The why is what is unknown. Is the spreading commodities market everyone is watching. The spread is almost 4. The global tightening we are seeing in the market when it comes to balancing. 10. R up by the vix, modest today. Desk david says trump was back in campaign mode. He took on nafta, the media, and the republicans senators from arizona. He threatened to shut down the government over the building of the wall in mexico. We have to close down the government, we are building the wall. Me be clear to democrats in congress who oppose a border wall and stand in the way of border security. You are putting all of americas safety at risk. David explain what the president was doing here. Keep thee things is to government going. Why did he reach out and say we may shut it down . He felt a need to draw a red line about the border wall. A number of republicans and all democrats are opposed to using taxpayer money to pay for a border wall. The president says this is something he campaigned on an something he believes in, something his voters expect from him. He said it is something he will require to sign a funding bill. Congress has a number of things they need to do. This throws a wrench in the process and makes it difficult to get a funding deal and keep the government open. Onid in the speech, he took both republican senators from arizona. You have seen about what the relationship is with Mitch Mcconnell. The relationship between trump and mcconnell has disintegrated and they have not spoken to each other in weeks. The rupture between the two tumultuous moment. There is scant room for legislative error. You have the majority leader taking on his own republican president. Outhe president was lashing yesterday. He is entering his eighth month in office with no pieces of signature legislation. He is upset with republicans. Moreinks they should get done. He is not making nice, not trying to make friends. He believes his base will get him over the top in terms of squeezing some of these republicans who have not been on the team were supporting him. Ully yesterday, he was sending notes and signals to republicans as they get near to getting back to work in congress, that no matter what, he believes his base will work with him. Noisy at the white house. You have a decision to make. You can shut down the government with him and outsource the blame to other parties. David remember when Newt Gingrich shut down the government. It really helped clinton. Jon after the markets yesterday, higher after a move of almost 1 . Futures were softer. Now, looking at the dramatiction, nothing tell me what you think about it. Government shutdown, no matter who is the occupant in the white house, this has been well reversed. I dont think we will see a sharp Market Reaction until there is definitive evidence something dramatic will happen. I dont think we want to get there. The treasury build curve captured the story a couple of weeks ago. I wonder, are we going to see anything outside those moves in the market . Could it be a broader story . Dollaryen and other potentially disruptive things that could happen, it is worth monitoring whether that feeds into other markets. This is something that has been off. Me on and a full shutdown will be disruptive. It should make everyone involved think twice. This reminds me of greece. There are only certain weeks of the year you have to care about it. Risk, needed to do you where is the best area to do that . Talk about politics, we have to see how much that can affect the fundamental scenario. If it impacts earnings and Economic Growth, people are derisk already. Event, is a political which could have longterm ramification, people may look into rotation. Equities, we are not overweight in the u. S. , but if there is a prospect of more derisking, that could be an area to go. Isx what perplexes me companies that beat on the top line did not give us stocks we are used to. Is the catalyst for the fundamentals starting to wane . People are asking where is the next upside catalyst. Heading into a conversation, we have moved away from what is , thatto happen to europe focusing how they are their investments. If that continues to hold, i dont see a reason why we should hold back in the near future. It has been this peso strength story. This morning, it is not dramatic. It is only a move around 6 10 of 1 . It is bayer and off of the back of a combative speech. They have to justify staying where it is. Another most important, when it comes to u. S. , peso is most liquid. We saw how dollar peso went through 22 at the hive. That is an Early Warning indicator in the market to look at. It is susceptible to repositioning risk. David to what extent do you take into account whether a country is making its money domestically or internationally, given the talk coming out of trump . We have to look at a sector by sector basis. Northrelevant given the Korea Related sanctions. Escalate, howto does that happen. Does china want to retaliate by where they companies are particularly exposed or do you want to start on the low level and then you risk escalation. Lets than a broad brush, look at it on a sector by sector level. If you look at the earnings, probably about 45 less than that. Alix is there any answer just cannot answer . Ask the audience gets to questions at this panel and if jeff had a book, against each bang. Ce member, bang, there is not a question he can answer. He cannot answer. Jon mario draghi said Research Shows cueing and Forward Guidance have been a success. Qe involves direct intervention by central banking markets through largescale act purchases. Gescale jon he gave no clues when he might and monetary stimulus. Joining us now, paul, who leads our coverage of western European Central banks. Was there anything we should take away . Read between the lines all you like and there is nothing they are nothing there. This, he was speaking in germany, one of his biggest critics. Said you must be open minded, you must do your research and come up with policy and not get stuck on outdated paradigms