And powerful people share provocative thoughts in the top interviews. Government is a probusiness government. Everything is better with growth. No one has been successful that has never admitted a failure. He has never admitted a failure. Matt that is all straight ahead on bloomberg best. Matt hello, welcome. i am matt miller. This is your weekly review of the most important Business News, analysis, and interviews from Bloomberg Television around the world. The week began with a stunning announcement as 2 Asset Management firms consolidated. Janus capital, home to bill gross, being bought by henderson group. The deal create a company with with 320 billion under management. Is this what we have come to you in investing . So much pressure that managers have to combine to make the marginal margin . Yes, we are going to see more of this. What is happening is the rise of passive investments indexing has put pressure on active managers. One thing this hopes to accomplish is to provide more scale to both companies, allowing them to distribute projects more evenly. Products more evenly. Henderson in the u. K. And Janus Capital in the u. S. , they feel they can expand their client base to run active management actively managed funds and stay competitive. Why be global . You will be dwarfed by blackrock and fidelity. The combination gives us more resources and economy of scale. It gives us more operating leverage. Were not trying to be black rock or a huge one. But the additional scale of 300 billion of assets under management allows us the opportunity to capture more benefit and opportunities for shareholders and build out our business around the world. Does management have a role to play in this combined company . There is no star manager or a lone wolf. They are part of a combination of ideas being generated by people in the firm. Being able to collectively grab that through a collaborative approach. That is the future of active Asset Management. That is what the future holds at henderson and Janus Capital, going forward. The pound has fallen to a 31year low as their could be a as investors brace for what could be a hard brexit. How much lower could we go . It will be a bumpy ride, guy. I think you are right. Investors are looking at the hard brexit scenario and being spooked. We have had decent data very recently. Yesterdays manufacturing pmi data was better than expected. Investors are looking past that as the brexit becomes more of a reality. What about the europound trade . That is important to note. Notwithstanding the dollars strength, euro sterling has been pushing higher. The pound has weakened. It has been relentless. We do not have the size and scope of 31years of lows, but we are seeing multiyear lows for the pound against the euro, and that will be important to watch as we go through the next few months. Lets give you an update on the euro. It is pairing its sudden gains from the news the European Central banks may wind down the bond purchases before the end of quantitative easing, 10 billion euros a month. Why is the European Central bank talking about tapering qe purchases were the economy is not at a point where that could happen . I dont know if they are trying to keep in lockstep with the fed, but by announcing measures, incremental measures to step back, it will be everybody hitting the door at the same time. There is no way they can exit on an incremental basis. Bonnie treasuries trading after the bloomberg scooped that European Central banks will gradually wind down the bond purchases before the conclusion of quantitative easing. Do we have another taper tantrum on our hands . We have had a drop for the day. Is it totally significant . Probably not. It caused me to reverse positions in terms of being Long Duration to a short duration. Im glad i have been watching bloomberg. European stocks falling with emerging markets after bloomberg reported some ecb officials are discussing ways to bring quantitative easing to an end. As well as the selloff in stocks, 10 year bond deals in italy have surged to the highest since june. The 10year spanish yields is above 1 for the first time in two weeks. It shows you how nervous investors are. We all know we are getting to the end of the big road they have been kicking the can down for years. You can only extend that for so long. Anything with a hint we might be nearing the end spooks the market. Is there any sense that the ecb perhaps leaks this information to test the market to see how they might react . On this occasion, they may not be too pleased with the reaction . Central banks are known to fly test balloons here and there. If mario draghi wanted to do an official one, he would have done it himself. It is probably not right to say it is an official trial balloon, but people are having discussions. The Ecb Governing Council has not officially discussed tapering or the future of qe. It has not been on any official agenda. Clearly, people are talking and thinking about it. German regulators investigating Deutsche Banks ties with an italian bank. That came up with new revelations. Regulators Say Deutsche Bank mismarked 37deals with other banks. Deutsche bank says there is no connection between the deals. Talk me through what we have learned about Deutsche Bank in the last 24 hours. We have learned this one type of deal that they structured with monte paschits, it is a similar deal with other intention struck by the german bank with clients am by the german bank with other clients, 30 other clients. Deutsche bank itself used and accounting treatment that was not what regulators determine should not have been used for those deals. There were more than 100 deals in all similar to the one they were doing. The crucial thing is in the ones that they had to restate, Deutsche Bank was lending money without putting the loans on their balance sheets. If you do not understand what is on the book, how do you value the bank . How much of a problem is that for the c. E. O. John cryan . ,on the balance sheet, it is the unknown of what is hidden. Were they doing complex deals that shareholders dont know about . Payrolls number out in five seconds. Erik schatzker is in d. C. With the numbers. 