Brexit. That came up to a 15, 16 month high. Coming to brexit, i just dont know if she has a plan. I think that is the confusion today. Emphasis appears to be on immigration. Represented in the market. Coming up we have several guest. Charles peabody managing director of compass. Is here to talk about systemic increase. Deutsche banks chief economist joins us to help make sense of store for a Europian Union minus one. Time, the market. Lets get the global score card up. Relatively flat in the united states. Percentage point. Today in losed frankfurt. 128. 78 down. Two opposing forces. Throughout the uk is positive. He politics thats whats weighing on sterling. The pound sliding after the pledged rime minister to start pulling the uk out of the Europian Union by march. Theres no such thing as a ifference between soft brexit and hard brexit. Hard brexit is a conscious reject trade is a false dichotomy. Whether people like it or not, the country voted to leave the and that means we are going to leave the e. U. Lets more analysis, bring in our Bloomberg Team. The take art with you away, analysis from teresa mays speech over the weekend. What was it . That she is doing clarification to the date so know when she starts that two year process, article 50 will be to vote by the end of march. So we know that which we didnt know before. We know shell put e. U. Laws into british laws and we didnt know that before though we would be the case. I want to talk about the Financial Markets. Weaker pound. We do have politics on one side. The manufacturing data and the Economic Data on the other side. Walk me through that. Its nice that you have manufacturing data on the day have their s chancellor. Yes the data are reasonably buoyant at this stage. Youve seen what the market has said this morning. Seen whats happened to the pound. Down to 1985 levels. Hey may talk about the fact they dont feel very calm when ou have those kinds of headlines breaking. You talk about the positive 100. Y within the ftse bloomberg allows currency to adjust what the ftse 100 is doing. It may be up year to date in sterling. On a year to date basis in its down by 2. 23 . Youre a british person for ting in pounds but everybody else not so good. Anna, youre at the Conference Party there. Today the chancellor there will be talking. What do we expect to hear from mr. Hammond . Yeah. Speaking to your point about manufacturing. Times eard that a few from the business secretary over the last couple of days. No doubt many people here are the most of that positive data that we have seen. Phillip hammond, the chancellor, very aware of the complications protest. Is brexit he just said the brexit protest will be complicated. Looks to set out more detail in the autumn statement. 23rd. Omes in november, we could get more detail. Right now what weve got is a timing and l on protest but not much clarity about where this goes. Relationship be . Cdi has been critical of that aying theres a great urgency now that we get more detail around it. I spoke to david today. No clarity from him either on the detail will look like. Were looking at live shots speaking at mmond the conference. If you look at what the proposals might be. Phror, spend more, forget about balancing the deficit. Ab those kinds of proposals . Hes talking about targeted infrastructure, spending. He himself recognized there have anecdotal evidences, businesses cutting back on spending. Get ahead of that. Can tell you every time anybody talks about building new roads that gets big cheers. Comingd see some of that through. Hes pledged to seek the best market access. They say its a false dichotomy. That might be what the treasury thinks but the 27 other members e. U. , they make noises to uggest that they want to put both of those into the same party. Government saying they understand the by concerns about brexit. Businesses do have to take that on face value at the moment. Were y just says listening to the bank. Very aware of the forces of the market. Just to wrap things up with you in london, heart of markets, short from sterling just stay on. As far as businesses are oncerned, is it business as usual until then . You saw the deal that went morning. His this doesnt look like the ma stopped. Easy to make the case to the fact that uk stocks are cheap. City of ook at the london and see marriages that block. On the its easier to an asset anagement Business Post hard brexit than it is to some other aspects of the financial out nity you can run funds to dublin and make it work. Thats a very straight forward do. Ng to in terms of where the shorts are n sterling, the markets probably still believe there may be further downside to come if continues to emphasize it. That probably makes life more difficult for sterling. Bloomberg team on the brexit story. Thank you very much. Up to speed on the world. Nes now in the by donald Trump Supporters are firing back at that report about he president ial president ial nominee and his taxes. The New York Times says trump 960 million loss on his 1995 income tax return. Trump y have let eliminate his federal taxes for almost two decades. Rudy new york mayor giuliani said that shows trump for is an absolute genius making use of legal tax breaks to help his company survive. Defeat for the peace plan in colombia. Voters rejected it surprising would passho said it easily. The government backed plan called for them to give up their weapons. Return they would be guaranteed seats in congress and penalties for crimes. Colombias president said a cease fire will stay in effect. The ryder cup. N American Team defeated the europians. Hours a day 4 powered by more than 2600 ournalists and