Banks in Silicon Valley in the spotlight. We are swimming upstream. Market shares are hanging in there. David it is all straight ahead on bloomberg best. David hello and welcome, im david gura. This is bloomberg best, your weekly update of important analysis and interviews from around the world. Lets begin with a look at the top headlines. Of atday, the results snap election in japan delivered a boost to the ruling party. Abesme minister shinzo gamble on an election may have paid off. He comes out of this with a stronger mandate. What does that mean for abenomics . It was a victory based on one crumbling opposition. And a referendum on abenomics. We have on employment below 3 . The stock market this up in areas we have not seen since the 1990s. We will likely see a continuation of abenomics, as well as mr. Abes plans to hike consumption tax, but not until 2019. And also, slow moves to revise the constitution. What are the most significant ramifications of the win . It has to be ugly a green light for the Stimulus Program in japan. The abenomics. It would be a green light for the bank of japan to carry on with their massive Asset Purchasing Program and a green light for abe to go ahead with the consumption tax. The point being, he wants to raise taxes to tackle the deficit and improve education. We may also hear more calls for greater urgency in japan and pushing through structural reforms. Those will be the key challenges for mr. Abe going forward. Chinas communist party has approved a charter hearing under xiguiding principles. S this is the clearest signal we have had up to this point that president xi is going to have a grip on the party, the government, and a china, well beyond 2022, possibly for decades beyond. Tarik, archaic form of wording that is put into the charter, but it is consequential. Xisare saying president characteristics are going to be enshrined in the constitution, putting him on the same level in terms of respect as mao zedong. It is significant. Easing ping has president xi has ms more power than any leader in a generation. Amassed more power than any leader in a generation. That opens up the prospect that the president can stay in office beyond 2022. The politics of it are clear. It is not clear where he will go on the economy agenda. Will he be involved into shaking up the state owned sector . Economy . O hard on the if you look at the personality demoted today where similar is ers promoted, it ecb president mario draghi trying to head for the exit, but draghi emphasizing the central bank will proceed with caution. The decision today is for an openended program and it will not stop suddenly. It is not going to stop suddenly. Matt we got exactly what the market expected, 30 billion euros in bond purchases per month from january through september. That is a cut of half of where we are now. Also, the ecb maintaining figures where they are well past choosesof qe is draghi to end qe at that point. Stuck by the technicals. He could have had an earlier stop to it if you give himself the flux ability to carry on for longer and possibly increase if needed. Jonathan those thirdquarter results showing trade revenue found more than expected of the two institutions exceeding the incline. It is a difficult revenue environment. We are swimming upstream and a market that has seen shrinking revenues, particularly Financial Market revenues. Their,et shares held in given what other banks have done. We expect a return to normal levels of volatility and revenues in the Investment Banking space. You are putting more risk on a fairly unknown period in history. The barclays shareholder price is the cost delivery. Barclays has given us new range. Target. E lowered their they are doing a good job on costs. The motion is adopted. The house has adopted the Senate Budget resolution. This unlocks a fasttrack process to achieve republican goal to cut taxes by the end of the year. Big news come up budget just passed house willans in the unveil their official tax proposal on the vendor first, next week. November later on 1, next week. Are on pace for tax relief by the end of the year. That is good news for investors, but how they will pay for it remains to be seen. To think welistic will get done by december 31 . We have a 1000 page bill coming. We have a ticking clock in the background. My sense here is that we are going to get a bill on november 1 and they will start a markup the following week, but the market will continue into markup will continue into december. At the earliest. Passagecould get actual at the end of the first quarter, beginning of Second Quarter next year. Catalan lawmakers voted for an independent republic. The parliament, the results of the elections on the 27th of september, has taken a longawaited and long fought for step. The great majority of politicians fulfilled a mandate, which was validated by elections. The Spanish Senate voted to revoke catalonian autonomy. Bonds dropped, pushing yields the whitest in a week. That he came under a lot of pressure to do this and they are going to get power over the region starting with the Catalan Government. The question market is with what the response we will get from catalonia. Says this has to stop. What are we going to get in backlash over article 155 . The Catalan Government is they dont have control over the administration. They have not established the Authority Takes precedence over the spanish state. They want to make a gradual takeover of catalonia. The byword throughout the process is that we should be a promotional response. They want to avoid the violent scenes they saw in october. They need to restore their authority and quickly. Still ahead as we review explains David Solomon how Goldman Sachs is building its business in your. Plus, a conversation with ray dalio. Up next, more of the top business headlines. Carlyle Group Announces a secession plan and they put thought into it. Having this inside outside balance is