political rallies and the growing hostility which seems to be emerging in u. S. Politics. Athink that we are really at time where we have to step back and reflect upon who we are and what we have to achieve what we want to achieve as a country. By the way, i agree with the results that are probably more disturbing for chancellor merkel than anything else because the prosperous part of the country says they are not comfortable with your direction. Back to america, this whole issue of immigration and how america deals with islam is becoming a powerful and unfortunately divisive issue. It is not just up to the leaders of the financial community, the leaders everywhere to reflect on how to build a more stable consensus. Francine what happens to the Banking System and the future of Economic Growth if donald trump becomes president . Both parties have found it convenient to continue despite this, we see strong resilience and broadly Strong Performance in u. S. Banking systems. It is hard to say whether there will be any rollback and parts of that frank. I think that the key is to find a way to build sustainable by ands models and large, u. S. Banks are doing that. At the same time, other segments of u. S. Industry are becoming increasingly robust and in certain areas, increasingly important. Francine thank you so much. We will be talking about negative rates, soon. If you look at the 10 year in the u. S. , it does have a huge difference to what drug he did and did not do what mario draghi did and did not do. Tom it is a fed week, we will have special coverage. Anything to the United Kingdom, but we wont do it on wednesday. We need to to our Bloomberg Business flash. Oure need to dash to Bloomberg Business flash. Vonnie there have been reports investors are growing concerned about a pay package. More than 20 of ashes and because shareholders may reject it. The British Government the British Government will allow topless cars to get tested on british roads. George osborne says Driverless Cars could be the most fundamental change in transportation since the invention of internal combustion engines. The first trial of the fall 3 faulty General Motors admissions begins today in new york. Gm has recalled more than 3 30 million vehicles. That is the Bloomberg Business flash. This is what we are watching for the rest of the week, a big week for Central Banks. Tomorrow, the central bank of japan will announce its Interest Rate policy. Fed,dnesday, it is the they will release their policy statement along with updated quarterly forecast for the u. S. Economy along with a dot plot. Live onerage will be bloomberg tv starting at 1 00 p. M. New york time. On thursday, we are expected to keep the benchmark rate at 0. 5 . It was early this morning that ubs has said negative Interest Rates dont work in japan, so why do we think it will work in europe . Lets get back to our guest for the morning. Negative rates, even if done correctly, hurt banks if they stayed for a prolonged time, we are stuck with this one. Charles that only two they hurt banks, they hurt savers and while i understand the desire to try experimentally, this we see inate policy japan, i have some serious doubts to its potential effectiveness. Tom i believe they are not in the textbooks any of us knew, are we truly in uncharted territory . Charles i think we are and we have to step back and asked what are we trying to accomplish and what could be accomplished here . Are we trying to force banks to win . We know what happens when banks make imprint loans. We have seen this movie before. We know that it will not be the government or the ecb, it will be their shareholders and bondholders. There is obviously scope to increase credit flows. I would have thought that Government Programs which support credit flows that level ofadjust the Capital Requirements for credit into certain sectors such as small and mediumsized enterprise, this might be a more productive route because i do have concern. Extended credit flows without extended profits, particularly in european banks. Japan is going out there in a few weeks. I have some serious doubts about it. Tom thank you so much, greatly appreciate it. In our next hour, Richard Haass will join us and Carl Weinberg. This is bloomberg surveillance. Week. Fed the politics it starts in florida and ohio. After a two weekend of antiestablishment protests. In ivory coast, we consider the new world order. In this hour, Richard Haass with the council on Foreign Relations. This is bloomberg surveillance , live from our World Headquarters in new york. Monday, march 14. I am tom keene france in the choir in london. Sunday hocking Francine Lacqua in london. It was a shocking sunday. Francine it has huge percussions for the view in this country specifically on brexit. People may be more concerned when they see terrorism go up in the world because they say i want my sovereignty back. More and moreme, german divisions. Tom we will look to the fed meeting wednesday. As we continue on turkey, here is bloomberg first word news with vonnie quinn. Vonnie turkey is responding quickly to the suicide bombing in ankara. No one has claimed responsibility for the ankara attack. Kurdish rebels have carried out similar attacks in the past. Militants