Steelmaker. Very damaging for japans managing sector. Michael the i. M. F. Puts out a sunny growth forecast. Christine sheds light on the support. This report. Christine we see the sun shining but we also are seeing the clouds on the horizon. Michael fomc minutes. Fed president s add inside insight. Im really nervous Inflation Expectations are low. Were not trying to address the relative price changes that occur in the economy, were trying to get the underlying rate. Michael plus, economists consider the conundrums of tax reform. Has to be basebroadening as well. Growth will pay for part of it but not all of it. Might as well assume unicorns will come and deliver packages of money. Theres no reason to believe this. There are miracles and sometimes productivity growth picks up and for reasons we dont always understand it happens. Michael all straight ahead on bloomberg best. Michael hello and welcome, im michael mckee. This is bloomberg best your weekly review of Business News , analysis and interviews from Bloomberg Television around the world. Now, president Donald Trumps legislative agenda was going to be a big story this week no matter what. Monday dawned with unexpected 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 the senate is. The president blamed bob corker of tennessee for the iran deal, said he was not running for reelection only because he failed to get the president to endorse him and that he wanted the secretary of state job but he didnt get it. For his part, senator corker compared the Trump Administration to a reality show said the white house was an , Adult Daycare Center and the president s threats against other countries could put the country on the path to world war iii. If you play it forward in terms of tax reform, every vote counts and senator corker, while not the most physically fiscally conservative in the upper chamber, his raising the fiscal issue really in line with what some members of the far right and senate have also been saying and that poses significant Political Risk for tax reform by the end of the year. President trump demanding Congress Fund his border wall, and it will be changed 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 its a nonstarter. When you look at the polling of the vast majority of american support, a clean daca bill that provides protection will be laid at the feet of the republicans if it doesnt happen. A crucial moment in the crisis in catalonia. The president is set to address lawmakers in barcelona just moments from now. A lot of anticipation in that chamber. Were not sure of the wording people use. We are not even sure of the format the parliament might take place. Were not sure the opposition will get a say here. We do know, however, they have a majority in the cabinet and parliament and if they , wanted to enact this law to create an independent republic, they have a majority to do it and can get it done. The question is whether the word unilateral will be used or backout lastminute. The government is proposing that the Parliament Shall suspend the effectiveness of this declaration of independence in such a way in forthcoming weeks we can undertake a dialogue without which there can be no agreement. We need to open up a time period to have a dialogue with the state of spain. Thats Something Else that shall be done today out of responsibility. Spain maintaining its ready to seize control of catalonia if the push for independence continues. The Prime Minister said catalonias efforts to break away from the rest of spain are fraudulent and fruitless. It was a fraudulent referendum in the first of october and cannot go ahead by that amount of people. Yesterday the catalonia , president made the move and said im ready to upset the except the mandate. For 10 second it was a independent republic and then said ill suspend this for talks. He made it Crystal Clear theres nothing to talk about, this is a complete fairy tale and his signal now, im ready to implement article 155 and time is running out and the president is running out of options. His divisioncks will implode. But he will implement this article when hes out of government. The fed released minutes from the september meeting and showed growing concern in the central bank that low inflation is just more than a passing fancy. Policymakers said another rate hike this year would depend on the strength of the Economic Data the next few months. I think the minutes show the policymakers are taking the inflation backslide a bit more seriously than they were earlier this year when they were quick to write it off as transitory and idiosyncratic. Now theyre pondering whether part of that weakness may be due to broader global trend and means theyre now hinging their decisions to hike by year end in the next couple months of economics data, but also acknowledge that the hurricanes are going to muddle those reports. Theyre in a bit of a complicated position. Think i think what is interesting here is when we look at the roster of who will be at the december meeting, there are four or five doves im not sure chair yellen will have a vote at the meeting for a rate hike. Jpmorgan and citigroup kicked off third earnings season revenue from ficc trading plunged 27 at jp morgan and citigroup saw a 16 yearoveryear decline in revenue from the you had top line Revenue Growth this quarter but when you balance out the top line Revenue Growth with a weak capital markets, particularly trading, Investment Banking was healthy, youre getting no Revenue Growth, maybe 1 or 2 Revenue Growth. If you look at loan growth year over year the past 52 weeks its dropped from a high single wage growth rate of growth to maybe 1. 