Transcripts For BLOOMBERG Bloomberg Surveillance 20161003

Is in new york. We have an interesting week ahead of us. A lot of talk about governor kuroda and looking at the bank. Tom i look at the green book that comes out from the imf. The Financial Stability issues of the week will be interesting, starting with Deutsche Bank. I was taken aback by Prime Minister mays speech over the weekend. Francine i dont think we learned that much new in terms of brexit. It seems Party Politics will take a bigger role in when you invoke brexit. She doesnt like it being hard or soft. I think it is all or all the same. Lets get to the bloomberg first word news with taylor riggs. Taylor supporters of that peace plan that ended five decades of fighting in columbia. The agreement it would pass easily. The plan called for rebels to give up their weapons and return penalties for any crimes they committed. The president said the ceasefire will stay in effect. Donald trump is resisting pressure to release a information following revelations about his finances. The New York Times says the billione posted a 916 Million Dollar loss on his 1995 income tax return. Just that mayled have led trump illuminate his tax bill for that may have let trump illuminate his tax bill for two decades. Theresa may on brexit. Over the weekend, she said she will start pulling the u. K. Out of the European Union in the First Quarter of 2017. She also said she will introduce a bill to convert all of you loss into u. K. Legislation that is aimed at providing certainty for businesses and investors. Global news, 24 hours a day, powered by 2600 journalists and analysts in more than 120 countries. I am taylor riggs. This is bloomberg. Tom thank you so much. There were a lot of boards on friday, flat. The yield of 1. 60 . Theres not much on oil. 50. 73, down below on brent crude. Sterling front and center. Dow, it lost levels. Francine this is what i am looking at. My chart of the hour. Germany led in the uneven growth. European stocks a little changed. We did have a little bit of m a in terms of asset managers. U. K. Is pmi for the pmiitis. It seems to be all the rage right now. U. S. Manufacturing pmi. The blue line is the 50 level on infusion index. Delia line is ejaculation the yellow line is the calculation 43. 2. We are nowhere near that. Show a trend lower with the recent ugly statistic low of 50. You dont think well get the pop that we see in the u. K. This morning. Francine well have to wait and see if we did have a pop in the k in the u. K. That is the red line. You can see it is a led lower. The pound approaching a three decade low. Weekend, theresa may she will begin the process of withdrawal from the eu in the First Quarter of 2017. That meant that it went further downhill. Well have to look at brexit and pound implications and what that means for other states including germany. Deutsche bank is set to reach an agreement with labor representatives that will pave the way for eliminating 1000 jobs in the pound market. For more, lets get to Bloomberg Newss Michael Moore and chris wailing. Michael, lets start with you. Reminder to our global audience that germany is closed for a public holidayo there is no trading on Deutsche Bank. The adr in new york is a much flat, because we think our hope that Market Sentiment has shifted in that their shedding jobs. They are shedding jobs. Michael it is getting to the finish line. One is cutting jobs that they laid out last year. This is one more obstacle that got thats that theyve got in terms of shrinking the bank. The other is on that b is on that boj settlement, what number they end up at and how quickly they can reach a settlement with the boj. That is the big question. Longterm, it is about the profitability. A 4ine if we have billion number, we are not going to see further Price Software Deutsche Bank. Analysts have come up with that initial 14 billion number. Now it is more in the four to six range. Something in that range would give investors some relief. The lower the better given they have some other legal issues Going Forward to have to develop. You dont want to waste all of the reserves on this on. ,om the Financial Markets lets look at the oneyear cdf. Its not the standard fiveyear. It is the explosion of risk trading in a little bit. It was worse on friday. Christopher joins us. If it blows out, that is not about a government fine, that is about the mystery of the Balance Sheet. How mysterious is a john cryans . Alance sheet christopher i dont think it posted anything about the fault of the bank. It shows that investors started paying attention to this thing. A big move in the spreads. The spreads are going to come in because 500 over is excessive. We dont see any credit issues with deutsche. We follow all of the banks very closely even though we dont have a rating on them because of the rolling market. We worry about southern europe, italy. That is the big concern. That is what is driving this, the fact that the europeans have refused to deal with their banking issues and they are pretending they can lead large banks fail and stand by and do nothing. These are the things that are worrying investors. Tom lets go to the first order , chris whalen, a quote from his note from the weekend. Unable to usetes fiscal expansion and shortterm demand, global Central Banks acting alone have been asked to address the issues of global overcapacity, rising unemployment. You are looking not looking for fiscal for the rest of the year, are you . Christopher the politicians are intimidated by the forces of xenophobia. You saw it in theresa mays speech, talking about immigration. As a merkel would put out a statement leslie that said she would not support largest bank in germany which to all of us is incredible. This is the politics. Think it is unfair to say this is crazy, because i am not sure a u. S. Statement guys, i fromt the stand behind any of the banks. Michael, these are the things that take their time. They should say nothing, but when they asked over when they get asked over again, a lot of the european politicians keep saying investors are unsophisticated when it comes to dealing with a lot of the european banks. It just takes a longer time in europe to do something. Christopher this is not about international investors, this is about italian Retail Investors who were encouraged falsely to invest in banks who are insolvent. The politicians new International Investment investors were backing away six or seven years ago. Nobody wants to confront the basic issue which is many european banks are undercapitalized, they need some sort of assistance to get the party started. Private investors will come in. It is similar to what sheila bair did. The room was empty. They threw shares on the table and then the room was full. You have to get the party ,tarted, mark these assets because the International Economy rules are the opposite, they hide the problems. This is why the investors have no confidence in what is going on in the Banking System all over europe. Whether the bank is sound or not, it does not matter. Francine mike, is that right . European, theres that much lack of transparency. Michael that is one of the factors. To chriss point about the loss sharing, the question of who takes the loss, and