Michael mckee in london. We have a very busy week and we Start Talking about yields an Economic Indicators that disappointed. Michael we are starting to get ahead of the fed meeting on wednesday, the bank of japan on thursday. The bank of japan is a wildcard and it is having an impact on the market. Tom heard that vonnie quinn had been on assignment for several weeks and said he is not coming back until she returns. Nobody told him. She is back. Francine i thought he was getting caught up on game of thrones. I am sure he is also looking at jgbs. Isnie president obama pitching American Business today in germany when he spoke at a trade fair in hanover. So here we are proud to showcase americas commitment to innovation. You will see pioneering countries that are changing the way we live, work, learn, so this is another chance for me to tell everyone to come here and by made in america. The president also said Companies Looking to create jobs should set up in the u. S. The president is wrapping up the u. S. Fight against Islamic State in syria and is expected to send 215 more u. S. Troops according to a Senior Administration official. They would help local forces fighting Islamic State. In north korea, latest attempt to display its military might is on display. The regime says it has successfully testified a National Desk testfired a missile test fired a missile. Saudi arabia is unveiling a , admap for the postoil era plan to overhaul the saudi economy. Oil accounts for 80 of their in oilbut the decrease prices is causing them to diversify. The other two republican president ial candidates are teaming up to stop donald trump. They have agreed to play in certain states and not in others. But could bolster romps criticism trumps criticism of the system that he calls rigged. Michael so much fun to watch the republican president ial campaign. Lets say what is happening in the market. If it is not the republicans, it may be oil. The equity markets around the world are lower this morning, futures decidedly down. Some of that money going into bonds, the yield on the 10 year down to 1. 87. The euro getting a little bit stronger today ahead of a fed meeting that is going to do nothing. Crude oil lower, dragging down on stocks. Thised will consider lower. The yen, some of the money going into japan ahead of the meeting. Look at the korean won, at a two mud flow. Korean yuan at a two month low. Soybeans,s commodities might start rising again, at least soft commodities. Francine im glad you brought soybeans up. This is my board to show you some of the european equities. They are all down. Shares falling in asia and europe so crude oil dropping, the yen strengthening. Investors are cautioning before a Central Bank Meeting this week in the u. S. And japan. Michael Something Interesting about what is happening with the fed and Central Banks, the fed has been raising rates but it is having no impact. This is the fed funds effective rate, how it trades in the market. It has gone up since the fed raised rates, and here are corporate spreads. This is the bbb rated spreads and they are going down. They should be going up. If the fed were making it harder to borrow, they would be rising, but they are not. Does the fed raise rates . Does not seem to matter in the markets. Francine i like that chart. This is a little bit random that goes to the point. We were looking at excavator sales in china so i want to show you production margins. Chinas steel mill margins are at a sevenyear high and this is what the chart shows you. You can see five or six months ago they were almost at a record loss and now they are up here. The question when you look at this, can you trust the data and how much stimulus from china has filled through this construction . Lets get to saudi arabia, decades Oil Dependence may change their vision on oil. We are expecting a conference later on from the deputy crown prince. Bloomberg had a privileged experience when we spoke to him about six hours state straight. He joins us now on the phone from riyadh. Glenn, great to have you on the program. We are expecting the deputy crown prince to once again lay out his vision. Is it because he is trying to make a stand or because they are in trouble because of the Oil Price Level . Glen i think they are trying to change the economy and adapt to lower oil prices. Today they will roll out and announced several economic, social, and development programs. We do not have details, that is with the deputy crown prince told us. Michael what is he expected to announce, what kind of diversification is going to make enough money for them to keep the population happy . Glen they are going to announce on whetherme points they may lower subsidies, areas that they want to create jobs, whether it is in the Service Sector or tourism, and maybe some new developments that they are working on. We have had very few specifics on what they want to do, but this is part of their overall froma to move saudi arabia decadelong dependency on oil to an economy that has diversified sectors. Francine glenn, thank you so much, glen carey in react. Joined by davide serra. This week we have boj, have the fed, gdp, a lot of earnings. Great to have you on the program. You look at the real economy but also look at how you make money in this kind of real economy. Does it feel a little bit better, or do you think back to janet yellen, thinking she is not seeing the move so im a lot more cautious . Davide i think overall, markets were to bearish at the beginning of the year. My experience has been typically that debt was consensus ends up consensusg davos ends up being wrong. If i see where we stand today, flat yesterday. If you look at the pmi and china is basically a 50. The bankshares which are supposed to be are down. In reality i think what is happening is a coordinated Monetary Policy of easing so far has kind of been working. Francine you think that the fed is not hiking because there is some kind of tacit