We are seeing how this all fits into the focus with theresa may and whether she can work with the labour party in particular. We will be looking to talk about that with our brexit team here at bloomberg. We also have great guests coming up. David thank you very much. Lets get caught up on the markets. Alix here is where we stacked up. Equities have gone nowhere. Volume in europe is pitiful at the moment. I am looking at cable, not necessarily on theresa mays speech, but the chief economist at the boe will talk about where he comes down on the hawks vers us doves side. Selling on the margin coming down on the board. Crude goes down, 0. 8 . There is a risk of oil below 40 if opec does not shock and on the markets. David it is time now for your morning brief. We will get u. S. Job opening numbers and turnover for the month of may. And we will get the keynote address on normalizing the Central BanksBalance Sheet in new york city. Sell 123ury will billion in u. S. 10 year notes. That is all taking place today. Late yesterday, we learned President Trump is nominating randall coral to be the Federal Reserves chief banking regulator. He is the newly nominated vice chairman of he is expected to play a pivotal role in carrying out Donald Trumps pledge to ease banking regulations after the 2008 financial crisis. There are a couple of specific banks, but the macro thing things, but the macro theg like the volcker rule, macro issue is that the government should not be a player in the financial market, it should be a referee. David joining me now is michael mckee. This is a big move. What will this do to banks . Michael it should mean less regulation for banks and perhaps a little more profit. The question is how much can orioles do on his own corals do on his own . What changes he makes he has to get through the fed board of governors and working with the office of the comptroller of the ad toncy and fdic he standardize regulations across the industry. It would probably do things like have avolcker rule volcker rule lightnened. He thinks capital standards are too high, causing banks to raise Interest Rates to increase profits. He thinks there are good things about doddfrank, but he does want to make some changes. One would be to lighten the stress test regulations. David it is not as clear to the world what Donald TrumpsMonetary Policy is, but it is clear he wants less relation of the banks regulation of the banks. Michael dangelo was the point man forgetting new regulation for getting new regulations into the banking system. From what does he want Monetary Policy, is he going to care about financial conditions . He mentioned that a little bit talking to bloomberg tv. Doddfrank repeal is politically difficult at this point. You could see significant changes at this point. In some ways it was not ambitious enough, and in other ways it was overly ambitious. I think there are a lot of ways to refine doddfrank and other regulatory policy. Alix that was also about doddfrank. Nonetheless, we are talking about a rulesbased economist. He is not an economist, but he is a lawyer. Theres something wrong with that. He believes you should use a rule like the taylor rule to make Monetary Policy predictable so wall street is not trying to guess what individual members of the fed will do. They know what will happen a stunned the inputs to the role. Based on the inputs to the rule. The fed is very much against this. If you look at the bottom of the screen, these are all the inputs into the Bloomberg Taylor rule model. These are all different taylor rule models. The blue line is how the Interest Rate would go up if you use that model. If you use the aggressive rate, it goes up even more. The question is which will do use, how do you use it. Fed officials will say we need discretion because there are too many variables in a complex economy. Alix with us is Michael Purvis ribari. M her party will we see more rulesbased Monetary Policy now . I dont think so at all. I think this years hearings in congress will be illustrative. I think there are political pressures across many economies to push in that direction. I think Monetary Policy is too complex to be formed into specific roles. Behink Central Banks will successful in fending off this pressure. Alix there is so much unpredictability in the fed, we need some predict ability in the markets, and rulesbased is a way to get that. The rules are not only very complex, but some of them are broken. I think the fed has been learning on the job that some of these things we all learned in Business School are not necessarily as relevant. When you talk about aggressive central banking, you have to talk about inflation, and the inflation story is nuanced and complex. I think that is where janet belens strategy is going to very relevant. Understanding which taylor rule is going to be implemented is going to probably be as confusing as not being rulesbased. The answer of going away from rules is to signal as far in advance as possible what you are thinking about. Interesting to hear from janet yellen as she testifies before congress about this discussion against rules versus data. Are going to have a tougher time because it is not clear the rules are working. Findseem to be really to as where wage pressures are versus employment. I think there is a lot of discussion about specific roles. The devil is in that detail. To pushing responses for roles to tell what specific rules you would use in practice. I resume that chairman yellen will reinforce what is already in the Monetary Policy report, which is how difficult it is to work with the practical elements of rules but instead the fed is ready to be accountable. Giving the fed the discretion the possibility of complex economy requires. Alix