italy there is a political issue of the Retail Investors in italy there is a political issue of the Retail Investors. An incident that is not been tested with the market with a lack of coupon payment. Regulators have been working to clarify the rules on the ap ones because they are scared of investors fleeing that market. There is a lot of uncertainty about any party that would take some of the loss. Help me, chris whalen on the quality of Deutsche Banks Balance Sheet. The stock price, bring it appeared, anthony. The quality of the stock price is below 10 the other day. What is the Balance Sheet quality of Deutsche Bank . Michael the Balance Sheet is irrelevant. What matters is the counterparties in the confidence in the bank and the nfidence of the bank. Should they have more capital compared to the u. S. Peers . Yes. We know that. The issue is when you have politicians publicly talk about this, they are violating the golden rule. You never talk about a bank as long as it is open. And they are a product of the problem they are a part of the problem. Francine thank you so much, chris whalen. Of course, Michael Moore from Bloomberg News coming up, Bloomberg Kathleen Hays will be live at the Federal Reserve bank of cleveland. She will have an interview. This is bloomberg. Francine this is bloomberg surveillance in london. Tom keene is in new york. Heres taylor riggs. Taylor go there is a big takeover in the Money Management business. Henderson group has agreed to by janice capital agreed to buy janus capital. The combined firm have the market value of 6 billion. Two years ago, they hired bill gross. British factories have had their best month in more than two years. The i just market index was much higher than forecast. Export orders increased the most since january 2014. The weaker pound made british products cheaper overseas. That is your Bloomberg Business flash. Francine thank you so much, taylor riggs. Lets bring you back to the markets. Jane, thank you so much for joining us. We have a lot of move on pound, dollar. I guess what is most significant, brexit. Jane it was up until now, brexit has not begun. It was pretty good data. That is the Key Manufacturers there had a nice depreciation in sterling. A lot of monetary easing. Now wehas not begun and have seen the beginning of that march 2017 is when article 50 will be signed. Not only that, it does seem that to some a has taken a hard line with immigration. Seen as the u. K. Cutting itself off from access to the sick of market. Francine what does it mean for sterling echo sterling . It means the uncertainties are much more significant. If we dont have access to the , it is being seen as ok we are not going to have access to the single market. We dont know yet. If that is to, the uncertainty for u. K. Business. It is difficult to imagine how our relationship will be if we dont have access. We can expect investment will be spoofed and that is a bad sign spooked and that will be a bad sign. Tom this is standard euro sterling. This is something that jane foley and Francine Lacqua live everyday. The remain that there with the greenock, down we go green arc, down we go. Jane, what is the risk of a junk condition . How much is a streak lined up against weaker sterling . Jane we have had that big move already. Were not expecting to see any more junk like that. It depends on the political news. If it does seem the ukip Prime Minister is going to hold firm and say were going to keep control of immigration and if the European Partners say in that case, you give up axis to the signal market, what does it mean . Does that mean we are going to say Japanese Companies you have tariffs, we dont want to invest anymore in the u. K. . It unleashes a massive wave of massive wave of uncertainty. I dont think we are good to see that jump like we had this year. Tom i want to bring up something that jane lives everyday. This is a stunning chart. I have never seen it. This is a one way that currency surface on euro sterling. It is absolutely stunning when you get out to that red spot. This is a massive oneway bet on sterling. We are going to come back with jane foley. Nextng mr. Chandler in the hour, luigi from the blue school in chicago. Really looking forward to that. Dallas on the linkage of our politics. From london, from new york, this is bloomberg. Tom what a weekend. Francine lacqua in london. Really focused on brexit. German mark is a closed. Back from ireland, michael mckeen. He checked his taxes it immigration. They do not do that. Mckeen has taken just mckee has taken a loss, i have taken a loss and then there is a big loss, is to trump. If you do have a loss, you could use that loss to offset to texas. Making it offset future taxes, making it easier for billionaires. Experts consulted by the times say he could have avoided paying taxes for as long as 18 years. That is one years losses. Donald trump declared bankruptcy six times. Tom the distinction to me is he allowed to take those losses over to his personal statement. Can he take business losses and bring them over to his individual statements . Michael it depends on how your corporation iset up. The Trump Organization released a statement that says the only news here is that the 20yearold alleged tax document was illegally detained. It wanted to say that he was a highly skilled this is man skilled businessman pd paid hundreds of millions in taxes,eal estate taxes, city taxes although they do not specify whether those were from the corporation or the individual. Tom is this typical echo or is this is this typical . Or is this a oneoff event . Michael they could. It is not atypical, it is not illegal. It is what the law provided in 1995. Real Estate Developers often have a big losses. Tom you are still coming back. The idea that the clintons lets say they make 10 million, they are paying tax on that, right . Michael they are paying taxes on that is Hillary Clinton has released 40 years of taxes between her husband and herself. You get 40 years of taxes. Trump has refused to release his. Whether this plays in the public life are not is not clear. Tom quite something over the weekend. That was interesting. Much more that. The Vice President ial debate coming up th week. Michael mckee, much more on bloomberg surveillance this morning. Tonight, five clock p. M. , 5 00 p. M. , they will be talking about trump. German markets are closed. Today the german unity today, of to mark the anniversary the unification. But can germany remain unified hen it comes to dealing with Deutsche Bank . We heard from the vice hancellor criticizing Deutsche Bank for building its business. Probably one of the biggest we look at the german elections next year. Ell have plenty more on Deutsche Bank. Tom keane is in new york. Taylor . Voters in columbia raised the country could fall back into a war with marxist rebels. Columbians released a cease fan to end the war. Scoffed at the fact that eaders would get lenient treatment. Colombias president plans new negotiation and says a cease will stay in effect. Democratic president ial candidate Hillary Clinton takes fargo today. Shell call for limits on forced and ration clauses contracts that make it tough for workers and consumers to sue companies. Fargo invoked those to ses when customers