Silicon valley in the spotlight. In a different revenue environment, we are swimming upstream. Market shares are hanging in there, given what the other banks have done. 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 best review of the most important Business News, analysis, interviews from Bloomberg Television around the world. Lets begin with a look at the top headlines. On monday, the results of a snap election in japan delivered a boost to the ruling party. Prime minister shinzo abes gamble on an early election has paid off. It may have won him a chance to lead japan through 2021. He comes out of this with a stronger mandate. What does that mean for abenomics . It was a victory based on one crumbling opposition. Two, a referendum on abenomics. We have had six straight corridors of economic growth. We have had unemployment below 3 . The stock market this up in areas we have not seen since the 1990s. What we will likely see a is a continuation of abenomics, as well as mr. Abes plans to hike that consumption tax, but not until 2019. And also perhaps move, slow moves to revise the path of his constitution. What are the most significant ramifications from your point of view of the ruling coalitions win . It has to be something of a green light for the massive Economic Stimulus Program in japan over the last few years here, the socalled 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 a consumption tax increase. The point being he wants to raise taxes not to tackle the deficit, but to Fund Social Programs like education. We may also hear more calls for greater urgency in japan and urgency pushing through crucial structural reforms. Those will be the key challenges for mr. Abe going forward. Chinas communist party has approved a revised charter here enshrining president xi jinpings name under guiding principles. And elevating him to a status that alluded his predecessors. 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 china well beyond 2022, possibly for decades beyond. This is an archaic form of wording that has been put into this charter here, but it is consequential. They are saying xi jinpings thought on socialism, chinese characteristics in the you year are going to be enshrined in the constitution, putting him on the same level in terms of respect by the party as Deng Xiaoping and mao zedong. It is very significant. Xi jinping has closed the 19th party congress, having amassed more power than any leader in a generation. In a break with a 25yearold succession system, members of politburo will be too old to rule after xi finishes his second term. That opens up the prospect that the president can stay in office beyond 2022. The politics of it are clear. He has consolidated power. It is not clear where he will go on the economy agenda. Will he be emboldened to shake up the state owned sector . Will he go hard on the economy . If you look at the personality promoted today, they were somewhere reformers promoted, but there were some whose background was not in the world of finance or economics either. I think its a little bit of either or. Ecb president mario draghi trying to head for the qe exit, but draghi emphasizing the central bank will proceed with caution. Mario draghi the decision today is for an openended program and it will not stop suddenly. It is not going to stop suddenly. Matt we got was exactly what the market expected 30 billion in bond purchases per month from january through september. That is a cut of half of where we are now. And also the ecb maintaining the two hold to hold Interest Rates where they are well past the end of qe if draghi chooses to end qe at that point. He is sort of stuck by the technicals. He could have had an earlier stop to it. He gave himself the flexibility to carry on for longer and possibly increase if needed. Jonathan Deutsche Bank and barclays struggling. Those thirdquarter results showing trade revenue found more than expected of the two institutions exceeding the decline seen by the u. S. Peers. It is a difficult revenue environment. We are swimming upstream in a market that has seen shrinking revenues, particularly Financial Market revenues. Market shares held in there, given what other banks have done. Clearly i think all of us expect a return to more normalized levels of volatility and revenues in the Investment Banking space. This is an interesting time. You are putting more risk on a fairly unknown period in history. The difference between our deutsche share prices price is the cost delivery. Barclays has given us new range. They have lowered their o. T. Target. At least with deutsche, they are doing a good job on costs. Trading for both of them is weak. The motion is adopted. Vonnie the house has adopted the Senate Budget resolution. This unlocks a fasttrack process to achieve republican s goal to cut taxes by the end of the year. President trump sent out a tweet saying, big news. Budget just passed we are learning republicans in the house will unveil their official tax proposal on november 1, next week. Five days later they will take take it for a markup through the committee process. With the passage of this budget , they 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 does remain to be seen. David is it realistic to think we will get done by december 31 . We have a 1000 page bill coming. We have 9500 registered lobbyists in d. C. And we have a ticking clock in the background. My sense here is that we are going to get a bill on november 