Lets get straight to the bloomberg first word news with taylor riggs. Taylor republican president ial nominee donald trump is pushing back against allegations of Sexual Assault. The womenhe says accusing him of misconduct were lying at a rally in florida and in two appearances in ohio, calling them vicious and false. He is back on the campaign trail today with two appearances in north carolina. In europe, the president of the European Union is offering a stark choice to the u. K. Hard brexit or no brexit, take your pick. Donald tusk delivered his hardline stance in brussels, signaling that the departure may take longer than two years, and it is when theresa may realized it will be painful for britain. And thailand is beginning a year of mourning for the worlds longest reigning monarch. He died yesterday at the age of 88. The government signaled that his only son will ascend to the throne. He was a symbol of unity in the country rocked by 10 coups. He has been ill for years, making limited public appearances and spending most of his time in the hospital. Global news, 24 hours a day, powered by over 2600 journalists and analysts in more than 120 countries. Im taylor riggs. This is bloomberg. Tom thanks so much. Lets go to equities, bonds, currencies, commodities. Day, but iner review, equities are a little bit weak yesterday, including a visit by the yiels stronger over the last 48 hours. Elevated. The big 16. 17, the dow just above 18,000. Note that with all the backandforth in currencies, euroswiss is stronger and much more about weaker euro. Its not a big deal but it is may be something to watch into monday and tuesday. Lets look at the American Economy and the spirit of american retail. Inflationadjusted control retail. What i mean by that is that the american consumer, all that noise, building material, we will get to in a moment. Theres a level change off the trend in the financial crisis that is unprecedented, to see that pullback in retail. You can see the parallel nature. Lets bring in our macro risk advisor. I brought this chart of just for you. The American Economic association, a million years ago, is up on stage. Anthony, its friday, do something. I saw this chart you can bring this over to all sorts of things. A level change, then the Great American recovery. Sure. I think that chart shows we had a pretty significant shock. I remember retail sure. Sales that was inflationadjusted, yeah . Tom inflationadjusted, but still yeah. We have had a recovery. Theres a big debate about whether we should be drawing lines like that, potential growth has also come in a little bit, right . Which is why even though we have had that big shock and recovered, were starting to see things like inflation picking up. Tom i want to bring this up. Bring the chart up one more time the price of bringing that line back to what we knew is higher inflation, isnt it . Did we overheat the economy . Are you worried about overheat, overshoot in the higher inflation . Im not worried about it. I think we will over and shoot. I think its interesting that core pc inflation, for example, is on pace to get to 2 by the end of the year. But if you look at the performance of core inflation, we are already getting there despite significant dollar appreciation. Tom theres a lot of gloom this week, but you are the antigloom. You pound the table saying no. Jpmorgan, 3 statistic for gdp. What did they get wrong . If you have been listening this year, you have the losing money. You have to put your money where your mouth is. Look at industrial stocks they have been rallying. All the worry was around global growth. E. M. Stocks have been doing better than developed market stocks. Tom 3 gdp in the u. S. . For a couple quarters, probably. You have to member that we had a significant inventory shedding, and that will help us get up to 3 . Tom im trying to be optimistic. The doctors are in the national league. Francine, the dodgers mega baseball game. They go want to play the chicago cubs. Its nirvana for baseball, francine, in america. Francine nirvana for baseball . Im so happy to your that. This is the breaking news of the morning. I spoke to Emmanuel Macron, the former french finance minister. He said he wont decide if you will try to become president by january. You focus on baseball, ill focus on the president ial election. With us now is catherine mann, who joins me here in paris. Thank you for joining us. Glad to be here. Francine we talked about all the biotech startups. So what you are focusing on his trade. You clearly told us trade is populism, because of because people are holding back what will de facto change that . Growth. Growth is what drives trade, and trade is what drives growth. There is a synergy, and in particular, more investment. Investment is very trade intensive. The very slow investment that we have seen around the world for many years now, trade has finally caught up to the slowness of investment. Of course the consequences of people, potential output, possible new developments in other countries, trade is a key element. Francine what is the one thing we need to spur growth . If you could change one thing core inflation . What is tricky . Right now, whats most important to spur growth is fiscal spending. On bridges in some countries, on innovation in others. Both r d and hard stuff. What we see here today in the french science and technology, my husband is a serial entrepreneur, and being here brings back memories of doing this kind of thing when i was a lot younger. Coming to these events, showing your stuff, doing that innovation, making a difference for whats going to be true and whats going to be investment in the next year. This is also a key for getting us back on track to a higher growth rate and higher trade. Francine but the problem is you talk about entrepreneurs, we had a whole panel, theres a f ear of failing and a lot of european countries, and its difficult to take risk. Growth comes from risktaking. Right. One of the things about france is that there are a lot of entrepreneurs. In