tried sue for damages. The british chancellor is predecessors his policies. He will use his first major peech to confirm that hes plan. Ning george oxburns he will stress a new way to finances. Uks a shift in spanish politics may finally allow the acting prime take office for a second term. The socialist party booted its long time leader. Sanchez had been blocking the attempt to form a new government. Global news 24 hours a day powered by more than 2600 analysts in 120 countries, im taylor riggs. Francine . Thank you very much. Oil climbing to the highest in three months. Ur next guest ran the Largest Oil Company and has 15 years in the industry. Always great to have your insight in the matter of opec hich youve been dealing with politicians and opec for decades. When you look at the algiers agreement, how confident are you that opec will actually go hrough cuts, the cuts they promised and how does that rebound the oil market . What happens at with energy, essentially three things. Minimal cut. Minimal, less than 1 of the of oil. Oduction second, who is going to cut and decided on will be the third day of november. Third, the other play here, continues to pump the maximum level, almost at the ever. And has said nothing on what do. S going to one might conclude that. In effect this is my view. A lot has happened because there change of whole strategy. Lso iran, also iraq, the biggest player. Essentially we can summarize by market share is important. This has been a dramatic change. Remember a time when somebody was saying that even at 20, ere good enough for some countries. 45. Not even libya an nigeria restore output, how much is the challenge for saudi arabia increased by . Libya and nigeria we might expect more. View there is a consensus including the u. S. To bring e prices to a level say around 55, which are still not too for the world, but is high enough to compensate the roducers in the u. S. And also to have the Oil Producing countries restoring their budgets. Surplus think the oil that we see in the markets will algeria nated thanks to as long as russia gets involved . This is my chart when you look price. You have wti. Count whichu. S. Rig you were eluding to. Voicing russia has been they would like to have prices a little higher as well. Is, difference between 45 and 55 is immense because example of saudi arabia. Ar them would be 100 million so its bigrefvenues money. I doubt prices would go higher 55, but i believe they would stay in the range of 50, 55, because Everyone Wants it. Raise much more can iran production by . Iran has already raised production by almost a million. Now they say to be around 3. 7, barrels a day. They proved it can go up to 4. 1, 4. 2. Much higher because this requires time. At one time in the past iran has producing 6 million so they have the potential. But it will take time to go there. Good morning. Can the europian big oil eni with a 6 plus dividend, can they sustain policy given where be . Is or where it will well, for everyone, it is a problem to pay a dividend with a price of 40, 45. T would be much less a problem with an oil around 50, 55. Company has its own way to cope with this issue. Companies which have a huge bounce in sector which is performing reasonably well and balancing is compensating the lack of profit theyre making. Lets say i believe that Even Companies and al companies which have a will solve a lot of issues around the cash generation. Would you suggest europian Oil Companies will be more like the u. S. Oil Companies Given the migration from 100 down a barrel down to your 55 . Your meaning in term of the dividend generosity . Generosity or particularly statement, income will they have to run leaner . Yes. Do have, and y they are, as a matter of fact, organization their in order to be more effective, but this requires time. In terms of dividends, i doubt they can cut down dividend. All the investors are expecting that the dividend of the are really stable. Very good. Back here on oil this morning. Oming up today on Bloomberg Television and radio, conversation with one of three dissenters. Latest fed meetings. Cleveland. Cleveland playing the red sox in baseball. This is bloomberg. Tom keane is in new york. Ets get straight to the Bloomberg Business slash. Tesla motors delivered more expected in the third quarter. The company shipped more than vehles. Workers to sell more cars. Mitsubishi delayed the latest on of the jetliner. A e is set to receive the first 2018. In mid and making fun of president ial ratings s was a solid boost for the nbc Program Saturday night live. He network said the shows debut was up 29 from a year ago and was the highest rated season in eight years. After alec baldwin played donald trump, Kate Mckinnon played Hillary Clinton. Thats your Bloomberg Business watch. Francine . Thank you very much. Voters in colombia raised the that the company could fall back into a war with rebel rebels. Rebel leaders would get lenient treatment for crimes such as murder and kidnap. Executive editor for International Government and foley. John, this is something that was completely unexpected, right . He problem is the president is now scrambling to try and make is still eace process in place until he comes up with plan b. There is no plan b if its a no vote. Now they have to come up with one pretty quickly. Huge surprise. All of the polls showed 60 margin in favor. Done, hes hes ordered negotiations to go back cuba. Owever, its very interesting, very importantly they will respect the cease fire for now. For the huge set back peace process. Its not over yet. Resuming tors are talks, right . He president , this took four years to lock down. Can they keep the Peace Agreement while forcing the rebels to have stronger punishment . Will that be approved . I think certainly you see the process in the different sense in south africa as well. All of the parties have invested the last this over four years. Of the it seems like one real big fault lines in the Referendum Campaign was about immunity or how much perpetrators should receive. The opposition, the campaign was saying they were giving impunity. T will probably come down to what sort of punishment is perpetrators the of terror. Jane, how does this translate world . R first of all the polls again got it wrong. Im not trying to draw parallel prices. But its difficult to look at Political Risk. Company again. At so much Political Risk in europe too. N south america, the khropl byian situation ably pertain morse to mexico. More to certainly in terms of foreign huge. Nge, politics is and right now there is a voters to go f against whats being suggested i dont think well see this again. The New York Times has a vignette of two people who voted no and two who voted yes. A general who, of course, maria ave voted yes for isabelle. She has one statement that david brought me back to kirk patricks face book effect. That book on colombia and on the power of social media politics. With your global remit, is that what happened here . Media again social changed the dialogue . Is ell, social media extremely important in places ight around the world as a polarizing effect where people get sucked into their own sychological bubbles and a reinforcing effect. With colombia, turnout was very low. It