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Lets get straight not to bloomberg first word news. Chris taylor riggs. Present here is taylor riggs. Taylor President Trump announced he will replace janet yellen as the chair of the Federal Reserve. Picture chose to have this for fed governor powell. But this will ease financial regulation. House republicans will unveil their tax bill today, and a call for Corporate Taxes to go down from 35 to 20 , but only for a decade. Estate tax would be faced out, and the Child Tax Credit would be increased to 1600. This can pass without democratic votes, but not not all republicans are on board just yet. Defense secretary Michael Fallon has quit over Sexual Harassment claims. Fallon fell short of the standard expected. He was a veteran defender of conservative part rate policies. Separatist leader of catalonia accuses spain of conducting a witchhunt against their colleagues. Carlos just a month and in selfexile. Had thiseadership for the declaration of independence, and could face 30 years in prison. Baseball, the Houston Astros their first world series ever. They beat the Los Angeles Dodgers 51 in game seven. Houston George Springer was named best player he tied a series record with five home runs. Global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. Im taylor riggs, this is bloomberg. Francine, tom . Tom thanks so much. Tom the household sharply divided over this. It will be interesting to see, major shout out to this of sea breeze, and the legend of baltimore, jim palmer, who told me in early april, watch the astros. The hall of famer absolutely nailed his call for a springer there, the global audience was extraordinary, also in the defense, playing in centerfield was truly most valuable player as well. Go with our most valuable. Was do this in honor of drum powell, presume to be the next fed chair. A little bit of weight after nearly morning yesterday. Pretty much unchanged. The vix with a nine handle back up to 10. 39. The but the tens 1030 spreading here. The 1030 he will bring you barclays who can address that. What do you have . Similar data check to yours. The slides on the next pick for the Federal Reserve chair, a dollar declining, treasury yields studying. European stocks are drifting. I want to show you pound rising ahead of the bank of england decision. Policymakers expected to rise. Im also watching oil. In listening to this earlier on trade oil falling a touch, as it seems you us crude start files declined. Dated check here. I will come over to the pen. The honorable Houston Astros pen. We need to do this and orange for the Houston Astros. Up we go with boosted productivity. Here is a huge decline down. The end of greenspan and yellen we are in this model here, and what is singular is how rare this is, to william szczesny martin. The productivity is rare and inefficient right now. Francine . Francine lets get straight to our top story. Thats the feature of the fed. President trump will announce his nominee, and we understand thats how is the next fed chair today. Thats according to four familiar with his decision trade Market Reaction has had to do with market expectations. Trump is expected to make a formal announcement at three clock p. M. Lets get straight to our guest host, who stays with us for a while. Is the current head of this strategy and joins us now in london. Its are you are on your own. Thinkingts right in that drupal is in line with what janet yellen had to do so far, may be cautious in the stimulus . Think thats right. Bernanke isetween one of is a great solace to the market. All things are changing, and we have some continuity at the Federal Reserve. The key difference is not during normal circumstances. Currently theres not much of a change. Think the things change, the next time we have a recession or crisis, how fast the new chair will be to adopt unorthodox measures, whether its Balance Sheet or yield target, like the bank of japan. This is more of a technocrat function. They will be bought out borne out. Mark, what do we understand drum powell, will see the banks . As you know under doddfrank, this name coral, who recently joined the fed, thats where the regulatory chart of the Federal Reserve i think powell is not that much different from yellen. I theres a lot of things hes been saying recently. Maybe there are places there where they can adjust regulation. There could be more rigorous regulatory environment, post crisis. Good morning. One of our jobs and form people of the past, Jerome Powell took to this announcement this afternoon, again, the presumed announcement. Theyre still in, Nicholas Brady with secretary treasury, and prop how into treasury. This is the first time that we have a fed chairman with true. Reasury experience is that going to mean a different dialogue on the dollar from our newly minted fed chairman . Federal think so, tom. A think hes been clear that the dollar policy is decided by the Treasury Department. The trump administration, its not recognized. Dollar isar that the regarding this factor, some the Federal Reserve cant control. Muchess analysis, very like how draghi describes the euro for the ecb. Within this policy, i know he watches surveillance every morning do we have a strong policy right now stronger dollar policy right now . Its not exactly the price of the dollar, lateral measures like euro are the dollar, but a strong dollar policy means that the u. S. Will not use the dollar to try to as a weapon to try to get Foreign Companies countries to open up trade policy like they had previously. Dollars, the u. S. Uses to lighten up the debt burden. Sorry. I think this is important. The wall street journal highlights the china policy this morning. The president , with mr. Navarro and mr. Ross, has taken a strong stance against traded traditional trade relationships with asia and china. Chairman powell is going to have to deal with that. Do you have a feeling about where he stands on a traditional relationship with china . Going thing i would say that ive heard powell say is t he is concerned investors are concerned about leveraging and debt levels in china. I dont think this is going to be something that they see powell move into. I think the Federal Reserve mandate right now is full of stability, it struggling to achieve full employment and financial stability. A think it believe china to the Treasury Department and state department. Of the same time, if you look at the amount of treasuries had by turkish held by china, it has risen significantly, in the last 67 months. What