plan be derailed if wages do not pick up? there is the presidential pro. robert mueller is said to be looking into whether trump obstructed justice. his policymaking possible in this environment? really matchplan the complexity? why are you in switzerland? ere for the swiss national bank meeting. they have a biannual meeting. last night they even had a big dinner where we heard, showed speak.ke -- tomas boden we are expecting a move as far as rates. they're expected to stay until 2018 including -- according to a credit suisse report that came out earlier. 33% of the economists surveyed said there could be a change in the language. the buzz word or phrase is significantly overvalued talking about the swiss franc. compared to the euro, it has been climbing at a somewhat steady pace over the last two and half years going from 90 centimes to 109. they have been intervening and currency markets although that intervention has slowed down. i will talk about that in a few hours time and bring that interview to you here on bloomberg television. are front andanks center. the s&p, matt is covering that and we have the bank of england coming up. account in terms of rates and what happens with the qa program. more interesting will be the commentary, the political backdrop to what is happening. the main event today from a u.k. point of view on a fiscal and monetary policy front comes later, it is the mansion house speech. we'll hear from governor carney and from the chancellor, the recently reinvigorated chancellor of the exchequer to my philip hammond. what is he going to the out in terms of his aspirations for brexit and what will he say about fiscal policy? the gilt market will be paying attention to that. where thinking about the fed and the boj coming up, central banks front and center. they do not necessarily have the same kind of force they used to have a couple years ago but we are still thing attention. this is what we found in the markets this morning. i would argue no clear sense of direction and delivered by this at the moment. looks like we're going to open fairly flat in europe. let's take a look at the gmm and focus on what is happening there and give us with the heads up his. this is the picture at the moment. the aussie dollar this morning. the british pound is neutral. agree markets were generally negative in the american session . australia down 1.21. the paying attention to minus. that could be an interesting story we need to focus on. let's get a bloomberg first word news update with juliette saly. juliette: donald trump and his wife melania have visited house majority whip steve kerr scully see in hospital after he and four others were you -- were wounded. ranked publican. he was shot and the hip. he remains in critical condition after the attack in alexandria, virginia. in the u.k., fire crews have worked through the night to dampen the deadly blaze near -- of a west london tower block that killed 12 people. the number of the counties will almost certainly rise. the fire that broke out in the early hours of yesterday morning injured 74 others and left an unknown number missing. the cause of the blaze remains unknown. the u.k. has slipped further into political limbo as prime minister theresa may's talks with the democratic unionists drag on. calls are mounting for across party consensus on brexit. talks could further delay the opening of the new session of parliament. currently scheduled for monday. u.k. chancellor of the exchequer philip hammond will make the case for a new path to brexit. according to a treasury official he will give his annual mansion house to the city of london to push for a so-called pragmatic brexit. it will focus on jobs and economic growth. coming after the disastrous general election result. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. guy and matt. guy: thank you. 24 minutes until the european market open. janet yellen pressed ahead with plans to normalize monetary policy. the ongoing strength of the liver market will prevail over the recent weakness of inflation. the bullish curve is going to work. she spoke following the decision. >> with employment near its maximum sustainable level and the labor market strengthening, the committee expects inflation to move up and stabilize around 2% in the next couple of years. in line with our longer run objective. nonetheless, in light of this softer recent inflation reading, the committee is monitoring inflation developments closely. provided the economy evolves broadly as the committee anticipates, we currently expect to begin incrementing a balance sheet normalization program this year. is plan is one that consciously intended to avoid creating market strains. and to allow the market to adjust to a gradual and predictable plan. i fully intend to serve out my term as chair which ends in early february. i have not had conversations with the president about future plans. guy: let's get more details on what was said, what we can expect. mark cranfield joins us from our mliv team. talk about where u.s. yields go in waiting host is and can we expect a flatter curve? pointing thate is way. the market does not seem to believe that the fed is going to be be able to hike rates too many times although the fed is saying there's one more hike. the market is pricing for that to happen. we have quite a bit of time to go. it is only halfway through the year and the fed has for more meetings, they have plenty of time to signal if they want to do one more hike, they can ramp up at any time. september and december are possibilities in the market will have time to react. once they are trimming their balance sheet. the options they could be looking at is they go for a september hike and begin tweaking the balance sheet in september. there is plenty of time and the market has not made its mind up yet. matt: how do you think the tweaking of balance sheet will proceed? mark: very gradually. if they go for this 10 billion number of month which was suggested and that is a pretty small amount considering the size of the treasury market and that balance sheet which is huge, $4 trillion around there. that is a small amount of money. it is not even a question of selling securities, a question of not reinvesting money