my neighborhood, there are five or six. The issue is that it is hard to grow. And the essential thing to promote growth and investment and productivity and higher potential output, you have to be growing a small business. And that is where some of these regulations become a challenge. The regulations make the incentive to remain small, and if you are small, you cant have a global marketplace, you cant get to scale, you cant hire new people. Its innovation in small businesses, then growth. Francine what is the linkage between the market and growth . Thomas saying we are having a quiet day doing a quiet days so people can get things done . Well, one of the things is that theres a big disconnect between what goes on in the Financial Markets and whats going on in the real economy. That disconnect has become very severe in the last five years, since the financial crisis. The disconnect has only become wider. The markets are volatile, dependent on low Interest Rates, and the real economy hasnt caught up yet. In terms of being able to grow and support where the markets are. The two of them are very disconnected. I think most onchip renderers should look at the marketplace most entrepreneurs should look at the marketplace. They should focus on the growth. And policymakers should focus on what it takes to get businesses to grow. Francine carolyn man stays with us. We will be focusing on china next. I thought it was important when she said that the disconnect spurs growth. Tom thank you so much. I am looking at sterling, turning into the market. I dont want to oversell it, but we will monitor the market through the morning. Well also monitor the comments of chair yellen, an important speech today in boston at 1 00. On radio, on television worldwide, a reason to stay with Bloomberg Television and radio. This is bloomberg. Tom economics, finance, investment, from paris and new york. Francine lacqua, a wonderful event on innovation in paris. Will get to her in a moment. Sometimes on friday, there are little stories we go yeah, i dont care. In three weeks later, why didnt i Pay Attention to that story . Out of china this morning, the Chinese Government may mate two of the major companies. These two giant Chinese Companies helle without they do. China, the government, wants to merge them why . Its quite a big merger. The wider backstory is that china is promising to shake up and reform its massive state owned enterprise sector, which is still a significant part of the economy. But its also debt laden. The government is trying to shake it up, and progress has been quite slow. Tom does it get pushback . Is there any debate, or does china just say, this is what we are going to do . They arent even relying on foreign investments; they are doing this themselves. We have a big year of political change in china next year; all the analysts say there isnt much appetite for closing stuff down and putting people out of work. Nonetheless they say they are sticking to their guns, saying that we will see more mergers like this and or consolidation. But they still have a long way to go in terms of arming. Tom in terms of reforming. Tom thank you. Lets go back to paris. Katherine man and francine. Francine thank you so much, tom. It was fascinating to hear of this megamerger. This is this a good omen . This seems to be the government trying to overhaul. Megamerger czar what . A desperate measure or sinus sign of Better Things to come . Consolidation,he but megamergers are necessarily the strategy to improve productivity growth. Its not exactly going to promote competition. May lead to higher prices, which may be a desirable in the shortterm, but there is a question about whether this is the right way to go. The next stage has to be focusing on activity and competition. Francine but it shows that they are tryi sure they are overhauling companies so much as overhauling sectors. In the end, we have to see overhaul in companies in order to get to a higher productivity, more competitive situation. I think there might be pushed back around the world, because if you have a megamerger in china, does that really enhance competition around the world or not . Francine theres also some news, for the first time in five years, they are factoring in inflation. What did i tell you . What does that tell you . Some of the effects of consolidations that you dont have any competitors at all, and that is an environment where you can raise prices. In the short term that might look like a good thing, but unless there is productivity to support higher prices and demand, that could ratify higher prices. This is a necessarily exactly the way we would like to see it. Francine would china export that inflation to the rest of the world . Could, to the extent that it is a major player in sectors. Yes, they can export inflation. It depends on what happens to the exchange rate, because of the combination of those things that ultimately impact the transmission mechanism of china prices out to the rest of the world. Francine catherine mann, thank you. We will be talking about brexit. Ceo,so spot to the loreal about whether he was worried about a shortage of cosmetics and the u. K. Tom francine, thank you so much. Neil, as we listen to dr. Mann, she has been on a tear for the last six months. The idea of tepid nominal gdp forcing mergers. Does nominal gdp get back to where we want it, or is it in a new, lowerlevel where Corporate Officers have to meet to survive . Thats a great question. My sense is that it will get back up to 4 to 4. 