they deal with the dual mandate of inflation and employment, but there is also asset bubbles of financial conditions, do we have an idea where mr. Corals stands on asset bubbles . He believes they have been too low for too long. He has not used the word bubble or suggested we are in trouble, but he has suggested he is worried. David thank you very much. Our guests will be staying with us. Coming up, we will set down with David Shulkin and talk about the sweeping changes he is setting up for the v. A. And what that might mean for the Health Care System overall. This is bloomberg. This is bloomberg daybreak. J. P. Morgan chase seo jamie dimon says the European Union could force banks to move more employees from the day after a first wave of relocations. He said he thinks more people should focus more on the second step. If the eu wants to move jobs out of london, they can dictate that. Google will find out as soon as tomorrow if it owes 1. 3 billion in back taxes to france. Judges are set to roll whether google illegally. Taxes by moving sales in the country to ireland. Illegally dodged taxes by moving sales in the country to ireland. About 1take over billion. Your Bloomberg Business flash. Caroline thank you. U. K. Prime minister theresa may giving a speech in london this morning. Lets get the latest headlinesi what is next for the brexit process. This speech coming from theresa may, it felt like everything was leaked, there was not much substance. Ofre is a slight whiff desperation. She is talking about Worker Rights and regulation and part of that message was that opposition lawmakers should come up with their own suggestions. Ideas . Ut of is she asking others after this real change making election . , thee flipside, on Brexit Labour Party has yet to fully formed a position in part because they dont have to and they want to keep some of the powder dry. Theresa may wanting to push them into making commitments that may come back to them later. Caroline Jeremy Corbyn himself does not seem to be averse to brexit itself and is not the biggest fan of the eu. We know optimism is falling among the confederation of businesses. We know jamie dimon, jpmorgan eue in london, saying the could actually move more than hundreds of jobs out of london. How much is the Business Community going to lean on theresa may . There is a real sense of momentum behind is this is. They think the election was again changer. It is honest like we are a year back before brexit. Jamie dimon has been the most outspoken of the week American Bank ceos in discussing brexit. They think their moment has finally come to shape brexit and make it more bank friendly. The chancellor of exchequer is someone willing to listen to them, but the question is if theresa may willing to listen to them. They are hoping to shape their agenda so that when we get to the trade deal, theresa may takes their thoughts with her. Caroline lets listen. Though the results of the general election are not what i expected, the dividing believes are unchanged defining beliefs are unchanged. I remain steadfast. Caroline that was theresa may speaking today at the royal society. Bloombergs managing editor or brexit is with us, and joining us is Michael Purvis for weeden. You are with us from new york. Let me get your point of view first. When we talking about political posturing, the markets, im looking at my bloomberg, looking at the outperforming currency, which is the british pound, but i feel it is moving more on what we may see out of the bank of england. I would agree with that. I think the Monetary Policy story in the u. K. Has become interesting. We have had a number of bank of england speakers pointing to the possibility of an Interest Rate hike. Markets are believing them more than we they were earlier in the year. Theres also a sense of Financial Markets that there is an opening to a softer brexit eventually. That is probably somewhat supportive of the pound overall despite the fact that the economy is actually showing mixed developments. Caroline certainly, Consumer Sentiment on the downhill. Do you believe politics plays into all this . Maybe we are having a regime change. Maybe Political Risk is something that is going to be factored into currency pairs. Is Political Risk going to be one of them . The last couple of years, real rate and nominal rate differentials have been the factor for defining em currency pairs. You are saying that shift. That shift. I think not just fx markets but also equity markets have under priced Political Risk. This may be a u. K. Specific issue, but whether the forces for the catalysts of populist events like brexit a year ago and donald trump in november, whether those are being translated into the far left. You saw that in the French Election with melenchon getting 20 out of nowhere. Tremendouscorbyn has momentum right now. The markets still have to contend with if corbyn were to be a prime minister, what does that really mean for fiscal policies and such. That is not just a pound discussion, but a broader economic discussion. Fxid we will start with because that is your specialty, are they basically pricing and brexit and perhaps even a corbyn prime ministership . Is it too soon to tell . Saying we will lose employees in the first round, but there is also the second round. When it comes to what markets are pricing right now around these specific political events, it is essentially impossible to tell. I have not that anybody who seriously doubts brexit is likely to go ahead. I would assume that is incorporated into Market Pricing. There is also a slightly softer version of brexit than what was discussed earlier. I would agree with the previous speaker that some of the uncertainty related to potential labor