3 rate of growth. If you look at activity in the trading markets, it continues to be fairly anemic. One positive thing we did get in this quarter is cost control. Both citi and jp morgan coming in very big, and is important because as the revenue environment becomes uncertain you want to know the banks are doing what they can in terms of trying to protect the profitability of the firm and 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 charge for a precrisis mortgage billion probe. Many of the metrics we monitor for these large banks came in positive for bank of america and the net inches net interest margin, for example. We point out the expense control at bank of america is quite strong and they continue to focus on reducing expenses to a 53 billion number for next year. The wells numbers on the other hand obviously have the onetime charge which we take out and came in line with expectations on the bottom line. The Revenue Growth was not as strong as some of the other banks as they continue to work their way through the scandal that theyve been dealing with. President trump has disavowed the Iran Nuclear Deal without yet quitting the multinational accord. Thats very important. He has refused to recertify iran which he must do every 90 days and he hasnt yet quit the accord. President trump as ive 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 situation, its adding more uncertainty into the mix we have right now. Again for business this is not , really what people wanted to hear. Certainly they wanted a sense that this massive market with all of its huge potential will be opened up again and it looks like this probably will continue for the next few years. Michael still ahead as we review the week on bloomberg best, conversations with i. M. F. Managing director christine le guard and Sergio Ermotti and fed president s Charles Evans and eric rosengren. Up next more business headlines. Economist Richard Thaler is happy to win the nobel prize but not so upbeat about the markets. I dont know about you, but im nervous. Michael this is bloomberg. Michael this is bloomberg best, im michael mckey. Lets continue our global tour the weeks top business stories. In japan, where a scandal engulfed the nations Top Manufacturing companies. Shares of japans Third Largest steelmaker continue to fall, being absolutely battered, kobe steel is down 20 over two days. This comes off after kobe steel admitted their staff falsified data about the strength and durability of some of its products. This is very damaging for japan and damaging for the integrity of the japans Manufacturing Sector and manufacturing and exports are the bloodline of japans economy, the worlds Third Largest. It comes in the back of standards lately such as takata air bags. If this has spread overseas we know kobe is one of the Oldest Companies and supplies some of the biggest automakers like nissan and toyota. If it does emerge they have been supplying Auto Companies around the world it would have a severe backlash on japans integrity and have consequences down the road. Shares of kobe steel falling for a second day, down about 15. 7 as of now as the data scandal widens. They admitted falsifying information about another of its products but insists safety has not been compromised. Iron ore data was falsified and that was shipped to one customer. Iron ore powder is used in a lot of Machine Tools and auto parts, everything from exhaust and power Steering Systems to camshafts. Were still trying to pin down exactly which customer that was, but so far the company has confirmed. One of the problems for kobe steel, over the last 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 rivals, so it branched out in lots of other businesses. One of the things were looking to see is a selloff of assets not only to raise money to deal with liability but also to help it sharpen its focus on its core businesses. The fourth round of nafta renegotiations begins today in washington. President trump says the u. S. Will walk away if a deal doesnt meet his expectations and hes repeated that. President trump well see what happens. Its possible we wont be able to make a deal and its possible that we will. There are a number of priorities of the Trump Administration in these talks that canada and mexico may regard as being poison pills. Real deal breakers related to country of origin rules and things like that. Do people have to rep for the have to prepare for the real possibility in your view nafta could go away . Yeah, joe, theres increasing chatter that it looks like some these proposals are so far off the limit, so politically impossible in canada and mexico that it looks almost like a strategy the Trump Administration has to put a kibosh to these talks