The future for the banking world and the political escape. The exclusive conversation at 9 30 a. M. London time. In the meantime, lets check on your markets. This is what i am seeing. A lot of the talk will be on burberry after the company put out an announcement that maybe was interpreted in the markets. They didnt see anything worth buying the stock. It is down here in europe. The european stocks taking their cue from quite a volatile session in asian markets. The dollar flat. Treasuries flat as trump challenges china over unfair trade practices. Ere is nejra cehic nejra in the u. S. , republicans on the house ways and Means Committee ames to aims to release their tax reform bill later today. Speaking exclusively to bloomberg, Steve Mnuchin stressed how crucial getting tax reform through is to the white house. This is the president s most important domestic agenda item. We are going to get this passed. The objective is to get it to the president s desk in december. Nejra the uks government has lost its second cabinet member and a week. Failed to tell Prime Minister theresa may but she held a series during a holiday in august. On tuesday, it was revealed that she rejected giving british aid money. Ian mccafferty says clarity on brexit will be needed early next year to prevent banks starting to shift jobs out of the country. Is bad that instability for business, investments and the economy. He says there will be some movement of banks out of london. Institutions are making contingency plans and will start to have to ask to thats have to act soon. Have to ask soon. To dave western ahead of the latest rounds of negotiations. Of exit, we are watching it closely. From our perspective, the prudent thing we have to do is we have to assume what has been termed as the hard brexit. Meaning there is no transition and theres no sharing arrangements that are put in place because we have got to be open for business on the day for our customers and to make sure we can facilitate things they need to do. That is the way we are approaching it. Nejra global news, 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries. I am nejra cehic. This is bloomberg. Francine President Trump says china is taking advantage of American Workers and companies with unfair trade practices. In beijing, he blamed his what us princesses for allowing a u. S. Trade deficit to grow. Speaking alongside president xi jinping he went on to say theres a Good Chemistry between the two leaders. Today we have an allstar guest lineup. Leading voices in investment and markets. Jean boivin joins us. Blackrock heing was an associate deputy of the country. One of the most recognized names along british investors with a bit of and i for identifying with a bit of a nine for identifying trends. Gentlemen, thank you for joining us. You. Let me to go with what kind of language do you look for in a president to see the markets . Jean one of the risks i can think of about markets, the discussion would be key, i dont think we are seeing a lot of information around framework around trade. This is more transactional. I dont think this is a surprise. Theres a lot to be expected in terms of trade information. A construct against a constructive discussion. Francine i dont think a trade war is more likely than it was six months ago. Sometimes the president measures is language better in life. Jim i think that is true. He has been pretty muted. What he said is fairly reasonable. I wouldnt expect anything to come out of this week. I think the 250 billion have been lined up. Theres nothing really sensational coming out of it. I think it is going to be good for some asian currencies, particularly the yen. Doesnt look like theres going to be a trade war. Jean . Ne do you agree, jean i agree there is no sign of the trade war. There was that was one concern we had. In this context, we are seeing a more constructive outlook on the region. Francine that me bring up a chart. Looking at yen. I am doing it in realtime. This is a yen chart. We can bring it back to a year, five years. This is the one your chart for yen. The concern that we have for japan as they are nowhere near the inflation target. We dont know if kuroda gets in place, who will take over . Inflation isn of something i am looking at the moment. I think inflation is assiduous. Is insidious. Wage pressures building and the labor market being so tight. I wouldnt be too concerned about that. Besides, i dont think it takes a rise in Interest Rates in japan for the yen to go up sharply. I think you will be a very small rise. Francine jean, when you look at the pboc, the governor keeps warning about leveraging. About deleveraging. Why arent the markets heating his concerns . Heating his concerns. Jean the role that we are seeing, we think theres going to be some deceleration from the highlevel we saw. Stable overall. It is giving back up to allow for addressing some of the vulnerabilities. That is what governor joy is pushing. They have been doing some tightening. I think it is pretty impressive. We have seen tightening. This question about where this could come, the headwind. We havent seen this yet. We see there is a Higher Quality credit story in china which helps deleveraging. There is not a disconnect. The growth story is addressing some of the concern. Francine i keep on being told that instead, you can roll over it or adjusted. They keep an eye on outflows in the currency. Is the next crisis likely to come from china . Is that an easy target . Jim certainly the world suffers an unbearable burden of debt which has yet to be addressed. Anyway reasonably that can be addressed is through inflation. I think inflation is coming. This goldilocks economy is a very transient one. Inhtening across the board almost every major jurisdiction is going to have its affect next year. Growth is not going to be as great. Francine so you think they are tightening too soon it . Jim i dont think they are tightening too soon. But it is