that dont work. Jon there are policies you can divorce from the political pressure, as well. If politics in germany had its way, i imagine qe in germany would not be here. Going forward, what do we expect . Rom the ecb caution at the very least. Stickb has said he will to the theme of the conference. Main factors people are looking out for, what will happen with the bond Purchase Plan and any concerns about the euro. Draghi had the opportunity to mention that and did not do so. Theay be sanguine on matter. Those are the two topics, but dont get your hopes up. Jeffrey. Are joined by what we had paul talking about, this is august. August has seen a huge run in the euro. They have never gained this much through august. The white bars are the full year. But howot say anything, does he start to address this . I dont think he as as concerned. The important thing for the ecb is whether the recovery in the eurozone is broadening out and whether inflation is gaining traction. Evidence that unemployment is falling faster than expectations. As the ecb was highlighted, the ecb qe fell. It is likely they moved to taper next year. The Exchange Rate is moving. I dont think the ecb is going to be concerned about the level of the euro. Pmi data. Had the the stronger euro is not hurting. Verbal intervention is nothing new for mario draghi. It is not levels that matter. It is a question of pace. May verbal intervention will come through. There is a process where the ecb can flag rings. Is forecast for next year 4. 3 . There will be downside risk. Flag it in advance and the market will correct itself. That just the pace matters. Jon what is the base case now . 60 to zero and here is how it happens, or we go from 60 to 40 and here is how long it lasts. I think the latter. Much more sensible to say this is what we are going to do in the first quarter. We will come back and address the issue again. Wouldng the bond rate make some sense. Everything is data dependent. If the eurozone was showing signs of pouring over, it may be atficult to say anything all. The market is looking for clarity. Whether we get that in october or december, we are not going to get it at jackson hole. David some form of coordination is important among the banks, as you look at the fed and the ecb. General, moving away from the radical accommodation. Those are basically coordinated together rather than disruptive. They love to see some kind of the ferris plan. They would talk to each other and ultimately, it is determined by domestic fundamentals. We have seen some degree of synchronization in individual cycles. Europe and japan are following along. The u. S. Was ahead of the curve, now, look at where euro dollar is. The weakness in the dollar, that is helping the u. S. On the margins. About u. S. T is it economists choosing beautiful locations for these . Both our guests are sticking with us. , coming up, kevin rudd. From new york city, you are watching bloomberg tv. David when central bankers gather in wyoming, one is and will the Janet Yellens remarks on Financial Stability. As investors calculate the quantitative questioning whether central bankers will be as important as they have been. Many believe central bankers are in control of markets, but with less room to cut rates and expand alans sheets compared to 10 years ago. Learn whethert to Central Banks are masters of the universe or emperors with no clothes. Which is it . I dont think they would claim to be masters of the universe. Central bankers are mastering the arts of maintaining optionality. Is the ecbf exit going to execute . Keeping cards as close to their chest as possible. They will communicate. They will not try to disrupt the market. They will let the market know where the power lies. David as they exit from the bond market, will they be less important to that market . The umpired you have playing in the game. There is risk of shortterm market disruptions. Ultimately, it is about communicating the flow. As long as the two sides go hand in hand, the process can be managed, do no harm. Bearing in mind, there is the ability to go the other way, as well. The ecb is doing its thing and the boj is doing its thing as well. We are about to find out how to removeit is accommodation and raise Interest Rates. How hard will that be and what will it mean for markets . You have Interest Rates and equity levels. Here, i think they are more exposed. Not surge, they need the rest of the world to do its job, which we think it will. That is where the test will be. Jon good to have you with us. Mark. Up, the market open about two hours away. You are watching bloomberg tv. Jonathan from new york city for our viewers worldwide, visit bloomberg daybreak. I am Jonathan Ferro. Two hours from the open, and move higher. Think the little bit softer this morning. The biggest up, and losing Industry Group today is media stocks. Wtp getting absolutely hammered, down by over 10 . Covering fullyear growth and big moveok, making a your. David there is a basic move immediately when the company is under stress, you cut the media by. When companies are coming under pressure on the bottom line, the first thing they do is look to cut the media by. Jonathan that is what they pointed out. Sending a shock wave through the industry. You wonder what will happen. Not looking good at the moment. David the packaged Goods Companies are still under pressure. Alix and amazon will be longerterm. If you wind up not having to advertise at all as you are on wtp . N, what is that for jonathan lets get you some more headlines, shall we . Here is emma chandra. Emma thank you. President trump threatening a Government Shutdown to build the border with mexico. Trump professed to pass some sort of spending bill. The president wants 1. 