Theta, there is no graceful exit here, folks. Ylor special Counsel Robert Mueller appears to be building the case the Trump Campaign was in close talks with brexit officials who wanted to defeat hillary clinton. Robert mueller revealed that a former trump foreignpolicy advisor pled guilty to line about his contacts with russian operatives. George papadopoulos is not cooperating with prosecutors. Meanwhile, Paul Manafort and an aide have been charged with Money Laundering. Congressional tax writers are considering a gradual phase in. According to people familiar with the matter, they looked at the schedule that would business traits from 35 to 35 in 2022. That would slash business taxes from 35 to 20 in 2022. The bank of japan reduced its forecast for inflation. The boj is under little pressure to take more action, though inflation is low below the 2 target. Catalonias Independence Movement is struggling to find a way ford. Off for belgium. They say he plans to seek asylum. Madrid has strengthened control over the Catalan Government and rajoy called for regional elections. Global news 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries around the world. Im taylor riggs. This is bloomberg. Tom a data check. Curb flattening is what i really sisiced on a 78 ba point move. The next screen, i am bored. On to the vix and equity markets. Brent crude, elevated. That is european oil over 61. A weaker accident peso, that b ears steady through the week. Nejra tom, we have got something in common. Im showing brent crude holding above 60 a barrel. Wti is on track for its second monthly gain since 2017. Oil and gas stocks are outperforming. By 10 . Dollar, off there we go. The 10 year yield on the gilts, its lowest in a week, tom. Tom i want to show you the spirit of america. This is the confidence numbers. Up we go. Then theres a sharp decline from the peak of march in 2000. Notice where we are right now is above 2006, but we are not quite back to where we were in march of 2000. Theres the lehman low. That paints a very nice picture of the confidence of an employed in prosperous, maybe one of the eeericas of the two or thr out there. Nejra we got Economic Confidence data for the eurozone yesterday as well in that is also at a record high. My chart is showing the u. S. Market cap sinking versus the rest of the world. We are talking about a Global Equity market, tom. Tom i think i have to steal that chart. Down we go on a relative basis. We see the International Stocks coming back. David harris giving us great perspective on that as well. What a joy yesterday to have the knowledge of stephanie baker. She had a definitive article on Paul Manafort. She joins us from london yesterday. Let me ask you the question i got three times yesterday afternoon and evening. Where did all that money come from that mr. Manafort used to buy real estate in new york . Whose money was that . Stephanie this is the thing i had focused on yesterday, that there was great detail in that indictment about what manafort use that money on. We had antique rugs, we had his renovations of his home, his landscape gardening, but we had no detail on where the money came from. The indictments alluded to the fact that a lot of the money came from his political president work for viktor unicod. I know a lot of the money that came through those companies also came from a russian billionaire. Vthat russian billionaire says this indictmen only confirms that he has done nothing wrong and that manafort has been misleading him for years, as part of a private equity deal they had struck back in 2007 to 2008. Tom you are reporting on this over the number of months. Are the consultants billing at day . 00 00 a or is it a billionaire writing a check that goes from an account in cyprus . Is it that blatant . Stephanie there are two things going on here, and we dont have the full picture. Manafort no doubt made millions dollars advising on election campaigns. I was told he made so much money on the 2006 elections in ukraine he was able to buy his apartment in trump tower, for instance. There is that set of money and then there is also another set of money that he received as part of this private equity transaction, as well as additional money that cyprus accounts show, but we dont know what that was for. Littleif we zoom out a bit, it shows that Robert Mueller is building a case that President Trump was in close touch with russian officials who aimed to defeat hillary clinton, but at the moment, we are not seeing the president implicated in any way. Stephanie no, not yet. The Manafort Indictment was very damning, but the far more significant indictment was the one that followed in the onetwo punch against trumps former foreignpolicy advisor, George Papadopoulos. That, i think, could reach closer to trump himself. It referred to a number of Campaign Officials, Senior Campaign officials, that puppet apple is was emailing that George Papadopoulos was emailing with. I think he has not revealed everything that he has got and that Robert Mueller has more coming. Tom i want to bring up a morning must here. This is feldman of bloomberg view, our impressive law professor from harvard. We have a couple of these coming for you today. Is itoblem for manafort auld be difficult to draft clear, publicly digestible narrative of collusion between russia and the Trump Campaign. Robert mueller and his team need more than just the truth. Stephanie he heard a hint at one because if manafort is indeed the Campaign Official that George Papadopoulos was emailing with, then there perhaps is more to follow, that there is a