Australia are the most attractive. The insurance of prostate costly promises is virtually limitless. Releasentral banks Meeting Minutes with important clues for investors while the fence stock profit. They overreact to everything. They overreact to the upside, the downside. Host plus, the earnings continue loud and strong. What is pleasing is all of this is performing well. We are pleased with where we are today. Host it is all straight ahead on bloomberg best. Hello, welcome. This is bloomberg best. Your weekly review of the most important business news, analysis and interviews from Bloomberg Television around the world. Markets were closed in the United States on monday but there was plenty of drama elsewhere as we sought a nominee for the vp of the ecb. The euro group has nominated lewis for the ecbs eyes Vice President ial role. It is a move that will hand madrid a top seed at the bank for the First Time Since 2012. It is a controversial decision because it is very unusual to see politicians making these transitions from government into the central bank, especially because the at is the whole point of a central bank, it has to be independent from political interference. He tries to portray himself as a hawk. He has spoken in favor of prosperity. He has been a strong supporter of the policies that have been taken in the euro area in the past few years and spain was going to start with this in the it has rebounded dramatically since the crisis. He doesnt have much of a track record when it comes to Monetary Policy. Straight from politics to the central bank. Opening the debt floodgates today, the u. S. Treasury sold of debt. Ion worth theyre working to rebuild their cash balances. Yields rose to levels unseen since 2008. What you saw in the twomonth auction and threemonth auction, was repricing, to your notes are starting to flatten a little bit against the longterm issues, and the reasons for that is there will be a lot more of them. So the Treasury Department will issue more every month twoyear while theeyear, issue an extra billion dollars for longerterm securities. I think one of the reasons you front end do a little bit worse here is on the supply. Were waiting for the results of the fiveyear auction and theyre coming in right now. We see that the long end of the curve is just a little bit stronger but investors care about a few Different Things here. The one issued rate on this average, is 2. 658 , those are the actual results in terms of the bid to cover. Were looking at a ratio of 2. 44 . That is slightly stronger than the previous option. That is good. It tells us demand is here for auctions. If we say more hawkish fed we have the statement coming up this afternoon. What could this spell for bond markets . One thing we are keeping a laser focus on is what the fed said at about inflation in the last meeting. We didnt see a rate hike but we did see the addition of the word further a couple of times in the statement. And that turned out to be a hawkish addition as a uc markets getting a little bit nervous that the feds will be more aggressive. Set ofomewhat hawkish minutes for the fomc meeting. Januarya number of fomc participants said they already upgraded their forecast for gdp growth in 2018 when they met at the end of january. Why . Because of quickening Economic Activity in the u. S. , a brightening picture on the Global Outlook and because of the tax changes that appear or may appear to be having a greater impact on the economy than originally anticipated by fed officials. I think the markets have gotten the take away pretty correctly, that the fed will continue on the great pass it had already announced, theyre not ready to raise the number of rate moves they will make this year. Interestingly, we also heard from the Philadelphia Fed president , who suggested he is still in favor of to rate hikes rather than the three that is the consensus forecast. Interesting price action today. If you take a look at the performance, just on the daily session before we got the minutes, we were in positive territory and there you see the repricing. The u. S. 10 year spiking higher and well see what was going on as far as sentiment and a legler at the close. Their expectations that the fed might telegraph a pullback of that rate hike past that we have for 2018. I think when we first got the statement, it looked like there may be a pullback, but once they read between the lines they said , the fed is not going lower than three. They will probably not go higher than three. We are basically back to where we were this morning. What it has said is there has been a major mispricing in this market or at least a misalignment between what the market sees, the stock market sees, what the bond market sees and what the fed is , telegraphing. Barclays ended a tour of 2017 on a mixed note, trading, slumped 24 in the Fourth Quarter the chief executive was optimistic about the ahead. And he is putting his money where his mouth is, increasing dividends and considering a buyback for the first time in more than 20 years. We begin 2018 with a clean operating amount, that is the first time in five years for barclays. But also, we close 2017 with a Strong Capital position. 13. 3 , that is above our target. First time we have done that in a long time. And what that will enable us to we hadthe announcement this morning, in 2018 we plan for a dividend of 6. 