156,000 jobs is the increase in nonfarm payrolls for the month of september. Hourly wages, up 2. 6 from a year earlier. And up 0. 2 from august. The Unemployment Rate is 5 . Yes ticking up from 4. 9 . ,it does add up to a slight miss in economists forecasts, but it is not the political football it could has been in this election season. If you are janet yellen, call it a goldilocks job report. Not too hot or too cold. I think the fed will move. They are cautious. They will move perhaps every nine to 12 months unless circumstances change significantly. An upward move to renormalization is appropriate. This is a no drama report. That is what we would like. The way this report should be read is the economy is continuing to recover. Unemployment rates held steady. 10 movement is not significant, it is within the margin of error. Top line job growth is similar to last month. We are continuing to dig out of the problems created by the recession. One sign of progress is the wage growth is the strongest in seven years. Matt the datadriven fed has more data to consider. Later, we will replay our exclusive interview with Loretta Mester who says it could dictate a november hike. Plus, Christine Lagarde and europes biggest banks trying to get smaller. The cuts are causing pain. This is bloomberg. Matt this is bloomberg best. I am matt miller. Lets continue our global tour in europe with more cutbacks coming in the Continents Financial industry. Ing plans to cut 8500 jobs in 5800 jobs in the netherlands and belgium. Approximately 3500 jobs cut in belgium over 20162021. The cost on the top line will be 1. 1 billion euros. The company says it remains committed to progressive dividends. Is this the worst Case Scenario for you . Will all jobs be let go over the next five years . Yes, unfortunately as we invest, and continue to invest, in a digital transformation, and another 800 million we are committing to the strategy, it means less jobs. The important point is we have strong commercial momentum. We are growing profitability. We are growing our roe on the back of increasing capital ratios. We are doing very well. Yes, we have to move to the next stage. Time waits for no man. We are ready to move to the next stage of our digital transformation, which unfortunately means a lower fte. It will mean ing can navigate a low rate environment and deliver growth. Vonnie Deutsche Bank is set to reach an agreement with labor representatives that will pave the way to eliminate 1000 jobs according to people with knowledge of the matter. This is preannounced. They are also nearing a settlement with the doj to not pay 14 billion . It is about getting to the finish line on some of these items, cutting jobs they laid out last year. This is one more obstacle they have in terms of shrinking the bank. The other is on the doj settlement number, what number they end up at, and how quickly they can reach a settlement with the doj. That is the question, shortterm. Longterm, it is profitability. Shortterm, it is about the doj number. Takata is said to receive investment officers of 2 to have received investment offers of 2 billion from five suitors. How big with these investments be in relation to the size of the company . 1 billion to 2 billion from the suitors. Looking at the market cap it is 290 million. A big jump in terms of the market cap compared to the offers. The suitors include a bio company, and 2 airbag makers. Not all are considered equal. Why are some viewed more favorably . There are three bidders. Those are the ones takata may lean towards. All five proposed bankruptcy as an option. Two insist upon it. The three they may favor according to bloomberg sources include the bio farm. The other two insist on bankruptcy. At this point, we are told none have been ruled out. You have it official, Bass Pro Shops buying cabelas for 5. 5 billion. These would be the two biggest Outdoor Sports retailers. The idea was that Elliott Management owns part of cabelas. They have been pushing for an the mesh a sale they have been pushing for a sale of the company. There is a bidding war between Bass Pro Shops and sycamore. What is driving a deal . Elliott. There was an activist and cabelas pushing a deal. They got a deal. 5. 5 billion is above where they traded. For the last two years, cabelas shares were going down. Since elliott got in there and they became public, shares are up 15 to 20 . Now they are up another 20 on top of that with this deal. Bass pro shop, one retailer buying another, you see that a lot. Retailer names come and go. I would not be surprised if the cabelas name went away. Matt u. S. Sales figures for september trickling out all day. I am talking about autos. Of the u. S. Automakers gm and , ford posted declines for the month, but came in basically in line with analysts estimates. Nissan saw u. S. Sales rise 5 for the month. That clobbered estimates for a drop of 1. 5 . I think that this month is about quality of sales over quantity. One thing i was encouraged to see was the improvement in average transaction prices. Consumers are paying more for vehicles than last year. They are spending more, higher trim levels, better equipped vehicles. This is a positive when we look at gm and ford stock in particular. It speaks to the profitability of the balance sheet. Breaking story out of australia. Rba keeping rates unchanged. 1. 5 . The decision was not in doubt. It is the statement is key. What is rba saying . It is all about inflation. That is how we got to 1. 5 . We have had weak inflation. The two cuts we have seen so far this year were in response to that. The statement said keeping it at 1. 