going to have the effect of tapering off, not just Monetary Policy, but also Economic Growth. I see Economic Growth being lower. Thinkne jean, do you Monetary Policy is coming . Jean we think the time for the next beacon is measured in years and quarters. There are legs to this expansion. We have seen we have not seen inflationary pressures impact just yet. There has been some surprise on the downside. Inflation is missing in action in some parts of the world. There might be a measurement issue but the Bigger Picture point is this means no big change in policy. Their move is going to be very gradual. We are in a low rate environment for some time which has not much to do with central banks. Very powerful forces at play. Was conversion, just risk aversion. Despite record highs, the markets are afraid of kill risk. Of tail risk. Francine i looking forward to continuing the conversation. Jim mellon and jean boivin, both with us. Amex was a conversation with coming up next the conversation with carlos mussina. This is bloomberg. Francine this is bloomberg surveillance. Lets get straight to the Bloomberg Business flash nejra cehic. Nejra lehmans signal a slump in demand siemens signaled a slump in demand. As after weaker orders led to a sharper drop out of its power and gas division. Profit at the power and gas division declined by 40 while orders for new agreement dropped. New bank has attracted consumer customers as it push to expand its consumer business. Revenue continues to decline in the Third Quarter. Adjusting for onetime affects, a cayman it to put 15 million it came in at 2. 15 million. Do two telecom has raised its fullyear profit forecast. Europes largest phone character says adjusted even the ever the in a deal that would attract the u. S. Wireless market. Burberry shares plunged and the new ceo disappointed investors. That is the trenchcoat maker says it will add accessories and revamp its marketing while investing in store refurbishment. The Company Expects 15 Million Pounds of restructuring charges in 2019. Citigroup ceo says the u. S. Bank will not charge clients for fixed Income Research as new rules coming to affect. Michael corbat was speaking exclusively to david west and. David west and we are in the stages of talking to our clients in regard to what they want. The things they expect us to deliver and we will come to a price and expect that. On the fixed income side, there hasnt been that same type of metric in place. My guess is we will continue as we have to provide fixed Income Research for our clients. Nejra that is the Bloomberg Business flash. Francine brexit talks resume in brussels today and reports that the European Union have given the u. K. And informal deadline of two to three weeks to say how much it is prepared to pay. The reports increase the pressure on u. K. Prime minister theresa may. She lost her second cabinet member in a week. Priti patel declined resigned. How is the chaos in the u. K. Government and uncertainty around brexit talks affecting markets . Boivin and jim mellon are still with us. Jim, we look at everything, what do you look at . Is the noise coming from brussels echo is it the leaks . From brussels . Is it the leaks . Jim our own government is a mess. Him a plate towards achieving a dip it may play towards achieving a deal. The conservatives dont want an election. There is a chance that Jeremy Corbyn could get in which is a disaster. A lot of people there is a 90 chance of a deal coming before the end of this year. The outline of the deal, so i am not the slightest bit worried. I think immigration should remain relatively open. The issue of sovereignty is one that i never thought was important. Francine what is the probability of the u. K. Crashing out . 10 crashing out . And no brexit . . Jim no brexit is very unlikely. Say theres a nine out of 10 chance before the end of this year, there will be an outline deal because companies are in certain it finance companies, in particular, a very uncertain. Here has been evidence of that so far, the kid economy continues to confirm the pundits debts the u. K. Economy continues to confirm the pundits. Every time i look the figures, they have been revised upwards, not downwards. The pundits have been wrong and they will continue to be wrong. We will have a deal but you can assets are relatively in the context attractive. Assets and where seem to be overpriced at the moment. Francine how does that translate into market sharing . If you believe you will have a deal, that means there will not be a huge fallout. Jean clarity is most important aspect for the markets. What is going to be driving markets. If we do get clarity, it is going to be very significant. I tend to see it more sequentially. Provides a status quo provide status quo a fallback for the next three years. That is a key driver. Start thinking about adjusting its policies. That is what is driving the markets. A story, the clarity. On the back of that, we are seeing signs of that affecting consumers and the initial reaction was pretty surprising on the upside. No big effect on now we are starting to see a bit of the impact. The place on the market that plays on the market. Francine what happens to the pound . Jim in terms of the bond, we have seen the reaction post decision last week and despite the first high continues, dovish in that context. The broader direction is toward policy normalization. It is consistent with the general treasury. Francine what happens, jim, to sterling . Sure that the government wants a deal for Financial Markets . Jim i wouldve thought so. It is an important part of the british economy. It is the golden goose thank you to ring else going. Keepsden goose that Everything Else going. The trade deficit is still persisted. The row, about . 