greater connection between manafort, George Papadopoulos perhaps there are more emails we are not aware of. It does look like the charges against manafort and gates are attempt by Robert Mueller to put pressure on them to cooperate and provide more information about what they know. We will have more on this throughout the show. Dumasderrick and charles are with us. Come to you first. We did see a bit of dollar weakness yesterday. This move seems to be more on the developments, or lack thereof, that we got on tax reform. How importantly is the market looking at the Robert Mueller investigation . I dont think it is looking into it at all at the moment. Obviously, the market was focused on yield. Could that change . Yes, it could. Time, if you go back in you look at other major investigations, 1973 or 1998, it really takes a lot more. It has got to be when we are talking directly about something that impacts the presidency itself. At the moment it is unlikely. Tom charles, i want to get ready for what we will see in the coming days. We will tease on this as well. With the fed meetng and the idea of hawks and doves, and my right that we are miles away from neutrality . Yes, i think all the Central Banks are pretty easy. The fed, less spectacularly so than mr. Draghi, but easy nonetheless. Right now we are about 0. 25 below. They are seeking an acceleration of inflation. Tom very good. Charles dumas and Simon Derrick, we will come back. Cirilli willvin join us for the festivities in washington and a political and economic analysis. Were really looking forward to that in the next huour. This is bloomberg. Taylor this is bloomberg surveillance anchorm taylor riggs. The company says deliveries will miss targets. The jet continues to be played by engine problems. Sony has raised its earnings outlook. Dual camera smartphones health boost sales. Meanwhile, the Company Faces lowered sales with the playstation gaming console, and the film business has had a lack of blockbuster hits. Morgan stanley dropped out of an agreement. The deal allows advisors to defect to competitors without getting sued by former employers. Morgan stanley says the agreement is closed for opportunities with loopholes. Thats your Bloomberg Business flash. Nejra the bank of japan has left the massive monetary Stimulus Program unchanged, even as it changed the monetary forecast blame. Kathleen hays is in tokyo. The decision was expected. So, is the big focus the inflation forecast . Kathleen well, to a certain extent. The boj was forced to acknowledge reality, that a 2 target is running 0. 7 year after year. So, they lowered it from 1. 1 to 0. 7 . This was pretty much expected. Expected or not, what is important here is that governor kuroda defended every aspect of their monetary stimulus, their super stimulus policies, and made it clear he is sticking with all of them. Thea kuroda also defended etf purchases at a time when we keep seeing stocks hit new highs. Why . Kathleen because, first of all, it is interesting. Of japaneseigns stocks overheating. He knows that relative to other markets in the world, they look appropriate. Yields etf purchases, curve control, are all part of a policy aimed at boosting inflation. Each part is necessary and all of those parts are going to be in place as long as it takes to reach 2 . We know the boj has shown some flexibility as stocks have risen in october. In fact, they pulled back on etf purchases. Kuroda has no since this will change yet. Tom kathleen hays, thank you so much. Bny mellonck from and Charles Dumas as well. Let me go with yen and abenomics, on the that mimics we see out there. Wheres the optimum yen level for mr. Abe . I would say 200, to be quite honest. Lets be realistic about this. I was really fascinated, when you look through the comments from mr. Kuroda. Te was making comments tha people thought were getting ahead of themselves in terms of exit strategy. That was a curious comment to make. They are defending against the calls for strategy and this is there areg pressures growing on the bank of japan. Whatever you might say about where stocks are in japan at the moment, they clearly are getting towards multidecade highs. We are nowhere near where we 1990. N 1989 or with the other Central Banks getting close to finishing their programs, maybe the pressure is starting to come in a little bit. Tom i find this fascinating. China,u are booked on with the idea of the flows that ts lombard starts every day, what is the flow right now, the immovable force between the dollar and asian currencies . A think there are any immovable forces, but if the japanese want to achieve their objective, they will have to stick with this policy a longtime longer and by adopting a price targeting policy for money, rather than a quantitative easing, they are able to do so more cheaply than before, in terms of the stuff they are able to buy. Sure, the stock market is high, but in dollar terms, everything is quite high. Were relatively bullish and there is no reason to expect it to go down. The one thing that will go down is the yen, which will help kuroda achieve what he wants. Inabilitys the bojs to reach its inflation target highlight the sort of concerns we are having with the phillips curve globally, or is it an isolated case . I dont think it is an isolated case. The actual rate of inflation is close to zero in the United States and the eurozone. In japan, it happens to be negative. If you try to invoke 2 inflation, it is inherently least, ando say the it will take a long time to achieve. The attitude and habits of the country are not particularly