which they received. it is not a dramatic stick -- a step for the market. the fed likes to call it like watching paint dry and it may end up being like that. matt: thank you very mark cranfield discussing the fed and obviously there is a packed week of central-bank news, i am here in bern, switzerland at the snb. we will hear from their governor tonight, mark carney. let's talk about robert mueller and his investigation into resident donald trump. , it isow official reported that robert mueller is looking into the possibility that the president has obstructed justice. he will interview a couple of senior intelligence officials. want to get the exact details. we switched places a little bit. let me ask what we know so far. what has been reported? jim: what has been reported is that the investigation has now a new front has opened in the investigation by the special counsel who was named by the deputy attorney general after james comey was fired. previously, we knew they were looking at links between the trump campaign and russian influence and it has broadened into an examination of whether the white house has obstructed justice. sources who spoke to us and the washington post have told us. the interesting thing about that is that the president in his own words had made no secret about the motivations for white he fired james comey and james comey in his testimony took -- to congress said he felt as if the president was pressuring him to derail the investigation so there is a lot that is on the record and it is very straightforward. it is a very straightforward set of facts as posted the more complicated deep dive investigations that are going to have to be done to look at the financial links in the campaign. change inis quite a direction in terms of the way this is going to proceed. how big a shift is it and how has washington reacted to it this far? jim: it is a major shift because so much information is out there publicly. too many bones or tried to soft-pedal their motivations. you will recall the attorney general testified the other day and was confronted with the president's own words that originalted the rationale for the firing of james comey. justice casesn of motivation is important comey spoke to motivation. it is a much more straightforward piece of prosecution. the political world has reacted and they have run to their artisan camps, the republicans have floated and continue to question whether robert mueller should be fired because there are conflicts because he is not fair. ad that will -- that would be bomb. guy: thank you. joining us from berlin. coming up, we will talk to analysts about deutsche bank. restructuring its corporate investment banking unit. we will get analysis on that. we will bring you an interview --er on today. with the thomas jordan coming up right here. minutes tost over 15 go until we open stocks in europe. ♪ bloombergome back to markets, the european open. i am matt miller here in front of the glorious hotel bellevue alice for the snb meeting. we will get a statement from the swiss national bank. we are expecting negative interest rates to remain at 0.5%. and the terms overvalued and still attached to the swiss franc. the swiss national bank does still intervene in currency markets, not as much as it did pre-january 2015. that's get you the bloomberg business flash and we go to hong kong and juliette saly. juliette: thank you. isna's anbang insurance [inaudible] as theective came investigators began a wide-ranging probe into the and the chairman. a representative declined to comment on its relationship with banks. qatar is signing a bill to buy as many as 36 f-15 jets from the u.s. the pentagon said the defense minister and his american counterpart completed the agreement in washington yesterday. the move comes as the country navigate tensions over president donald trump's backing for saudi led coalition to isolate the country for supporting terrorism. western digital has asked according california for an order blocking the sale of the chip unit of toshiba it's partner in a manufacturing joint venture. it is trying to stop disease where from -- toshiba. said the could not complain because they had not -- they could not respond because they had not gotten the complaint. guy: deutsche bank has announced a new structure for its corporate and investmen banking division. according to people familiar with the matter. n email seen by bloomberg which helps. joining me now, chris wheeler. deutsche bank has had a fairly complicated management structure. there are few institutions that have had co-ceos in the way that deutsche bank has had. i'm struggling this morning to see how this makes deutsche bank and easier organization to understand or run. chris: i agree. john did last year when i thought was sensible in putting together the corporate finance and the deflating businesses. they had been broken up by the previous management. that seemed sensible in the way that goldman thinks or morgan stanley was run. they're still under the same umbrella and it is not quite clear what is to achieve. they think they will be more efficient but what i would like to understand is is it about cost-saving, more efficiency for clients or going after new segments and it is not clear what they hope to achieve. guy: who is running deutsche bank? chris: john is sitting at the top and letting his lieutenants get on with it. he has german and that is important to deutsche bank. i think john is lonely. there will be questions about the results in a few weeks time to say what they were trying to achieve, what is the core business, that is the important thing here. matt: how do you think we will see shares react if he were try to -- if you were to step down. is that priced in already? chris: i have been called out here before. i have always said if james stepped down the stock would plummet. in the case of john if he went, people would be concerned. he is -- has done a decent job. not a lot of visibility in what has been achieved but he has done a good job in stabilizing things. if he stepped back there next question would be who is taking over? he's still got a couple years to complete what he started. i was keep going back to the factors. quietly andthree efficiently. that