6 billion to begin building the wall. Featuring a rash of accidents. The navy relieved the vice admiral. That happened just days after involvedohn mccain was with u. S. Sailors dying. British Prime Minister theresa may once down to take control of the countrys exit from europe, now the government is willing to accept a relationship with the review court of justice. The ok is open to abiding by the ruling and sticking to it. Global news 24 hours a day, powered by more than 2700 journalists and analysts. I am emma chandra. Jonathan thank you. Lets talk about this. Is it a red line or one that has been diluted a little bit . Guest it is a redline come and this is one that has been hugely, symbolically important. The reaction has been quite muted. A very outspoken prebrexit member of Parliament Says this is fine, but he does not see this as backtracking at all. Theresa may had said in october, two great applause from the conservative party, that brexit meant leaving the jurisdiction of the ecb. What it means now is direct jurisdiction. Mighte of the things they do, they want close cooperation, as you mentioned earlier, but they might refer decisions to the ec and they are abiding by and decisions of thej, ecj, as one of the ministers said this morning, they would keep half and i on it. Half an eye on it. Jonathan will they establish a new court, some justices from europe, some from the u. K. . Emma that seems to be what they are suggesting. They do not want an off the shelf solution, but norway is a member of the single market, and the court rules on dispute basically between atomism and the eu. That core does tend to follow for theng of the ecj, rulings are not binding. Even with that in july, Philip Hammond raised the possibility of the model that the u. K. Might seek to adopt. Jonathan thinking about things going forward, compromising, getting something back, what are they looking to get back. It was a stumbling block, britains opposition to the ecj was a massive stumbling block to any kind of good brexit deal. Whether you talk about the interim arrangement for a future trade deal, so in terms of compromise, there should be more scope for review. Jonathan bloombergs emma rossthomas come our London Bureau chief. Still with us, geoffrey yu of ubs Wealth Management and david owen of jefferies. The strategy, they were not last long. O i think what is happening is the obvious. In the real world, it is a very deep relationship with the eu, everything is going to have to adopt a lot of the ecj rulings. So the statement to me was the obvious. Remember, a lot of this is just asked fo aspirations of the part of the u. K. Government. Is squeezingarnier again, saying actually we have to settle first the divorce, the irish question, and labor. Those things have to come first in his mind, and the negotiations kick off next week. Geoff, we did see the low. At a twomonth that is theresa may backed away from the redline, supporters what back away from her, etc. Is that not the case . Geoffrey there will be some elements of political uncertainty, and that will remain with us, but i think the declining study has more to do with the provision and great the fact that the boe is probably not in a position to hike at anytime in the future. Remember, the market was up. That will continue to drive sterling. Alix david, do you degree that the politicalhat risk, when do i really need to care about brexit . David o you still have to care about it right now. A drop in fdi flows into the ok, so, you know, brexit is going to have an impact on the economy. Tomorrow, we get migration data. We have gdp data. All of those things will show some of the impact on the way to the economy. But it remains high, and the brexit clock is ticking. It should be done by october of 2018. We do have the transitional phase. It is going to be a long time, i am afraid. Jonathan footing to people with knowledge of the matter, bank of overca executive divided where they want to hold the brexit. Hub after how material will is ultimately be down the road after these negotiations have taken place . Once we do have an established role of the u. K. Will have that the u. K. Will have. Geoffrey most businesses right now need to prepare accordingly. No surprise that decisions are being made as they are. One area of interest in these reports is what is going to have into commercial real estate in london. Hand, we know we are seeing a Strong Demand from tech firms for commercial real estate. There are always offsetting factors. Lets bear in mind this is a dynamic process, not an absolute. We do not have to deal with absolutes when it comes to investment decisions. I wonder whether the bloomberg report raises a larger issue because people are saying this is not one hub but they are losing more than one. Maybe we have another part in dublin because Brian Moynihan often stays in dublin. This digital age may be the case that we no longer have to have a place, because we get it all done with digits anyway. David o it is interesting, with the growing use of the internet and so forth, how the forces really do work. We all like to work on futures around the world. Working forare their clients and their colleagues. I think that is more the case to the growing use of the internet. At the end of the day, brexit will imply it is more. Generally popular. Decisions will have to be made, and silver will be a key month for all of the management a december will be a key month for the management to make decisions. Transitional relations play could way enough, and firms will have to have a cliff edge policy, which means more Companies Make most quicker. Jonathan that is the drink, isnt that . Take it to the beach, drop it somewhere. Also, i get cold so often, that is like my dream come true. Jeffriesvid owens of and geoffrey yu of ubs. Coming up, we will be talking with charlie falconer, former lord chancellor of england. We will be talking to them about how he will resolve brexit disputes. Live from new york and from london, this is bloomberg. Emma this is bloomberg daybreak. I have emma chandra. Coming, an interview with sir the wpporrell on earnings. David china has been at the center of President Trumps agenda since before he was elected. With demands in the trade relations, demands that the chinese get upgraded to give up nuclear weapons, and even as Presid