inflationary. In the process they are overstimulating capital assets. Hence, what we are seeing for the japanese stock market. Nejra simon, you talked about the fact that kuroda is defending against calls for an exit strategy, but i feel there is a lot of tolerance for the fact that the boj is not reaching its target, in the markets at least. Theres a multitude of funding currencies you can choose from at the moment. You want to choose the euro, the swiss franc, the danish krone, theres a multitude out there. The yen is one of many, but historically the yen has been the choice. Tom we will continue this discussion. Simon derrick and Charles Dumas with us this morning. The news flow this week is extraordinary. And we have an appropriate guest ur, richard of pimco. Too many topics dimension. Lets start with the fed and the bank of england. Stay with us. From london, from new york, this is bloomberg. Tom good morning, everyone. Nejra cehic in for francine lacqua. Im tom keene in new york. An amazing news flow this week. Greg valliere will join us this hour. A lot going on with the special counsel in washington. Right now, brexit. Simon derrick joining us and Charles Dumas, who has enjoyed working with jay femmnby. Im struck by the lack of news of brexit. When do we get the next wave of a timeline, i guess, of how we get to the end of this process . What are we waiting for . In an ideal world, the period for these negotiations would have been six months, other than two years. We would have been forced to a conclusion sooner rather than later and everyone would have been forced to get to their positions, rather than this dancing about. The whole thing matters a lot less than people make out and so, theres a sense of inaction. There are very strong feelings on both sides over here, but in terms of market, im not sure how significant it all is. Tom i agree. Wes amazing here, the lull have on brexit right now. Simon derrick is with us, as well as Charles Dumas. I want to remind you, the former president of Harvard University and the former treasury secretary, very much in the news of tax reform. Lawrence summers, look for that in the 9 00 hour. I am nejra cehic in london with tom keene in new york. Lets get the bloomberg first word news. Former Trump Campaign manager Paul Manafort and his business associate are under house arrest. Pleaded and rick gates not guilty to Money Laundering and other charges. They were the first to be publicly charged in special Counsel Robert Muellers investigation. Meanwhile, former trump advisor George Papadopoulos pleaded guilty to lying to fbi officials. He is cooperating. More details will come out today on capitol hill about social media and russian meddling in the election. Executives from facebook, google, and twitter testified today. Facebook will say that about 126 Million People got ads from the kremlin group in their newsfeed. The Trump Administration says it does not need congressional approval to fight the war on terror. The secretary of state and the secretary defense testified against before a senate theee, pushing back u. K. , the 6 25 has reached the heart of Prime Minister theresa sexgovernment the scandal reached at the heart of Prime Minister theresa mays government, where a minister said he inappropriate touched a woman. 5 years ago, but she downplayed the incident. An extraordinary week for centralbank theory and tactics. We are enthused to have Simon Derrick of the ny of bny mellon and Charles Dumas of lombard street research. Let me start with mr. Powell as fed chairman. Fourwill he do in a standard deviation crisis . We know someday we are going to get there. Charles pretty much the same as mrs. Yellen would do, which is support the markets. He has to come up and this is with Great Respect for his academic and legal career with a view and also advise the executive and legislative branches. Will he do that in committee, will he do that by the phds, will he do that through a singular vicechairman . How does that get done . Charles the thing about the powell appointment, assuming it happens, is that he is the guy to start working on the issue of regulation of the banks. If you think about the degrees of freedom of the fed, given the way the u. S. Economy is developing, what powell what a powell fed is going to do would be similar to what a yellen fed does. A couple of tightenings around march or june. Then, all bets are off because of the tax cut front. Where they have degrees of freedom, i think the answer is in regulation. Big banksu treat the as monopolies or try to split them up or just control them by means of capital ratios. That is where powell will have a lot to add. , do you want to ask you agree that whoever leads the fed next is going to be yellens said . What does that mean for the 10 year yield, particularly given how highly correlated dollaryen is to those rates . Think it basically follows the dovish fed, yes. We are 13 years into this cycle of fed that is prepared to support the market. The reason why we are caught in this loop is precisely because the fed has proved itself so sensitive to market downsides. Do i think that will change no, absolutely not. The interesting bit is the widening of the Balance Sheets. The way it has been downplayed by yellen and others in the fed. Hasas been the thing that driven markets for debit for decades. They are building up to 50 billion a month of withdrawal. JustCharles Dumas, do you assume we are at quantitative tightening . Are we had a point where the next fed chair, Governor Carney, the rest of them, that we are in an era of tightening, or do