agreement with the pboc . Davide i think what they understood as a question of speed. They had to give the time to the stimulus,r domestic which is basically part of more lending into the economy. It is a close system so when you look at the overall lending in the economy, the fact that you do not have that you have the possibility at least, as far as china is concerned, to stimulate. Not want to lower it because of the Exchange Rate pressure, but i think if i look at three or four months ago, we were supposed to have an evaluation. We have not had it. Tmi, you justthe mentioned the Profit Margins were going back. I think it was not as bad three or four months ago and it is understood in the markets today. Michael is it that markets are thinking we can now make more earnings arees going to go up or are we just getting used to this new normal of slow growth and what is possible . Davide i think markets were very worried about the possibility of the socalled leaving event style. , a mistake ofina the ecb not clearly communicating some of the rules that crashed european stocks. Given the fear that the economy was not as stable as it is. When you look at tmi you look at gdp, job growth. It is not as bad. I think what happened is the market entered in panic and Central Banks said, relax, look at the data, and that is why we had a market recovery. Francine davide serra stays with us for the hour. Coming up, james stavridis. Natorved as a former supreme allied commander for the u. S. This is surveillance. Markets are down, oil, yen rising. Francine this is surveillance, im Francine Lacqua in london, Michael Mckee in new york. Here is vonnie quinn. Vonnie in germany, the ceo of Deutsche Bank and four former Bank Employees have been acquitted in a fraud trial. The charges were linked to the media empire. Before closing arguments began, the judge said prosecutors had failed to prove their case. Phillips leading toward having an ipo of its lighting business. It is the first time they said they may prefer an ipo to a private sale. Lighting units had more than 80 billion in revenue last month and the last year. One of the biggest shareholders in all of japan is the bank of japan. Bloomberg crunched the numbers and found that it is a top 10 shareholder and 90 of the nikkei. Distort valuations and undermine efforts to improve corporate governance. That is our Bloomberg Business flash. Francine president obama is in germany for a second day, meeting with angela merkel. We are expecting the president to speak shortly from germany. Zuczkae moment, tony c joins us from berlin. How much of the focus is on tt ip . Quite a bit of focus on the u. S. Eu trade deal because it is hard to pass. ,t is hard to pass in the eu certainly not very supported among the german public. The mood for free trade is not as good as it may have been on either side of the atlantic. It has been a topic of both obama and merkel, both made a pitch for yesterday. Francine president obama was in the u k where he did a pitch urging the britons to stay within the eu. One of his best relationships and europe is with chancellor merkel. Was it a warm welcome . Tony he was absolutely if you said yesterday when he was effusive absolutely yesterday when he was talking at a news conference. Obama really brings a smile to her face, which is something you do not see often these days since she has under a lot of pressure in germany domestically because of her stand on the refugee crisis. It is a big shout out from obama to merkel. Michael that is an interesting point, because obama is not very popular in the United States for the past couple of years. Is he still as popular in europe as he was . Is he an advantage to merkel . Tony that is an interesting no,tion, and the answer is, the euphoria that you had in europe at the start when obama came in and george w. Bush left the white house, that has stated and has faded quite a bit faded and has faded quite a bit. There are few figures in the world that can swoop into germany and give a boost to merkel. Factor, this residual although they openly mention some differences including on global issues. Francine tony, thank you so much for the up date. From our berlin office. Davide serra is still with us. The last seven days was dominated by president obama in europe. Brexit, where you flabbergasted that he came here, or does it just tell you how serious the debate is for World Leaders and general growth . Davide i think it is the key to political unrest. President obama made it very clear that were the u. K. To leave the eu, it will have to negotiate a new trade agreement. If we were to leave as a country, where are we going to stand in terms of trade negotiation . Have beend france clear that we will be at the bottom of the list. , they willticularly be even more clear, you have to keep paying the eu subsidy with a budget. These kinds of choices and is very simple, that we pay some and the over influenced by the weight of the eu economy. Most importantly, the thinking of the commission is often driven by an anglosaxon trade and at thatleave point if we want access to the market we have got to pay the bill. That would be for my view a disaster from an economic point of view. Francine we will be talking a little bit more about brexit but also u. K. Banks. We will bring you president obama speaking live from germany. He is in hanover and is expected to Start Talking about 5 30 in new york. Francine you are watching bloomberg surveillance. We are heading straight to hanover where president obama is speaking. President obama over the last seven years have relied on your friendship and counsel, and you are a firm moral compass. We appreciate your chancellor angela merkel. Bundestag,ers of the prime minister, meier, distinguished guests, people of germany, and i am especially pleased to see the young people here from germany and across europe. We also have some proud americans here. I have to admit that i have developed a special place in