i continue will that continue . Thats an important question. China buys treasuries, because theres not a lot else for them to buy. Bond yields shy are just shy of 40 . In germany, less than a quarter of that. Its from the chinese point of view, their reserves if they have accumulating reserves again for the past 69 months, reserves go up. They buy dollars, treasury. Treasuries. This is not something we need to be concerned about. China has sold treasuries, and yields still fell. The best thing we can think about is whats going on in the u. S. And, of course, later today, tax reform. Thank you. Francine lacqua in zurich. We are thrilled to have mark chapman with us. Let me tell you about some of the events we will do here in eric nymex coverage. Announcement by the president of the United States for the chairman of Federal Reserves. Powell late in the Economic Club of new york, goes after the inflation a conversation at 2 00 p. M. With a former Philadelphia Fed president. This is bloomberg. Taylor this is bloombergs this is bloomberg surveillance Credit Suisse posted thirdquarter profit profits missing investment. Assets under management hit a record. Credit suisse has a will outlook for the third quarter. The bank sees a significant tailwind from strong global growth, despite geopolitical uncertainty. In italy, the central bank had two years before prosecutors say that this bank tapered over a lost one with a half 1 billion. Thats according to documents in a milan court case. Deutsche bank and others are on trial for trying to manipulate the market. The bank of italy is not commenting. This russian abuse being alledge worldlatform the Largest Social Network plans to boost spending by 60 . Ceo Mark Zuckerberg told investors that would cut into profits, but its a Good Business decision. Thats your Bloomberg Business flash. Tom, francine . Than 10 its been more years since the u. K. Has seen an Interest Rate hike. Thats the size of a backdrop for the u. K. Economy for political uncertainty. Because of the above target inflation that they are looking at this. The hurricane hitches outside of the bank in london. At this moment, first of all, whether they will have to reverse it. Their hedging their bets in case it on raise Interest Rates today. Absolutely. A lot of Fund Managers are hedging bets. Markets are fully pricing in that rate hike. That would be the first hike in a decade. Future passive rate hikes. Do you by rob wood think we are going to get a vote in favor of a rate hike today . The fact that the bank of ring not that the fact that it . Will, but should answer is no. Growth is weak, running at half its historical average. , and itn has peaked will next month. Wage growth is nonexistent. There is not too much to be generated. You dont hike it. Had into that the risks. Look in the papers this morning about carmakers demanding clarity on transition. See the reasoning. So you dont see the reasoning. What story do think they are going to weave around that how are they going to justify . . They say, hold on, we think the u. K. Economy has been so harmed by the financial crisis, that it can grow 1. 5 in a year. We roughly add that rate now. We need to fight to keep growth week. Hikes. A few not quickly, but a few. Storyk that will be the that they tell. In terms of a one and done today, or future rate hikes, what do you think is going to be the scenario . Will they be consistency and does . Between what it says and what it does, yes, its unlikely they will follow through with a series of hikes. Its one and done. In practice, i think it will be one and done. Its the story of the monster in the cupboards. Its always there, you always worry about it. Which growth is about to pick up. They will tell you a story that they need to be careful. That hasnt appeared for the last few years, its not going to next year. I dont think they will follow through. But yet, they do keep saying, we will get domestically generated wage pressures. In that case then, above target inflation, what will this be . Picked up on Service Growth isstash which here. The only thing picked up on service inflation, wage growth is also up. We will walk around to february may next year and be just at the peak of inflation. Where do you see it is moving froms at sterling . I think,s not what unfortunately i dont get a vote. Are more than i am spending. They are not going to say this is a one and done. Theyre not going to hike for the first time in 10 years. They wont say, no worries, no more hikes ever. Theyre going to say is this is the first of the series. Well go twice in the first two or three years. You are absolutely right. In the past, it hasnt really. We will happens. We have been here before when mark carney has pulled back. Wood, francine. Thank you so much. Fully ifas explained you look at inflation its gone up. It has riven. That was 3 back in september. Thats why we expected that jury we will have to see what it means for inflation going forward, of course, for sterlings statement. This coverageyou live in new york. We will go through your markets and much more. This is bloomberg. Reverse the big hike, or is it rsing the cuts in general, i would say its unlikely they will have to be replaced in the short term. Inflation, i expect inflation to come off. My best guess is that this is a one and done. Thank you so much. It will to come back and talk about terrific research. The unitedand kingdom really looking forward to that. This is going to be a wonderful interview. This he was considered without question, with a senior position. This is who we believe the next Federal Reserve of the fed will be, j powell. We go beneath the headlines trying to give you perspective for these historic moments. With kathleen hays. Tonight from asia with dennis fed. Art of the atlanta he is out of stanford and has a wonderful international bias in his analysis monetary economics. The morningt and in in asia. Here is taylor riggs. Taylor he is out president true to head the Federal Reserve is a former equity executive. According to people familiar with the matter, the president him today to head the central bank. Confirmed he would replace janet yellen. This aspect in the new york city terrorist attack should get the death penalty, the president tweeted. Earlier, the president asked congress to in the visa program that allowed the suspect to enter the country. Thehe u. K. , a victory for Opposition Labor Party over theresa may. Parliament voted to call on her government to release 58 sectors of the british economy. Labor has been