linked to al qaeda say they carried out the deadly attack on the ivory coast. The government says 22 people were killed. It is the first attack by islamic militants in ivory coast, where the population is almost evenly split between muslims and christians. Antiimmigration alternative for Germany Party had its best showing yet in free state elections dominated by the refugee crisis. For merkels union fell across the board. A Police Officer was killed in what authorities are calling an ambush. A gunman opened fire outside of a Police Station in suburban washington, d. C. That sparked a shootout that left an officer dead. Donald trump is ramping up his campaign in ohio, where john kasich may be pulling ahead. Donald trump has moved a prior to rally from florida to ohio. Trumps campaign is overshadowed by growing violence at his events. Global news 24 hours a day, powered by 2400 journalists in more than 150 news bureaus i am vonnieorld, quinn. Tom lets get to a data check. Equities, bonds, currencies, commodities. Not much going on today. Futures, negative four. Euro 1. 11. This bears watching second board, quickly. The vix showing good. The punch bowl is full. 17,205 . S elevated the lower yield over the past 24 hours. Francine this is my board. I want to show you asian stocks higher overall. Japanese machinery orders spurred a little bit of spurred a little bit of risk taking. Two of the three biggest ,conomies boj, and the fed probably make the top four. Tom i want to introduce a new function. I thought this was vonnie game of thrones. This is the number of people who died in season one. Work bythe brilliant our Technology People at bloomberg. This is why people spend umpteen thousand per year on bloomberg. The is the green line, median forecast estimates. This chasm here, bital of 2017, is what ellen7, zentner called today. Vonnie Michael Feroli says we in thely see a drop median terminal funds rate, 3. 25 , which is a little bit. Tom i do not know. This may be kings landing. It may have something to do with kings landing. That is a great function. Francine, what do you have . Francine i also like it because we have tom keene to translated for you. To translate it for you. 10yearhe u. S. Forecast. Are expecting the boj to they are pressing ahead with her grand monetary experiment. Germany and japan are exerting greater influence over u. S. Treasuries. You can see it there. Tom that forecast is folding right into where fed policy is. We booked Richard Haass eight weeks ago. We talked to his people, he talked to our people, and unfortunately you have the tragedies, Serious Violence in turkey and ivory coast. I think they are unrelated. Richard haass, the president of the council on Foreign Relations. We could spend three hours with you this morning. Richard know, we could not. Tom they are unrelated, right . Richard they are, but they are related in terms of this is part and parcel of the world we live in. Tom what is the new world order that your experts see at the council of Foreign Relations . I could read your book or eight other peoples books, but all we know is that bombings are everywhere. Weak states cannot control what goes on in their countries were outside the borders, as strong states can. We are seeing the erosion of all kinds of security and stability arrangements, clearly in europe, in the middle east is the most unraveled. There are pressures under the surface at asia in asia that worry everybody. Francine the country is effectively embroiled in a conflict with kurdish separatists. We are in a proxy war with isis in syria. How does europe look at turkey and say what the next step is . Richard there is not a solution. To managet best a way it. And that seems optimistic right now. The government of turkey is doing two things that are misguided. One, it is moving against anything with checks and balances, targeting independent media. The talks that began a couple of years ago were called off, and now were seeing resumption of something that looks like a civil conflict. For europe this comes at the worst possible time because turkey is in the center of a migrant crisis. Europe is trying to work out a deal with turkey at a time it is increasingly difficult if not impossible to do so. Francine your prescript would to take a step back from turkey . As you say, we need turkey to try and find a solution to the immigration refugee crisis and the war in syria. Richard you are paying a high price for doing it. I do not think it is necessarily going to work. The real answer for europe is the one that is not there, which is somewhat which is some sort of a you are which is some sort of a europewide arrangement. Tom it was striking how the news came out on my twitter feed, one crisis, then the other crisis. All i could think of was a pollock call all i could think of was a paula cole song in the brave years ago, where have all the cowboys gone . It is essentially gone, isnt it . Richard the short answer is yes. About ao i wrote a book president called the reluctant sheriff. Barack obama is very much a reluctant sheriff. What we are seeing is that the United States, if they do not do it, the world is not on autopilot, and there is no one else with the capacity and willingness to settle