Comes to the opec meeting on thursday. Spread coming in at 57 basis points. And bitcoin. Is it going to be 10,000 today . Time for the morning brief. At 8 00 this morning eastern steven mnuchin, William Dudley on the hill of the sec will all be speaking in new york at a conference on the structure of the u. S. Treasury market. At 10 00 all eyes will be on capitol hill as Senate Begins confirmation hearings for Jerome Powell. And President Trump continues to campaign for a tax overhaul. He will be going back to the white house for a meeting with congressional leadership on how to avoid a government shutdown. Thats all coming up today. The big story into ec is Federal Reserve nominee for the chair, Jerome Powell. The gap appears to be narrowing between short and longterm Interest Rate raising concerns on the future of the u. S. Economy. Joining us now is drew matus, metlife and that achievement metlife management chief market manager. Are we expecting to see anything different from the confirmation hearing today and the testimony tomorrow from chair yellen . I dont think so. Differences tend to be on the regulatory side. The fed is very consensus driven and powell hasnt dissented ever so you have to assume hes on board with what they are trying to do. Even the fed doesnt know how many rate hikes they are going to do next year. I wouldves an answer take it with as much of a grain of salt as you can find. Jonathan it looks like as you were for the Federal Reserve. You could put Janet Yellens name on it and it would read the same. His goal is not to make any waves. I suppose something good came up and questioning. There are issues about regulation. Waspowell in his statement very firm and saying we do believe regulation is needed. We shouldnt roll it back a lot but we could we get some. That is perhaps where a lot of the senators will go. David will that be enough for the financial district . When theld trump was elected numbers went up in part on the promise of deregulation. Is tweaking going to be enough . I think it is and it has been for the economy as a whole. Everyone ascribes the movement to tax cuts. It shows the regulatory pendulum doesnt just swing in one direction. Sometimes it can swing in the opposite direction and thats what markets have in responding to. The idea that its not going to be the constant push of more regulation. Job sincehas had this several months. As you taken any specific steps that would encourage the banks to think there is deregulation coming . He is behind a move to take some of the pressure off corporate boards in terms of what they are supposed to know and do in the financial industry. He has also suggested he supports moves in congress to raise the threshold at which you get extra regulation. It. Asnt put a number on there is a bill in the senate that would change it from 50 billion to 250 billion. If i am in the senate im going to ask him what do you make of the flat yield curve. What do think he would say . Say think hes going to that they will continue to hike and they have a forecast and the forecast is whatever. The fed has a number of rate hikes next year. I dont think youre going to get three or four next year. I think you might get two. There are enough people on the fed who dont want to compress the yield curve that far so unless the 10 year starts moving it might cap how fast theyre willing to move. Alix whats going to be the main street question . My mom definitely does not care about the yield curve. People say, youre an economist. Was going to happen to Mortgage Rates . Am i going to have to pay more to buy a car . Probably Mortgage Rates are going to go up but they havent responded a lot yet to what we have seen in terms of fed tightening. We dont know what its going to cost you to buy a house next year. Me wonderit makes what we can learn from today. To the start of the year when they had the projections for gdp growth the majority didnt even factor in stimulus. Fiscal this is why they call it a confirmation hearing. Hes going to confirm what we already know. A washington pun. He has not factored in the stimulus. Its got so many moving parts that its really hard to know. The one thing you do know is that its going to increase the whicht significantly should raise Interest Rates over time and may crowd out a little growth. He might comment on that. Fed chairs have commented on the deficit in the past trying to be as nonpolitical as possible. Theerms of its impact on economy may be too early for him to take a position. Ifathan for the next crisis they ask him how hes going to respond and he says with a Balance Sheet outside go over with republicans . I suspect hes going to say thats his last option but hes going to keep it on the table because he has to. The whole idea of moving rates higher was to make that less and less likely. The curious thing from my will be what does he think of the idea of a natural rate of interest which is in my mind most dangerous concept at least as its being applied by the fed that exists today. Natural rate the of interest is now such that the fed funds are going to pick at 2 peek at 2. The wide range of estimates of what the rate is which is a couple Percentage Points in either direction. I would love for someone to take him to the table on that not because i expect an answer but because i would like to see him squirm a little bit. David isnt one of the challenges he has convincing the markets that he will be aggressive enough to respond in the next crisis and tell the senators that he will stick close senators get nervous when fed chairs say we have a lot that we can do. Hes got to win over the staff. He really has to defend the Federal Reserve a little bit and if youre going to defend it in one way or the other you might as well defended keeping your options open rather than letting them get constrained. Alix deals are getting done. Porac is buying Buffalo Wild Wings for 2. 