85. I think there is about slight upside to the british pound. Francine i dont know what you call the kind of the light of the new the tunnel. If there is a number on the divorce bill from the u. K. , the first indication that we do get a deal. Jean i think it is one of the key indications, one of the key drivers. How we manage will be significant. Francine jim . , it it will be spun out will be less than that because it will take time to pay. The real figure will be about 50 was a very large british economy. It is certainly worth paying. It is harmonious that is effective. Francine in the u. S. , republicans on the house ways and Means Committee released the tax proposal today. A senate such person says it will be more of a consensual outline. The treasury secretary spoke to bloomberg. Mr. Mnuchin this is the president s most important to messick agenda item. We are going to get this past. The objective is to get it to the president desk in december to sign. Francine tax reform crucial to the trump team. How much is it worth . There were rumors this could be delayed by a year. Does it hurt spirits . They fadedut away. B and have seen the ebbb a flow in the u. S. We tend to think that if there is a significant decision being made, they can be more despicable positive for the markets. Details ofstion, the that package and whether this is more of a progrowth kind of package or more stimulating on the demand side. The deadline you see seems to be constructive on the investment picture and capex with the Corporate Tax cut. That could be some of the things you can see buying more time in the cycle in giving more room to grow in the u. S. And i could be very constructive. It would be more of a sugar high tech story. That is the big question we will be grappling with. Francine you have fomc members coming down. Bill dudley from the fed saying announcing his resignation on monday. Are you worried there is no communication you go is that the biggest risk . Indication . Is that the biggest risk . Jean we have a history. In the first phase of this news fed new fed administration, theres a story that is there. We have to plan around the Balance Sheet that has been laid out. The big primers are in place. At the end of the day, the fed matters but they kind of gradual normalization story is largely not even up to the fed to decide. That picture i will think is likely to change. Francine jim, do you worry about Monetary Policy overall . Jim i think the fed is fine. Monetary policy is ok and it is good that there normalizing. Im worried about the fiscal policy. Gdp in the Public Sector will rise to over 120 very quickly which gets it up to italian levels. Francine but they have the dollar. Jim they do have the dollar. They are going to have inflation as well. Aggressive tax reform, it is not going to mean interest of years economy. They are being a bit aggressive. Francine will it have to come as a package . Jim everything is a negotiation in the u. S. I heard you sing it might be delayed for year. That is the case. In terms of yours markets, they are already priced expensive. There are very few volleys of pocket. Fair if you there are very few pockets of value there. The downside may come from other factors. We dont know what those are. Francine what does this mean for bonds . Treasuries . Jean the big story for the bonsai, there is a interesting disconnect. At the same time, you have this low rate environment which is very persistent. It has to do with structural fortis that wont change very quickly. It gives you a very lens gives you a different lens. In this context, bond prices are still very important for safety. This is a force that is going to keep rates low. The directions higher. We are going to get maybe a bit more of a higher pressure coming from the dissident side in the u. S. This is in a world where everything is contained in terms of ability for rates to go up. Francine thank you so much, jim mellon and jean boivin. Up next, exclusive conversation with carlos messina. He is working on a plan that he will deliver in january. Will be asking him about dividends and ecb. The interplay between italian banks in the addendums that the ecb wants to put in dealing with nonperforming loans. This is bloomberg. Francine you are watching bloomberg surveillance. I am Francine Lacqua in london. Lets get to the first word news. Donald trump says china is taking advantage of American Workers and companies with unfair trade practices and brand thats blamed his predecessors in the white house rather than china for the trade deficit. Speaking alongside xi jinping, donald trump said in contrast to what he said was a very Good Chemistry between the leaders as they announced 215 billion in deals. Who can blame a country for taking advantage of another country for the benefit of its citizens . I give china great credit. In actuality, i do blame past administrations for allowing this outofcontrol trade deficit to take place and to grow. In the u. S. , republicans on the house ways and Means Committee aim to release their tax proposal later today. Markll be a conceptual instead of detailed legislative and speaking exclusively to bloomberg, Steven Mnuchin stressed how crucial getting tax reform through is to the white house. This is the president s most important domestic agenda item and we will get it passed. When . The objective is to get it to the president in december to sign. Lawsuits second has lost its second he failed to tell theresa may that she held a series of meetings with israeli officials during a holiday in august. It was revealed she suggested giving british aid money to an israeli army project. Citigroup ceo says his back is basing bracing for a harder brexit. Aheadke to david westin of the latest round of negotiations between the eu and u. K. In terms of brexit, we are watching it closely and from our perspective the prudent thing we have to do is assume what has been termed as the hard exit. Meaning there is no transition and no sharing arrangements that are put in place. Because we have to be open for business on the day for our customers and make sure we can facilitate the things they need to do. Th