institution was one of the finest in terms of rising financial and's tensions globally. bet: can deutsche bank still a global player? can they still be a player on wall street and take market share? chris: that is an interesting question because of you look at the department, at the paper mr. yesterday, wet have the head of the fence regulatory body making it tougher for international banks to operate in capital markets in the states. in that document, it talked about encouraging international banks to come into the market and that would be a positive to slip the list in the u.s. market. this may be an opportunity for them. guy: free the quote and explain why. chris: i brought the quote with me. they were supposed to have said i was to learn later in life we can to meet any new situation by reorganizing and a wonderful method it can be for creating the illusion while reducing confusion, inefficiency, and demoralization. we will leave that. chris wheeler joining us from atlantic equities. we are minutes away from the european market open. let's see how deutsche bank opens and how the market reacts to the latest reorganization. confused? we will find out. we will be talking about h&m as sales miss estimates. that is coming up. the market open in eight minutes time. it will be alone -- lovely day in london. this is bloomberg. ♪ matt: welcome back to bloomberg markets. -- european markets. is at our european headquarters in london. let's get your stocks to watch this morning. the open coming up in a few minutes time. deutsche bank could be a mover after making clear the roles for co-deputy ceos and also creating a separate division for equities, derivatives, and leveraged capital. people who wanted to see some clear strategy going forward are getting a clearer picture of how that bank will operate and shares may gain on the open. h&m, outs talk about rising 4%.s, topline estimates were higher. you make it a little bit of an issue. quickly showing you the anr. let's show you with -- leave you with this. , thatis the price target line there. that is where the price is. market is not that optimistic. ♪ guy: welcome. stocks going ex-dividend in the u.k. you can find the function on your bloomberg. in terms of the main ones, persimmon is going ex-dividend today. just be aware of that when you look at how london opens in a few minutes time. talking about how london is going to open, here is the fair value calculation. ftse down .3%. dax both called softer as well. the moves are not substantial, mr. matt miller in switzerland. the s&p an hour away from releasing its statement. i am in switzerland and we will interview the president. you're getting the bank of england decision today and talk from mark carney later, and it is the first-day of a two day boj meeting, so it is a big week for central bank action. watch currencies. manus: keep an eye on what is happening in south africa. we are expecting news in terms , the neww mining story mining charter. you can see the selloff yesterday into the close here in europe, and it does look as if we are softening up a little more. the fair value point to a kind .1% this morning. be aware of that. we are expecting some of the other markets as well to soften up as well. we are reacting to the fed, but thinking about the bank of england and the s&p. through that. there is a rare conflict around the european market this morning. i want to know what a pragmatic exit is. -- pragmatic brexit is. i would like to know what the resetting is for a pragmatic brexit. european stocks are lower. j.p. morgan asset management , talking about what they are doing. back of the sheet numbers, about $1 trillion will be taken up the balance sheet if they say at the caps they have announced. but what is the endpoint for the balance sheet? europe has underperformed the united states in the past two months. blackrock with us this morning. they are saying still the tilt of the flow should be in europe and any drawdown is a moment to look at those. the balancing act tonight at the mansion, you have philip hammond, the chancellor, telling us what a pragmatic brexit is. but another critically important set of rhetoric is coming from mark carney. he has got a -- this is the probability. from 65% todown, 35%. this is the central banker who is tethered to an awkward situation. he has run out in terms of interest rates. he could go negative. we know his view is not towards that. e is really qe. q the economy is slowing down. g7 to theest in slowest in g7 from a central bank fully engaged and taking its foot off the pedal. what a different set of problems for him versus janet yellen. this is shanghai. this is the shanghai composite. this is how we finished flat on the day. anbang, the insurer story, we have a rest. we have the regulators telling banks -- that is a subliminal story in terms of quashing the leverage, and i suppose, a warning shot to billionaires. that is our top china story this morning on the bloomberg. you can seat up a commodity index has gone a little bit of a bid. oil has gone 8% in the last month. there is momentum for the commodity stocks. i am off to digital radio. guy, good morning. guy: good morning. enjoy yourself indeed. on an individual stocks story basis, around europe, as i indicated, we have a bunch of stocks going ex-dividend today. these companies are ex-dividend. a bunch are ex-d today. keep an eye on the minors. it could be an interesting day. we will look for news later on. on the upside, petrofac looks as if -- i have not seen a note. maybe there is a note out this morning on the services side of the energy market. deutsche bank trading up by 1% on its organization this morning. not. -- matt. matt: and of course the federal reserve is on the top of a once mine. janet yellen really pressing ahead with plans to normalize monetary policy. she says that details of the balance sheet plan released yesterday are one step in a larger effort to ensure that absolutely no one is taken by surprise when her plan actually goes into effect. to maintainntinuing the size of our balance sheet by reinvesting proceeds from maturing treasury securities and principal payments from agency debt and mortgage securities. provided the economy evolves broadly as