analysts in 120 countries. This is bloomberg. Alex . Thank you very much, emma. Taking a look at some movers in the market. Capital and henderson coming together. Henderson is up. Bill gross saying he is of that deal. They would have cost synergies 110 million a year. Money moving into passive anagement out of active management forcing consolidation between the active managers. Deal that we al might see, cabela. Potentially a Bass Pro Shop winning bidder for this company beating out a pe sycamore. Trying to get it to sell. Pressuring the company. It looks like bloomberg is reporting Bass Pro Shops could be winning that. Cabela up 18 so far this year. Get auto sale numbers throughout the morning. Saying q 3 sterday shipments topping ef mates 24500 cars. Company reiterating goals automobiles. No comments on if there was discounting used to get those a key. For numbers, Car Manufacturers when theyre at that peak auto fear. John, all in all, it is a touch today. Elief rally bit of relief for now as Deutsche Bank isnt trading. What we will be watching is the amount of deposits still in trade. Story coming up next, well catch up on the news over the wbg. Story for Deutsche Bank. New york this is bloomberg. Deutsche bank continues in the news whether investors rying to figure out whether problems were as bad as they sounded last week. Argen, take us up to date on exactly what happened over the eekend, both respect to italy and respect to possible layoffs. Right. Weve really had two bits of news that have been received positively by investors regarding deutsche. First and most importantly on riday we got some news regarding speculation that the final assessment with the doj region up being in the of 5. 4 billion. A now that would imply capital hit much lower than analysts thought by after the initial 14 billion opening gamble from the doj. Thats been positively received by investors. From ly, weve had news this morning that Deutsche Bank are close to reaching agreement labour representatives over job. Ing 1,000 thats part of previously announced cost plans. Nevertheless its positive that head way in g some reducing costs. Thats something they already right . D to do, isnt that this is just about getting approval to do it. Deutsche bank doing anything to confidence of their customers . Well, clearly they havent market yet with anything concrete in terms of new strategic plan. Thats something they need to do to win the confidence of investors. I think first and foremost they just want to try and resolve first. Egal issues before they come to market in terms of raising capital, they neeto convey to investors a credible restructuring plan. Cuts, cost cuts. Something that theyve been lagging their u. S. Peers in of cutting costs. Argen, thank you very much. Jonathan . Much, david. Very so the ceo john klein set to dc this week potentially to meet with the department of justice. Ig question is how big a fine will they face and will it have enough capital . According to research from j. P. These are the various scenarios for Deutsche Bank. Anything between 3 and 4 billion that would result in no capital increase. North of 4, a capital increase. Is if you get me a revenue loss that forces a increase. Big question goes to Charles Peabody. Great to have you with us on the program. The third outcome, the idea that losses from ue clients because of what has been happening over the last month or likely is that . The operating environment is very difficult. One of the main risks at is their ank derivatives portfolio which is about 50 billion value. A significant piece of that is very illiquid, type three, level assets. When youre leveraged 25 1, any to that portfolio can have a big hit on your capital or earning. Thats what we are seeing at Deutsche Bank. Concerns shifting from earnings funning to political. You talk about the level three asset. Over the he talk weekend. What kind of discount do you apply to that because it is so illiquid. An you take us through the me tann canics. For 35ve been doing this years. Theres one portfolio i still can get my arms around and derivatives portfolio. Improved. Es have i ask any analyst to tell me what that portfolio is worth particularly when you is 18 of euro in level three asset. No e are assets that have observable market price. Ou can tell what those are valued at. The question like this is incredibly difficult to answer, priced. Its if youre trading a quarter of book value at the moment, surely that price to some extent. I mean, the stock prices the uncertainty of what level of capitals going to be the balance estore sheet to health. He funding issues are asking questions about which level of creditor will have to take a hit capital. E that i dont know if you can bring up financial s senior europian cds spread, but what i that, its made up of europian Financial Companies all weighted. Starting to re accelerate towards the spread widening trade in all of those european financial indexes. Its similar to the setup we had ahead of the january february in stocks this year. I thought we were going to clean that up. How could Deutsche Bank be in today . Sition german leaders have questioned how a bank who blamed for lators, you know, whats happening to their stock price is in the business of peculating with their derivatives portfolio. European system was slow in dealing with their systems. Political problems are now, you know, that its hard to aid, particularly in germany, when you argued against providing state aid in or portugal or greece. Charles peabody, youre sticking with us. Go, Charles Peabody will be with us. Ell be talking about the outlook for Bank Earnings as we start the Fourth