Johnson . Where did this summer go . Guy we had to the summer. This was the first summer in ages nothing happened. Last august it was china blowing up and greece. This is the summer to relax. Tom we just saw good english data, didnt we . Guy absolutely. The bounceback is there in the Manufacturing Sector. The british pound has gone down. No effect on manufacturing. We have a big drop and suddenly a number coming through. I dont know what to be more excited about, the comments on Monetary Policy not working or the data out of the u. K. Tom right now, lets get to the Bloomberg September 1 first word news with taylor riggs. Donald trump has returned to form an immigration. In phoenix the republican candidate made it clear he was to build a wall on the southern border with the u. S. And make mexico stay for it pay for it. There will be no amnesty. Status,ot obtain legal or become a citizen of the United States by illegally entering our country. Day,r earlier in the donald trump flew to mexico city to meet with the president there. He did not discuss the border wall, but peno contradicted him pena contradicted him. Suggest that she is willing to leave the eu Single Market to accomplish that. Since the start of the week, 12,000 migrants have been rescued in the mediterranean, an unusually high number. Controls were tightened along the routes connecting turkey a to austria, so italy is the main point from africa and the middle east. Singapore has its first case of a pregnant woman testing positive for the zika virus. There have been 100 cases reported. The first locally transmitted infection was identified this week. Singapore has set up efforts to fight the zika virus and the mosquitoes that carry it. The brazilian president says the worst is over. His first job is to build the economy back on track. He told his cap that includes spending caps and pension cuts. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. I am taylor riggs, this is bloomberg. Tom lets get to equities, bonds, currencies, commodities. The futures are up. Euro, weaker dollar, oil stronger with a little bit of a adapter ugly day yesterday. In the nexts on vol hour. Theres brent crude under a 47. Gold coming in. In mexico, trumps visit to mexico, a fourday move of the weaker peso that we have seen moving back towards 19. Guy lets talk about what is happening with the pound. What is happening with the ftse did the low low the back of that number. Chart, 130om of the 2. 49 on the back of the stronger manufacturing number. I will give more numbers when we come back. My bloomberg, god has a short review, this is a straight weighted them. Is there a lot of history in this chart. The turn down is the weakening of sterling off of the euro crisis. Unlike most major nations, it did not come back. The brexit dropped on a weak sterling, the blue circle. The red circle in the lower right, if you extrapolate or interpolate out a 120 sterling and bring it over to trade weighted coming you get to the red circle, which is beneath lack wednesday of 1992 on the left. Thisohnson, the profound of a 120 call from Deutsche Bank and others is extraordinary. Guy the extraordinary thing would be to see that having a bigger effect on the Manufacturing Sector. That is what we are seeing at the moment. Finally an effective a weaker sterling. We have waited so long. You can see that on my chart. I have the cable rates, the blue line. The white line is the Manufacturing Sector. Both have been going down in an, but finally we have a drop. This is the Manufacturing Sector bouncing back. Went to bloomberg intelligence, they said wait for the services number. If you get to a Strong Services number, like it have an effect on Monetary Policy as well. Tom does that mean it is 142 one United Kingdom. Cumberlandunder of Global Advisors joins us on set. Weaker pound a finally having an effect. How does the bank of england reacts . When youou think about think of brexit is not only ss trade deals and immigration, but the impact of slightly better tools to compete in low growth. Clearly, a weaker pound will we know that europe, which is a trade partner is going through a difficult patch. We had the german numbers, inflation is still very difficult. If we have Central Banks that are running out of guy she the bank of england to say look at what we are seeing, maybe we should cut rates again and get sterling down over to the levels that tom is talking about . I think that waiting would probably be advisable if you see these kind of numbers. If you do things too quickly from you create uncertainty. If the pound is dropping too quickly you create uncertain tea, which could affect the Manufacturing Sector. To gainant competitiveness through weaker currency, doing it in a managed way is better, my personal view. Tom youre more qualified than anyone to talk about the linkage of banking and financial london and the United Kingdom. Do you look at Financial Services in the city as a discrete andn as separate from the study of the United Kingdom economy . Nearly, the Financial Services in the u. K. Is a very important part of the u. K. Economy, and has Dynamics Beyond the u. K. It is global dynamics, central ks, mobile Monetary Policy that is different than specific Manufacturing Sectors for example. You have to analyze it in a different way. If we link that to the comments that theresa may made yesterday, understanding how the brexit will impact the city must be done in line with what the brexit could do if you have a weaker current the. Most likely weaker currency. Most likely the city has to lose on the margin from brexit. Tom what will they lose to . Help me, here. I get the idea of dublin, but if we are going to lose in london, where are they going . Virginie there is that part, where do you move. Paris, germany, clearly