Disaster for a japanese steelmaker. Japaneseng for the manufacturing sector. The imf puts out a sunny growth forecast. While we see the sun shining, we also see clouds on the horizon. Worries. Mc i am really nervous Inflation Expectations are low. We are not trying to address all of the relative price changes that occur in the economy, we are trying to get the underlying rate. Plus, economists consider the conundrum of tax reports. Growth will pay for part of it, not all of it. You might as well assume unicorns will come deliver packages of money. There is no reason to believe this. There are miracles, sometimes productivity growth picks up. And for reasons we dont understand, but it happens. That is all straight ahead on bloomberg best. Michael hello and welcome, im michael mckee, this is bloomberg best, your review of the most important Business News and analysis from around the world. Now, president Donald Trumps legislative agenda was going to be a big story no matter what, but monday dawned with unexpected clinical fireworks. Political fireworks. President trump made an interesting choice over the weekend. He can afford to lose only two republican senators if he wants to get tax reform done, and he decided to pick a fight with one of those senators. The president blames bob corker for the iran deal. He didnt run for reelection only because he wanted the president to endorse him. He wanted the secretary of state job but did get it. Senator corker compared the Trump Administration to a reality show, that the white house was a Day Care Center and the president s threats could against other countries could put the country on a path to world war iii. If you play this forward in terms of tax reform, every vote counts and senator corker, not the most fiscally conservative member, his raising the fiscal issue really is in line with what some members of the far right in the senate have also been saying and that poses Political Risk for tax reform. President trump also demanding Congress Fund his border wall in exchange for letting dreamers stay in the country. How much more of a distraction will this be . It will be another distraction. Chuck schumer and nancy pelosi said that is a nonstarter. When you look at the polling of vast majority of americans, they support a clean daca bill that provides protection. It is going to be late laid at the feet of the republicans if it doesnt happen. A crucial moment in the crisis in catalonia. Catalan president is set to address lawmakers in barcelona just moments from now. A lot of anticipation in that chamber. We are not sure on the wording he is going to use. We are not even sure of the format parliament might take place. We are not sure if the opposition mode get a say here. We do know they have a majority in parliament and if they want to an act this law that could create an independent republic for them, they have a majority to do it and can get it done. The question is if the president will use the word unilateral, or back out last minute. The government is proposing that the parliament should suspend the effectiveness of this declaration of independence in such a way that in forthcoming weeks, we can undertake a dialogue by which there can be no agreement. So we need to open up a time period to have a dialogue with the state of spain. That is Something Else that should be done today out of responsibility. Mark spain maintaining it is ready to seize control of catalonia if the push for independence continues, if rajoy said catalonias efforts to break away from the rest of spain are fraudulent and fruitless. It cannot go ahead by that amount of people. Yesterday, the catalan regional president made the symbolic move, he said i ready am to accept the mandate. Catalonia was an independent republic, but he will suspend the talks. Rajoy says there is nothing to talk about. This is a fairytale. He is ready to implement article 155. Time is running out and he is running out of options. His coalition will probably implode if he backtracks. If he is ready to continue, oy willis republic, raj implement this article and he is out of government. The fed released minutes from its september medium showed growing concern that low inflation is more than a passing fancy. Policymakers said another rate hike this year is dependent on the Economic Data of the next few months. Policymakers are taking inflation backslide more seriously than they were earlier this year when they were quick to write it off as transitory and idiosyncratic. Now they are pondering whether part of that weakness might be not to do too much broader global trends. That means they are hedging hinging their decisions to hike on the next couple months of Economic Data. They also acknowledged that the hurricanes are going to model those reports. Bit of ain a complicated position. What is interesting here, as we look at the roster of who will be at the december meeting, there are about four or five , whichhich doves means im not totally sure chair yellen will have the vote count for a rate hike. Jpmorgan and citigroup kicked off her quarter earnings season, plunged while cities Group Citigroup saw a decline in revenue. You did have good Topline Revenue growth this quarter, but with au balance it out weak capital market, you are getting no Revenue Growth. Maybe 1 or 2 Revenue Growth. If you look at loan growth yearoveryear for 52 weeks. It has dropped from High School High digit growth to maybe 1. 