was important to look at. People are pointing to the impact Hurricane Matthew had which weribbean region are expected to be pro. 19 turnout there. Social media across the board becoming more and more important. In colombia that what might be at as a one up effect. I hope you get smarter as a people get asked over the weekend and i didnt have an intelligent answer. Fare andre be more war more rebellion off of his vote . Are so said, both sides committed to this. It will be a while before we see translation back into violence. They did make a big point in the vote,ign that if its a no we will see a return to war. Who knows what will happen before now. Both sides, the government and the far side of figure out rying to how to salvage and make this work. We havent been in this concentration before. Agreement t get an in the next two, three weeks they start over. I think were in unchartered here. Tory no one saw this coming. Again, given the fact that they were working on this for four say theyll give it more than two, three weeks. Voter turnout was so low . Anything is possible in these situations. Not endum are usually politically binding and governments as we saw here in obliged to act on them. Gain, when you put so much store in a referendum, it is people. Ignore the if they did manage to negotiate back deal, they could go to that. Thank you so much. A great briefing on colombia. More on this h through the day. Me do a daily check here. Quiet market. Closed today sly for unity day, unification. Sterling gets my attention. 128. 88. Nowhere near the low back post brexit. Crude well over 50 a barrel. From london this monday, this is bloomberg. City of london, overlooking the london bridge. Lovely . It doesnt take into account what weve seen on the pound, nearing a three decade low. Ell have plenty more on brexit. Tom, we also have to look at banks. Talking about it day in day out. Deutsc bank set to reach an agreement with the doj. But it also may have an agreement with labour representatives that will pave eliminating about 1,000 jobs in its home market. Thats according to people with the merger. Were here with the former rothchild and jane foley. Staying with for us. How do you view the europian Banking Sector . Wo months ago folks were on italian banks, it was the end of the world. Banks, focus on german now its the end of the world there. I think there is a common europian all the sector. They have a problem related to the past and a probe related to the future. Past i would say the nonperforming loans which are seven or eight years of cries in italy. All the fines. Is the case of Deutsche Bank, of course. But i have read somewhere that english banks have been fined 52 billion in the last ten years. So big problem. So we have a problem with the past. Have a problem with the future. Understoodody really certainly how a commercial bank would be making money in a world which regulations are getting tougher every day. Getting higher every day. Or Interest Rates are low even negative. Even the of that, management teams for managing capital are going down. World in which its very difficult to make any money. Is a t youre pointing to timeline. The problem is investors have a problem in assessing business for a lot of these banks. It doesnt explain the angst seeing today. Is that the pessimism investors are related to the past. Of the equation that is a final 14 billion is raising a whole set of questions about capital requirements, about how capital can n happen. So this is the immediate reaction. The other thing not is we really do understand how europian banks will cope with all the issues they have. Of course they will find a solution. But there is a lot to go. Solution is key here. Back drop of economics in italy. Is the four year moving average. Average of r moving italy, real gdp, an malaise back 2002. If that is the back drop, what will be the catalyst for mergers italian banking . Already n banks have merged. There are still too many banks. Will need to get together in order to be more tpbive. Baseannot reduce your cost small. Are too here is the regular regulatory body in italy . Neither inthink that italy nor in frankfurt you can pose mergers. Capital requirements which we need to collect new capital will oblige banks to themselves to investors with an appealing position. Will be ling position achieved only in f they get together. Foley, ok here at jane the thing that will move the markets. Its currently. What is your call on euro out year . Again, very much depends on the u. S. Market. Have is a low u. S. Category. Its going to be very difficult euro to go down. Clearly it would be more useful euro were weaker. Think thats going to happen. Do think the fact that the market is so ginger when it comes to banks really reflects i think themarkets deception that of policies, ects low Interest Rates, really are the detriment of banks and were beginning to weigh out these side effects could gaingger than the marginal continuing with these extraordinary policies. I think because of those concerns the market is more jittery about the news ab banks than it would be. Focused ch are markets n banks and governor policies capping the ten year deal which is almost now dead in the water. One. Think it merges into theres a back drop of anxiety. Its quite interesting. Of the Banking Sector had to fail. I thought it was too small. Forced them. Ave now they did the right thing. Fail. Et the banks now, clearly we do have choices. Policies. Manage but look at the side effects. The side effects are an environment where its difficult to make a profit because american Interest Rates have been very low, very flat. Productivity and low growth. Negative Interest Rates a hour. E bit in this thank you both so much for getting your monday started. Next hour a conversation with Mark Chandler. This is bloomberg. A this morning near post brexit lows. Beware of ter said the eyes of brexit march. East and west germany as one are trading. Deutsche bank gets a one day reprieve. In this hour, prescriptions for Economic Growth. Bloomberg g this is surveillance. Were live from our World Headquarters in new york. Already october. Pmi manufacturing october 3rd. Francine, pmi crazy. Good, right . Etty it was really strong. Expected. Ter than i it was stronger than expected. Brexit. A date for before march of next year. The back dropping on of that. I like how she said hard and dichotomy , a false well talk about that in this hour. Taylor r news, heres riggs. Stunning defeat for upporters of the peace plan that ended five decades of fighting in colombia. Surprised pollsters who said it would pass. Rebels to or markist give up their weapons. Would have seats in congress. Colombias president said a cease fire will stay in effect. Is resisting pressure to release new tax poers following revelations about his finances. The New York Times says the republican president ial a 916 million loss on his 1995 income tax return. Have helped trump eliminate his federal tax bill for almost two decades. To people familiar with the matter, trump wont make any Tax Information public. Business groups and opposition parties will have details on brexit. Over the weekend, may said hell tart pulling the uk out of the Europian Union in the First Quarter of 2017. Introduce a bill to convert all existing laws aimed certainty for business and investors. Global news 24 hours a day than 2600 more journalists and analysts. More than 120 countries. Riggs. Ylor francine, tom . Lets go through the daily check. Going on except in the land of brexit. Utures flat flat flat, oil elevated 50. On to the next screen, if you would. 