Francine welcome to bloomberg surveillance. Green on the screen for european equities, but we are headed for the first weekly loss in six. U. S. Futures are struggling for direction, along with the 10 year yield after we saw stocks as the marketsy assessed the risk around the political situation in the u. S. Table taking ahead, dropping below 1. 23. Previously, one of the more hawkish members saying that rate cuts might be needed even with a brexit deal. Coming up, we speak to commerzbank ceo Stefan Engels after they have revamped their strategy. But now, lets get first word news in new york. The bank of england may have to cut rates you but if the u. K. Avoids a no deal brexit. The comments are a sharp departure. He previously was considered the most hawkish member of the Monetary Policy committee his argument is brexit uncertainty will continue to depress growth. Thats even if the exit is delayed or canceled her the u. S. Federal reserve is looking at a possible shift to its inflation strategy according to richard clarida. Pastwould commit for deviations from its 2 inflation target rather than treating them as mrs. And moving on. Commerzbank is giving up its goal of high revenue. They say economic slowdowns and lower rates are forcing them to cut costs. They are trying to reverse years of falling revenue and they say that returning to profit will be down to when it can agree on its restructuring. With the Interest Rate environment and all of the positivity we have right now, that seems to be a pretty tricky idea. But the assumption is that we can not only compensate for the negative Interest Rate environment, but also that we have the ability to have growth by 2023. Where carrie lam is taking blame for the entire arrest rocking the city. Try to reducey tensions ahead of the peoples republics 70th anniversary. Already granting an application for a rally on saturday but organizers of march on sunday say they will go ahead without police approval. And france released a 2020 budget is set to deliver tax cuts in an effort to appease socalled yellow vests protesters. According to the spending plan, the lowest tax rate will be cut by three points but it will mean slower progress on cutting the nations budget deficit. Global news, 24 hours a day on air, on tictoc, and on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Francine thank you. Nejra thank you. Trump has is a closed door meeting to disparage a whistleblower complaint over his controversial phone call. Whistleblower. The whistleblower, its the same. I could not have put it better if i wrote it myself. The video was obtained by Bloomberg News. Nancy pelosi quickly raised the specter of a white house coverup. Joining us is our senior writer. We learnedt yesterday at how this pushes it forward for us. Whistleblower but also the director of national intelligence. On the whistleblower complaint that was released yesterday just before mcgwire testified, the three takeaways for me are that one, the extent of concern amongst u. S. Whocials in the white house had expressed their concern to the whistleblower about what had and is abetween trump lengthy and the ukrainian president to dig up dirt, many were concerned. We do not find out the names of those individuals, but i think the impeachment inquiry will be looking very carefully at who those people are. And perhaps calling some of them to testify. The whistleblower himself will likely testify. They are trying to get him in. Secondly, the issue of the call transcript or the rough transcript seemed to be put on a separate system designed for highly sensitive intelligence. That was a key takeaway and that is something that has been seen democrats as a cover up. There were actions taken by people in the white house to this call and the concern around it did not get out. Thirdly, the role of Rudy Giuliani, trumps personal lawyer , and how he used back channels ofreach out to the circle advisers around the ukrainian that became very clear from the details. Sum of thatt was much more wideranging. Anna has impeachment risk increased . Yes. Between the rough transcript being released, the whistleblower complaint which is very well written is clear or documented it is quite a clear narrative for the democrats to push. That is what they are now looking at them are having a very narrow impeachment inquiry focused only on ukraine, setting aside the obstruction of justice lines of inquiry they were going down before. I think it does look like they will move quickly with drafting articles of impeachment. We dont not how long that would be about what it could be six weeks. Nejra thank you so much. Hen gallo. Is step said impeachment risks have increased, but what does that mean for the dollar . And i just say i think the u. S. Long dollar has been one of the most unloved trade in all of fx. It has been profitable on a number of axes, but it has been it hased axis,but been unloved. People want evidence things are going back to how they used to be. It is clear that the world has changed, i have to say, yes, i absolutely agree. I will not say it is my base case, i have to leave that to my economists, but the odds of impeachment have gone up enormously, i think. Happen isk what will if the impeachment process blows the dollar will become even more of an unloved trade. If the impeachment proceedings or inquiry itself blew up, the dollar is going to go even higher. I coulde a situation only describe as pentup dollar strength. Which, at that speed, becomes more of an issue for the Global Economy. Specially against the backdrop of dollar shortages in repo i think one ofis the biggest market related events of the year, if not the biggest. Nejra we talk more in a moment. Mention of a special program coming up on bloomberg tv. We go inside the protests in hong kong and talk to key players. We look at causes of the arrest and possible solutions to a crisis threatening the city. This is bloomberg. Nejra this is bloomberg surveillance. The fed is considering altering