3 of growth. If you look at activity in the trading market, it is anemic. We did get cost control. Both city and jpmorgan coming in very well on that metric. That is important because as the revenue environment becomes uncertain, you want to know banks are doing what they can to protect profitability of the firm. The fact you can bring down costs and become more efficient. Obviously, that provides more upside as the revenue picture improves. Bank of america posting its best profit in six years, higher rates helping there. Wells fargo takes a surprise 1 billion charge for precrisis mortgage probe. The metrics we monitor for these banks came in very positive for bank of america. Were also pointing out that the expense control of the bank of america is quite strong and they continue to focus on reducing expenses to a 50 billion number for next year. The wells numbers, on the other hand, they obviously had the one time charge that we took out. The Revenue Growth was not as strong as some of the other banks as they continue to work their way through the scandal they have been dealing with. President trump has disavowed the Iran Nuclear Deal without it a quitting the multinational accord. He has refused to recertify iran, which he must do every 90 days. He hasnt yet quit the accord. President trump as i have said many times, the iran deal was one of the worst and most onesided transactions the United States has ever entered into. We are in limbo now. Essentially. If you look at the broader geopolitical situation in the middle east, this is adding more uncertainty into the mix we have right now. But again, for business, this is not really what people wanted to hear. They wanted certainty, they wanted a sense that this massive market with all this huge potential will be open up again. It looks like this probably will continue the next few years. Guy still ahead as we review the week on bloomberg best, conversations with ims managing director Christine Lagarde. Ubs Ceo Sergio Ermotti and fed president charles evans. Up next come up more of the weeks top business headlines. Richard taylor is happy to an when the nobel prize, but not upbeat about the market. I dont know about you, but im nervous. Guy this is bloomberg. Best,is is bloomberg im michael mckee. Lets continue our global tour of the top business stories. In japan, where a scandal engulfed one of the nations top nations Top Manufacturing companies. Shares in japans thirdlargest steelmaker continue to fall, being back to being absolutely battered. Kobe still is down 20 over two days, this after kobe steel admitted to falsified data about the strength and durability of some of its products. This is damaging for japan and the integrity of the manufacturing sector. Manufacturing and exports are the bloodline of japans economy. The worlds thirdlargest. It comes on the back of other scandals, such as takatas airbags. If this was spread overseas, we know kobe is one of the Oldest Companies and one of the biggest automakers like nissan and toyota. If it emerges that they are supplying other Auto Companies around the world, it will\onto on japans integrity and two cause considerable consequences. Shares of kobe steel falling for a second day, down about 15. 7 as of now. As its stake data scandal widens. It now admitted falsifying information about its other products, but insist safety has not been compromised. Iron ore, powder, also seemed to be the data was falsified for that and that was shipped to one customer. Iron ore powder was shipped to cash is used for everything from exhaust to powershift power steering. We are trying to pin down which customer and that was, but some of the customer has confirmed. One of the problems for kobe steel, over the past few years, the Steel Industry has seen a lot of consolidation and mergers, which put more pressure on kobe steel to compete with these big huge arrivals. So it branched into other businesses. One of the things we are looking to see is a selloff of assets to not only raise money to deal with liability, but also help sharpen its focus on its core businesses. The fourth round of nafta renegotiations begins today in washington. Trump says the u. S. Will walk away if the deal does not meet his expectations. And he has repeated that. We will see what happens. It is possible we wont make a deal, its possible we will. There are a number of priorities of the Trump Administration in these talks that canada and mexico might regard as poison pills. Related theeakers country of origin rules, things like that. Do people have to prepare for the real possibility nafta could go away . There is increasing chatter that it looks like some of these proposals are so far off the limit, so politically impossible in canada and mexico, it looks like a strategy the Trump Administration has to put a kabash to these. The proposals are trying to make the talks doomed from the start. Congress failed to pass Health Reform and President Donald Trump has now taken his own action, today signing an executive orders which he will says will promote choice and competition. My administration will explore shortterm limited duration insurance. The outline the president has announced are important in signaling his intentions and kind of a tertiary affect, the have a Chilling Effect on signups for the Affordable Care act heading into the Enrollment Period and the prospect of pulling Healthy People out of the existing system. The Trump Administration is taking the most drastic step to roll back some of the provisions of the Affordable Care act, saying it will stop making subsidy payments to insurers. In a statement, the white house said the bailout of Insurance Companies to these unlawful payments is another example of how the previous demonstration administration abused taxpayer dollars to prop up a broken system. Lets be clear about what is happening here. There is a slow but systematic attempt to remove the nuts and bolts of the Affordable Care act in order to