50. 74 on crude, sterling in a southerlyng direction. Francine know if its dont the fact that teresa may said she would invoke article 50 by march. But from her speech, its very clear that she will give into than politics more possibly what investors thought contained. That strong pmi manufacturing figures. 2. 3 . Gaining Deutsche Bank closed today its a public poll day in germany. Lets start with the u. S. Manufacturing. Futures index up and down. Yellow line is in the foot note napm presser. 43. 2 is their estimate of contraction. We are miles away from a what we see ed on in manufacturing pmi, although regressions are with a little bit of a downward slope. Francine. This is a simple pound chart. Because of that drop. Remind see lets ourselves what pound, how that brexit vote june 23rd. Line there currently at 128. 71. Also if you are on twitter check twitter handle at brexit, tom. Very good. Much. You very with us today from chicago, sengales. This is a real joy to have him back in the election season, the debates here as well. And we drag in by his left ear chandler, author and writer of great notes. Chandler,ve about mark hes completely character driven. You look at trade weighted now, is it such an oddity with brexit and all hat that you have to go to a blended index . The reason uk has held up so well partly having to do with debate, providing liquidty, and the est rates decline in sterling helping. Sterling is making new lows against the dollar. Set two year , lows against the euro. Governor king and other economists, i like king because hes always level based. Said, look, currency is a one off effect. Once you get through the depreciation of sterling, you with that. Do you buy that idea . Yes. To be a good ws absorber. It softens the blow from brexit. Luigi, you have to give me longer answers so i have time to get the charts up here. At sterling. Do you have a level on an appropriate sterling . Of course not. That, than ter than to make forecasts. We sort of as at academic we cant move the market. Heres euro sterling up we go, weaker sterling, stronger euro. Where does that end up . Does it extend out . I think it was above 90. Were trading around 88. We havent found a bottom for it. Fishing for it. Shes confirming what has been awhile. For excite that is the uk will make a decision to begin the divorce of q 1. Ngs by the end so i think that we really havent seen the effect of the brexit decision yet. Businesses have not yet made heir plans for Capital Expenditures and for employment moving forward. When these are affected the that leads us to the Morgan Stanley call which is relatively redeker. Hans but then the hsbc call out a months. Right. His all depends on the view that hard or soft brexit. I know theres been push back not only from government a lot of the pro brexit militants. Or houldnt call it soft hard, that we should call it clean or messy. Whatever it is. You either take a view, mark, brexit is something that works both way, that theyre not tariffs which means the k can sell their goods, we can import goods here shooting up. Or whether its something that uglier. Y is where do you stand on the two . Kind of messy. This has been a marriage of over 30 years. Lot of intrie kasys and complexities. Already were seeing uk up as a quick pass through from the weaker sterling and lower Interest Rates. Theres t think that any good thats gonna come out of the uk. Think fast forward a few years, i think the uk will be weaker. Regaining sovereignty is an illusion. Think the important thing today is many people are still thinking that push come to shove, the uk would not even invoke article 15 may put those umors and that speculation to rest. Right, but come on. Article 15 will be invoked. Uk just depens on whether the is soft on immigration or not, right . Thats a red line for the e. U. Think this is what may said. It seems to me, the way i would ead it, the uk is willing to try to get control over its immigration policy and forego market. O the single thats a tradeoff the uk is willing to make it looks like. Mark i know you have given calls on pound by the end of the year. Hats it look like in three years. Its unclear to me and i think economists what the u. K. Will look like in terms of what they make, what they benefit re, what they three years from now . Going to be s not like manufacturers will come to the u. K. Weve already been seeing this japanese auto producer. Theyre thinking twice about expanding Production Capacity in u. K. I think the u. K. Will be weaker. Sector which is a key for the u. K. Is not going to be lowered. Im not optimistic on the u. K. And brexit. From people, is john green was saying the same thing. Professor, what is the inequality of wealth or vie bransy between london and the rest of the United Kingdom . Its massive, isnt it . Two separate entities almost. They are two separate countries. London is probably one of the can imagine. S you i think foreigners are very much welcome. Theyre integrated. Dont feel a sense of foreigners. And when you leave london and go to the rest of the country, its picture. Ent not only is it a wealth inequality, theres also a ultural inequality, which is huge. This is fascinating. I go back to what john green said. Like you, mark. Really negative on what it means for the United Kingdom, as well. This. Come back on lots to talk about in this hour. Well do a heavy segment on at the bottom of the hour. I think kathleen is just out great tickets for cleveland boston. In the playoffs. This is bloomberg. This is bloomberg surveillance. Tom keane is in new york. Riggs. Taylor big takeover in the Money Management business. Henderson group has agreed to 320 nice capital with billion under management. The combined firm will have a of 6 billion. Unconstrained bond fund. Cut utch bank ing plans to 5800 jobs in the netherlands and belgium over five years tp the estimates the cut will save about 1 billion a year. Ing has been cutting costs to financial technology. Factories have had their best in two years. The ihs index for september was forecast. R than export orders increased the most since january 2014. Pound has made british products cheaper overseas. Bloomberg your business watch. Francine, tom . Taylor, thank you very much. Mark chandler is here, as well songales, way out front on the possibility of a trump candidacy writing about this in book on capitalism a few years ago. Joining us with the here and ow, the clear and present reality, megan murphy is in washington. Megan, with all that happened over the weekend. Assume a large part of our global audience knows weekend, ned over the how does it change the debate this week and the next debate as well . Kaine is under renewed pressure. The thing that came out of this the biggest thing people will know is this allegation of this huge tax law donald trump took and how it may have been affected his federal tax payments in the ensuing