to step up. Essentially, order declines. Tom can we lose the reluctant field . Ishard this administration not, and it is not clear the next one will be much different. You are seeing enormous debates within the parties, with Bernie Sanders having a very pinched view of americas role in the world. Several people are running for president who are anything but Traditional Internationalists. It is not obvious that the United States resumes its Traditional International leadership role after the election. Francine the attack on the ivory coast was the latest in a string of attacks. Powers needr world to do to support west african . Richard there are assistance programs with intelligence, training, and advising. We cannot occupy the world, but what we can do is build up local do with theto terrorist threat that can and does show up in dozens of states from africa and the greater middle east. That is the most we can do. It is not a problem we can solve. It is a problem you can contain. Vonnie will there be the formation of new states . Will that be the ultimate solution . Richard i am uneasy with the word solution. I can imagine a syria that is in effect several many states. I can imagine the same thing in libya. We already have a version of that in iraq. The world will want what i call the rand mcnally map, i do not see how we get back to the form of reality. Tom it will be most interesting hour here, Richard Haass with us on the council of Foreign Relations. On japan later, Carl Weinberg will join us with High Frequency economics. We will do that at the bottom of the half hour. From london and from new york, this is bloomberg surveillance. Futures did sherry rated a little bit, negative four. Futures deteriorated a little bit, negative four. Monday, you need a data check. S p futures at 5. The fed meeting on wednesday, we will have special coverage on bloomberg television, bloomberg , wednesday afternoon. I am tom keene in new york, Francine Lacqua is in london. Lets get to business flash with vonnie quinn. Vonnie David Cameron will announce a new plan to help lower paid workers save money. The help to save program. Cameron will raise the minimum wage between 18 and 24. Maserati is recalling 18,000 cars. Covers two maserati models. Hasas Insurance Group agreed to buy bank 16 luxury resorts and hotels in the u. S. Black stone group had just bought some three months ago. Among the properties are the Hotel Coronado in san diego, and a hotel in san francisco. That is our latest Bloomberg Business flash. Francine . Francine thank you so much. No stimulus mediated no stimulus needed was the message. In beijing with the very latest. When i look at where the pboc is, it is significant they are stress testing their banks. Are we confident that we will not see a financial crisis is the pboc are on top of it . What you are seeing is a central bank that is determined to counter any hints that that would even be possible. Silence, theyf are having their concerns addressed. A financial crisis, the people we talked to suggest that would be a long way off. They have so much firepower and so much cash in reserves defend that off. All of these banks are statecontrolled, so if they have any trouble, the state can intervene. Downsize the economy, but not a financial crisis. We mentioned linkage of the European Central bank, and mr. Draghi with chair yellen on wednesday. Is there a linkage of chinese activity with what we will see with the bank of japan tomorrow . I think the big thing his comments and the Securities Regulator at the same time on saturday. He came out and said listen, when the market gets choppy, we will intervene. What bigger signal do you need that this government will take its time shifting from estatecontrolled that from a from arolled statecontrolled economy . Translated as a floor on this market. That is why you are seeing the moves today in the shanghai composite positive territory. Francine where do you see the most stress in economies . Is in mortgages, that loans that may be have been taken out by authorities . Where should we be looking to make sure this is handled in a way that will create shocks . Nick the big issue here is their official nonperforming loan ratio for the big banks is low, but when you look at the wobblier loans, and the gray that isis 3 three or four Percentage Points higher. You look at these banks and you think, yes, they are statebacked and they have state support, but they have a lot of loans on the books they are not classifying as nonperforming, and there are a lot of question marks about how big they are and what can happen if they fail. Om nick wadhams, thank you it is evening for him in beijing. Richard haass with the council i waseign relations, thunderstruck by the projection of china in aiding other countries. It is persistent, i guess it is a good thing for china. They are deploying their capital abroad. There is no other way to put it. Richard absolutely, and partly for Foreign Policy reasons. It is also a economic thing, the ability to absorb capital at home. China has gone down that path. Reluctant. Re not they are antireluctant, arent they . Richard absolutely. We have a big debate about how bad things are in china. The chinese know how bad things are, and