1. They are going to start a markup the following week. That markup in the house is going to continue into december. At the earliest they will clear the bill in december, at which point we can get actual passage at the end of the first quarter, beginning of Second Quarter next year. Mark catalan lawmakers voted for an independent republic. Today the parliament, the legitimate parliament, which is the result of the elections on the 27th of september, has taken a longawaited and long fought forward step. The great majority of politicians have fulfilled a mandate, which was validated by elections. Mark the Spanish Senate voted to revoke catalonian autonomy. Spanish government bonds dropped, pushing yields the widest in a week. It is a symbol at for the proindependence majority. We know that he came under a lot of pressure to do this and they are going to get power over the region starting with the entire Catalan Government being dismissed from office. The . Question mark is what the response we will get from catalonia. We have seen protesters outside were very happy about this. Madrid will tell you this has to stop. What are we going to get in backlash over article 155 . He cannot stay in office according to madrid. The Catalan Government is claiming to the republic they really dont have proper control over the administration. They have not established the Authority Takes precedence over the spanish state. The signals we have been having theythe government is that want to make it a gradual takeover of catalonia. Their byword throughout the process is that we should be a proportional response. They want to avoid the violent scenes they saw in october one when they try to shut down an illegal referendum. They need to restore their authority in catalonia and they need to do it quickly. David still ahead as we review the week on bloomberg best, David Solomon explains how Goldman Sachs is building up its business in europe. Plus, a conversation with ray dalio. A list interviews in the future Investment Initiative in riyadh. Up next, more of the top business headlines. Carlyle Group Announces a Succession Plan and have clearly put some thought into it. Having this inside outside balance is interesting. David this is bloomberg. David this is bloomberg best. Im david gura. Lets continue our global tour of the top business stories in europe, where eu and u. K. Officials are having trouble establishing Common Ground in brexit negotiations. U. K. Chancellor Philip Hammond wrapping up testimony in the house of commons after European Council president donald tusk revived the idea of the uks staying in the eu. While speaking to matters of the best members of while speaking to members of the european parliament, saying the outcome of talks was fully in the u. K. s hands. They think the cabinet is divided on what the u. K. Wants as a future trading relationship with the eu, and the eu knows until they decide they cant come to an agreement. Donaldk talks tusk talks about no brexit or no deal, does it mean everything will fall apart and the u. K. Will leave the eu messily . Or does he mean somehow things will get reversed and the u. K. Will stay after all . Both those things we need a lot of things to fall into place. They are certainly not willing ruling it out. So far since the date of the Eu Referendum and brexit was agreed, nobody knows how this is going to end. Excessive speed and the this test in the disposal and the disposal of nonperforming loans could derail the recovery in italys Financial System according to the countrys finance minister. This is absolutely vital for all economies, including the italian economy. My point is that we must be very careful in getting the speed right, the timing right. If we do it too fast, we could derail the whole system which is now gaining speed. It is interesting to hear him talking about the speed of dispersals. It occurs to me that that is not necessarily the major issue. The issue is that it is marked at a price way above it would trade in the market. In order for the banks to dispose of these loans, they either have to accept a price, well below they are being marked or they need to find a buyer willing 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 rules of the european union. Mark struggling commodity trader noble agreed to sell its oil business to this group. Use a medical analogy, is it off lifesupport . Where is it using medical analogies . Not a trained physician, 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 was pretty critical. Yes, they have sold of the oil sold off the oil unit, but there are so many conditions attached. So many escrow accounts. So many ifs in this scenario. Its hard to tell how much is going to come out of it in terms of actual cash. In here . Do they gam there is an interest in certain bits. Not the whole thing, which is what he have this complex structure. It is not entirely clear what it is worth. It is not entirely clear what the trading business is worth. Therefore there are a lot of question marks around the. Aluation it helped cement its position as a World Class Oil trader. Ciscos m a spree continues. It snapped up rod soft in a deal at 1. 