years. About this, sting mike pens, governor of indiana, ill be out there having to defend his rival against these allegations. From seen a lot of quiet the Trump Campaign so far on this tax issue and whether hes gonna release more information. Changes the dynamic quite substantially for tuesdays debate in virginia. Dynamic between this candidate and his new Campaign Leaders . Fascinated by just where that stand after the sunday talk shows. Yeah. Mean, this has been a week as weve reported, several others reported, one of the most weakness le president ial politics at anyone has seen on a campaign. Really seen, after several weeks of donald trump hisg quite disciplined with new leadership in place, the of came off the truck without any other way to phrase it since the debate from, know, his Early Morning tweets about sex tapes to his appearance in the whole thing has been unbelievable. Whether he can recover or not is question. Megan was actually responsible and read the news. I just watched the opening of saturday night live to get all needed to know. Alec baldwin was a great trump. Professor, you were out in front of this. We heard earlier ab bankruptcies. Ets clarify here, that the bankruptcies i believe are not mr. Trumps personal ankruptcies but the normal cycle of business bankruptcies. Your chicago has a history of homage to failing usinesses and clearing capitalism. What did mr. Trump do wrong . He just did american business, right . Know all the details of his business. I think going through bankruptcy and recession is not necessarily a fault. Necessarily a sign of being the greatest business man on the face of the earth. What i understood from his released tax return is that he advantage from a tax point of view of the losses and the extent he followed the law, i think that what needs to law, not him. The the distinction here on another level is the auto motor did ere ford not go under as the others did. Americans keep score on this even if its loosely. Right. Look. You given what tom was saying is very simple. If he doesnt release his tax people still vote for him . O one understands enough about the u. S. Psychology to understand whether thats punitive or whether he can get away with it. Im not sure i understand the psychology as well. I think some people might be turned off by this fact. Vote trump of people because they are upset with the establishment. Releases the f he tax returns or not doesnt seem difference. Ge so i think that hes able to to the white middle he s voter in a way that cons to connect. Especially among the males. 76 ve seen statistics where of white males without college vote for trump. Statistic. Amazing i dont think that this will be fact that ed by the sort of he discloses his tack returns or not. Brings us back to the republican strategist that spoke to republican politics that said worst in be the history for any candidate and yet the polls are neck and neck still. Want to pick up on what luigi said. That we see these huge margins among donald trump for white women and men, less educated voters. Theres a huge gap among white voters. Floor will be 40 . He is attracting a base gonna vote fors him no matter what. Again with his tax returns. Es, he took advantage of the system. We dont know how much he took advantage of it because we cant offset. Much he the issue is this. Theres one thing American Voters do know. In es two things certain america. Thats death and taxes. If he did get out of the taxes, do think people will look at that and it will be something it will pick up their ears. People in pennsylvania and ohio look againt this and at how hes conducted his business. About n, can we talk normal politics . This is the new normal, tom, sorry. What is mrs. Clinton gonna do this week . All the focus is on mr. Trump. Clinton gonna do this week . Well, i have a thumb on what doing is g to be hammering it down and trying to press home her advantage and what she will be doing on the economy, particularly on looking forward. What hes going to want to do is this positive message about what shes going to do. Her economic plan is. People talk ab her tax plan. Its about boosting that Labor Participation rate, making it easier for women to get back into the work force. Them to obtain affordable child care. She will be looking at outlining that. She has economic speeches this morning where shell outline those issues. Key selling point for her. Will Somebody Just kiss a baby . Someone kiss a baby. Thank you so much, megan, for getting us started. F you need more pain and suffering, i recommend tonight. The debate this week by the Vice President s then on to the next president ial debate. 5 p. M. Onig. Due respect, this is bloomberg. Bloomberg surveillance monday. Brexit laden london. Keane in new york. And Mark Chandler. Have a new book coming out. Coming out early december, early january. Plug. Ry nice shameless lets go over to a shameless chandler. E for mr. I put this up just to bust marks chops. Blended index. Weighted oad trade real dollar. I can look at the dimension of the moves, the red the right. Arrow on weve had a big move, but nothing like weve seen over the years. I would call this the obama dollar rally. Bill clinton dollar rally. Im gonna steal that. Rally is over, we dollar levels on which would bring the euro down. Amazing what mr. Chandler just said. Hes saying the why line is to go up to the tip of the yellow arrow which is basically clinton dollar. Give me more on that. Is on the back of strong jobs or just who wins the election . You look at the market depending on who comes into the you look e and how do at it depending on what janet young does next . On the obama dollar value is based on the fact that engaged al reserve is in a tightening process. Secondly, its based on the idea that theres no way trump will president of the united states. That the odds still strongly favor Hillary Clinton. National poll or average of polls show trump is ahead ever. Most he peaked around 40 opinion. Fed dition to the tightening and europian problems, im looking at next france and ns in germany. Thats going to lead to greater instabgt and ur certainty in europe. I have a multiyear view on this. As goodrm your guess is as mine. Longer term i have got the obama rally continuing. Charts that re the will make mark happy. Our next ank here in section. This will be must listen for all continental europe. Later today on his world wide with twitter. This is bloomberg. Hey hows it going, hotcakes . Hotcakes. This place has hotcakes. So why arent they selling like hotcakes . With comcast Business Internet and wifi pro, they could be. Just add a customized message to your wifi pro splash page and youll reach your customers where their eyes are already on their devices. Order up. Its more than just wifi, it can help grow your business. You dont see that every day. Introducing wifi pro, wifi that helps grow your business. Comcast business. Built for business. Markets are closed in germany. No trading for Deutsche Bank today. However, lot of the talk is still surrounding Deutsche Bank. Getting readyyre to get rid of 1,000 people. This as telegraphed that was going through. The ceo is traveling to the tates, possibly to meet with the doj. Tom keane is in new york. Unified team. Lets