they need to maintain stability. They cannot do it all domestically. Francine so it seems vonnie so it seems china is making friendly with international markets. What about militarily . Richard Chinese Development in the South China Sea has gotten everybodys attention. The chinese are reacting to the vietnamese and the philippines. In the region, it is seen differently. People are worried about what china is doing externally, and also about the political crackdown at home. There is a lot of unease about what the chinese are up to. And what will be the political and foreign reactions to the economic slowdown. What ie that is exactly wanted to talk about. It seems these two are interlinked. China will play friendlier in economic terms as long as they are welcomed by the foreign community. So u. S. Politics has a usual to play in this. Tom we have made somewhat of a mistake by our opposition to the asia infrastructure bank. That was a big foreignpolicy mistake. Obviously china is now part of tpp. Building interdependence, so it is less likely to on the other hand, the United States has two minds about what to do about china. Tom was it the most bizarre political weekend you have seen in american . Richard only after the most bizarre political six months i have seen. There has been nothing like this. And talkill come back with Richard Haass about american politics. Florida and ohio, tomorrow. Today, Ellen Zentner with Morgan Stanley with her bombshell shift. This is on Bloomberg Radio worldwide at 8 30. Tom we welcome all of you on a monday, a most interesting week last week. We continue with francine the pot in london. I am tom keene in new york. Lets get to a we continue with Francine Lacqua in london. I am tom keene in new york. Where we are for our next commanderinchief the stakes are in norman us. The next president cannot get away with this. Tom we will cover this later in the hour. The red wine is pretty ugly right now, isnt it . Richard this is having three boxes on your desk, in, out, and too hard. Professors can get away with it, but the next president of the United States will not have that much. It will be a big tough inbox. Read across what is happening in germany and what may happen in the referendum it is huge. What do people think about . Do they say i want to make sure my family is safe, or do they think or about jobs and safeguarding American Values . Richard the answer is all of the above. It also reflects a general sense that the country is not going in the right direction, so people are voting for change. That is the message out of germany. Vote, theistatus quo on the refugee situation. It has to be worrisome for David Cameron. If you have this amount of antistatus quo, antiestablishment, things are not right and are not going right, it seems to me that some brexit, it isbout going to win. I think it is much more of an uncertain outcome than the polls are suggesting. The large turnout is also probably bad for the Prime Minister. Want to changeo things, not people who favor the status quo. This is a time of economic hardship. Richard it is. People do not feel well. People see their wages stagnating and are worried about jobs. You see populist parties flourishing, and people are generally concerned also that it is not going to turn around so easily. Here we are seven years after the financial crisis. Jobs have not returned, they will not return in many cases. People are uneasy. That is what we are seeing. Tom we are going to continue this discussion. We have a killer chart on the tepid american growth, coming up. Oming up, Carl Weinberg we need an update on japan. The bank of japan makes decisions tomorrow. Futures, 3. The yen, 1. 1369. V francine markets do this sometimes. At 7. 8 ,ee glencore Angela Merkel with 5. 4 . We are trying to figure out why there is such a substantive rally among commodity producers. They are the ones who lost out in january and in middle february. Commodity producers are rising for the 10th time. Some of these market sometimes have the feeling things got oversold, so they buy into it. Francine lacqua in london, tom keene is in new york. Lets get to bloomberg first word news with vonnie quinn. Vonnie in brazil, millions joined in some of the biggest protests in the countrys history. Brazil is mired in the worst recession in more than a century. The syria peace talks resume in geneva, and tha aimed at ending five years of civil war. In the gaza strip, two children were killed when israeli warplanes shot at hamas military bases. Those attacks were in retaliation for rockets fired at Israeli Border towns. Israel held hamas responsible for the attack. Train u. S. , amtrak derailed in southwest kansas. Passages were taken to a hospital in dodge city. The train was traveling from los angeles to chicago. Flooding has damage more than 5000 homes in louisiana and mississippi. At least watch her deaths were reported. The National Guard has rescued 3300 people. Global news 24 hours a day, powered by 2400 journalists in more than 150 news bureaus i am vonnieorld, quinn. Francine . Francine thank you so much. This is what we are watching for the rest of the week. It is a big week for Central Banks. The bank of japan will announce its Interest Rate policy tomorrow. The boj is expected to leave rates unchanged and its Asset Purchase Program unchanged as well. Wednesday, the fed will release its policy and updated quarterly forecasts. Us. Keene will translate for tune in for live coverage of Janet Yellens decision. Carney and the bank of england are expected to keep the benchmark rate at 0. 