foster uncertainty in the market. And i think catalyze some degree of legislative action. Mark brexit talks have hit a wall, the Sticking Point money, specifically how much the u. K. Owes the eu. There is no deal. No deal would be a very bad deal. U. K. Is planning for all outcomes. We are planning for everything. The progress made was theresa mays speech in florence, which when she said we would pay the u. K. Would meet its obligation broadly, and continue to pay the budget for two years after brexit. He mentioned it mays speech and said but, the negotiations here today have not put flesh on the bones. The deal has to be approved. There are months of approval processes once the deal is approved, so it is looking pretty tight. The Trump Administration has formally proposed to repeal the obama era clean power plant. This was a 2015 regulation and a cornerstone of obamas environmental policy. In a statement today, administrator scott pruitt said they are committed to writing the wrongs of the obama admin administration by cleaning the regulatory slate. It will be done properly and with humility. They are arguing the obama epa overestimated the potential Climate Change and health that benefits from this rule, while downplaying the potential costs for customers electric customers and utilities, and they are arguing the epa under obama overstepped its authority, that this rule was too broad and it allowed to decades of practice regulating power plants because the obama approach required broad changes to the electricity sector. The attorney general of new york and other state leaders have indicated they will challenge this plan, and one of the ways they will do that is focusing on how the Trump Administration is justifying this change. If they have adequately identified a 180degree pivot in policy. John cryan facing increased pressure to perform on his pledges of growth at the firm. Some Deutsche Bank shares have john cryan since raised 9. 5 billion from investors in april. There are rumblings that if he doesnt deliver, his job might be at stake. Is he on borrowed time . He kind of has been for a while, actually. As soon as he announced his strategic shift in march, we had investors saying he doesnt have much time to show that will work. The numbers in the Second Quarter were somewhat disappointing and the news hasnt gotten better since. He has been described as a fireman and hes come in and put out the fires and he is back into rebuilding the bank. I think this is where investors are getting a little nervous that the rebuild is taking longer than they might have liked. John flint as its next chief executive offer after new chairman mark tucker offered not to break tradition and insider tong serving run europes largest bank. Would hsbc be better off going down the barclays route and opting for an outsider . I dont think so and i think thats because there was not as much pressure at this particular time to choose an outsider. We are seeing because u. S. Rates are normalizing, because growth emerging markets are holding up, because growth is there, they want more of the same, which is more low issuance, more cost cuts, and a steady hand at the tiller. That is what mr. Flint represents. Richard taylor won this years nobel prize in economics for his work in studying human biases in decisionmaking and their effect on markets. The use and diversity the university of chicago professor he coauthored nudge. This is the badge of authenticity placed upon behavioral economics, if it wasnt already. Thaler was the guy who did all the blocking and tackling and the Organizational Work to make behavioral economics respectable, to create institutions, to make it possible for grad students to make money in behavioral economics. He was the Institution Builder who did not want to destroy mainstream economics, but get people to pay more attention to the weird ways we think. Less volatility in the stock market, yet stocks seem to be going higher. Do you have behavioral explanation for this . I dont know about you, but im nervous and it seems like when investors are nervous, they are prone to being spooked. Nothing seems to spook the market. If it is all based on the expectation of some big tax cut, surely investors should have lost confidence that would happen. Given what has happened so far out of congress. Michael welcome back to bloomberg best, im michael mckee. The International Monetary fund raised its forecast for Global Growth this week as it kicked off its annual meetings in washington, d. C. Despite a stronger baseline outlook, inflation and monetary tightening remained points of concern. Managing director Christine Lagarde fleshed out the report in an exclusive conversation with bloomberg reporter tom keene. Tom have we reached escape velocity on all the agony in the last 10 years . Christine lets hope so, but it is not guaranteed. While we have certainly better growth and better growth year,st, 3. 6 for this 3. 7 for next year, it is not shared around the world. While we see the sun shining, we also see clouds on the horizon and countries and people not having the benefit of it. Tom how does the imf link constructive tax reform with the worldwide idea of getting our debt house in order . Christine what, you know, needs to be done is to look at the evidence, at the data, at the numbers, and then to determine policies on that basis. With in mind, two things. The spending, the political objective of wanting to improve the situation of the middle class and ultimately reducing excess of inequalities, if that is the case in that country. That is what needs to happen. Clearly, in those countries that have a heavy debt burden and those that have entitlements coming to fruition