get to unified bloomberg riggs. S with taylor voters in colombia raised the prospect that the company could into a war with rebels. Khropl byians rejected a peace five decades e civil war. Any balked at the idea that leaders would get lenient punishment for murder and kidnap. They were all guaranteed seats congress. Colombias president said a cease fire will stay in effect. Democratic president ial candidate Hillary Clinton takes today. Wells fargo she will call for forced arbitration clauses and make it tough for workers and consumers to sue companies. Fargo invoked those clauses when customers tried to rating to fake accounts. Phillip hammond will confirm osbournesned george goal of achieving a fiscal surplus by the end of the decade. For a new l stress way to manage the uks finances. A shift in spanish politics may allow the acting prime for a r to take Office Second term. The socialist party booted pedro sanchez. Sanchez had been blocking his attempts to form a new government. Physiology ore in fed sin has gone to a japanese biologist. Honored for his work on how cells recycle their content. Its involved in several conditions including cancer and neurological disease. Global news 24 hours a day powered by more than 2600 analysts in more than 120 countries. Im taylor riggs. Thank you very much. As i kidded before every level textbook chapter 21 or 23 is all about finance. They save it for the end. Luigi ever read it as a freshman. Lets go to explain some politics and finance into our economics. In combination with the spread hybrid securities such as ocoa puffs that exact as amplifiers, i love that. Internal amplifier. Banks difficulties transmit volatility to other structure al potentially enlarging the group of institutions that attract short sellers. Complex. A what are you focused on . I think first of all let me what mohamed is saying. Worried that not on tradecurity will start to lower valuation creating a slow, but there are a lot of institutions that need to raise capital in the next six months. And clearly Deutsche Bank is one of those. This will create a lot of Banking Sector. Dr. Alerian mentions amplifiers. The biggest w problem and crisis is guessing amplitude of shocks. How do you gauge the stew of italian banking in terms of trying to guess what it will be like if they screw this up . Its very difficult. Let me say that i think probably overstated in the sense that the fine will be negotiation. E so i dont think that is the biggest problem. However, the shock of the fine howed our sort of weak is Deutsche Bank overall and how to create akes tension in europian bank and market. Italy, we are n uni credit who have to weigh sostantial amount of capital they are in a weak position as well. How can you say how long it will take . Its 10 billion more than analysts were expecting. We were expecting a 3 billion and the doj came out with 14 billion. A given that it will pressure . K under i dont know why the market expected so little from Deutsche Bank. Of america paid 16 billion and jp morgan, if mistaken, paid 12 billion. And Deutsche Bank was the last one to settle. To settle first one generally get a discount for their cooperation. That if the market was told that the number was so is because Deutsche Bank made a mistake in tallying that number. Chandler, i dont want o get you in trouble, but youve seen this before. Basically everybody jaw bones something, ust do right . Problem is preexisting conditions. Banks are not in the shape. The u. S. Banks got recapitalized whether they needed it or not 37 europe is very slow. This has been an on going trauma. Get caught anks repeatedly violating the law, repeatedly getting fined i think bloomberg reported that Deutsche Bank is the most fined bank since 2008. Preexisting conditions. Do you fix it . I know its easy to say the u. S. Quickly. Uch they have a Business Model that work. The u. S. Went through a huge of pain. You had a Systemic Risk out there. The thing we have to avoid. Europe makes it harder. Directive that really confines or really limits the ability of government to bail state without unsecured Share Holders and subordinated holders. You said something brilliant. You said whether they needed it American Banking they said shut up this is what were going to do and they did it. Number of guests. Said we havent done negative or not ether we needed to society. Weve pigeon holed negative very small set of institutional effects. We havent affected other institutions. Havent affected retail. Is that what well see in the broadening out of the effect of negative rates not. Er we need it or i think banks are reluctant bring negative rates to retail. What about politicians . Politicians dont decide, we hope they dont decide the market. I think here sort of these are afraid at the moment. They say the more we charge you, to take their money somewhere el. Historically the policy has been very important and i think banks are afraid. Thats what squeezes their ability. Contributed to the instability in europe. Causes. Of the many s mark said, i think theres a fundamental stability there. Creates e thing turmoil. If theres something fundamental thats quite ugly, to consolidate . Do we need to take out some of the weaker banks . Do we have a regulator that is consolidation . I dont know whether the regulator is ready for this idation especially consolidation as it crosses border. What we desperately need in border re more cross banks. If we do the mergers inside each country, this will gain too much market power. Thats not good for firms or consumers. What we desperately need are cross border mergers and consolidation. Inevitably lot of job cuts. Lets continue. Luigi and mark with us. Oming up on Bloomberg Television and radio, a conversation. With the leader third bank of cleveland will discuss. This is bloomberg. Tom, lets get straight to the Bloomberg News. Tesla phoeters delivered more electric cars than expected in the third quarter. He billionaires company shipped more than 24,000 vehicles. Musk implored employees to boost sales ahead of a plan to raise more capital. The Dutch Company phillips is in lighting ell its components division. Thats according to people matter. R with the earlier this year phillips scruffed a plan to sell the 2. 