interesting. David this is bloomberg. ,avid this is bloomberg best im david gura. Lets continue our mobile tour in europe, where officials are having trouble establishing Common Ground in brexit negotiations. U. K. Chancellor Philip Hammond wrapping up testimony in the house of commons after Council President revised the idea of the uks staying in the eu. While speaking to matters of the parliament. The outcome was fully in the u ks hands. They think the cabinet is divided on what the u. K. Once as relationshiping with the eu and the eu knows until they decide, they cant come to an agreement. Brexitey talk about no or no deal, does it mean everything will fall apart messily . What does he mean that somehow things will get reversed and the you kate will stay after all . U. K. Of those would need will stay after all . Both of those would need nobody knows how this is going to end. Excess of nonperforming loans could derail the recovery in italys Financial System according to the countrys finance minister. This is vital for our economies. Bepoint is that we must careful in getting the speed right, the timing right. If we do it too fast, we could derail the system. It is interesting to hear him talking about the speed of dispersals. It occurs to me that that is not the and necessary issue. It is markedthat at a price way above it would trade in the market. An order for the banks to dispose of these loans, they , or theyccept a price need to find a buyer will and to pay over the market price. The only buyer that would be able to do that is the state and unfortunately, that is in breach of the european union. Traderggling commodity agreed to sell its oil does this to this group. If we knew it use a medical analogy, is it off lifesupport . Where is it, using medical analogies . I would say it is still on life support. We have had clarity on key things. The number one thing is the extension on the waiver. That is critical. They have sold of the oil unit, but there are so many conditions attached. So many if this scenario. How much is going to come out of it in terms of cash . Is an interest in certain bits. It is not entirely clear what it is worth. It is not clear what the trading business is worth. There are a lot of question marks around it. It helps cement its edition as a World Class Oil trader. Spree continues. Dealapped up rod soft in a at 1. 9 billion, expanding software and of the cloud, a huge priority for the company. Talk us to the terms of the company. It is a reasonably large premium. If you look at its prospect in august, it is a fairly healthy premium for the sector. It is not a huge deal by cisco standards, but it is there 200 takeover in the history, a phenomenal number. We usually see cisco do smaller numbers. Understand, it was a competitive process. There were other people interested in the asset and that is reflected in a decent premium cisco ended up paying. Apples iphone x hit stores next week but a new report struggles is clouding the rollout according to japans nikkei. Initial shipments will only be around half of what was expected this year after it has been battling technical issues. News, we hearden about the display technology about a year ago, that we dug into the story about the 3d sensor. That is the biggest bottleneck that cant get enough components. Making thee people modules that go into the phone. They admitted it would cause supply constraints. There is increasing concerns that they would be slightly worse than a lunch quarter. Carlyle announced a secession plan. Coceos january 1. His partner bill conway will become coexecutive chairman. What will this mean for carlyle . You have this pair of guys, one of whom has been at the firm his entire adult life. He joined in the mid1990s and seen the growth of carlyle since its inception in the late 1980s. Birdddenly is a rare because he did most of his work at another firm. He joined carlyle a few years ago. Having this inside, outside balance is interesting. Run banks, thee government pledged to inject 32 billion into the lenders. Is catching everybody by surprise but making a rare headline. They are increasing the efficient capital by 10 fold has cut everybody by surprise. It is ae already said positive move. Equity markets are this move. Tanks clear up bad loans help banks clear up the bad loans. This will help them clear the add more loansnd to the economy, which will help reviving the economy and profitability in the next couple of years. Firms can accept Research Payments from eu clients. 30 months reprieve to u. S. Firms on the coming into effect on january. This is what wall street brokerages have been pushing for in washington. They got the sec, wall streets made regulator to step in and tell them they are able to accept Research Payments, as will be required under european rules, for the european clients, and it will not have to register as investment advisors. That would heap on a bunch of additional requirements and it could be costly. They did not want to do that. They are getting a reprieve today and the brokerages are happy. And a half years from now, we dont know. We will see. President trump is leaning toward appointing Jerome Powell to be the next chairman of the fed. This according to three people familiar with the matter. We will hear for definite before november 3 according to the president himself leaving for asia that day. What will he bring to the fed that janet yellen hasnt got . Bring thatld he janet yellen hasnt brought . Probably nothing. He is not an economist, so he will be following the policies that were set in place, and then be influenced by the staff or anybody who is appointed as vice chair or who would replace yellen if she decides to leave the board. Asbably, you would see it yellenlight. She keeps wall street on the same course. You dont like to deviate and maybe that is what trump is thinking. Welcome back to bloomberg best im david gura. President David Solomon sees Great Potential in his