its strategy for achieving rice stability according to richard clayton. The central bank could commit to making up half deviations from its inflation targets rather than treating them as misses. Gallo. Ith us is stephen what is your base case from what we get from the fed . We are in a rate cutting cycle. Its just a question of the timing. The other big question is the affect. U. S. , andolicy in the you could argue fiscal policy, has more traction and maneuverability than it does in the rest of the Global Economy and other major economies. A point with a structural factors in play means that the impact of fed rate cuts and the broader em space and other g10 currencies visavis the dollar, is quite limited. Analogy or time reference is immediately following the Global Financial crisis when we had a big downturn in growth in the health of Financial Systems and western economies. To,started printing qe1, and there was a huge ballooning of foreigncurrency debt by em economies. That is less likely to happen now, even if the fed where to go down the route of a more aggressive Balance Sheet expansion program. Again, a lot depends very much on what happens in the 2020 u. S. Election. This will be a very ugly year in u. S. Politics and a very uncertain year in u. S. Politics. So what i am talking about is u. S. Trade policy. And are turning more inward that has structural ramifications for the Global Economy. Nejra had to all of that the wall of worry you are outlining. You have cautioned about making links between the repo market and the fx spot, but nonetheless, what is your thinking around this issue . The longer that these a dollar shortages persist, the more downside Global Growth risks there are. Even as you rightly point out there are no direct links between a dollar funding stress at the spot value of the dollar. If nonu. S. Entities cannot get access to dollars cheaply to roll over the existing foreigncurrency denominated debt, etc. , and if Central Banks, china in particular, are still bleeding reserves, thats a serious issue for the Global Economy. Im not saying this will turn into an acute problem yet, but gun to my head, my call would be that this issue, weve seen similar situations to this before. This one has the risk of being more chronic. Nejra does it make you take the risk of more riskaverse trades . Invest only in the soundest em currencies you can find for the right yields. , the central bank is arguably whether restrictive policy stands. Various other geopolitical reasons. I dont think that is a bad bet on a relative value basis but southeast asia, china, these are countries you typically want to avoid you are seeing these types of moves. Stays withhen gallo us. And up next, we bring you our interview with the commerzbank cfo as they try to get back on track your thats coming up, this is bloomberg. Nejra this is bloomberg surveillance. Marks one year since commerzbank was kicked off of germanys benchmark index and has just downgraded its revenue outlook. Earlier this morning, matt miller sat down for an interview with commerzbank see the cfo stephan angles engles. We have not given an exclusive a number in terms of percentages. With the environment and the volatility we have, that seems to be a tricky idea. But again, the base assumption is that we cannot only compensate for the next Interest Rate environment by growing customers and assets, but also we think we have the ability to have growth by 2020. Are you going to be passing on a negative Interest Rates to your retail clients . This is not a discussion that anybody is really happening realistically. Have, like we have been doing and copper, obviously will have focused discussions about certain thresholds, but they are far away from what the normal retail client would look at. We have talked about this before, the fiscal spending in berlin. Do you think they are doing enough argue think that merkel and coneed to do more . Firstly, i would still say that we still have a Strong Industrial base. It is still on the right track in that sense. For a lot of people, it is kind of a first time that they are seeing growth in being a little bit slower. And we are not even talking about a recession right now. So i think that makes the discussion a little more hectic than it should be. Do you see a recession coming in germany . Stephan we definitely see slower growth. Or twobug other one quarters of technical recession remains to be seen. The tradeake conflicts and other stuff going back and forth. Theres a lot of volatility even on a twitter to twitter base, so to speak. But back to germany, if you look at the latest political packages on the climate , you can debate whether there should have been more. But this is a clear first sign that there is activity from the government. Matt joins us now from frankfurt for more. Great interview and great to see you. Profitability continues to be a challenge largely because it is hard to generate revenue so will they have to rely on cost cutting . Matt absolutely. Even that wont be enough. This is a bank that was forecasting 3 Revenue Growth over the next few years and only a 4 return on tangible equity. Those goals now are no longer told,t, as i was just because of the slowing German Economy and it negative Interest Rates. Be able to going to forecast growth in revenue for question,rofit is in depending on where they put these restructuring costs. It is a difficult environment to say the least. Theyreank 5. 