the committee anticipates, we expect to begin implementing a balance sheet normalization program this year. in ajanet yellen now statement. the central bank said it will at its treasury reinvestment $6 billion a month. mortgage-backed security at $4 billion a month and increase both assets on three-month intervals. that is the breakdown. you can find us on your bloomberg here it btv 7'6" five. a chart of what -- btv 7665. a chart of what you can see on your bloomberg, what the fed has in the size and scale of the operation that must now be conducted. in some ways, it should be thoroughly straightforward. the problem, it never is. good morning. kind of thewith easy bit first. can the fed raise rates one more time this year? guest: easily, yes. some of it depends on how much we get from trump and congress. i think that is the balance for them. the more trump we get, the more they raise rates. guy: you think that it's possible in an environment where inflation is not really playing ball? guest: yes, they have to keep raising rates. with the labor markets now so more negligent that maybe they have been in being so slow to raise rates. yes, they had to keep raising rates. matt: she is making a bet really on the phillips curve still working out. it does not look like it has in recent years for many different regions globally. why should it work out in the u.s.? why should wage inflation snapped back? neil: well, i think the reason wage inflation should start to step back is because the u.s. is at full employment. they may be creating some of the wrong type of jobs. essentially, one of the factors that i think got trump elected was the dissatisfaction of a lot of people who feel the u.s. economy has passed them by in the last few years. we think we will continue to see treating wage inflation and therefore, the fed could well be well behind the curve in 12 months time with such a tight labor market. matt: we have just learned also specialert mueller's investigators looking into the possibility that the president obstructed justice. environment, is it likely that the president is able to pass the kind of stimulative legislation that he wants, the kind of tax reform that has evaded so many presidents before him? neil: well, i think that it's really the key question we have been wrestling with since his election, is just what he will be able to achieve. the way i would frame the question may be slightly differently. if the republicans want to have a chance of retaining control of both houses in november 2018, they has to do something to convince the electorate to give with aother two years republican president and republican congress. i think by the end of this year, one way or another, the republicans have to get their act together, otherwise they will lose in november next year. i think the onus increasingly will start to dovetail. question for the three of us is how much is discounted in the marketplace? if they are more successful, and we are talking trillions of dollars here, the fed will be the break. you will have trump on the accelerator and the fed on the break. as we all know, when we learn to drive, you do not normally drive with the feet on both titles at the time. pedals at the same time. [laughter] guy: let us talk about the bow and sheet and how this is going to be done. in some ways, this should be a straightforward process. in many ways, that is what janet yellen laid out yesterday in terms of the tiered structures they will put in place. what will this look like in a normal period? where does it go? that is a question i still have n answer for. how is this going to unwind? what does this chart look like? neil: your chart is just not quite long enough. i think you go back to the 700 or $800 billion the u.s. economy needed of old, and all the other interferences are taken out. i think the key for us is that now we have a stock that is about to become a flow again, except it is a stunning flow rather than a buying flow -- a selling flow rather than a buying flow. thekind of know how much market can take, and i think what is interesting is if we do get the confluence of the new dodd-frank at this point in time, i have seen some estimates talking about over $1 trillion of capacity. the market would just internally generate that. they have got about $ 3 trillion to sell in the coming years. matt: neil, we talk about the unwinding of the trump frame, and yet u.s. equity indexes continue to hit record highs. does that continue to be supported or is that also reliant on something being passed through congress? neil: i am not too sure that the do with got anything to the trump trade, because what we have seen increasingly in q2 is that the markets are fantastic in the u.s.. everything else has not been so, we have seen it increasingly with the flattening of the yield curve, a rotation towards the defenses and utilities. i think the trump trade is rapidly and rightly being priced out of the market because, as you know, $1 trillion infrastructure is not matter to a $20 trillion economy and his repatriation plans seem to be less, slower, and lower. therefore, i think it is quite right, some of the exuberance on the trump reflation. it has taken a backseat to be tremendous growth opportunities in the tech center. all right, you're trying to stay with us. it is great to get your take on these issues today. neil dwane is a global globalist at allianz investors. being strong but maybe softer. the u.k.'s chancellor of the philip hammond, is set to lay out a new for brexit. his address, next. plus later today, an interview with the swiss national bank's president. this is bloomberg. ♪ matt: welcome back to bloomberg markets the european open pee-wee are 15 minutes into the trading session today and we are seeing equity indexes -- welcome back to "bloomberg markets: european open." if you take a look at the ftse, down half a percent. cac downdown -- the .7%. the european equity index is down. guy: it is an interesting time to be in the u.k. right now. the u.k. has slipped further into the fiscal limbo story. cause have mounted for a cross party consensus on brexit. i am not sure how you define that. meanwhile, philip hammond will make his case for a new path for a brexit focused on