firm to expand their business in europe. He discussed those opportunities with my colleague, alix steel. There are places we can add market share and one of the things you know is that a portion of our Growth Initiative is focused on places receive market share opportunities in equities, or was he claimed gaps marketes where by adding resources, we can influence market share. We have strong market share across europe. We have good market share in sales and trading equity business and Investment Management business. But there are places we can invest and improve our market share and position. We are focused on making those investments and making sure we are creating growth opportunities. It is in banking, too. One of the things in banking we have looked at is that we have broad market share and abroad footprint, but there are places we can grow that footprint. There arecap expense, more that could be under the radar screen. We are looking at our footprint and our Investment Management business. We invest in that business and private wealth area wealth. You brought up lending. You unveiled this good plan and it seems you are focused on that area analysts are looking for how they judge it. If i am a Market Participant and i look at goldman and say, are you delivering on your promises, what do i look at . There are Different Things you can look at. If you look at the lending business, it is a broad term and touches a lot of activities we engage in. On one hand, we have made a push to broaden our Debt Capital Markets capability and we improved our market share oe. ,f you look at our performance it is a record for the firm. That is a form of lending. We have corporate clients making acquisitions. We are looking to purchase companies in the market. We are lending into them to support the business. That means revenue. Tric. Venue is a me one of the things i know you are aware of, a consumer platform. It is a new area of expansion for us. This is a business where customers who have Credit Card Debt can manage that debt more effectively with a fixed rate, no fee loan. We are excited about the product. We have been rolling that product out in the early stage. We are on track to have 200 billion in loans, but that is a business that will be a nice conservation to the firm. There will be more as the business progresses. David coming up on bloomberg best, you want earnings reports . We had earnings reports. A very busy week. Plus conversations with a starstudded conference in saudi arabia. Plenty just ahead. I look at the 2017, 2018 very differently at how we received 2007, 2008, 2009. David this is bloomberg. Boj will behe importing some reflation from the rest of the world in the next year and that will help them as they comfortably stay on hold with their yield control target. Adaptingc. Boj policy to what has been a growing economy . Slight growth. Inflation is stubbornly world stubbornly low at. 7 . That is the point. We have seen there is a difficult process in using growth as a tool to get out of the deflationary psychology japan has been in. We will be sitting here in a year from now with core inflation below 1 . Getboj is looking for it to to 2 and that will be a story that says the boj will have to stay here and hold its policy stands for a long time, even in the face of what we expect to be good growth. We dont know how far it will run before you jumpstart the economy in terms of reflationary dynamics, but it seems to take more than a year even with good growth. David that was jpmorgan chief was cast meant discussing the snap election. That was and i swiss interview with stephen engle. Exclusiveter an interview with stephen engle. Several of those influential guests sat down with interviews with bloomberg television. There are some european challenges which require european responses, like migration, security, growth, and it jobs. That aretional sufficient and we need to integrate them with a higher policy. More work there is that needs to be done to slow down the trend we are seeing . These are structural problems. And there is a window of opportunity to deal with them because the economy is growing at a healthy rate and there is lots of job creation. Lets talk about the italian economy. Growth projections are 145 . Is there a chance 1. 5 . It could be stronger. There are upside risks and in the coming two years. Certainly there are in our forecast. Yousef how much more do you think the economy could grow . If all the reforms were implemented and if all the resources mobilized for Public Investment were fully spent, we can go up to 2 . Ago, wolfgang schaeuble, the outgoing finance minister of germany, suggested that the rising amount of debt could trigger the next crisis and he was spot on. Are we at that point yet with the intimidation of debt, particularly in markets that are not as visible as they used be too financial regulators . That the commission of debt is getting to a point where we could see another crisis . I look at 2017, 2018 very differently than how we 2008, 2009. 07, the Financial Institutions were so much more levered and less transparent in the 20072008 period. Financial institutions have had an enormous improvement in Balance Sheets and we should take comfort. People are using leverage and there are investors and institutions that by longterm assets with shortterm liabilities, yes you should scratch your head over that, but that is an institutional issue. I dont think that is a market risk, but more an investor risk. Blackstone has intentions, plans of doubling its assets in the next five years. 8 billion. For the past five years. They are planning to continue on the same pace of growth even though they have become so much larger. What is carlyle find to be in five years . Our firm is in very good shape. Our quality of investments will continue to be good, that i do not have a number. It is possible by son will become a trillion dollar firm. Is it possible for an asset manag