0 is what calling it, that can tell you how long they have tried to turn this thing around. Really coming down to closing branches, cutting costs reducing staff, and trying to get clients that are used to this old traditional german , those who still are but to stop going into the local branch and to start banking online. Nejra if the cost cutting might not even be enough, what more can they do . Certainly does not help when you get comments from chief economists saying because even more rate cuts. Matt one of the things i thought was really interesting in that conversation was that he said a they are not too keen on deposits right now. That is not the way they want to build capital. The prefer to look at other ways. This is not an issue that just affects commerzbank, it affects banks across europe. Thoughtked him what he about the rate situation and he said listen, its not up to us. Take the information as it is and try and make the best of it. This is the way he thinks they can do that. I will remind you that he is on his way out. He is only remaining chief finance officer until the end of q1. Then he is moving to danske bank and will be relocating to copenhagen. He says that is merely for personal reasons. Nejra we will see what his successor does. Great to catch up, thanks so much. Was woes. Peloton because the latest to slump on opening day. The latest to slump on opening day. This is bloomberg. Almost a spy. President trump lashes out at the whistleblower, adding fuel to the flames of the each meant inquiry. The bank of england says the u. K. May need a rate cut even with a brexit deal. Downgrading a revenue outlook. Speaking to the cfo. It is sobering lee realistic. Thatis not the first time we have taken decisions a little bit earlier than the market. Matt im nejra cehic in london nejra im nejra che attend london. I want to kick it off with ashmore. The emerging markets fund manager got upgraded by morgan stanley, who said their concerns seem to be overdone. Potential sales of iron ore positions. The canadian ones could be most interesting. Downside. O the chip stocks have been in focus after what happened with micron. They are also sounding the alarm on chipmakers in general. Nejra thank you. Lets get the bloomberg first word news in new york. Threat tohe biggest his presidency, donald trump lashing out at the whistleblower at the heart of the congressional impeachment blurb probe. Bloomberg obtained this video. Who was the person that gave the whistleblower the information . You know what we used to do when we were smart . With spies and treason . We used to handle it very differently. U. S. House Speaker Nancy Pelosi accuses the administration of a coverup. The news coming shortly after the tanker began transmitting its location for the first time in weeks. Saudi arabia dropping it strict grass dress code for foreign women as it attempts to boost tourism. Foreign women will not have to wear the cloak that for decades seems to have been mandatory attire. It is optional. In the going to be clear online visa applications. They see it as a part of the culture. Global news on air and at tictoc on twitter. In viviana hurtado. This is bloomberg. Telethon has become the latest major debut. Agency toted a talent postpone listing. Why so many ipos underperforming . Or is it just unfortunate and each have their own issue . I think each does have its own specificity. I think keener focus is developing in the possibility. Part of that is to do with the fact that they may have stayed private a bit too long. They have got very punchy evaluations. Justifying the valuations they are getting. Is essentially the part of it the ipos being mispriced in the first place . I think there is a bit of that. Pellets in. They would have to empty half the gyms in the u. S. , which is a big ask. ,qually Something Like endeavor they do not have the predictable Revenue Streams that you would expect. Are going toct you have subscription stretching into the future. If you lose a client, that could damage your revenue as a Talent Agency for an extended period. From one moment to the next. Nejra great to have you with us. Thank you for joining. You are about to hop back on your peloton . [laughter] nejra for next time. Thank you. Worth individuals are fling the u. K. Amid brexit concerns. That is according to the chief executive of petermann constancio, based in zurich. He spoke exclusively with bloomberg. People are asking, is that brexit . Is it Jeremy Corbyn . Is it both . We have seen a number of clients choose to leave the u. K. To various german destin u. K. Destinations, including switzerland. Clients have always been globally diversified. In other news of difficult market decisions, rate cuts may be needed even with a brexit deal. That is as bloomberg has learned the eu hopes of reaching a deal, those are fading, and Boris Johnsons language is offputting. Still with us is stephen gallo. We got the news breaking earlier this morning. One of the most hawkish in the mpc saying we might need rate cuts, even with a brexit deal. Do you think that is what the bank of england is going to have to do even if we avoid in no deal . Means they have joined the chorus of global Central Banks using. The difficulty is what if we have a wto brexit . It raises all sorts of permutations and scenarios. He has set more firmly that we would ease policy. But the Exchange Rate impact on the economy. European countries in the euro zone, they dont have nominal Exchange Rates anymore. Farcical, but that is another story for another time. Britain still has a floating nominal Exchange Rate and that has to be taken into account with their future policy decisions if we have a wto breakthrough. Right,let me get this you dont want to make probabilities on brexit, but given a comment like this today, even if it is difficult to trade you more, doesnt make inclined to sell the pound . Stillrall, my buyin is negative on cable. Structural and cyclical factors. Once that date becomes certain, there will be a kneejerk reaction lower. Im not saying it will bring us , buty with cable especially now that level, if we were to get back to the entrylevel, that is for sure. Election risk, why do you see that is cable negative. A very confusing picture, as of the electoral maps. Day,is going to be a field the selection, for people who study electoral statistics and electoral maps because i think it is going to break historical norms. With labor being modeled on brexit, the lib dems have a very clear policy on brexit. The conservat