and this concern is bubbling through the u. S. Business community. It looks like these proposals are trying to make the talks doomed really from the start. Congress failed to Pass Health Care reform. President donald trump has now taken his own action. Today signing an executive order which he says will promote choice and competition. President trump my administration will explore how we can expand something called Short Term Limited Duration insurance. The outlines the president has announced are important in terms of both signaling his intention and kind of a tertiary effect which could be immediate , which is the potential to 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 yet to roll back some of the provisions of the Affordable Care act, saying it would stop making subsidy payments to insurers. In a statement, the white house said, quote, the bailout of Insurance Companies through these unlawful payments is yet another example of how the Previous Administration abused taxpayer dollars and skirted the law to prop up a broken system. And lets be clear about whats 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. Brexit talks have hit a wall, the Sticking Point money, specifically how much the u. K. Owes the e. U. Basically theres no deal. A no deal will be a very bad deal. U. K. Is planning for all outcomes. Its not what we seek but were planning for everything. The progress thats been made is really teresa mays speech in florence when she said the u. K. Would meet its obligations broadly and continue to plan the budget for two years after brexit. What vonnie said today was that there has been a new momentum he mentioned mays speech in florence and said but, the negotiators here today havent put flesh on the bones of what she said in florence with 15 months to go, the u. K. Wants a feel. How realistic that is is up for debate. This deal has to be approved. There are months of approval process once the deal is agreed so its looking pretty tight. Now the Trump Administration has formally proposed to repeal the obama era clean power plan. This was a 2015 regulation aimed at curbing green regulations and today the federal Administration Agency scott pruett said were committed to righting the wrongs by cleaning the regulatory slate. Any replacement rule will be then carefully, properly and , with humility by listening to those affected by the rules. Theyre arguing the obama e. P. A. Overestimated the potential Climate Change and Health Benefits from this rule while kind of downplaying the potential costs for customers, electric customers and utilities. And theyre arguing the e. P. A. Under obama overstepped its authority. That this rule was way too broad and it flouted decade of practice of regulating emissions at individual power plants because the obama approach basically required broad changes to the electricity sector. The attorney general of new york and other state leaders have also indicated theyre going to challenge this plan and one of the ways theyll do that is by focusing on how the Trump Administration is justifying this change if they have adequately justified basically 180degree pivot and policy. Deutsche bank chief president john cry is facing increasing pressure to perform at investment. The Deutsche Bank shares lost raised 8since cry billion from investors. Now april there are rumbling if he doesnt deliver on key parts. His job may be at stake. Is he on borrowed time . He has been for a while, as soon as he announced his strategic shift in march we had investors saying that he doesnt have that much time to show this is going to work. And the numbers in the Second Quarter are somewhat disappointing and the news hasnt gotten any better since. And what hes been described as is a fireman. Hes come in and put out the fires and now its back to rebuilding the bank. And i think this is where investors are getting a little nervous that that rebuild is taking longer than they might have liked. Hsbc naming john flint as the next chief executive officer after new chairman mark tucker opted not to work with tradition and tapped a long serving insider to run the largest bank. Would hsbc been better off going down the barclays route and opting for an outsider here . I dont think so and i think because there wasnt that much pressure at this particular time to choose an outsider. I think now were seeing, because u. S. Rates are normalizing and emerging markets are holding up, because growth is there, that they actually want more of the same which is more loan issuance, more cost cuts and a steady hand at the tiller and thats what mr. Flint represents. Richard thaler won the nobel prize for economics in his work in studying the role of human biases in decisionmaking and their effect on markets. The university of chicago professor coauthored the bestseller nudge. 2008 this is the badge of authenticity placed now on upon behavior economics if it wasnt already. Thaler most of all more than any particular research he did, he was the guy that did all the blocking and tackling and the Organizational Work to make behavioral economics respectable, to make it possible for grad students to get money for research in behavioral economics. He was the Insti