protecting jobs and economic growth. they are calling it the pragmatic exit. not sure quite where that leaves the immigration story. he is going to speak later at the mansion house and we will hear from the governor of the bank of england, dr. carney, as the boe announces policy isisions amid inflation exhilarating. wage growth is not. you can watch that announcement on bloomberg and we will have tliv , which we will run for you. you can follow it on the mliv as well. a great functionality. neil dwane, global strategist at allianz global investors. how much of a mess is the u.k. in? how should i treat it? neil: i think we are in a concerning place. we have gone from being the best performing g7 to the worst, and a think we will continue to see economic difficulty. we now face arguably double political jeopardy. we have got a hung parliament. looked at the economic policies. we are not going to see anything radical because a week conservative government cannot do anything radical. a would be particularly supportive of the economy because they would require some of the us to sign the check. the u.k. looks like real trouble ahead. price?e gilts the right breakevens are appear end up bank -- and gilts here. actually, this was a vote on austerity, not brexit. hisill keep one wing of party happy by saying this and spend money as a result of that. that is probably going to mean more issuance. how, with this negative yield story in the u.k., is that dealt with? neil: i would argue we have not had any austerity on dirt phillip haven't we have been using our credit card. when international investors decide they are not prepared to support her link or the gilt markets, which they have done quite considerably over the last few years. i would argue at about 127, 128 with political difficulty. .ising rates in the u.s. maybe the u.k. is not quite the attractive place that i would like it to be. we would probably argue that gilts have to go higher. they are going to be wrong. the good news -- neil: i was just going to say, if sterlingin asia, fell another 10% or 15%, there is wall-to-wall buying for u.k. assets. matt: is the good news from these election results perhaps that you are going to see a much softer brexit? that europe and the u.k. will continue to trade? people will continue to flow back and forth across the borders unencumbered? is that more likely now? neil: do you know, i find it so hard to speculate about what type of brexit we are not going to have. the one thing i would say to guy off camera is the chances have gone up considerably. when we look into our modeling and what we are saying to clients is i think the greatest and most likely outcome is that it takes a lot longer than two years and we really cannot see much else there. we do not think it is credible to have a deal done by march 2019. it just feels impossible to get that deal sorted by then. matt: it certainly seems that a lot of people are talking about the possibility of giving the u.k. more time for these negotiations, and it seems, at least from my conversations with german government officials, that the e.u., powerful members of the e.u., still want the financial center to remain in london. they are concerned. it seems that any problems for the financial center in london could mean problems for the global economy. do you think we are going to see the banks stay there? neil: i think we have argued for some time that given that the city of london is now dominated by the u.s. investment banks, unlike during bid, when we were bang, we think that they will go back to new york, and europe will be lesser because of it. the other thing i would say in terms of the political dynamic is with the strong approval now macron and your the likely reelection of chancellor merkel, if we can , as you were reporting this morning, positive statements about the need for reform and a journey to the united states, if we can get that going, it will result may be some of the tension around italy, and that will mean europe is more self-confident, which i would ironically argue therefore allows them to be more generous to the u.k., because in allowing brexit to be done on a nice basis, they are seen to be magnanimous rather than as being the people who are very hostile and negative, so i think if we do see some self-confidence emerging later this year out of your, it could make brexit a lot easier for the u.k.. guy: neil is going to stick around. we need to figure out how he sees the world from an investment point of view in a little bit more detail as well. global strategist at allianz global investments. just a word of interest. the south african market is down pretty sharply again today. we will try to get some details on what is going on for you. all of that, coming up. this is bloomberg. ♪ matt: -- guy: 23 minutes past the hour. let us get your bloomberg business flash. >> ted anbang insurance faces an added challenge. according to a person familiar with the matter, the director -- a wide-ranging probe into the business. anbang's representative declined to comment on its relationship with banks. deutsche bank has outlined in a structure for its corporate and investment banking. it will create a separate business for us equity debt operation. it has a division of responsibilities. he was appointed as cohead of the trading units. qatar is to sign a deal to buy as many as 36 jets from the u.s.. the pentagon says the defense minister and his american counterpart completed the $12 billion agreement in washington yesterday. the move comes as the two countries navigate tensions over president donald trump's backing for a saudi led relation to move to isolate the country for supporting terrorism. that is your bloomberg business flash. guy, matt. matt: thank you very much. clearly, a lot of investors are on a hunt for income. our guest, neil dwane, is a global strategist at allianz global investors. the self-help energy the might be the right play to pay. neil, let me ask what you mean by that, and why you are bullish. ok, when i talk to our clients around the world, we see two different types of clients. looking on thets hunt for income. i think a return on their investment, too. when we look across the equity space, we think the big oil majors