9 billion, expanding ciscos presence in software and the cloud, a huge priority for the company. Talk us to the terms of the deal and what stands out. It is a reasonably large premium. If you look at its price back in august, it was about 20 premium which is a fairly healthy one for the sector right now. It is not a huge deal by cisco standards, but for them it is the 200th takeover in the history, a phenomenal number. We usually see cisco do smaller private market deals. This is slightly unusual and as much as it is public. It was a reasonably competitive process. There were other people interested in the asset and that in some ways is reflected in a decent premium cisco ended up paying. Apples iphone x hit stores next week, but in the report of supply 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 that involves the models new facial recognition feature. There has been news, we heard about the first problems with the display technology about a year ago, but we dug into the story about the 3d sensor. That is the biggest bottleneck right now. That cant get enough components. Coincidentally at the same time our story went out, they had the people making the modules that go into the phone. They admitted it would cause supply constraints. There is increasing concerns heading into the quarter that they would be slightly worse sales than expected on a launch quarter. Carlyle announced a secession plan. Glenn young kim and lee will become coceos january 1. Founders David Rubenstein, who hosts the David Rubenstein show, and his partner bill conway will become coexecutive chairman. What will this mean for carlyle . What is interesting is you have this pair of guys, one of whom has been at the firm his entire adult life. He joined in the mid1990s and has seen the growth of carlyle since its inception in the late 1980s. Lee is a bit of a rare bird. He did most of his work at a another firm. He joined carlyle a few years ago. Having this inside outside balance is interesting. Indias state run banks, the government pledged to inject 32 billion of capital into the lenders. The capital boost catching everybody by surprise, but really making a headline. The decision to increase the capital efficient target by tenfold has caught almost everybody by surprise. They have already said it is a positive move. Equity markets are also cheering this move. This will help banks clear up the bad loans. Indian banks are settled with one of the highest rates among all the economies. This will help them clear the Balance Sheet and add more loans in this economy, which will help in reviving both economy and the bank systems profitability in the next couple of years. The sec says firms can accept Research Payments from eu clients. The u. S. Regulator gave a 30 month reprieve to u. S. Firms on the Research Tools coming into effect in january. This is basically what wall street brokerages have been pushing for in washington. They got the sec, wall streets main 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 they will not have to register as investment advisors. If they had to take on that label, it would basically heap on a bunch of additional requirements and it could be costly. They basically did not want to do that. They are getting a reprieve today and ensure a lot of big and im sure a lot of big brokerages are happy. What happens to it half years what happens to him a half years from now, we dont know. Basically we will have to see. Vonnie 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 would he bring to the fed that janet yellen hasnt got . Or that john taylor might bring . It is interesting the way you put that. What would he bring that janet yellen hasnt brought . Probably nothing. He is not an economist, so he will be basically following the policies that were set in place, and then be influenced by the staff or by anybody who is appointed as vice chair or who would replace yellen if she decides to leave the board. Remember, she can stay on if she wants. Probably, you would see it as yellenlight. Powell keeps wall street on the same course. He is not likely to deviate. That makes people happy in and maybe that is what trump is thinking. David welcome back to bloomberg best. Im david gura. Goldman sachs president David Solomon sees Great Potential in his firm to expand their business in europe. He discussed those opportunities in detail with my colleague, alix steel. David there are places we can add market share and one of the things you know from when you talk to harvey about our Growth Initiatives is that a portion of our Growth Initiative is focused on places where we see market share opportunities in equities, or where we see client gaps in places where by adding market resources, we can influence market share. Yes, we have strong market share across europe and all of our businesses. We have good market share in sales and trading equity business and Investment Management business. But there are places we can actually invest and improve our market share and position. As an organization and Leadership Group across the organization, we are focused on making those investments and making sure we are creating growth opportunities. It is not just in equities. 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 where we can grow that footprint. As market cap expends, there are more companies that mightve been under the radar screen that are some really a billiondollar tech companies. We are looking at our footprint there and our Investment Management business. We invest in that business and private wealth business and there are good areas for us to grow our market. Alix you brought up lending. You unveiled this good plan and it seems you are focused on that. Analysts are looking for how they judge it. If i am a