With tom keene in new york. Deutsche bank is down 7 . M the idea of a cash call being had. I can maybe make a guess. What are they waiting for . They have to go out and recharge. It has been years and years and years. Maybe this 14 billion love note is another catalyst to get them there. Francine they say they dont want to pay 14 billion. May they will get a better deal. The analysts guessed 5 billion. Im not sure how how they got it so wrong. Lets get to the news. Angela merkel is promising to do everything she can to hold the European Union together. They are meeting in bratislava brexit plot their post course. British Opposition LeaderJeremy Corbyn says his labor party is looking to norway when it comes to the brexit. Norway has exit to the e. U. Single market but is not in the e. U. Itself. Maybe we can learn a great deal from norway. After all it has a successful economy. It is based on oil. It is a much smaller society strongrs but they have a social democratic tradition. They have a huge welfare state and health service. The model of their socially based economy is that different from what what we in the labor party talk about. Corbyn is working to keep his position as head over the labor party. The ceasefire appears to be holding. N. Ready to roll with they are stopping from pulling back on a major road in the city. The typhoon battered the province. More rain is expected. The typhoon is the strongest storm in the world this year. Global leaders attending the in venezuela will be greeted by Anti Government protesters. They are vowing to take to the streets again throughout the country. They are demanding a timeline to old a recall referendum. This is bloomberg. Tom thanks so much. On a friday, lets get to the data now. Equities, commodities, futures some weight to them. Negative seven. Euro has done nothing since time began. Crude oil is a back story this week. 4338 on american crude and there is brent that 98. It is not so much a big deal but if trend continues, that is big deal. Here is the trend, dollarmexico, 19. 31. Really gets my attention as a proxy for e. M. Combined with the american election. Francine tom, this is my data board. I have to look at the banks. Down 1. 4 . Deutsche bank down 6. 6 after the dodge asked for 14 billion the d. O. J. Asked for 14 billion. This is a claim they say they will not pay for. They do have to raise capital if they pay somewhere near that mount. Very quickly some of the main movers. Tom nice second chart from francine. Is that in euros . Rancine it is in euros. 21 euro cents a share. Tom not centimes . Trey the old french franc, tom. Tom i learned something today from francine. Very, very cool. Lets help you with the many faces of inflation. The white line c. P. I. The yellow sideline core. Oil is rolled over. There we are. The red line is a 2 level that everybody blathers on about and then those three circles over there are only a few of the many inflations from the top. Service sector inflation. Well over 3 , francine, what is in our mailbox . Maybe that is the rent in london. The green one is my favorite. Cleveland c. P. I. , a little above core and the red one, which is what the fed looks at is the top line deflator. It is an odd picture of which inflation the fed should look at now. Francine . Francine this is Deutsche Bank. Instead of looking at the share price, this is cocos. Remember there was a controversy cocos. February about this is when the controversy started. A leg lower from these Deutsche Bank cocos. Already in a little bit of a mess on what the d. O. J. Will do next week and what the fed will do next week an all of this uncertainty about european banks. The d. O. J. May do something. The fed wont do anything. Were at a point where whatever Central Banks do, that bit of a jam jar with the spoon scraping around the bottom and then there will just be enough jam to put some on your last crumpet but there is no meal down there. Francine what does that mean for the markets and participants . It means solving all of these problems, there is not much inflation. There is not much wage growth. Horrible numbers out of france this morning. There is not much the Central Banks can do to liven it up. It means a journey on lets all o and hunt and yield and carry wherever we can in the summer. Tom showed the mexican peso which is in limelight for two reasons at the same time. Bond yields cant go any lower because they cant get any help from Central Banks. We take a pause. Tom lets come back to mexican peso in a minute. Sterling is maybe a proxy for everybody like you waiting around for something to happen. I love your Research Note the morning on how deadly it is and youre looking for a surprise to get my pulse up. E have the hsbc call to 110 on sterling. A lot of people, that yellow circle to 120. Where is consensus on sterling now as you look at it . I think consensus is slowly coming up. People overdid their bearishness. It is not going to be moving much. The story on the u. K. And sterling is the story about the longterm Economic Impact and the uncertainty about how the u. K. Divorce itself from europe and we are no further forward on that today than we were. Tom what is the catalyst kit to umpstart weaker sterling . Garagal slow realization that hirings will be postponed and the growth of the economy is going to continue to slow and lag and the bouncing around over the Economic Data at the moment doesnt change any of that. As growth slows to a 0 to 1 range instead of 2 to 3 that we have been in, rates probably get cut further and asset purchases probably increase again at some point and then i think we get another i wouldnt look for a huge move. I would look for 5 . Francine thank you so much for now. Coming up, well have plenty more on banks. This is what the Deutsche Bank is doing at the moment. A lot of pressure from what we heard from the d. O. J. Yesterday. Slumping after a 14 billion