in the u.k. and europe look very attractive. the did many of the management, they understand oil will stay around the current type of levels. they are cutting their cost accordingly. therefore, we think that sort of helps you are the self-help story is irrelevant to where the oil price is. because we think demand will outweigh the growth in supply going forward, we think the oil price should drift slightly higher, in which case, royal dutch shell, very strong rated company. if you look at it as a country, it is the 25th largest country in the world. it is paying you seven points at present. we think that is a good place to start. guy: we will carry on the conversation. up next, a rate decision out of the s&p. this is bloomberg. ♪ i've spent my life planting a size-six, non-slip shoe into that door. on this side, i want my customers to relax and enjoy themselves. but these days it's phones before forks. they want wifi out here. but behind that door, i need a private connection for my business. wifi pro from comcast business. public wifi for your customers. private wifi for your business. strong and secure. good for a door. and a network. comcast business. built for security. built for business. so we need tablets installed... with the menu app ready to roll. in 12 weeks. yeah. ♪ ♪ the world of fast food is being changed by faster networks. ♪ ♪ data, applications, customer experience. ♪ ♪ which is why comcast business delivers consistent network performance and speed across all your locations. fast connections everywhere. that's how you outmaneuver. matt: inflation expectations. inflation expectations. fed raises rates and lays out a plan to cut its $4.5 trillion on portfolio this year. could the plan be derailed if wages do not eventually pick up? presidential probe. special counsel robert mueller is said to be looking into her donald trump sought to obstruct justice. the german lender is said to be me organizing its corporate and investment banking unit. does the new plan reduce complexity? welcome back to the european market open. i am that miller switzerland, rating the s&p decision alongside guy johnson at bloomberg's european headquarters in london. guy: you can get it on your eco-screen and on the news flow we have at bloomberg. depositreturning its rate. that is completely unsurprising. in terms of the details, let me move my head away from the screen so i can read it without my reading glasses. basically, the snb saying it expects developments to be favorable. does not really budge that much. it will take the overall currency situation into account, which is interesting as well. it is a slight twist. it will take the overall situation into account. basically, matt, i do not think there is much here. it will continue to monitor the situation in the mortgage and property markets and is going to regularly assess the cyclical capital buffers that are in place. matt, given all of that, what are you going to ask thomas later on? one of the things i will ask him is how much they plan to intervene or what kind of target he would like to see, where he would like to see the swiss franc. he says it is significantly overvalued now. what would be a fair value? us specificill give and direct answers to those questions. is in kindd, the snb of a difficult spot. it is waiting on the ecb to move it policy before it can budget itself. it is also -- it has also intervened after taking the cap off, the euro cap it had on the swiss franc. it has been intervening the entire time to the tune of hundreds of billions of francs. so it has got to act more if it wants to control the currency, but it cannot let the currency markets know it is going to do that. and let us bring in neil get his take on this year neil dwane, joining us from allianz global investors. the snb, does it have any control in switzerland? neil: it appears the flows that would come out of the euro if they were significantly the right price. a have to remain an unattractive currency to stop global flows going into it. i think the question matt should ask is what they are thinking about in their massive equity holdings. they are one of the largest equity holders around the world, courtesy of their quantitative easing and there etf purchases. maybe you can ask what he thinks about amazon at $1000. [laughter] yeah, i think they have now -- the balance sheet is 120 times -- 120% of gdp. they are the third largest holder of foreign currency reserves in the world. that is not set to change anytime soon, though, is it, neil? are entirelyy hostage to the policy of the ecb, and the ecb, i think, has made it plain that they will end quantitative easing before they move rates, and therefore, for denmark and switzerland in particular in europe, they are therefore going to have to remain even more accommodative relative to the tapering that we see from the ecb in the next 12 months. guy: it was a great pleasure to see you. thank you for stopping by to see us. neil dwane, global strategist at allianz global investors. you can use tv as well as the video stream. there is neil. you can also access a lot of functionality around all of this pure for instance, you can get neil's bio. you can get some of the data we are talking about. you can see some of the charts we are using. you can use the data check some of the functionality, the tliv . you can check this guest, ask the spot here, ask the guest of question. you can you tell us, you can i.b . us. what are we going to talk about next? the euro zone finance ministers will meet in luxenberg for a resolution to ease greece's that ebt flows. we will get commentary. this is bloomberg. ♪ matt: welcome back to "bloomberg markets: european open." i am matt miller in switzerland, where the swiss national bank has left the interest rate -0.75%. it is a busy week for central banks. we have the boe coming later today and the bank of japan out tomorrow. yesterday, of course, we have a fed, where chair janet yellen raised rates. she is pressing ahead with plans to normalize monetary policy. she says the details of her balance sheet plan, released to some extent yesterday, or when extended a larger effort to make sure no one is taken by surprise when the plan goes into effect. chair yellen: we are