5 cents for our shareholders. That is more than double what we paid in 2016 and 2017. We feel good about that. We learned from the ecb account of the january meeting out this morning that although they were comfortable staying the course for now, some officials were ready to remove a pledge to expand the Bond Buying Program if needed. This is to quote from the account, some members expressed a preference for dropping the using bias regarding the Asset Purchase Program from the governing councils Litigation Program as a tangible reflection of past inflation. They went on to say however, it was concluded that such an adjustment was premature and not yet justified by confidence. It is important not to read too much into this because these governing Council Members expressed in that, they do not carry the day. For some of them, it is a natural step that you get to the point where instead of continuing to be promising to expand your program, you say we will carry on up to a certain date. We may extend it, but will not expand it. Alternatively, you start to at totalsaying stimulus, negative interest ands, free loans to banks that is enough. That is what some of them want. Is 2. 49,s seven year which is lower than the previous auction. 62. 2 to the right bidders. How would you compare that to the treasury earlier this week . It is just like the rest of the auctions. Back to the same kind of demand structure you saw in october and december of last year. Which you know, it was kind of hohum. This was an ok auction. The fact it has held a little bit shows that there was indigestion in the market that needed to be taken down. Weerestingly, in two weeks get the 10 year and that 30 year auctions and those will be telling, because will there be demand for the longer and more Interest Rate risk product then we have seen this week . China is to take control, removing the chairman and prosecuting him. What do we know . Regular to say that they will be taking control as of today for one year. As you said, the chairman will be pushed out of his post and he will be prosecuted for economic crimes, is what they are saying. They also said that the reason they have to step in is because illegal operations at the company were testing and putting pressure on the solvency of the company. This has been one of the biggest swaggering conglomerates in the last five years or so, spending billions of dollars in acquisitions overseas. It has about 320 billion worth of assets. Including those not just the ones, in new york, but also Insurance Companies in countries ranging from the netherlands to korea. And they paid in many cases, for many people skyhigh valuations , and skyhigh prices for some of those assets as well. So, it will be a long process of trying to unwind some of these problematic purchases for the regulators. You have regulators and ecb, exchange the commission and securities and banking, all trying to pick apart this problem. Host still ahead, as we review the week on bloomberg best, neil says market was should not not the fed office course. A Bank Consolidation coming in europe. Plus, we go through a heaping helping of reports. Up next, more of the weeks top business stories bloomberg , reports that Deutsche Bank plans to cut hundreds of jobs , but how does that square with the promise to grow revenue . The challenge is to create topline while cutting costs at the same time. Obviously, it is a big conundrum. Host this is bloomberg. Shery this is bloomberg best. I am shery ahn. Lets continue our global tour of the weeks top business stories, in new york where j. P. Morgan chase announced plans to build a brandnew headquarters. J. P. Morgan chase is getting a new address. The largest u. S. Bank is planning to consolidate its new york city offices and 15,000 workers into a new headquarters on park avenue. The announcement came this morning in a joint statement between jamie dimon and the mayor bill de blasio. They are tearing down their current headquarters which was built in the 50s and 60s and was meant for a much smaller staff. And if so, they will build a sleek new modern tower that is about twice the size. So this will be about getting all of their people into one spot. Right now, they have that building, they have the old bear stearns buildings, this is going to be a major project that they are going to tear down the building starting next year and it is going to be five years of construction. So if you are for j. P. Morgan you will be spread out into other offices for the next years but then you have a new tower to come back to. In some ways it is jamie dimon leaving a present for his successor. It will be done around the time that he is planning to step down about five years from now. So he is committing to new york in a big way. Germanys largest bank is cutting at least 250 jobs globally at its corporate and Investment Bank, Deutsche Bank is trying to limit expenses. Amid a sustained slide in the securities unit. The cuts could run deep, they could be over 500 layoffs on the. Over the past few weeks, they have cut positions in london and at the u. S. The challenge is to increase topline while cutting costs at the same time, obviously it was a conundrum. We have to keep in mind that this is part of a effort at Deutsche Bank to cut costs. I think what people need to look out for is what is happening at the management level, because i think there is a struggle there between the forces that want to cut costs on the one side and the ones that want to invest and expand the Investment Bank on the other side. It is hard to reconcile those two forces and we will have to see how it plays out in the future. Releasing their annual budget today, raising taxes in an effort to avoid another credit downgrade. The president yesterday saying that he will take personal charge of the state owned companies. He will take personal charge of the Structural Reforms and state owned companies, giving direction as to Structural Reforms in the economy. And i think that it will do just enough for us, not only does dave off a downgrade, but stave off a downgrade, but also to realize a change in the outlook for s p, so we can regain our investment rate. Siemens is planning new health care. The new company will be called siemens health. This has been a long time coming. This is something that i spoke to them about many