demanding the studies for months. Some conservative Party Members do not consider the vote to be binding. The economic form says the gap between achievement and wellbeing of women widened in the past year, the first time it had happened in the 11 year history of the Global Gender Gap report. Global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Francine thank you, so much. Propelling assets under management to a record high. Profits at the Investment Bank ceo accelerated as the began shifting the bank to focus asset asia pac management. He said he was cautious about the future, but overall is pleased with his performance. Not what we will convey quarter ishe third not a very positive statement. It is very difficult. Tricky situation to describe. Icbm. Good in the environment is out of your control, the fed, the Central Banks. Francine on Wealth Management , is there a particular part of the business doing better than others . Asia astrategy in billion in the last quarter. Same thing. It this morning. What they request from us. We get this move by lending. Providings by comprehensive services and deepening our relationship. Running around acquiring new accounts, we are working in quality. You have infrastructure and operating leverage and sell more to existing clients, that is great business. It is not risky. For 10e the relationship to 15 years, it is very healthy. There is the Credit Suisse ceo speaking to me earlier on. What did you learn from Credit Suisse today . Two to threet years out of the organization, what the focus was next, and he was coy, saying at the moment, steady as they go. The main takeaway is the strategy seems to be on track. If you look at cost, they outperformed and are on track to year. R 3 cost base this net new assets outperformed in all three regions. The drag from the noncore strategic resolution unit, that is coming down, come down more than half next year. They seem to be delivering on all fronts at this time. Francine i asked the ceo about an investor. S he owned 0. 2 , it might be tired now. He said he is friendly with all shareholders and looks at all proposals. Is there any sense of what active shareholders are asking . At this point, probably not. If you think about what spinning off an Investment Bank means, you have to raise funds. Who will fund a p reply Investment Bank in this market . Credit suisse performed better than most of its peers this Credit Suisse performed better than most of its peers this quarter dont think iti makes sense to spin off in Investment Bank and do that. The current strategy seems to be working of leveraging ultrahigh Network Clients and a serving them in the Investment Bank. Tom trying to do a ubs or morgan stanley. I get it. Bring up the underperformance of Credit Suisse, showing the immediate urgency for credits we send many other banks to move out of 12,007, the move out 007. Under at barclays is terrific pressure. Then you have the idea of ubs doing well, and Credit Suisse doing extremely poorly. What is the sweat level . I think one of the key issues that Credit Suisse is facing is the fact that there is a little miscommunication initially. They had to go back on their targets, which were too optimistic. That explains a lotthat explaine underperformance for the last couple of years. I think the strategy seems to be working. No issues there. Both of them are heavily geared. They don have other businesses to fall back on. In the case of Deutsche Bank, it is a very fragmented market. Their Asset Management business, which they are trying to scale up, is still subscale. Is the idiosyncratic issue for credits lease . Barclays, what is the distinction of her Credit Suisse has to do . Credit suisse has to deliver a net new asset flows. Wealth asset has to continue to deliver, especially in asia. Called and into the Global Market restructuring and are on track to deliver better revenues of 6 billion a year for next year. The other big thing with Credit Suisses next year we are going to see a significant dropoff in the drag from the strategic resolution unit. If you think of the pretax losses from that unit, it is over 70 from Group Pretax Profit at the moment. That will significantly drop off next year. They have maturing posole funding maturing wholesale funding. When that drops off you will see a significant increase in profits. Tom brilliant on some of the distinctions across european banking. The backdrop is the euro and the dynamics of the european economy. Is with us as well. All liver, all of these bankers, with the sweat of their system, have to have a good european economy. What is European Growth from next year . Oliver we think European Growth is one of the strongest drivers. We think German Growth was given by domestic demand. Export demand, as well as a eight we think European Growth could be the main locomotive of global growth. The u. S. And china have had their moment, but we think that european could be stronger. Tom let me talk to mark chandler. Chandler. What is the euro level that Deutsche Bank needs, etc. Etc. . Im not sure the currency level be the panacea for Financial Institutions in europe. The euro is Strong Enough that experts are strong not only in germany, but other countries, like italy. The real thing for europe is we got through, the ecb qt operations, and i think it is the politics coming back to bear. It has been a positive political story in europe. Election put in a floor and merkels election carved out the top. Focusing with a new chairman likely to be named come the ecb is a twoyear process in which the Top Executive directors, a big location that the ecb beginning in the middle of next year with the Vice President of the ecb, it will go from 2018 2019. Many top positions in europe will change. We will have a postcrisis europe with different changes in european commissions. That is in the next two years. Tom sounds like the stewards after the tudors. Theng up, the wealth of United Kingdom. You are getting briefed. We will brief you on the new fed chairman with exceptional guests. Theadio, depressed over dodgers, ecstatic over the astros, bloomberg daybreak asias to coast. In houston, houston strong. Bloomberg radio. Francine this is bloomberg surveillance. Francine from zero a k new york today. Tech earnings, that is in full swing. And new yorkh today. Tech earnings, that is in full swing. For more, our tech editor joins us now in london. First of all, away from the results of facebook, and we need of the at apple, a lot tech guys 48 hours ago, this is usually a privilege reserved for