continuing to maintain the size of our balance sheet by reinvesting proceeds from maturing treasury securities and principal payments. economy that the evolves broadly as the committee anticipates, we currently expect to begin implementing a balance sheet normalization program this year. joining us to discuss this now is jeffrey cleveland, the chief economist. welcome to the program and thank you so much for joining us. >> my pleasure. matt: what did you find surprising in yesterday's fed the release? i thought it was surprisingly hawkish. i think the chatter from a lot of investors going into the meeting was that we would expect a "dovish" height. the fed would deliver 25 basis point increase in the federal funds rate, but the language and dovish. would be more in fact, i thought we saw the opposite. the fed stuck to its guns. a stop to one additional rate hike this calendar year and three additional rate hikes in 2018. i think that is at all to with what is priced into the front end of the bond market. whether you look at fed funds futures or two year treasury yields. i think we have a disconnect still between the market and the fed. i think that was the most interesting development. matt: why is the fed so willing to put its neck out like that when the inflation numbers, core inflation numbers, are coming in so weak, and none of the trump agenda seems to have gotten really even a start yet in congress. jeffrey: well, i think the economy can do fine without any trump agenda moving forward. you saw the fed so looking for 2%, 2.1% growth. that is decent enough growth. i think the reason why they are confident to move forward without inflation pushing up here is the employment rate. we are at 4.3% on the unemployment rate. it,nding on how you measure somewhere around 4.5 percent to 5%. we are below that. to quote janet yellen, the conditions for inflation are in place when you look at the labor market. that gives them confidence. i would say as an investor, when we look at the inflation data, there is a lot of noise in the inflation data on a monthly basis, even over a few months. look at median cpi, still pointing at 2.3% year-over-year. it is not zero inflation. it is right around 2% inflation. they can be confident in moving forward with their agenda. guy: what you would normally expect to happen is the fed raises rates and financial conditions tightening. jeffrey: yes. guy: let us talk about this chart here. jeffrey: when you put on the break of your automobile, you expected to flow, not beat up. guy: absolutely. there is a bunch of factors here. the blue lines here are fed rate hikes. what is it going to take to get that line to turn down? jeffrey: perhaps, this is the question i think many unknowns with how monetary policy feedback loops work with markets in the economy. so, they are learning as they go. they are pushing the break on the car in real-time when they have not really used the break before. they may need to do more to impact financial conditions more than the market expects. if you go back 18 months ago, people said the fed cannot lift off or move interest-rate up because the economy and the markets will topple. just a little increase in the federal funds rate. that has clearly been disproved, that theory. have a morerder to significant impact on financial conditions, they may have to move rates faster than the market expects. guy: do we not fully understand what the balance sheet reduction will look like? jeffrey: i think the balance sheet will be big when all is said and done. guy: we are going to have a substantial fed balance sheet? jeffrey: a 3 trillion plus sized balance sheet, maybe down from 4.5 trillion. much larger than it was precrisis pure the big balance sheet is here to stay. matt: does that matter? does it matter to having a large balance sheet? so does everybody else. jeffrey: yeah. if the fed is the only major central bank moving to a smaller balance sheet, in a global macro scheme, i do not think it matters much on the fermenter. you still have 20 trillion or more on the top five global central bank balance sheets. i think that is a great argument. even without that, i do not think rolling off -- the balance sheet shrinking is sort of like your bond portfolio. you are allowing the proceeds to rolloff. you are not reinvesting your coupons. i do not think that will have a material impact on the economy. any concerns about that from the investment community are probably overplayed. all right, at great to get your voice this morning through thank you so much for joining us. jeffrey cleveland, chief economist. i want to get to bloomberg first word news. for that, we go to sebastian salek. sebastian: u.s. president donald trump and his wife melania has visited house majority whip steve scalise in hospital after he and four others were wounded in a shooting yesterday. he is the third highest ranked house republican and he suffered internal organ injuries and severe bleeding after being shot in the hip. he remains in critical condition in alexandria, virginia, near the nation's capital. in the u k, fire crews have worked through the night to dampen the blaze that killed 12 people. officials have warned the number of fatalities will certainly rise. the fire that broke out in the early hours of yesterday morning also injured 74 others and left an unknown number missing. the cause of the blaze remains unknown. further has slipped into political limbo after theresa may talks with northern ireland's democratic unionists drags on. ounting --ma it could delay the formal opening of the session of parliament scheduled for monday. a u.k. chancellor will make the case for a new cap for brexit today according to a treasury official. he will push for a so-called pragmatic brexit. they moved to focus on protecting jobs and economic growth will come in his first public appearance since the tories' disastrous -- in more than hundred 20 countries, this is bloomberg. matt, guy. guy: the euro zone finance ministers are meeting today in luxembourg to hopefully reach a deal on the ways to use greece's debt deal. next slicelock the of financial aid. that is due in july. the deal is expected to offer much-needed clarity on greece's future debt obligations, debt relief. it is