5 . It is a huge week for Central Banks, and also for geopolitical risks around the world. Single best chart. Here is dollaryen. The green boxes where abenomics and kuroda would like the weaker yen to go. Down we go off the bombshell announcement to stasis here, at 1. 13, 1. 14. Importantly, Carl Weinberg is with us with High Frequency economics. Good morning. When i see bank of japan, after the bombshell last time, what will they do this time . Carl good morning, tom. Greetings from charlotte. I think we will have a quiet meeting from the bank of japan this time. No action is expected. Their objective is to get the yield curve as low as possible, as negative as possible, to help the government with its financing. I am anticipating that they see themselves as on track to do that. Tom whether it is unilateral intervention or unilateral quantitative easing, have we once again proven it does not work . Carl i do not think quantitative easing will accomplish much for the economy of japan. They are dealing with the population, and the depopulation of the country, it has to get smaller. Monetary policy cannot affect any of that. Everything is focused on fiscal policy and trying to keep the government afloat with zero Interest Rates. Francine do you think the boj is regretting the move into negative Interest Rates . The markets did not quite react to it as much as they thought they would. Carl i have taken a slightly different take. I think that the main point in getting Interest Rates negative is not so much to boost the economy. They recognize the futility of that. But by bringing the Interest Rates below zero, they are changing the publicsectors finances. They are making public debt affordable, even with the shrinking population. They are getting the yield curve negative, and if that helps the economy, that is great. But i think they recognize that Monetary Policy is futile given their current predicament. A fair point, is but they are punishing the banks. If they stick with the negative rate for a prolonged period of time, the effects are difficult to quantify. Carl i agree with that. It is bad for the banks to have negative Interest Rates. The banks are paying negative deposit rates as well. If you are trying to get me to say that i disapprove of negative Interest Rates, period, i will say it. There are a lot of side effects. In japans case, the triage between public finances and the private banks, consider the government passed position. Two years ago when they were of gdp, it was costing 4 of gdp every year to pay interest on their debt. Now as they bring down the interest on the debt i central bank purchases, they reduce the maybe 1 ofment, gdp on average, and the number keeps on going down as they roll over bonds and the boj keeps buying them. This is about monetizing the public sector. That is the most important thing. If it costs them some pain on the banking side, they can bail the banks out with the money they are saving on financing. Vonnie do you see these policies ousting Prime Minister abe . We have seen his disapproval rates increasing. Carl the economy, that is what we learned in u. S. Politics. I do not feel qualified to comment on japanese politics, but if you force me to do so, i would say a bad economy will be bad for mr. A. There are a lot of on mr. Abe. There are a lot of hopes on his quantitative easing. Tom Carl Weinberg, thank you so much for joining us this morning, with High Frequency economics. Ishard haass, i guess japan a font of stability per how can we be a good ally to japan . Limits we can do on the economic front, it almost makes you sorry for central bankers. We can do things for japan, but mainly on the Foreign Policy side, without presence in the region, how we do with north korea and china. The one thing we could do for them economically is tpp. Given the politics, the four leading contenders for president , they are all against tpp. Tom are you predicting it will fail . Richard it will not pass. Francine the problem with trying things out is that things can go wrong. I am thinking negative rates, the structure that mario draghi put in place last week. Are you confident that this will not be the tipping point, that the blanket of safety could go wrong at any minute . Richard it could go wrong. We are in Uncharted Waters on all these things. Look at this country. The pressure now is going in the other direction. The debate is whether the fed will raise and how many times over the next year. I take a step back and what strikes me is how out of balance it is. They were looking to Central Banks because our politics will not let us do anything on fiscal policy or on basic structural reform. That is something the United States and japan and europe and india all have in common, and that is what worries me so much. Even if central bankers were geniuses, they simply cannot do enough, and at times they are going to make mistakes. Francine