bankers. More of the same today . World for theew tech executives. They sent their top attorneys before the hearing and they got an earful. Lawmakers are looking for more answers about how misinformation is spreading across networks, and what more companies can do to prevent it. There is not an easy answer. He gets to the core of how the networks work. Facebook puts material on the website and it is shared around. That is being manipulated. How they are able to reign that is, it is going to be a challenge. Francine what comes next for facebook . They willbook says put more effort into this area. Mark zuckerberg during the Earnings Call said he is going to be hiring they will have in000 people involved monitoring this material. You can see on the one hand the lawyers in washington are getting grilled by the ,awmakers, and Mark Zuckerberg otherwise they are reporting outstanding results. Theyre showing that they will try to put these efforts towards it. Whether it will be effective, we will wait to see in the months and years ahead. Tom maybe 20,000 people will be lined up for the apple iphone x. Do you see any idea of margin whatever andthe the x. Is their margin erosion predicted for apple . Adam it is with the higher prices. It will be negligible. Some think it might go up. We would get their first preview today. A lot of people are anticipating these results. It will give a window into the which willnd the x preview up into the holiday. Fascinating. T especially over whether it is x. Le 10 or apple that a loan is confusing for the branding. I noticed in the apple ad in the world series, the first thing chip. Ent to is a bionic is it that much of the bigger deal where Francine Lacqua will apple x. D an will she say that . Chip inside see the come it is really something. Apple has been investing for years. A lot has gone into the process. It is the engine that allows for a lot of picture taking technology that it has been developing, and other things that allow the phone to work at the speed it does. The chip is a differentiator. There are a lot of good smart phones on the market. It is a rectangular piece of glass. You need to differentiate yourself from others. They say the chip they have so you wont edge buy from samsung or what google is offering. Francine im so confused. I dont know if it is the Iphone Iphone whatever it is. I want to talk about voice recognition. We will probably all have one in our studio and living room. Chandler and Oliver Brennan stay with us. Of all i know is two out five kids have had their phones break in the last week and a half. How about this for your morning briefing . Is a very good briefing on the morning. Live. What is important is you can click on charts to dazzle common dazzle i say, dazzle your staff at your 10 00 meeting. This is bloomberg. Taylor this is bloomberg surveillance. Lets get to the Bloomberg Business flash. Tesla has not figured out how to overcome production problems that threaten viability. They will make 5000 units they will not make 5000 units a week of the cheapest car until march, five months later they originally planned. Royal dutch shell has taken away the crown from exxon mobil. They generated 28 billion dollars of cash flow from operations for the first nine months. That was bolstered from assets acquired. Shells thirdquarter earnings were better than expected, rising 47 . Ining its boldest move china. The Israeli Company plans to set up a venture to sell generic drugs. We are currently in talks with Many International companies were international partnerships. We are close to seal a joint israel deal with teva in. They want to make use of the chinese Regulatory Framework that allows parties without manufacturing facilities to also hold drug approvals. Is the Worlds Largest maker of generic drugs. Tom thank you. Oliver britain and marc chandler. We showed this a lot in june and july of the year ago. This is the current account deficits of the United Kingdom. Up year, services and goods with a nice rebound, currencyinduced. Then a very good rebound. All of her, you have written a note on what this means for the oliver,kingdom all o you have written a note on what this means for the United Kingdom. Is it wealth destruction for the United Kingdom if they dont get currency adjustment to even out the flows . Liver yes the short answer is yes. The current account deficit, nearly 5 . As mark carney said, europe relies on the kindness of strangers. In the past, that was fine. Strangers went to the u. K. As a safe haven. They created a new class of with the European Assets for euro investors, which moved into the u. K. You can see there was a spike in assetround the time the Purchase Program started from europe. Now the opposite is taking place. The market doesnt need safe havens and the ecb is reducing asset purchases. Where there was previously a plethora of strangers, now there is less. The u. K. Needs to fund a 5 deficit. The trade balance hardly moves in the last four to five years. It has been independent of the currency. A weaker currency hasnt helped adjust. What we need instead is a higher risk premium for investors. Tom the sterling chart, which going back to the 1970s, has been longterm dollar strengthening. Here is the little rebound. Sterling in a longterm is sterling in a longterm weakening . Is hard to talk let the longterm. When you look at a cat like that and you see sterling falling since the end of world war ii. A lot of bad news for sterling is priced in. There is uncertainty about brexit. Pricing inhas been the rate hike expected today, but sterling hasnt done well until the last couple of days. Did you big drivers of sterling, one pricing in is the external account in what is going on with brexit. The other is the domestic Interest Rate policy. The currency weakened more than the Interest Rates would have suggested. When i look at ithe other is thc interest Interest Rate differentials, i see it widening, but not with the u. K. Tom greatly appreciated. We will continue this historic day for the fed. This is bloomberg. Tom he said hopefully he will do a fantastic job. This afternoon President Trump chairman, a new fed Jerome Powell, the first noneconomic thd and years. Years. In in london, a boe decision. One hour later the governor will as a real wage growth is negative. It like Everyone Needs to upgrade to the new toy. This is bloomberg surveillance. Live from our World Headquarters in new york. I am tom keene. Zurich, Francine Lacqua. Do you get to have three passports . Francine what you are trying to get at is if