5 . Tom ok, not great. Ok, not great. If you look at the last expense, around 5 nominal gdp growth, to me, what gets us back up there in the near term is higher inflation. Tom what i note a couple weeks ago, the pepsicola earnings folks had 2 topline growth, and a manufactured it to 5 and 7 down the income statement. Well do that with the banks. Christine harper a Bloomberg News will join us as well. Later on, on Bloomberg Radio, fed hints. Formerly with lehman, professor hughes of new york university. The professor of the quality c. This is bloomberg. Francine this is bloombergs surveillance. Tom keene is in new york, im in paris covering biotech and innovation. Lets get straight to brexit, the one thing that is occupying a lot of curiosity. I spoke to the former french finance minister, launching a new Political Movement called en marche. I asked if exit could be a plus for friends. It could be a positive, but it depends on two things. Provide a ability to very effective package and deliver, because we permit a lot of things that we are without an actual compliance, and second, we have to monitor brexit. We are extremely attached. Francine that was Emmanuel Macron speaking earlier on. Dr. Mann is still with us. Katherine, when you look at what he was saying first of all, he wants to negotiate hard. He says if they dont allow immigration then they dont have access to the Single Market. But he does think france can have an opportunity france has so much talent. Can really regain it back . Its possible. Theres a lot of Financial Services that want to be able to deliver in the european context. Banking, of course, needs consolidation. There could be some work done there. Capital markets. Talent coming from the u. K. Could do that, but he is right. You can attract the talent, but are you going to have them stay . Will they be able to grow their activities . I think thats a question for europe. There is a lot of issues with regard to the Single Market services that have to be resolved before there really is an opportunity to have friends be the base of opera have france be the base of operations. Francine i dont know if it is on par, but they have a huge president ial election which could also give them a platform for the far right. Well, the Political Climate in europe is very challenging. The timing is difficult, of course. But we need to see the prospect in the longerterm. In the immediate, nobody will gain from brexit. The negotiations are difficult, the rhetoric is hard. So we have to look beyond that and think about what are the decisions that investors are making, both in where they will put their people and talent and where the will put their money. Francine is there any doubt in your mind that Prime Minister theresa may will put immigration before anything else . Immigration that we are looking at hard brexit, meaning that they safeguard immigration and give up access to the market . That is the tradeoff being presented to them by the european commission. The essential four pillars of europe. The u. K. Did have a deal before that, and it is hard to imagine that they will get a better deal now. Francine tom, its interesting. When you walk around here, people want to know a lot about innovation, but people do ask a lot about brexit, even at this summit. Tom im sure they do. Thank you so much. We will continue from paris. In our next hour, we havent done this in a while really important. Adam parker has to live with Morgan Stanley, challenging to say the least. We will talk to him about how that cautious call flows over into the equity markets. Lets look at data right now. Equities, bonds, currencies, commodities, very much currency makes the dow near that 17,000 handle. Yen weaker through the week. Euroswiss, stronger swiss today, its really off weaker euro. Stay with us. I harrisn, in new york, this is bloomberg. Tom bloomberg surveillance. Francine lacqua and an important Innovation Summit in paris, timely to say the least. Right now, to our first word news. Heres taylor riggs. Taylor tom, francine, some big pocketed republican donors are calling on the rnc to disavow donald trump, according to the new york times, who says that the donors believe the allegations of Sexual Misconduct threaten to inflict lasting damage on the partys image. The report notes that several big donors have defected, including billionaire julian robertson, who was backing gary johnson. Russian president Vladimir Putin is trying to gain ground on the battlefield before a new u. S. President takes office, according to top lawmakers in moscow, who say taking control of aleppo will give could more Bargaining Power in dealing with president obamas successor. Russia has rejected pressure to halt its bombing campaign. The u. N. Says 250,000 civilians are trapped in a humanitarian disaster. The u. S. Will remain the most important partner for the philippines, even if the president improves ties with china, according to the president s foreign secretary, who says the u. S. And philippines have a special relationship. The nations are leading in formal defense treaties since the president took office. Ministerish first Nicola Sturgeon says she will publish a draft of a Scottish Independence referendum. She says her nations interests are not being protected and brexit negotiations. A spokeswoman for theresa may says the question of independence was settled in the 2014 vote. Global news, 24 hours a day, powered by over 2600 journalists and analysts in more than 120 countries. Riggs. Lor this is bloomberg. Tom . Tom thanks so much. Its tough to see this howard lot make and the good people at cantor fitzgerald, this is there community day. Thanks to scarlet fu for helping the wme out with this. We are thrilled to be a part of this. Nei great to see you l. We were talking in the break about the fed, everyone will be frothing as we get to november, the live meeting in december. But the literature says a centralbank acts after the fact. They are waiting for the evidence to then make a decision, right . Yeah. Its funny you say that, because they always tell us tom they will be up front. Right. Not where the puck is at the moment. I mean, right now, the feds policy is to be behind the curve. They want to wait for inflation to be above 2 before they raise rates again. That is part of their strategy. Thats just the world we live in. Tom its great, and i love the lets continue with the puck analogy. Lets bring out the darts, anthony, if you can. The year of the dot plot. The pucks are coming down. They will settle