Quarter. This is bloomberg. This is bloomberg go. Only he bank isnt the news. R in the Patrick Flinn spoke with Bloomberg Television about how negative rates are impacting business. We see that the negative rate environment. Weve seen it for a year now. Think it will continue. Dont see the likelihood or prospect of it changing in the term. Therefore, we have to react. We are reacting. One of the primary questions me is how will you navigate a low rate environment you make rate means less money in terms of your deposit margins. This is the response. Will by investing 800 million in a Digital Strategy be able to earnings per share in a lower rate environment. Still back eabody with us. So, yes, we were talking Deutsche Bank more specifically. Rate likes a profitability, you dont want to lend. Thats a risk in the economy. Absolutely. If i can join your battle the challenge, alex, id like you to bring up w did i say comment . His will show you what youre talking about. Indexyou put in the sx 70 which is the european financial index and rank them by dividend see, what youre going to there are a number of european banks yielding over 4 which is the average yield. Market place is still questioning the capital capacity banks. T of european sue. Not a Deutsche Bank and if italian banks, if we that are theyield, higher paths. Thats why its so hard to to the german banks. It raises the question, whos next. Its aly wanted to bail out banks. Germany said no you didnt. Circular problem. Do they call an Insurance Company . O they call a warren buffet of germany and say you have to help us out . Quoted last was friday. Warren buffet usually comes in when hes the last capital piece. Were not sure this is the last capital piece. The price know what tag is until we figure out what are. Legal responsibilities its not just this Mortgage Backed settlement issue. Money for example and lawnering. Structurally for european banks, if we didnt have rates what kind of problems would that solve versus remains. That still if we didnt have negative rates in europe what problems would solving . D up the Capital Infusion from the third party . Their ability to raise capital and ability to lend. It probably would bring some stability to the funding side of equation. As a fiduciary, i would be limit my exposure to european markets. Elections in eral spain. State elections in germany. Refdum in december and president ial elections. Theres huge Political Risk where anything can go wrong. I have got plenty of risk in the Banking Systems. Fatigue withnetary the Central Banks. Charles, great to see you. Peabody research and trading managing director. Politics. Up next, taxes . Nald trump pay does it matter . Well talk about that next. This is go. It is 7 30 on wall street. Here is what you need to know at hour. A gauge of the pound against even major peers sell below brexit levels after teresa may pledged to start pulling the uk out of the European Union by march. People with knowledge of the matter say Deutsche Bank is poised to reach an agreement with labour representatives this week that will pave the way for german lender to eliminate 1,000 jobs as part of the cost year. Announced last and Henderson Group agreed to Capital Group creating a money manager as both Companies Seek to revise asset profit. Nd henner son shares surged the most in seven years. Combined firm will have a market value of at least 6 billion. Know at at you need to this hour. John, that merger speaks to a maker issue of how you can money this this environment. Lets get on the board. Futures flat. Dow futures positive 1 . Nowhere. Es going ftse climbing to a 15, 16 month high. Here is your why. Switch up the board. Comes from the fx market. Pound. Er cable rate drops towards the low we have not seen since the mid 80s down by 3 4 of 1 . Just two opposing forces colliding. Economic data is okay. The manufacturing data strongest since 2014. Politics is what dominates this trade as Prime Minister may said trigger article 50 by the end of the First Quarter next year. Bond market yield creeping a higher up one basis point. Trading 48 handle up by. 06 opinion. The New York Times has obtained a copy of Donald Trumps 1995 tax returns new light on trumps financial situation. Ccording to the document the 916 million loss could have led mr. Trump to reduce his tax as 18 years. Many megan murphy joins us now with more. Story in u. S. Politics over the weekend. From the we heard Trump Campaign . We havent heard much other they arent told us planning to release any more tax records that would shed any more tax situation. We have some people like rudy saying this shows mr. Trumps economic genius in being able to manage his businesss tax efficiently. Theres no question this is a big deal. The records are not complete to allow us to see what trump could have does with that and what he would have sed the loss to off set future years of income. Something voters in swing states pennsylvania, places where people are struggling to get that economic foot hold in he recovery will be looking at today. This is the last in a very very challenging week for donald trump. Debate with the performance, ended with a threat revelation from the New York Times. Out in support. Many other Trump Supporters have been out pressuring the it, do better. X we had this campaign with the play book approach. Yes, we have people saying this in he worst week president ial Campaign Politics they can remember. Look, weve also been here before. Got a debate between mike pence and tim kaine where pence will be under tremendous pressure to not on issue with Donald Trumps tax returns but his continued wall comments about women.