i have my italian passport and forget my italian passport, but if i was a brit, if i we now understand is am british and i only have the u. K. Passport that may decide i get to stay in the eu if i am british and ithey may do a dl allows you to travel in the eu. That doesnt seem very brexit to me. This was a european proposal to start with. Tom another wrinkle. Maybe mark carney will chime in. In new york city, our first word news, here is taylor riggs. Taylor President Trump will announce he is replacing janet federals chair of the reserve according to people familiar with the matter, his pic is Jerome Powell, a former whoate equity executive sympathizes with the white house calls to ease financial regulation. Top republicans will unveil their tax bill, calling for Corporate Tax rates to be cut to 25 for a decade. Tax credit would increase to 1600. It can pass without any democratic votes, but not all republicans are on board yet. In a u. K. , Michael Fallon has quit over Sexual Harassment claims. He says he fell short of the standards expected of him. He was a veteran defender of conservative party policy and seen as the potential Prime Minister if theresa may stepped down. The separatist leader of catalonia accuses spain of a witchhunt against him and his colleagues. He remains in selfexile in belgium. The entire leadership faces accusations and could face 30 years of prison. He calls it a political trial. In baseball come the Houston Astros have won their first world series ever. They beat the Los Angeles Dodgers 51 in game seven. Springer was named most valuable player, tying a season record with five home runs. This is bloomberg. Tom thanks so much. Shout out to julia coronado. Eggs Federal Reserve chair in dallas. Over the static astros. To guess to drive forward the discussion. Futures that negative three. The next scene, the basic idea 114. 10. En francine . Isncine what im looking at the dollar dropping a touch because of Jerome Powell. Bonds slipping. Barrel asg near 55 a crude stockpiles seem to be resuming their decline. Tom we would like to begin a discussion, we help an intelligent discussion, on the next fed chairman. Presumed to be jerome jay powell. Russ, is this going to shake the markets . Is it already priced in . Russ a little sigh of relief from the bond markets. Rates of putback despite strong economic data. This represents continuity. A little history. We can do this with michael mckee. Here is a speech from 1978 by g william miller. My major message is that jay no william miller. I went back and read the whole thing. The wall street journal headlined with william who . It is now my ambition to qualify for a similar headline for years from now. All that is required is the will. United, we will accomplish them all. Sound like anyone within the modern fed. Michael he was the last one that was a noneconomist to chair the fed. Miller lasted only a year. Francine what do we know about where powell stands on the regulation side of things . Michael you might call him regulation light. He believes in regulating the financial industry, he came out of the financial industry, but not someone that thinks you take take a heavy hand. He has proposed changes to the dodd frank law, including raising the cap of how big a bank has to be before it gets extra regulation. Modifyingked about the full rules so that smaller investment houses are not subject to the same rules. Those without big trading books. He talked about giving banks more transparency on stress tests. With they might learn from the fed about how they will be judged to help them frame their test results. He wants to make some changes. He also worked with the new fed vice chair for supervision at the Treasury Department. They have known each other for some time. The regulatory side, they should work well together. A done deal,it now Jerome Powell . 4 sources andom many Media Outlets have it. Is there anything that could derail it . 4 sources and many Media Outlets have words f, donald trump. No one knows exactly what will happen in his administration. We do expect jay powell to get the nomination sometime officially today. Francine when you look at dollar, what does it mean for here . Russ youre seeing a little bit of the upper pressure on the dollar coming off. I think this is more discounted into the market for the last few weeks. What i expect is that the dollar again on thede economic fundamentals and the prospect for tax cuts. The focus is on washington, but more on Congress Rather than the feds. Tom i used this with bill gross. With you. Rt this is the path from voelker, 12 to 15 , and the great moderation. This has been a luxury from greenspan on. Do you assume the great moderation continues for a chairman powell . Russ the Underlying Forces that have created the great moderation remain in place. Chairman powell probably represents continuity with the. Ellen bernanke fed mr. Powell is inheriting the withdrawal of monetary accommodation, shrinking the Balance Sheet. Whoever is the chair of the fed, it is unclear what impact that have. Tom the amateur reports we have a remarkable have. Quiet which rosenbergjeff study at black rock. Do we have any understanding how ven aphd chairman acts given vix of 30 or 40 . Michael the good news is he is from wall street. He can probably be the calm voice you are looking for when something happens. What policies does he adopt . Show thisill throw throughout the day. I went back to powells Economic Club of the u. S. Speech. Can you bring up the powell speech . This is the Economic Club in new york speech. This is the way the guy talks. My baseline expectation, i would view it as appropriate. Staff. To the phd the next slide shows. At the bottom he crushes mike mckee and myself. Some commentators predicted have not come to pass. This is the language of this guy . You would have to sit there with a textual analysis of what he says. There is a tradition of intentional Office Duration when youre delivering these speeches. Tom it is interesting to go back. Michael he was very and saying what he wanted. The interesting thing will be this is the devolution of the fed. You had ankles, martin, paul volcker, alan greenspan, they the fed. Economicsanke the, credentials, people have to make it a Committee Decision and corral everybody. Russ exactly why the market has been so calm, the market assumes the policy and an early powell fed will be the same as a late yellen fed. Exciting is an historic day. We will show the white house, maybe they will be in the rose garden, but an informed discussion. Smart