4 billion. Thats about 157 a share. Keep thethey will brands distinct. Theyre going to keep the brands distinct but the arbys ceo will leave that merger. We have been reporting for a while this takeover continuing in the distressed space. David is there going to be further consolidation in this . Art of the business bac jonathan the mood music around m a is improving. Are we going to see more of this over the next year . Yes. Rates are moving higher. People are going to try to extend the duration. That means trying to show that you can grow rather than just return as much capital to shareholders as you can. Jonathan drew matus and michael mckee, thank you very much. On the bond market and the Federal Reserve event of the everytune into bloomberg friday. 30 minutes dedicated to fixed income. Coming up on the program, is it time to get bullish on Global Growth . Credit suisse ceo says yes. Will bealerie jarrett coming up. This is bloomberg. Alix the synchronized Global Growth story. How long can that continue. When its reese Credit Suisse figure out to john us earlier. We are very positive about emerging markets. Noticeably very positive about ofope which is new because the election of macron and the turn of things in france. Enginee a Franco German that can power the european economy forward. We have the three Major Economic zones doing well at the same time. Capital expenditures is back. Thats a major shift in the World Economy and it can create a scenario where you can have high growth with low inflation because productivity gains. If you invest in capital and productivity growth you can get into a very healthy growth scenario. I was concerned about the exit of qe. It is very slow and the communication around it is very good. When asset prices are as high as they are it is important to take investors by the hand and not surprise him or her. I think so far the Central Banks have done a really good job at that. We think emerging markets will be all right. Qe, m a. We think the strength of corporate earnings and of cash. Itting on the Balance Sheet you have our industry. The lack of reliability of credit put a damper on growth since the financial crisis. It is starting to shift so we can support our clients and their m a ambitions. Economists from barclays and Goldman Sachs tend to agree with him. As good as it gets. Still with us is drew matus of metlife. As good as it gets. Still with us is drew matus of metlife. If you agree next year is as good as it gets . We are starting to see that positive reinforcement of growth across the globe with the u. S. Pulling everyone along. Now europe has begun to grow. Asia is beginning to follow. You begin to get the positive reinforcing growth cycle which one of the reasons we are optimistic that the u. S. Economic cycle might be able to extend to a record. Alix what do you see thats different . A matter of how much are they slowing. China in our view is going to. 2 . Off by japan also. 2 to. 3 . In europe about the same. And growth is picking up latin america and the rest of the emerging world seems to be accelerating. Offset suggests you are going to see better growth if18 that you saw in 17 and you look at credit in the United States it doesnt seem like bank is somewhat slow. That means theres potential for upside which could further the cycle that much more. Tax cuts could further the cycle. I think we should be asking ourselves how much beyond 18 will the Economic Cycle extent . David and how much further can with real growth around the world and without further inflation . You will begin to see it pick up within the next year. Model for underlying inflation suggests that the bottom of inflation is the second half of this year. Higher begin to move basically starting now and going through the first half of next year. You think high rates are going to lead to an acceleration of growth. Look me through the. Walk me through that. Where ise in a world all wall street all the time but main street a slightly different ambitions and i think what you see is that the saving rate and the 10 year yield, the relationship is not linear. Below a certain level people begin to save more money. It could just be fear. If the 10 is really low then maybe something is wrong with the economy. We know thats not the case because unemployment is so low so what are they scared of . If they are moving towards retirement and they want to move a for assets how much money do they need if 10year gilts are as low as they currently are to have us if retirement just using a safer asset and the answer is if 10year gilts are at 2. 3 a lot more than they had to in the past so it encourages rather than discourages savings and david how elastic or savings to Interest Rates . Because we are talking about pretty low rates. Really the perfect sweet spot is around 3. 5 to four and thats over a longterm history. Lets assume the natural rate of interest is maybe a little bit lower. Then maybe we can only get up to 3. 5 for normal. Then the question is what are inflation3. 5 for normal. Expectations because if people have low expectations then you dont really need to see rates drive that much higher in order for them to get a return that they want. The key issue is are we at a rate that encourages the maximum amount of consumption in the economy that you would want to see and the answer is no we are actually below that rate. You need to move higher to get to a lower level of savings and have more consumption if thats the goal. Alix when do we talk about top out . 