claim in the u. S. Justice department. Withmay mean they struggle profitability. Francine this is bloomberg surveillance. Im Francine Lacqua. Tom skeen in new york. The new iphone 7 went onsale today. Many may walk away empty handed because apple hasnt made enough phones for demand. Apple has decided to break with tradition and not announce the first weekend sales figures. U. S. Safety regulators have made it official. Samsung will recall the galaxy note 7 smart phone after dozens of the phones caught fire or exploded. They are recalling them because of a battery flaw. Francine thank you so much. Deutsche bank shares falling ome 7 in frankfurt. The 14 billion claim is to settle investigation into the sale of mortgagebacked securities. Figures are triple what some analysts had estimated. The company suspects the amount will go lower. James, a significant lower amount. It cant really be that significantly lower, can it . Well, there is a history of european banks getting slapped with big fines because of the securities issues. During the precrisis period and then getting their governments to go in to bat for them to try to get the fine mitigated to some extent. The fines have been very, very substantial indeed. The trouble with the european banks is they are not Strong Enough to pay them yet. Francine does that mean we will see Deutsche Bank raising capital . Personally speaking i think it is fairly inevitable that a bank like Deutsche Bank which has always argued that it is extremely high leverage was ok because it was mitigated by the fact that its assets were very low risk. The market used to believe that and give Deutsche Bank the benefit of the douth. Now it is not. Therefore that leverage just stands out. Tom james, thrilled to have you on. I love your recent work on lloyds bank. Help me with john and the size over the cash claw he will need and the effects to shareholders. Obviously the really big problem that all banks have with cash calls and Capital Raising is that you can only do it when you dont need to do it. Once you need to do it when your share price is under intense pressure like deutsches, it becomes really critical. Banks have to buy themselves time, to do it through retained earnings. I think there will have to be a cash call of some description. Deutsche is being assaulted on all sides. This is incredibly unhelpful for deutsche. The fact is they cant realistically raise enough in the shortterm. Thats why i think the authorities in europe will push for a delay. Tom lets go to the chart on Deutsche Bank. You have a 10year level with the blue line. We migrate below 10 to to be the catalyst. Do you think there is enough breakdown for that share price to go below 10 euros . This is an intense debate and were getting quite close to the theres the share price hit. This is the level at which the share price has to decide whether it is going to break or hold in there. One thing, you could make all sides happy. If you think about how long it has been since the infringements occurred and when the fine arrived, all could be happy behind closed zpoors deutsche agrees to fay fine but is given five to 10 years to do it in. It is not necessarily an urgent problem. All sides could be made happy and good as long as you buy time. The problem with that, as always, with resolution from banking crisis, when youre buying the banks time during that period, they are not in the business of helping the the economy or making new loans. Francine this go goes back to what you were saying about the impact that the Banking Industry can have on the european economy. Banks today, they say are not bulletproof. Regulator consist strain leverage and curb riskier activities. Shareholders continue to suffer. James, this is on the back of a larryby harvard academics summers. They chose the anniversary to put out this paper. This is before we knew about Deutsche Bank. Real real problem the problem for europe yan banks, Deutsche Bank is hitting the news today. They have too many bad loans still hidden away in the cupboards in their offices. If you look at loan growth at the banks. A lot of people look at it and think all is ok. That is mainly do to things like q. E. , etc. Loan growth is running about 0. 4 nominal. The u. S. Is 8 nominal. It has been for two years now. There is a large difference between the state of u. S. Banks which are largely fixed and european banks which look sickly indeed. Well talking a little bit about b. O. J. And currencies in general. This is the state of the markets. Quite a lot of pressure on Deutsche Bank. European markets fluctuating. Look out for the italian banks. This is bloomberg. Tom oh, the yankees. They have made a dash. They are less dashing this friday morning. They are up at the fenways losing. Oh, the yankees. Francine lacqua in london. Im tom keene. Francine it is tonch yen. You have the wrong yen. Yankees. Tom well do that later. Right now Michael Mckee with us. There i was yesterday. Me, mr. Trump on an economic plan. Did you hear a plan within his speech . Not much of one, not one you could evaluate with anything serious. Lets take a look at the one thing he got right. He talked about how growth in the United States has ratcheted down. He got that right. Post world war ii, at 2,000. 1999, 2,000, there is the break you can see. The we have averaged about 2 . There is yet a problem. He doesnt offer a lot to fix that. The center species his tax cuts. He goes to three tax brackets. That couldnt change a whole lot. He cuts Corporate Taxes to 15 and give it is everybody tax curts. Hat would be a 4. 4 trillion pra program. Total revenue loss is 2. 