discussion only on bloomberg. Tom good morning to our international audience, with us for this historic day of the Federal Reserve system. Perspective. Ve us is a historic day. We were talking about the idea of a nonphd economist. New saidto what the will be. New said will be. How will that meeting go . Carl consistent with the has persistedthat under chairman bernanke and chair yellen. We will see the same of that where there is deference to the inhouse staff forecast. About jayore i read powell, the more i like the guy. Georgetown prep to princeton, then back to georgetown law. The collegiality drifts away win the treasury goes out for standard deviations. Do we have any indication of the new fed under crisis . Russ there are a lot of empty governor seats, so we dont know what the new fed under crisis will look like. 2018 is more hawkish tilting, governor look at powell and his past speeches, he is very much consistent with what the yellenbernanke modus operandi. The same approach to that toolkit will continue under a chair powell. Does the new fed governor need to get along with china . Does it make a difference for how much of a buyin treasuries . Carl absolutely critical will be a cooperation between the two Central Banks. That doesnt mean that will betion, and there tough rhetoric about trade policy no doubt. Having a Clear Channel of communication could be helpful at a time when potentially after next years midterms President Trump is readdressing some of the outstanding trade issues. A very significant trade deficit with china. Francine do you think it is likely that china is a little bit of a surprise . We were expecting china to cool off the treasury buying, but it is quite risky. Treasury buying, but it is quite risky. Will that continue . Carl the issue with china is they are trying to make a transition into a more serviceoriented economy, more growth driven. Any time growth wobbles they resort to the old playbook, which is export powerhouse and domestic construction. If they are going to depend on exports as a major driver of their economy, they need a week currency. A weak currency. Jumping in with a set of Carl Riccadonna questions, we times. Own this many the blue circle is the election. A steeper yield curves common life is times. The blue circle is the great, ws powell comes and we are at a critical point on the curve. What does a flatter yield curve signal to black rock . Russ normally you are a little concerned. The curve flattened and is it a precursor to recession . That is not the case. The market is starting to take the fed more seriously. Youre seeing the short end of the curve move higher. The lack of inflation and continued concerns of longterm Growth Prospects means the long end is not in sync with the short part. A stunning 1. 4 percent gdp. Tial gdp. What is potential gdp and what does that mean for a potential fed chairman . Carl potential gdp might be higher than that estimate. It could be closer to 2 . Think the is i dont low productivity numbers we have seen, there are 2 main drivers. One is population growth, the other is productivity growth, which has been think the low productivity numbers we have k. En, there are wea just because it has beenk. Just because it has been weak for the last eight years or so doesnt mean it will be for the foreseeable future. We are seeing wage pressures pick up. We saw it earlier this week. As wage pressures pick up, businesses will boost productivity growth and we will see a return to more translike productivity, and i mean in the last 50 years. It. Will watch they wont use it. Carl riccadonna, u. S. Chief economist. We want to inform you about the new fed chairman and how it links into washington. Carl riccadonna, u. S. Chief economist. Very wise not only on economics. Also on the fed and the. Nternational snapshot from bloomberg daybreak asia, Dennis Lockhart later this evening. This is bloomberg. Tom good morning. Bloomberg surveillance. Zurich. Lacqua in an important interview with the Credit Suisse ceo. We will have highlights within the hour. Lets go nonfed with kevin cirilli. Life goes on. Life means tax reform. With think tax reform is on life support. The math doesnt add up. How much does the math not add up for kevin brady this thursday morning . Kevin this is not everything the president and Republican Leadership wanted in the bill. The administration, this is their last chance to get a legislative win by the end of the year. We will get this by 9 00 a. M. This morning. They want reduce taxes for the top 1 . It is a significant tax cut for companies in the middle class. They are all in in terms of getting this done by the end of the year. Tom what is middleclass to republicans . Kevin we dont have the breakdown of brackets yet. That is a huge question we will be following cleanly get the bill and start crunching the numbers. Tom look where we are in this. The idea of racing to the end of the year. The president wants to do that. It is november 2. Are we assuming 2018 . Kevin next week is the house markup. Then senator bob corker, who is no fan of this administration, is saying the senate will release their version of the bill. After that around thanksgiving they have to vote on this in the house of representatives. That is the timetable for when it would be in the senate. We are racing to the end of the year. Most folks are saying if they cannot get this by the end of the year this is a Republican Party in dire need. They need this win. Kevin, first of all bring us uptodate with the russian investigation. Focus the attention on something positive . Are kevin first of republs trying to keep the molar probe out of this. Several prominent republican very concerned of the scope of the russian investigation. Speaking to senator collins, she was very candid. She does not think the probe and the issue of collusion will be settled by the end of the year, with or without tax reform. Tom thank you. Greatly appreciated in washington. Let me show you the new Bloomberg Businessweek out today. It nationwide. It is getting a nice buzz among the younger crew. It is a great read. Front and center, central banking. Stay with us. This is bloomberg. Francine this is bloomberg surveillance. We are just getting some davis, a from david brexit secretary talking in the house of commons where he is being grilled by lawmakers. Is notaying no deal probable. His tone has shifted. What im hearing is a little softer. He is saying there is less probability of a no deal, but however even if something deals ine does expect data, nuclear, and