2020. E 2019, it depends on tax cuts. It depends on the way the rest of the world goes and if there is some sort of foul up in u. S. Financial markets. Metlife willtus of be sticking with us. Coming up, u. K. Banks in a messy divorce from the eu. Can the banks with down the fallout withstand the fallout from brexit . This is bloomberg. Informed by the stress test and risk analysis the sec also judges that the Banking System can continue to support the real economy even in the unlikely event of a disorderly brexit. Was mark carney speaking this morning after all the banks in the u. K. Passed the most difficult stress test today. For more on the results we welcome Stephen Morris in london. Through what we actually learned today from the boe. The first time in the four years of the stress test that all of the u. K. Banks actually passed. Of jubilation was ruined by the fact that the bank of england is asking banks to boost their capital buses in anticipation of potentially disruptive disorderly brexit so really what should have been a actuallyday for banks looked quite negative in retrospect. Jonathan weve spent a lot of time talking about the cyclical capital buffer in the u. K. Walk me through what that actually is and what the governor can do with it. Tool theasically a bank of england uses to force banks to build up higher reserves when times are good, when Lending Demand is high and allow them to release it when times get a bit worse and they usually will cut lending. This is the bank of england forcing banks to stockpile more money in order to lend should there be a downturn after brexit. Now have increased it to 1 which is another 6 billion pounds of capital and they will do another. 5 increase in the next six months of next year. Will this lead to material tightening in the u. K. In terms of lending given we have seen the first Bank Rate Hike in a decade from the bank of england. Could we see things tighten up . Was like a triple hit on the banks. You have a disorderly brexit, and economic crisis and about 40 billion pounds more in misconduct cost. Under those circumstances they say there will be a tightening in lending. If you take one of those three things alone the bank of system has said it sinks thanks the system will be ok. Thinks the system will be ok. Morris indavid london. I want to bring back in drew matus of metlife. The situation in the u. K. Overwhelmed by brexit at a time all the country is talking about it. Is that a direction of travel irelande . The u. K. And seems to be overwhelmed by a single issue and the rest of the world seems to be moving on. Because the rest of the world is doing fine. Growth globally seems to be accelerating. The u. K. We expect will slow next year. Europe will be slowing as well. Case where the devil is in the details and a lot of the things that could impact growth most over the next couple of years we just dont know enough yet. We have tax cuts in the u. S. , we ind more clarity on these order to get it. It seems like tax cuts are coming. It seems like brexit is going to happen. Most people have a relatively benign scenario penciled in and thats why people are talking about the disorderly coming from the bank of england. Jonathan what is the potential spillover . Its not obvious to me for many people anymore. Just the uncertainty and the impact on Financial Markets. When we think about what could cause the next downturn financialyou think market upheaval causes the next downturn as opposed to the other way around. Jonathan you will be sticking with us. Coming up, Valerie Jarrett. Former Senior Adviser to president obama and lyft board member. We will discuss women in the workplace. Futures this morning just a little bit firmer after yesterdays marginal losses. This is bloomberg tv. Jonathan just a couple hours away from jay powells confirmation hearing. Two hours away from the opening bell in new york and futures up almost 40 points. Of 19 industryt groups in positive territory on the stoxx 600. Bond market yields higher by basis point at 233. A bit of broadbased Dollar Strength against the euro and the pound. Around 133 on the cable rate. Crude a little bit softer this morning. Even with opec coming out and potentially agreeing with russia for a ninemonth extension. Alix we have mergers and breakups. Emerson electric is withdrawing its 29 billion proposal to buy rockwell automation. Rockwell continue to rebuff its efforts. Emerson also round of announcing a 1 billion buyback over the next 12 months after it canceled its bid. And then its the mergers. Borat capital warwick capital is acquiring Buffalo Wild Wings. It owns arbys as well as in a button the head of arbys will run the combined company although the bands brands will continue to stay separately. Jonathan we will get to taylor riggs. Jerome powell isnt on a mission to shake things up at the financial reserves to in a statement he signaled to broad support for how the fed operates, regulates and guides the economy. Have any expected to problems being confirmed. Two republican senators are threatening to hold up passage of the tax bill. Johnson bob corker say they may not agree to vote to measure out of committee today. That would jeopardize plans for a full senate vote this week. They have cited different concerns about the bill. I wish Prime Minister appears to have averted the threat of a new election. His deputy Prime Minister is set to resign. She faced a noconfidence vote in parliament over her handling of a whistleblower controversy that could have brought down the government and forced an election next month. Global news 24 hours a day powered by more than 2700 journalists and analysts in over 120 countries. Im taylor riggs. This is bloomberg. Alix the fallout from ubers data breach and ransom payoff may be a smaller valuation. Companies are offering to buy a stake at a 30 discount. Bloomberg newsis global tech reporter. His 30 material . 30 material . Starting point. These negotiations will be going on over the next few weeks and softbank is trying to bring in and investors from uber who are trying to sell so that the