times. Asking, what is the timing of this . We are getting answers today. And it will be one of the largest ipos in europe. They are talking about 40 billion euros. It is also part of this broader thing we have seen across europe and even globally, of these really big public conglomerates with businesses everywhere, simplifying and saying what are we good at and lets focus on that. Theresa may is planning the trade deal she would like to achieve in brexit negotiations britain will seek to stay close , to the eu will look in some areas while breaking away from others. It is an approach that some in brussels are calling cherry picking. Theloomberg, we have gotten scoop, we have landed that if britain doesnt get the deal it is prepared to hold back from brexit payments, how you illegal . S there is a chance that this kind of protest statement from the u. K. Could cause disruptions. What we do know is that britain has a contingency plan if at in 2021, 2020, or 2019 after brexit has after thinks one, britain option would be to hold back the payments of the money it has already promised. Apple is moving to security supply chain. The company is in talks with cobalt mines to buy the metal directly from the with no middlemen. Apple is worried that it could threaten its own supply, which it needs for its iphone and i pads. Is this unprecedented for apple . For apple, yes. Apple has never gone and bought cobalt directly from minors ers before. It never had to, because the market has been quiet, backward, a pretty tiny market in the global world. There has never been a question about whether they would have enough. This is to secure the supply chain. How likely are they be able to do it . If they are willing to pay up then there are plenty of companies to have plenty of supply, planning increases in supply, and no doubt that is the and no doubt at the right price a deal could be done. A space rocket carrying three satellites went into space from the california coast. This carried a smaller satellites for a system that would provide Internet Access to remote regions. Talk to me how potentially be this can be and how important it might be to tesla in the future. The idea of tesla and spacex merging together is a tantalizing idea. I personally think that this will absolutely happen, there is a tremendous amount of technology overlap, both companies are committed to seeing ai and Machine Learning develop and incorporate those technologies into their respective businesses. This business is actually a great business. In the future,ok call it 2025, it is a business that could dramatically improve teslas revenues and operating profits. We caught up with a treasury secretary Steve Mnuchin who is not worried about rising prices and growing debt. In an exclusive interview with bloomberg, he said there are a lot of ways to grow the economy. You can have Wage Inflation and not necessarily have inflation concerns in general are co we got some insight general. We got some insight from jeff. Check out these tweets, ill run it for both of them. Policies will raise wages without inflation. And will expand about the armies without making them bigger. Then he said if inflation is no up with wages, it is not before bond owners. Can you get the wage Growth Without inflation . You need productivity, that has been talked about a lot. So hope springs eternal. But im not sure theres a lot of credibility coming out of the administration on the policies and what they will do. Is it progrowth, low growth, it is really hard. Shery welcome back to bloomberg best. Im shery ahn. The past two weeks have given the fomc a lot to chew on with a surprising inflation spike, january rising bond yields and turbulence in the stock market. This week, our Bloomberg International and economics policy correspondent Michael Mckee sat down for and exclusive interview with the minneapolis ,ed president , Neel Kashkari who says he does not think that one month of data should change the policy path. To overreact to one job report that showed the wage increases of 2. 9 or the latest numbers. We dont want to dismiss the data but i also dont want to overreact to one months blip in the data. We have to look over what is happening and see if inflation is actually our target. I hope it is. For almost 10 years that that has been undershooting orientation target. We have tools to keep inflation from going to hide. And if it goes too low. I have always been saying, allow inflation to come to us. Jumpy wall street these days, so if you saw inflation breakout are you concerned you would see wall street overreact to the fed moving more quickly . Wall street overreacts to everything. They overreact to the upside, the downside, we can make policy based on market blip up and down. Congress has said that her dual and the dual mandate is a stable prices and a maximum employment and we try to achieve those on average over the long term. Wall street will do what wall street will do. If they do that, it could have an effect on the economies. And for years, people on wall street have said that the fed will step in because they do not want a collapse in business or Consumer Confidence if the markets go down too much. Is that socalled fed put still in place . We care about financial stability. ,e care if there is a mechanism a Feedback Mechanism. Just like there is a Feedback Mechanism through the currency markets on the u. S. Economy. But we have to that are not targeting currencies, we know there is a feedback loop. We do Pay Attention to it, but we are not sitting here trying to engineer a certain level of the stock market and obviously we want to avoid crises. So to me, i tried to differentiate a stock market crashing which did not lead to a financial crisis. From the 2008 housing bust, which did lead to a financial crisis. We have to work hard to prevent crises, but within that we