Richard Haass. We will talk about brexit as well. Coming up wednesday, look for full federal look for full fed coverage. Tom monday of an exceptionally busy centralbank week. A beautiful new york city, really an extraordinary march. A little more seasonal after record warmth last week. Right now, tom keene and Francine Lacqua in london this morning. Lets get to our Bloomberg Business flash with vonnie quinn. Vonnie directors of astrazeneca are looking at ways to tie executive pay to a 45 billion revenue target. There are reports of concerns about the ceos pay package. More than 20 of after zeneca plus shareholders may reject it. The British Government will allow Driverless Cars to be tested on u. K. Roads starting next year. The goal is to have that Technology Available to drivers by the end of the decade. Driverless cars could be the most fundamental change to transportation since the invention of the internal combustion engine. The first trial with the faulty ignition switches ended prematurely. The second one starts today in new york. Hundreds of lawsuits have been filed since the law was revealed. This the since the flaw was revealed. That is our latest Bloomberg Business flash. Francine thank you so much. Mother mayor Boris Johnson is accusing barack obama of latent hypocrisy after barack obama said that he would come here to london to try and muster support for the u. K. s state in the e. U. Richard haass is still with us. What are the chances of politics springing surprises . I am thinking of three major risks donald trump in the white house, the u. K. Leaving the e. U. , and Angela Merkel out of power in 12 months. Richard the last of the three is least likely. There is no real alternative to the chancellor right now, so she is pretty safe. I am most worried about the possibility of brexit. I think there is a hidden antibrexit. I hope i am wrong on this. Populism would lead one to think that there is more strength there than the polls suggested. In terms of our elections, i will be honest with you, i have been wrong every inch of the way over the last six months to a year. I do not even know who is going to be the republican nominee now, much less the next president of the United States. Francine what happens to world order if brexit happens . U. K. Robrexiters in the think there can be a unilateral agreement with the u. S. But what is the impact on the u. S. If they no longer have a channel of communication, which is the anglosaxon model of free markets . Do not see anything good coming of it. I worry about the u. K. Itself, whether the United Kingdom becomes the disUnited Kingdom. Oflso worry about the loss the u. K. , the coming a balancer of europe. No clear balancing of countries to offset it. And this is sort of an unraveling of the european project. We have seen a loss of support over recent years. On the screendot of the arrows going in the wrong direction. Tom for the United Kingdom people, how wide is the English Channel right now in the north sea . How apart are the people of england after 50 years of peace . Richard they are apart. I lived in england for six years. There is a National Consciousness. Tom where is the National Consciousness right now . Richard it is very much on the british side. Brussels has never capture the popular imagination. It has always been a more elite thing. A lot of brits will not be swayed by the elite arguments of this or that financial situation. Extent this is to some an iteration of the Global Inequality or their Business Owners in the u. K. Who say we are not in the single market. Richard i am not sure it is about inequality. I am on the other side of that debate. There are concerns about upward mobility. People are not happy with their lot and they are looking for things to blame. This is the one opportunity that will come up in british politics to express frustration and disappointment. If it were a national election, they would choose that. Too muchgerous to read into the narrative. Unhappy with their lot, and they no longer have confidence that the future will make them better off here at that the future will make them better off. Francine this is angst among voters, but it is often linked to sovereignty, to security. Someone in the u. K. Look, we are doing better economically in the u. K. Than anywhere else in europe, but they resent the fact that brussels has so much to do with their daytoday lives. Crisis,at the refugee Angela Merkel and how she deals with the refugees, people in this country say we are better off on our own. Tom i see it, and you just wonder we are in march, i believe. I wonder where this debate will be in april and may. Coming up, Ellen Zentner will join us on Bloomberg Radio. Also, we will speak with Richard Haass about the good news. He was not in the republican news this weekend. Haass, the news, and trump. Francine breaking news on starwood got an unsolicited bid for 36 a share. Marriott had agreed to buy starwood back in november. The deal looks to have been done, and now it looks like starwood will receive a waiver, or at least that waiver which would expire on march 17, obviously coming into effect. Not happen, we will have to see what happens to that. Tom money is cheap, to say the least. Our forex report right