8 billion because of regulatory concerns. Nd google will reject Europian Union charges that it has a monopoly. Thats according to the sunday telegraph. Newspaper said google will condition within three weeks to three separate charges that it e. U. Competition rules. The charges involve googles business, Online Shopping and Android Phone software. Thank you very much. Appreciate that. Francine . We have a lot of news on brexit. The pound falling after the british Prime Minister who said brexit will begin by the end of march. Speaking at the conference, teresa may said shell invoke of the treaty to begin the process of taking the eu. Out of the anna edwards joins us from the conference. To have you on the program. If theres one thing to take what we heard over the weekend is that she wants to happy. Er party that will probably mean curbing up free on and giving access in the single market. Yeah. She does want to keep the party happy. So much so she had to stomp out her address justifying the need trigger article 50. Shes trying to appeal to people here in the room. And she got a standing ovation. Of people pleased with what they heard. Pleased. Es not very confederation of business saying the governments desire to play cards close to its chest must be clear indications of where trade equality. Right now we dont really have any clue about where were going. Timing of the process but not the destination. What are we hearing from Phillip Hammond . Were talking a lot. That he would put fiscal policy in place. Phillip hammond talking now at the party conference. But we were hoping to have much more from him on fiscal. Taken a step back. Yeah. Eople looking at him for any clues as to what cushion they can provide. We had manufacturing data early on today. Than expected. Saying mond himself thats great. Further down the line when we more details of the negotiation. What is missing here is what the to lookination is going like. Teresa may and her team refuse to recognize what they call a dichotomy between access of the a single marketnd rules around immigration. This together ven if the rest of 27 members of the eu will. They dont want to put those two together. I understand shes playing to a domestic audience. Who is she playing to in europe . Figure out who Prime Minister may is speaking to . Timing is e interesting, tom. Obviously triggering before of march 2017 means that this will come before any of the big votes that take europe. Many people have suggested ncluding the former chancellor have suggested we need to wait to find out whos going to leave others. Germany and thats certainly been one of the considerations. Bit from ard alile europe. They said europe welcomes the news. Obviously theres no prenegotiation, so no talks can tart until article 50 is triggered. That remains six months or so away. Let me use an american phrase here. How long does the honeymoon last for Prime Minister may . Well, i guess it depends how keep quiet nage to about where the destination is. Right now it feels like the u. K. Behind the wheel of a car. It has an idea of how fast it will be going. To drive that car. We dont really know where were heading. S long as they can tow that line we have to wait to see how long by investment holds up in that environment. Look, were ling me listening to business. We hear them. Want access toey the single market. Right now theyre not making any continue that with any kind of reality post brexit. An that, thank you very much. We hear you. You want access to single market. You want passport. You may not get it. We heard back to what from brexiteers. Nick herbert saying they resembled three blind inconsistent messages. Luigi zangalis and Mark Chandler. Me go to you because nuances. Rstand the that speaking to someone said theres only a 40 chance its verydoesnt stand unlikely we will get a chancellor chable. What does that mean for brexit . It would make it harder to negotiation. Reputationt chables would be very tough, very inflexible and would not make it Great Britain to find a way. Le luigi,t is the one thing, chancellor keeps saying, the uk brexit. Protected post if they lose access to a single market, how do you protect this economy . Not easy. I think in particular the Financial Sector which is very sector in the uk, desperately need passporting. To ink its very hard imagine that they will get passported with restriction on immigration. Think this is really the fundamental trade off they have to resolve. Well see what are the consequences for the uk economy immigration, no passporting. And so no access as far as are concerned. I think that in the trade of issue. Thats not a huge Mark Chandler, youve got dollar, all on strong weaker. Where are you in sterling one year out . Will till think sterling be making new lows. 115 to 120. Isually based on what happens to past shocks. I knew you were going there. Literature, only on mondays. But within that Mark Chandler is idea of what will that shock mean to the public and to the united ans of the kingdom . Not so sure what it means broadly but a couple things seeing. Already an increase in tourism into the uk. Cheaper for americans to go to than 30 years. Cheaper for the chinese to go as well. Another one of these services the uk can export. Not ly agree the wto, its like the uk is being cut off from the world. Wto protects them, trade, especially for goods, not so services. Lets come back. Francine . Reminder that they are booming. They had their best month in september. Weaker pound sent exports orders surging. For all of our brexit coverage can follow us on twitter. Welcome the add brexit. Awesome twitter handle. Brexit means brexit. This is bloomberg. Id also note the mexican peso stronger over the last having f days maybe with the to do trump clinton antics. In new joins us on set york. David, i know you have a show. What do you have for us today . We have two great global chiefeconomists. Eric neilson. Jp also have dana kelly from morgan. Were going to talk to him ab risk. Weve got fed moves. Elections in europe. Brexit. Ot nd hal shot very prominent professor up in harvard law school. Tom, you know him. Orld wide authority on regulating financial institutions. Were going to talk to him about an are we really safer than we were before. Thank you. Mark chandler and luigi zingalis. This comes back to your books. Moving average of Economic Growth is down to a gdp. Ning 1. 9 he bush eight years in a red circle. Half a sepbry. A given u jump start economy, professor . What we want is more kpe teug in the system. Concentration in america has tremendously. Lower it has brought growth. An more inequality. Competition short term is to fix the economy. That doesnt work when you have dollar. Ilege of really doesnt work for us. Im not sure about the exorbitant privilege. Ideally is the u. S. Would pay because of the dollar and the world economy, Interest Rates thats not er, yet true. The u. S. Is positive Interest Rates. Else. 6 versus everybody i dont know about this exorbitant privilege. Question e its not a of getting more people to work. Shared lem really is productivity. Eak productivity could be a measuring problem. Could be the rise in these new devices we have on our smart dont make us any more productive, yet more entertaining. Which one is it . Whether were just measuring differently or whether we have a problem. A suggests there could be combination of things. Professor measure classes . What about the dentist . If he sees ten patients instead 20 is she less productive. There seems to be something on. Ger going professor thank you very much. More. Continue this afternoon a conversation with a dissenter. Mester of the Cleveland Indians dissenting 3 15 p. M. This afternoon. This is bloomberg. Pulling the brexit trigger. He Prime Minister said shell invoke article 50 by the end of march next year. Deutsche bank drama. Lender looks to cut 1,000 jobs as it faces fresh charges in italy. For trump. Imes he won release any new Tax Information in response to avoided his ve federal income tax year for almost two decades. Welcome to bloomberg. Starting to form brexit. The these people are believing at the moment. Market reaction. In terms of volatility, pound havent seen it pick up one, three, even six months out. You have to wonder is there