victories is not reflected in Market Pricing currently. For marketre is room reactions eventually. I think the whole range of areas, as you mentioned brexit, political future in the u. K. As far as when the next elections will take place and who is the next government. Alix we have standard and poor saying today they dont expect rate hikes from the boe until 2018. What is your take on the base case of what the boe is going to do . We also doubt that the bank of england will go ahead and hike this year. We dont pencil want in until late in 2019. We think the u. K. Economy is slowing, and when it comes to willive decision the boe shrink away. Theyre putting up a scenario of hiking. He is an important figure. I think it is not just the obvious one, but the following Inflation Report in november. Alix good to see you. Michael purvis, weeden global strategist, sticking with us. Caroline hyde will be with us throughout the program. Up, dont miss it, this is bloomberg. Alix this is bloomberg daybreak. Volume is light. Equities are stopped pretty much across the board. Interesting reactions taking place in the currency and bond markets. Dollaryen, fourmonth high. Centralbank divergence, as is where it is playing out. Bond bears getting a relief here. Crude off over 1 . Goldman sachs says there is a risk of oil below 40. By jamie dimond speaking today about the Balance Sheet unwind from the fed can be more disruptive than we are pricing in. David as well as ecb. This may be worse than people anticipate. Alix the fed is like the sleeper risk. David you notice coming. Sooner or later it is coming. Coming up, secretary dr. Shulkin, he is the secretary of the department of veterans affairs. Live from new york, this is bloomberg. Europe, s p down in 500 and dow futures down. Not a lot of action in europe. The man watching oil off the over 1 . Barclays is cutting its forecast. A relatively stronger dollar in terms of yen. Sterling the only currency stronger than the dollar. We are waiting for the chief economist speaking in an hours time. Where will they come down in the hot trend of debate. Dove debate . Wk and across the board, a sleepy tuesday, waiting for action. That could come from yellen tomorrow. Lets get an update on headlines outside the business world. The man who said of the meeting between donald trump doing your and donald trump ior and election lawyer trump junior conceived teammate time for the meeting trump junior was told ahead of the session that the russian government was behind the information on clinton. The trade deal with donald trump is saying they will be easy to promise but hard to deliver. That is a warning from trade analyst to say the challenge for the u. K. s america boost more leverage the u. K. That will cause may to compromise on areas. Thousands are expected to attend the funeral of a new York City Police officer who was shot and killed while sitting inside a Police Vehicle last week. She was a 12 year veteran of the force and a mother of three. Fors day two of hell commuters at penn station. Ridershe first day the had mostly no issues. Repair work will last until labor day. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. I am emma chandra. This is bloomberg. David the Veterans Administration provides comprehensive health care for military veterans, employing some 380,000 people and spending billions of dollars to do it. Improving the va is one of trumps Top Priorities and we are joined by the man he asked to get it done, and before coming to the va, he ran the moorestown Medical Center in new jersey. Welcome to bloomberg. Good to have you. You have a big task, and you have it undertaken. Give us a sense of what you believe you need to, set the va. First, we have to get it right for our veterans. There is no doubt the country has a responsibility to those who defend us and i feel strongly that we have to do better than we have been doing. We are modernizing the system and in every way possible, we are getting veterans more choice, updating our system, so they are better tools, and we are making sure we can back the trust of our veterans. David give us a sense of deliverables you want to get done. We are making it easier to get care in the ba, making more appointments in a timely way. And making these veterans who went to get care in the private sector or community and we are improving our facilities, getting new information system, it improving the timeliness and making a valuable and , andparent wait times everything we do, including when we let employees go. David you post wait times so people can look at them. This is a vast bureaucracy. Other people before you has said they wanted to reform the va and it is fair to say they have not gotten it done. How do you change that they a bureaucracy . Dr. Shulkin we areve the issues dealing with our issues dealt with over multiple administrations and for decades. Now is the time to address these problems. The way you have to do it is with support from the president. We have that. Then you have to have bipartisan support in congress. This is an issue democrats and republicans agree upon. It is time to take the reforms necessary. David do you need more money to get the job done . Dr. Shulkin i do not think this is a money problem. The president has put a budget forth for 2018 that is enough to get this job done. Primarilyis is improving the way we do business and treating it more like a private sector would approach a problem like this. This is a fundamental reform, not necessarily a money reform. David whether it is a business or va, there can be resistance from inside. You are trying to higher people faster and move people out who are not getting the job done. Are you getting resistance from rankandfile . Dr. Shulkin ov