5 is consistent with meeting the cpi target over time. This is also consistent with what the new governor has been saying in the weeks leading up to the meeting. It was his first in charge as the governor. He described the rba as not being inflation nerds words that , could come to define his tenure. He is expressing a willingness to allow australia to live out the inflation target ban and keep a little powder dry in terms of the cash rate. We got confirmation of that in a statement. Also saying the cash rate of 1. 5 is consistent with sustainable Economic Growth and continued jobs growth in the near term. Another stock we are watching is walmart. Shares down in early trading after the company forecasted earnings that missed analyst estimates. C. E. O. Doug mcmillon said income will be relatively flat compared to the current year. What was behind that mediocre forecast . They have been laying out for the past couple of years that it will take time to come back to growth. They have been investing in higher wages and fixing store bases. They closed a bunch of stores. The big news, i think, is they will not be opening as many stores as they have been. For the first time in years, since investors and analysts have been saying dont open so many stores. They are saying we wont open so many stores. They will spend 11 billion in 2017 and 2018 in ecommerce to remodel stores. In the long run, is that what investors want them to be doing . In the long run, in the next 10 years if they can do , everything they say they will do, investors will like that. Can walmart do, what they say they will do, and will investors give them this same leeway they do to a company like amazon . 2 minutes in chaos in asian trading caused a plunge in the pound to 31year low, saying the slump was exacerbated by computer initiated sell orders. Sterling fell against the dollar, the biggest decline since the day the e. U. Referendum result was announced. We have views that this was largely due to computers that exacerbated the selloff. Do you think theres something more sinister or just highlighting the sterling vulnerability . There were a lot of selloffs in the system. Why are there so many so orders sell orders in the system . If we look at what some economists and investors are fearing is that we could be in for a decline. It has been a horrible week for sterling. This is because the market is fearing a hard brexit. I think that it is suggesting a vulnerability in sterling. Matt welcome back to bloomberg best. I am matt miller. The Federal Reserve held rates steady at the september meeting. In an unusual show of dissent 3 fomc members voted to hike. One hawk was the cleveland fed president. This week, she put markets on the alert to brace for tightening in an exclusive interview with bloomberg. Why dissent . Is the economy overheating . It is not overheating and i do not think we are behind the curve, but there was a compelling case for taking the gradual step on the path. In my view there is a compelling ratee for moving the grea up gradually for taking another , step on the gradual path. Some people think, you want to curtail the expansion . Not at all. The reason i think it was appropriate to move up by 25basis points is that we want a sustainable expansion. I think moving rates up is consistent with that. And gdpirst half, barely grew over 1 . Does that make you think that the wait could be a little longer . There is a risk of hitting the economy with a rate hike when it is not that strong. What you are right. The first half of the year, growth was 1 . I still think we will see a rebound in the second half. Around 2 to 3 in the second half, 2 for the year. My view is that we will be growing a little over trend for the next two years. That will be Strong Enough to put downward pressure on the Unemployment Rate. I expect it to go down from the current level. I believe the data is in place for inflation to move gradually back to 2 . In my view, Inflation Expectations are reasonably well anchored with inflation moving up over the past year. I think Economic Conditions are such that we will go gradually back to the 2 goal. We do have to be preemptive to make sure we are moving the Interest Rate up to make sure we can keep the expansion sustained. If the data stays strong, it seems like the economy is on better footing for a november rate hike. If the reports come in strong, will you argue for a rate hike in november . All meetings are live. I would include november. I said in i thought the case was september compelling to take another step on the gradual path. If the data is consistent with my forecast over the meeting run, i would expect the case to remain compelling. We will look at all of the data that comes in between now and november, between november and december, as we do all the time. We like to look at all the incoming information. You are right, if the data comes in consistent with what we have been seeing, yes. I think it would still remain compelling. You would vote for a rate hike . We will see when we get to the meeting, but i think the case would be compelling. Matt more exclusive interviews straight ahead. The u. K. Exchequer Philip Hammond and imf managing director Christine Lagarde tackle the toughest questions facing the global economy. Plus, looking back at the week in tech. And mark cuban lets loose on donald trump. That makes him completely unfit. Matt this is bloomberg. Att this is bloomberg best, i am matt miller. Philip hammond has a tough job as head of the u. K. Treasury. He must set a fiscal policy that can soften economic shocks as the country moves ahead with its exit from the European Union. Hammond visited wall street this week to reassure u. S. Banks about britains strength, and discussed challenges he faces in an exclusive and new interview. Now we have a situation over the past week or you have seen all this talk of hard brexit, sterling has gone down, people dont see the city is something