aviation. He says they will be transition which will give time after brexit negotiations are made. There is muchf reaction on sterling, you will have to tell me by looking at your charts. The market is getting ready for the first Interest Rate hike in 10 years. Here is taylor riggs. Trumps choicent to head the Federal Reserve is a former executive that favors gradual interestrate raises. He will nominate Jerome Powell today to have the central bank. If confirmed, he would replace janet yellen. President trump says the suspect in the new york city terror attack should get the death penalty. Earlier, the president asked congress to end the visa program that allowed the suspect to enter the country. Has parliament voted to call a maze government to release brexit tax studies on the 58 sectors of the british economy. Labor has been demanding the studies for months. Some conservative Party Members do not consider the vote to be binding. Global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Tom thanks so much. A discussion on in disinflation, may be even reinflation. The head of Global Market strategy joins us looking at inflation or a baby bring up a chart, which is one measurement. Of fiveyeara forward rates, draghi with euro sclerosis. Chairman powell may be middle of the ground in this absolute unique separation of the character of inflation in the United Kingdom. What is the character of price change in britain . It has been high relative to where we are in the u. S. And europe. The markets are priced for that. That is why we expect rates to because today, inflation is about where they want it. In the u. S. , and remains low so the fed remains relatively easy. A big part in the move up in u. K. Inflation has been because of the move in sterling from last year, postbrexit. We dont expect it to remain high. This could be a policy mistake. Tom lets rip out the script, this could be a policy mistake. That is a lessening of confidence if we see a policy mistake today. Is blackrock looking at this as one and done on the u. K. . I would agree on the policy mistake, but that it is largely weak sterling. Whether the underlying inflation francine michael i, would you wait to hike Interest Rates, or would it be good because it would be a reversal of the cut from last august . Michael in the near term, our job is to predict what they should do what they will do, not what they should do. Inflation is high and the wage growth is low, that will hurt the consumer and eventually growth flows as a result. Fed. I want to get to the there was a currency adjustment, a massive political event. Or areclays place chips the politics selling certainly up to do would be learned in the textbooks which is step aside . Can you bet . There is unusual uncertainty because of brexit, but that doesnt mean you cant take smart risks. You just need to be cautious and watch the negotiations. Francine we are getting breaking news out of the u. K. After the defense secretary left amid scandal. This is now the u. K. Prime gaister theresa may naming vin williamson. You must be in the prediction of deciding what Central Banks should do. If they get it wrong and they reverse it, that will underpin anything the market wants to see. Longerterm,ook at we should think about what Central Banks should be doing. In the u. S. , the fed has been tightening for some time despite that inflation has been low. We think they are risking credibility on their 2 target because they are hiking when inflation has been bulldozed their target. Have comeexpectations down as a result. We expect longer Inflation Expectations will remain low as long as inflation remains low in the fed is tightening. I was talking about the boe. When you look at credibility issues they had i was talking at the . There is that concern. The central bank is looking at it from a risk perspective. Inflation is high and growth has been decent. The labor market has been strong. Wages have not picked up. They need to be quite cautious. Tom switching over to the u. S. Analysis. This is a fabulous chart. The inflation of target rate. The yellow circle is stan economic speech at the club of new york. J powell will enter the door. He is still very accommodative with a negative fed funds rate target rate right now. Russ when we think about what is happening in equity market and why it is grinding higher, part of the reason is the change in fed policy, monetary conditions, and broader financial conditions are accommodative throughout the world. I guess that is out the door. It was great for a while. You,ssumption is pros like ngethe way, astros ora today, i know powell does not care about this stuff, but his phds will. What is the urgency to get back to normal and the rate environment long ago and far away . The labor market has been tightening from 4 because of the accommodative monetary policy. Given that growth has been above trend, potentials closer to 1. 25 rather than 2 , if the fed remains accommodative as slack is removed from the labor market, they worry that financial conditions get too easy, stocks are overvalued, and they are worried about bubbles. About 1. 25 potential gdp. Carl riccadonna wanted to be more optimistic because productivity will come up. That is the soup chairman powell will face. Francine if you look at the eu and u. K. , everybody has their soup, it may be a different flavor. Inflation expectations worldwide, lets leave the u. K. , expectations to the 3 we saw a couple of weeks ago, and onlyake china china that can export inflation to the rest of the world . Michael they were a deflat 20142015, but it has rebounded. We are seeing the impact of chinas stimulus in metals and iron ore, copper since late 2016. We are seeing the inflationary force. Import prices have been rising rather than falling. It has not been enough to push domestic inflation higher, yet anyway. Francine thank you. Michael pond of barclays. Russ stays with us. Stay with bloomberg for full coverage of the boe rate decision. This is bloomberg. Taylor this is bloomberg surveillance. Lets get the Bloomberg Business flash perry tesla still has not figured out how to overcome production problems. The company will make 5000 of its cheapest car five months later than planned. Pharmaceutical is making its boldest move yet in china and. They plan a joint venture to sell generic drugs. Bloomberg spoke with the chairman of the chinese drugmaker. In talks currently with manywith Many International companies were international partnerships. We are very close to seal a joint venture deal. The want to take part in chinese Regulatory Framework that allows companies without manufacturing facilities to hold drug approvals. Taylor teva is the largest maker of generic drugs. That is your Bloomberg Business flash. Sses credit products at the Investment Bank also accelerated. This comes as the ceo shifts the bank from volatile trading to something more tangible. However, he told me he is cautious about the outlook for the market. It is difficult. In october we have not seen a fundamental change compared to conditions over the third quarter. We have seen that connectivity. This we are very cautious moving forward because of uncertainties. Francine any cost cuts or layoffs . We are close to the end of restructuring. Four point 8 billion by the end of 2018. We will be around 4. 