now i want to zip right through it. We have too much to talk about. Francine . Francine coming up shortly, it davidoomberg , with westin, stephanie ruhle, and jonathan ferro. Who is on the show today . Tom we are watching china. It was a big weekend for china. , after what he said, the numbers that came out raise some questions. Japan, the bank of fomc, and others. Peter orszag will help us sort through that. I have been listening to you talk to Richard Haass. Germany, turkey we will try to follow all of them on bloomberg. David, itlistening to goes back to the correlation between geopolitics angst amongst voters, and the markets and centralbank policy. Tom absolutely. Richard haass is with us this morning. He and his good people at the council on Foreign Relations came out with campaign 2016. I urge you to check it out. Little did he know he would become part of campaign 2016. 10 days ago, which seems a light year ago in republican politics, mr. Trump mentioned mr. Haas, yelling and debating on Foreign Policy. We get an update from mr. Richard haass. Ron paul says, wait a minute, donald trump is talking to the establishment. Have you spoken to mr. Trump in recent days . Richard i have not. I have offered to brief all the candidates, to have them come to the council. Tom secretary clinton as well . Richard absolutely. Half a dozen candidates this time, including mr. Trump several months ago. Tom could you serve within a Trump Administration . Richard that is so far off right now. We have learned that a week is a long time in republican politics. At the moment i am focusing on the council, focusing on finishing the book i am writing about a world in disarray, and trying to be a resource for all the candidates, democrats and republicans alike, as this all plays out. The index the inbox that the next president inherits will be extraordinarily complex. My job is to help them navigate their way through. The discourse i would suggest is fractured. How do we get gop or democrat or our National Discourse back on track . Richard it is going to be enormously hard because you have debates not just between the parties but within them. Fundamental differences on what our goals are, how you define success, what resources we should be committing, whether the goals should be to promote democracy, stay out of wars, and so forth. There is no intellectual consensus. Here we are 25 years after the end of the cold war, and american Foreign Policy is politically and intellectually splintered. Francine it seems like it is only the last three or four days that they are coming to terms with the fact that the u. S. Could elect donald trump as president. When you look at Foreign Policy around the world, are there one or two key allies who would lose the most out of president trump, or is it too soon to say . Richard it is really hard to say. Like anyone else running for president , mr. Trump is saying things that will win him the election. Government governing is a different thing. You do not begin with a blank slate per you have an inbox, responsibilities, alliance commitments, and so forth. So what he would do on issues like trade or immigration, he does not begin with a clean slate and he will have to do with tradeoffs. He himself has acknowledged that her he talks about his desire to have deals with some of the things that he says. I get an easy with any key i ,et uneasy with any candidate with what they would say in florida or ohio this week, versus what they would do if they were elected. Which candidates do you think are more intellectual about Foreign Policy . Richard i will not rate the candidates. Chart in is a progress. This may be my chart of the year. I cannot believe i am saying that. This is real gdp back 30 years ago. This is Richard Haass, the red line defense. This is not nominal, this is real gdp. What is stunning we have what is stunning is that we have moved from 3. 7. This is the real angst you captured in your blood. Hard economists can say economists was say things are better than that. You can get things for much lower prices, this does not reflect real improvements in your lifestyle. But it does not matter. This is what people feel, and this is what they fear about the future. You sochard haass, thank much. If used big with mr. Trump or mr. Cruz, let me know. France a lock while, what a central bank Francine Lacqua, centralbank situation. Francine these are the two main political risks this year. Tom very good. , next on television. Coming up on wednesday, full coverage of the Federal Reserve meetings. Stay with us. Bloomberg surveillance. Stephanie a tale of david a tale of two markets. The u. S. Federal reserve meets this week, but do not expect a rate hike, according to Morgan Stanley. The latest call is surprising on the markets. Protesters take to the streets in brazil, as millions call for president Dilma Rousseffs impeachment. David welcome to bloomberg , im david westin. Here with jonathan ferro. But i am is out, delighted to say that vonnie quinn is here. Jonathan male joins us come after another is the weekend. Matt we have a vonnie we have a packed hour ahead. Turkey striking back after the suicide car bombing after it killed 37 people. Turkish warplanes hit kurdish militant camps