becoming a bit of an issue. how does the imf stock up on the story? joining us now is simos anastasopoulos. good morning to you. just give me a sense from your membership how critical this deal is. we get something done in terms of this deal and we make sure we do not end up with another cliff edge in july. simos: good morning and thank you for the location. i guess we are getting very close. we are hopeful that we can reach an agreement today, although things appear to be more complicated than that. we have some pretty strong statements from our government. theprime minister, and minister for financial germany. quite contradicting, a lot of them. it is a real issue, debt relief. greece has performed quite well. the economy has done everything that was required to achieve fiscal consolidation and take the measures necessary for the future. now, we are expecting -- it was the understanding at least -- that we would get some kind of debt relief measures described quite clearly in the proposal. so this is what we are looking , and we hope that we will get them. guy: if we start to see more positive views emerging on this story, how quickly will the greek economy respond?how much damage has been done ? i am curious to see if your membership believes there is kind of pent-up growth available for the economy if some of these big hurdles are cleared. simos: i think the answer lies within the new predictions about growth this year. we were expecting something like a 2.7% growth. now, estimates and projections of forecasts are talking about 1.2, of maybe 21.5%. their lives the damage -- there lies the damage that has been done to the economy. the real economy is a different picture than what the government economics look like. there, we have achieved a huge surplus. nobody was expecting a 3.5% -- 4.2% actually, severance last year. it seems we will do pretty well this year either. the real economy struggled. although we have so many good companies that attracted investor interest, we need to clarify the situation. much of the economy do you think is still in the dark, in the shadows? would you say 30%? simos: i am not sure what that would account for. if you are talking about the economy, i would say the numbers are much less than that. if we are talking about the economy that is burdened by dbet itt might be about -- debt, might be about this area, yes. matt: what does the sustainable debt picture look like? how much debt can greece sustain going forward? the payments are such that until 2021, debt -- the servicing of the debt is considered quite sustainable. if we take some measures that will extend the payments, you know, better payments to 2021, i do believe it is sustainable. regardless of the ratio, we do expect the economy will grow significantly after that. not -- i am not sure if it can grow at 3% per year, which is quite high. but at least the 2% growth looks to be achievable, and this will bring variation down as well as the service of the debt, and that is an important thing. not, you know, afraid of what are the debt looks like as an actual number. servicing of the debt i believe is quite sustainable. guy: do you think that -- do you feel let down by mario draghi? you talk about being afraid of the debt. the ecb went by on the qe. is that something you feel should happen at this point?how important is it for the greek economy and your membership? simos: quantitative easing came from the ecb, and amount to 3.5 billion. there are talks already of transforming this positive review that will exceed the 7.5 billion and will be up to 11 billion. the qe easing is taking into account that you qe -- taking into account that. e is not the important thing. the important thing is the trust it implies to the greek economy. they would have accepted something better from ecb. guy: we are going to leave it there. thank you indeed for spending time with us this morning, simos anastasopoulos, the president of the american hellenic chamber of commerce, joining us out of our athens bureau in the center of the greek capital. up next, africa. mine ownership has been leading markets. the stock market down there, softer. with that story. that is next. this is bloomberg. ♪ matt: welcome back to "bloomberg markets: european open." i am matt miller in switzerland, where the snb has just left its therest rate change to negative. still saying the currency is significantly overvalued. i am just about to go into the press conference. i will interview the president of the snb. issue we get you an are watching very closely in south africa, a ruling expected later today that could affect minors and explain why they are falling in london and south africa. a ruling on black ownership of local assets. our economics reporter in johannesburg joins us now for the details. what exactly are we expecting? what are we talking about here as far as this ruling or law? >> good morning, matt. a charter set to come out in a few months, possibly around five minutes or so, which will give certainty with regard to policy on black ownership of south african mining companies. the draft charter, which was released in april last year did mines needed6% of to be black-owned. the minister had suggested that that should perhaps be increased 50%, and many feared opposition from political parties saying that may deter investment in the country. arabile: we hoped to get clarity. the process has been repeated in order to have the money charter come to a halt. guy: in 20 seconds, how are the companies going to react? arabile: it certainly will be an interesting one. they will have to put up a little bit and sell a larger state of the companies to get to the 26%, so it is likely to be quite frantic after this has been put forward. guy: perfect timing. arabile gumede joining us out of south africa. matt has an interview with the president of the swiss national bank, thomas jordan. that is coming up. this is bloomberg. ♪ . . . francine: janet yellen said labor market strength overcoming inflation weakness. are there hikes again? u.k. chancellor prepares to set up an alternative to theresa may's vision following her disastrous election results. robert muller said to be looking into whether donald trump out of bounds instructed justice.