6 trillion. How do you make that up . This is where it gets very tricky. They talk about renegotiating trade deals deals, cutting regulation and reducing spending and youll love this. The return to have rosy scenario from the reagan years. The tax cuts will pay for themselves through additional Economic Growth. You can see what happened in the reagan years when they said the tax cuts would pay for themselves. Francine away from economics, is he going to win voters with this plan . Here is the problem, francine. When you look at the plan, there is no plan. He doesnt say how he would renegotiate the tax deals. He loses every economist on that podium there. As Bloomberg Politics pointed out, the only thing americans are going to hear is donald trump says he will cut your tax. They are not going to go into the details. He may win some voters who say wow, he is going to cut my taxes. Doesnt add up. Doesnt necessarily make sense. We dont know enough to really judge it. Politically it may work. Francine berlusconi, we have drawn parallels between him and trump in past. This was his policy and he won every time on promising tax cuts. It is hard to say what americans think about cutting taxs. We saw it after jorning w. Bush cut taxes. Growth picked up a little bit but then we had a couple of recessions including the great recession. Tom francine has a good question about the marginal voter. I heard harkening back to William Jennings bryant. The difference was Jennings Bryant losing three elections. Was a kid from illinois, went to nebraska and was part of that fabric and soul away from new york. Trump is not like that. He is a new yorker. Is that a distinction to you in this process were going through . It is certainly a di tunks to people who are distinction to people who are i dont want to be too negative here. People who are educated and know donald trump. Average american who supports him seems to be grabbing on to his message which is filled with distortions. He claimed 94 Million People were sitting on the sidelines over the u. S. Economy. That is absurd. Tom im not sure he knew who he was talking to yesterday. Governor pence came out and gave a Real Campaign speech. People were like why are we listening to this . This is the elite of new york. You were there. Did anybody applaud . Tom yeah, there was tepid applause among the moverbs the Economic Club. Full disclosure. Im a member. This is great. Michael mckee. With all due respect 5 00 p. M. Tonight. Tom tim cook is a failure. Apple is a failure. I guess the stock prices i really vant looked a at this. This is the acclaimed fifth avenue store of apple computer. The glazz box with the apple. They are beginning to line up for the latest toy. Apple is a failure prm good morning, everyone. Im tom keene in new york. Francine lacqua is in london. Right now he is not a failure. Lets get to our first word news. Snowden. House said caused tremendous damage to u. S. Security. They will eventually spend billions to repair the damage he caused about spying operations. He is now a fugitive in russia. A movie sympathetic to him opens this weekend. Trump believes the president was born in the u. S. The Trump Campaign believes the socalled birth issue has hurt his efforts to win support from black voters. Hillary clinton has resumed campaigning after taking three days off to recover from pneumonia. She hit the swing state of North Carolina and the congressional hispanic conference. Japan and china may be on a collision course in the south china sea. Japans new defense minister said the country will step up its ativity in the disputed region. It comes a week after ping urged japan to exercise caution in the aters. Francine . Francine thank you so much. Next week, not one but two to have worlds major bank release the major policy decisions, the b. O. J. And then followed by the fed about nine hours later. When you look at the traders and i want to focus on the currency traders because they seem to be paralyzed. We have a great bloomberg article. They seem to think this is a guessing game. En you look at b. O. J. , is it communication from the governor wrong or do we think what they are doing is just not working . What they have done is not working. I think that seems at least not working anymore. I think it is also that there is disgrem about what to do next. The back story to some degree is bad uary they made a policy move without full support that surprised the market and failed spectacularly. Since then, they have given the impression of being people in a funk of what do we do now . They didnt work. I have three bullets left. I have just blown one. I shot one in any foot. Im not feeling confident. They are in unknown territory. I would go next week and cut rates. Francine you would but will they . Japan is almost the epicenter of this global last month. Correct. They would like to have steeper yield curves so the banks get some relief. That is a theme close to your heart. Francine ive been there before. They are not trying to push it down forever an forever but they need to do something to stop their currency from appreciating. I think if they do it in a quieter calmer market, their chance of success stronger. I think there is a chance they do it. Put me against the wall, i dont really think they will. I hope they do. Tom this follows on from Michael Mckees great chart on mr. Trump moments ago. Im going to introduce this in the 6 00 hour. It is remarkable in a fouryear move moving average of 1. 9 , real u. S. G. D. P. , how chronic, how chronic the lack of Economic Growth is. Can government policy relate in to create growth or do they just re flateto create inflation . You can. You dont do it by whacking global trade really hard, which is an observation on the side. Global trade growth is bad enough. The u. S. Captures it. There has been a lock of investment in the u. S. There has been a collapse of productivity growth in the u. S. In recent years. Same thing in the u. K. For what it is worth. Aggressive spending by overnment for longterm programs to boost productivity. The u. S. Is at 2 . It could work, sure. Tom help our global wall street audience. What i heard yesterday from mr. Trump was a