things are different. To think about the immigration side, given the number of europeans who work in the city. If it is difficult for them to stay here, they will be an impact on manpower and companies. Ill adapt and try to relocate from that uncertainty, it will have an impact. Will it last for sixhan solo 12months . We will see. We have will it last for sixmonths or 12months, we will see. We have the negotiation of brexit, you have the posturing around that, and immigration which has an impact on the city. You also have meeting surround the Central Banks, oh back, the g20. , the g20. That is creating volatility. Guy the eu needs the city of london in. Long time toeed a build the Capital Market if there is a brexit, i. E. The city of london. Europe needs the city, i Capital Market geared we cannot rely on the banks, the banks are broken. Europe needs the city, do not throw that out of the window. Virginie i agree with that. The question is, if you have a big part of the work force that cannot stay because of visa issues, that creates the. Hopefully that is easy to resolve. It is uncertainty in the time to clarity. In the next 12once you will have 12 months, all of the city is very clear. Theres nothing that can take away that function. Either the other centers will adapt or the lack of clarity erased and we will know what happened. The next 12 months will be quite volatile. Tom good United Kingdom data. Tomorrow, september 2. Join us afterwill the jobs report on television and radio. On theapital, bill gross fed and jobs. This is bloomberg. Guy 14 minutes past the hour. I am guy johnson with tom keene in new york. Taylor bouncing back from the postbrexit slump. Manufacturing reached a 10 month high in august. That are then economist forecasted. According to the research from market, numbers rose. The main factor for an increase in exports. English banks being attacked for entrenched elitism. A Government Advisory Panel says people from low income backgrounds are blocked in getting jobs at the banks. Theyre educated at private schools and workingclass kids lose out. For the first time in two years, gambling revenue ha risen in macau. New resorts attracted recreational gamblers and taurus. Chinas crackdown on corruption scared off gamblers from the mainland. It has also hurt macau. That is your Bloomberg Business flash. Guy thank you. Lets stay in china. The official meeting for factory activity in august hit the highest levels since 2014, unexpected momentum into the peak manufacturing season. Joining us is the chief major economist from bloomberg television. Is this number a blip . Tom i do not think so. There are other positive numbers at the same time. Everything from satellite images of chinas manufacturing parks to the flash ratings for career exploits with tend to move closely aligned with china pointing to momentum or chinese manufacturing in the second half. Guy is it just Big Companies benefiting . They would receive most of the stimulus. You wonder if we are getting a bifurcated Manufacturing Sector. Tom i think that is a genuine trend. The way stimulus works in china. Money to big enterprises, they are the first to come out of the slump. That is the trend we are seeing into the second half of 2016. Reflected in the official pmi, smaller, private firms not doing so well. Tom i want to look at september as you wander into september 2. What is the level of financial instability within the greater chinese debt system . I do not trust the pmi, i do not trust tom orlik, i do not even trust the woman in the food court in the beijing office. What is the financial instability of china . One measure that you can look at if you do not believe me or the pmi or the woman in the food court, money market rates. The concern on instability in china, chinas money market rates have stayed low and stable, sevenday repo rate not moving far from a low and stable level anytime over the last year. Risks are you that growing, but the government has liquidity management tools to control them for now. Tom if i look at shanghai , telling me the government is manipulating the shortterm market, is that an appropriate statement . Tom i think manipulating is a little strong. I would put it that despite capital outflows and chinese banks being overextended, vice corporate being stressed, the people of china maintain a sophisticated tools to manage liquidity. As long as it has those tools the chance of any of these risks blowing up, a financial crisis in china, remain low. Tom we will see you in the food court in beijing. Perspectiveving his from the chinese capital. Perspectivels tomorrow. One of the giants, j. P. Morgan Chase International chairman, his perspective from a troubled financial era. Worldwide, this is bloomberg. Uy i am guy johnson in london tom keene is in new york. In frankfurt, the current chair of ubs axel weiber has been weighing in. He says the world cannot accept the Monetary Policy is not working. He is not wild on negative rates either. Where we are now, the rates path is blocked, rates are zero. They can sink negative, but i was always skeptical of negative rates. I think they do more harm than good. Tom that is ask weber at the conference. Deutsche bank. Lets go to the house view you. My conversation with vice chairman fisher. Here he is on negative rates. Central banks implementing them, they basically think they are quite successful and are staying with that approach. Possibly with the exception of japan. They have said they will come back to try to make a negative rates work better. Tom i would suggest that professor fisher and dr. Weber have a Great Respect for each other. They are miles apart on this topic, arent they . Guy in some ways they are, in. Ome ways they are not i understand fisher talking about