9 billion. Close to the goal. Francine two years into the threeyear plan. What is next . Next year . Next year is concluding the plan. 12 aid we would grow 11 or sequentially year on year. Margin is up 20 in two years. We said we would cut costs. We are on track to meet those targets. We talked about q4, it would be two thirds less. It would have been one third two years ago. Comparable, but we are running risks. Capital is very strong. You had properties up 29 . Francine what is left . 17 billion. Now he 11 by the end of 18. Were close to the goal. A lot of derivatives. ,ou need compressions counterparties. He number of trades and loans. Byncine were joined bloombergs london finance editor. When you look at Credit Suisse and what he was saying, they have an activist shareholder trying to get 0. 2 . Trying to get spinoff with the Investment Bank and possibly the Asset Management. He was clear when i asked him. He says we treat shareholders fairly. Does it even makes sense . At these results, he would argue it doesnt make sense. He was for twice with you. He doesnt sound like a man that is gearing up for a knockdown drag out activist battle. This activist does not own that much stock. Andtruck a friendly note said he would meet with him from rvr cabr capital. Francine the bank that is getting the most in todays trading session. How does it look. They seem to be doing progress, but they seem to be looking better than some of their peers. Comparison to the Deutsche Bank and barclays, especially this quarter that had a tough reception. If anyone remembers, nay be a and mr. Cryan from Deutsche Bank, we were wondering coup was in more trouble with their restructuring. Whowould have wondering lives in more trouble with their restructuring. You would have to argue Credit Suisse is doing better when the numbers come in. And the new assets from asia hist paying off for strategy. He did not sound like a man under siege on the conference call, which is not something i would have said may be a year ago. Francine this is thanks to the repositioning towards Wealth Management in asia . It was not only asia, latin america also has good numbers. That new generation of chinese entrepreneurs out there, as they have Capital Market needs for their companies, they will be private to be more banking services. He has driven this home again and again. As long as the new assets keep a lot of, he will get leeway. One of the analysts i was looking at, they were concerned on cost, but as long as these assets come in at this rate, no one will care that much. They will be more happy about the assets and less concerned about the cost. Tom is the board behind mr. Andm, are they separate impatient . What is the makeup of the Credit Suisse board . Bloomberg surveillance. You dont hear a lot of noise as far as that goes. He is on board with the current strategy. That is quite a bit more than this activist investor. Tom keith campbell, thank you. The briefing finance editor from bloomberg news. Your briefing for the moment. London and blackrock. Astros. Celebrating the tv , your morning briefing. This is very good. You are sweating, you are under pressure, you have to go into a meeting and impress. Them. 30 a. M. , dazzle go to session, bring up the chart and you can steal the fiveyear chart to dazzle him. This is bloomberg. Bloomberg surveillance. As story today in washington, a new Federal Reserve chairman. President trump or make that announcement in the vicinity of 3 00 p. M. We will have deep conversation on what is presumed to be the first nonphd economist and 39 years. Uniqueness of Jerome Powell. The elephant in the room for chairman powell, speaker ryan, Senate Majority leader mcconnell, and i would suggest the president of the United States, deficit to gdp. Ugly, isthat is pretty this going to be the backdrop of a powell chairmanship that overwhelms every discussion . In the shortterm, no. In the longterm, probably. This has not put pressure on the bond market recently. We know the demographics start to drive a structural deficit in the u. S. When you add to that tax cuts, possible possible. Tom how do you frame cost to is reform that with quotes around it. Get to different numbers based on assumptions you make about growth and offsets. These are fuzzy numbers. You have to treat them as an opening bid. We have to understand where the cost cuts will come from. Francine if this gets put to bed, what is one thing it impacts . Gdp . If so, how much . Impact to gdp is probably modest. If youre talking about a 1. 5 trillion tax cut in context of a 20 million economy, this is probably going to be what i call a sugar high. It is going to help gdp in 2018, but not looking at the longterm structural reform that causes me to change my longterm estimate for potential gdp. Tom that is my lesson for the day. Fuzzy numbers. Francine lacqua in zurich. Thank you so much. 2020, smart conversation as we have a former Philadelphia Fed president. Trick to good hat start with. Go astros. Jonathan that the president is set to be ready to nominate the Federal Reserve governor as a next fed chairman. A tax bill that would cut the corporate rate to 20 . The yearend rates for a legislative win continues. The bank of england and governor rates is expected to hike for the first time in over a decade. For our audience worldwide, this is bloomberg daybreak. Desk. Teel is back on the alix missed you guys. Jonathan futures are a little bit softer area down by about two points. The bank of england decision and payrolls friday and the tax bill as well. Treasury yields go nowhere. In the fx market, a weaker dollar story against pretty much everything with the exception of one currency. Alix im watching that as we get into the boe

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