my heart for the german people. Back when i was a candidate for this office, you welcomed me with a small rally in berlin where i spoke of the change that is possible when the world stands as one. As president , you have treated me and michelle and our daughters to wonderful hospitality. You have offered me excellent year beer. You have now hosted our delegation in hanover. My only regret is that i have not been to germany for oktoberfest. I will have to come back, and i suspect it is more fun when you are not president. [laughter] [applause] president obama and as always i bring the friendship of the American People. We consider the german people and all of our european allies to be among our closest friends in the world. Because we share so much experience and so many of the same values. We believe the nations and people should live in security and peace. We believe in creating opportunity to lift up not just a few, but the many. Im proud to be the First American president to come to europe and be able to say that in the United States, health care is not a privilege, it is a right for all. We share that as well. [applause] obama perhaps most importantly, we believe in the quality and inherent dignity of every human being. Today in america, people have the freedom to marry the person that they love. We believe in justice, that no child in the world should ever die from a mosquito bite. No one should suffer from the egg of an empty stomach ache of an empty stomach. We can save our planet in the worlds most vulnerable people. These are things that we share. Common experience. This is what i want to talk to you about today, the future that we are building together, not separately but together. That starts right here in europe. I want to begin with an observation that, given the challenges that we face in the world and the headlines that we see every day, may seem improbable but it is true. We are fortunate to be living in the most useful, most profit mostuseful, most profit l, most profitable era. That might be a surprise. Consider that it has been decades since the last war between major powers. More people live in democracies. Healthierlthier and and better educated. With a Global Economy that has lifted up more than a billion people from extreme poverty and created new middle classes from the americas to africa to asia. Of thebout the health average person in the world. Tens of millions of lives that we saved from disease and infant mortality, and people now living longer lives. Around the world, we are more tolerant with more opportunity lesbians,and gays and as we push back on bigotry and prejudice. World, there is a new generation of young people like you that are connected by technology and driven by your idealism and imagination, and you are working together to start adventures. Is moree government accountable, and enhance human dignity. If you had to choose a moment in born, any time in Human History and you did not know ahead of time what nationality you were or what or what your economic status might be, you would , which is not to say that there is not still in or miss suffering enormous suffering and tragedy. That theremember trajectory of our history over the last 50, 100 years has been remarkable. We cannot take that for granted, and we should take confident take confidence in our ability to shape our own destiny. But does not mean that we can be complacent because today, dangerous forces do threaten to pull the world backwards. Our progress is not enough. Europehallenges threaten and they threaten our transatlantic community. We are not immune from the forces of change around the world. As they have elsewhere, barbaric terrorists have slaughtered innocent people in paris and brussels and we see these tragedies in place essential to our daily lives. Workplace, ors, theater. Unsettles us. It it makes us unsure in our , fearfuly lives notches just for ourselves, but for those we love. Conflicts from self event to fleeingve sent millions to the safety of european shores, but that strains on cities. Ies and local russian aggression has violated the sovereignty and territorial of an independent european nation, ukraine. That unnerves our allies in eastern europe, threatening a vision of the europe that is whole, free, and at peace, and it seems to threaten the progress that has been made since the end of the cold war. Slow Economic Growth in europe, especially in the south, has unemployed,s including a generation of young people without jobs, and who may look to the future with diminishing hopes. All of these persistent tollenges have led some question whether european integration can long injure, whether you might be better off separating off, redrawing some of the barriers and one between nations that existed in the 20th century. Across the countries, including the United States, a lot of workers and families are still struggling to recover from the worst economic crisis in generations. A trauma of millions who lost their jobs and savings is still felt. Meanwhile, there are profound trends underway to have been going on for decades. Globalization, automation, that have, in some cases, depressed wages and made workers in a weaker position to bargain for better conditions. Wages have stagnated in many advanced countries. Inequality has increased. For many people, it is harder. Han ever told on hold on this is happening in europe. Bc some of these trends we see some of these trends in the United States. These anxieties are real. They are legitimate. They cannot be ignored. Its their solutions from those in power. Unfortunately, in the vacuum, if we do not solve these problems, you start seeing those who will exploit these fears and frustrations, and ch channel them in a disruptive way. A type of politics that the european project was founded to reject. And us versus them mentality that tried to blame our problems on the other, someone who does not look like us or does not pray like us, whether immigrant