negative rates working where applied. Many would say that negative rates are working differently in different places. In switzerland, the nordic countries, they are working. The question mark, in a big economy like the eurozone, are they working in the eurozone . That is the crux of this. In what economy are you applying it . The what i find amazing is cultural economics. Nation to nation to dr. Webers point. Nation to nation negative rates are different outcome . Tom absolutely. Also the length of time that you apply them for. I think that it also depends on the Growth Potential and demand potential. If you use the extraordinary monetary policies in a country where you have demanded that can be ignited by those monetary policies, it works. It is smart. If you keep it for too long, and the demand is not taken care of, they are inefficient. We go back to saying, what do we need to have to grow . We need structural reforms, and perhaps some form of marshall plan. Sorry tom it could be a johnson plan as well. When we look at negative rates, do you bring them into the dialogue on the future of commerzbank . , brennery neil re interpretation, etc. , etc. , etc. The fold them in . Tom that is the bottom line. If it is a temporary measure, and demand picks up beyond that, that is fine. It is there to be semipermanent. Bigger bank every time. That is the problem. He says it only works on the capital and currency markets. He is not a fan. Monetary policy is not working, the do you agree or disagree . Virginie i agree. The next step is to think where our things changing . Clearly the u. S. Is in a position to very slowly normalize rates. It depends not only on domestic conditions, but global conditions. Thehat point will the normalization in the u. S. Put further emphasis on the lack of action and create more problems in japan and europe . Guy thank you. We will be talking about the brazilian political shakeup. We will be joined by kevin daly. This is bloomberg. Guy one hours since we had the standout venue fracturing number. The pound, look at it. It is september, the sun is out, we dont know what to do. Tom it is always raining. Guy the correlation there, maybe, i dont know. York. Ene in new guy johnson in lovely london. Lets talk about what is happening with the story further afield. Virginie donald trump is trying to reassure some orders he is not lawfully on the decision of illegal immigration. Their republican president ial candidate outlined a plan that rolled out amnesty for immigrants who came to the u. S. Illegally. He made it clear there will be a wall between the u. S. And mexico. Donald trump weevil build a great wall a long southern border, and mexico will pay for the wall. Taylor earlier, donald trump went to mexico to meet with president the answer. Refused to court has revive North Carolinas voter id requirements for the november intact a lowerng Court Conclusion that lawmakers intentionally discriminated against racial minorities. In germany, chancellor merkels party facing defeat by an antiimmigration party sunday. The Democratic Union is running neck and neck with the alternative. It is capitalizing on voters unhappiness with merkels hallmark policies were refugees to sanctions on russia. Chinas hardline on hong kong democracy put to the test on monday. Voters will choose members of the legislative cancel two years after students a blocked the streets. Must sixovernment governments from running saying that they do not support hong kongs basic laws. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. , this isor rigg bloomberg. Guy thank you. Has taken over as brazils president after Dilma Rousseff was impeached nine month after proceedings began against her. What is the Investment Outlook . Lets get to Aberdeen Asset manager kevin daly. Still with us, virginie maisonneuve. It has been a run for brazil ever since the political story started to change. The market is pricing in better news. The reality of the situation and brazil, does the market reassess . Kevin i dont think today. The vote overnight was widely expect it. What the markets will do is to see whether or not the fiscal reform measures the government will implement will be watered down. He did have one surprise in the vote, while they voted overwhelmingly to impeach her, they allowed her to keep political rights. There was a deal. There is a sense that maybe there is potential backsliding. We do not expect this, but that is something to look for in terms of shortterm risk. Have to doill michel to keep the market on board . Onin to pass the cap capital spending. Spending has been exponentially off the charts in recent years. You have a fiscal timebomb. Next year, we will have to see significant Social Security reform, these are the 2 very near term issues to be addressed. Guy hugely popular things to do. How long is the honeymoon . Kevin good question. Governments are very restrained by populism. This government will be no different. There is a shortterm window. We have 2years before the next election, and temer will not be running for president in 2018. They have time to implement the measures, though they will be unpopular. Tom with great humility, i can tell you one of the things that i messed up in my career was getting lula wrong. Everyone thought the world would end and i was wrong. It was a huge run for brazil. Are we setting ourselves up for a redux of the rally . Kevin you are not alone. Were worried about brazil blowing up and history has proven them to be wrong. This is a shortterm government. A government heavy with technocrats. The market is on board with that. They have 2 years to put brazil on the right track. They will not get everything right. You will not see the debtgdp stabilize. It is important from a signaling standpoint that this governmen