Was made in washington and there are limitations this morning. I am having trouble extrapolating this. We have great guests to do this in surveillance. I have a quote from john dean, from another time and place. Guy lets talk about these markets, figure out what is going on because we are starting to see a little bit of a sense of concerns in assets. Tom this is macrons chart, with the vix still under 10. 92. And there is the euroyen. Is the riskrally, on trade still there . Guy i want to start with the two year, which we are starting to see move. We are at 133 this morning. Are we starting to talk seriously about two hikes from the fed . U. S. Futures on the s p, starting to flip a little bit. The bloomberg pound Index Trading at highs. Tom i just heard matt miller and berlin talk about the lack of reaction. I did this chart for stephanie, just for stephanie. Here is the inflationadjusted dow, back to world war ii, back to 1947. The red circle on the left is the massacre of another time and place. You can see the real world, the Wealth Creation from massacre to massacre. I would call it the tuesday afternoon massacre. It gives you the sense of generational change, guy johnson, from watergate to where we are right now. Guy i agree. We have had one mention of water gate so far in this program. Tom two minutes into the hour, pretty good. Guy i will take you to the u. S. Two year. The market has priced in june. My question is, have we priced out the reflation the trump reflation trade, and can we draw a line basically, between what the fed does next because they are looking through the weak q1 start and what is happening in washington with the politics . Because if you start to see the politics changing significantly, does that bleed across into the feds space . Tom i think it is a second or third order effect. It is about the economy and the doubts about the economy right now. Lets move forward right here. To get you updated on the evenings news in washington, here is nejra. Nejra tom, you are talking about the twoyear yield. Federal reserve bank of dallas president Robert Kaplan says his best case for rate hikes this year is still three, including the move in march, but he says he is cognizant of the fact inflation pressures have been more muted. Meanwhile, the Kansas City Fed president reiterated her call for the fomc to begin shrinking Balance Sheet investments this year and says the process can start with reducing treasuries and mortgagebacked securities, and then leaving the runoff on autopilot. South koreas new president has taken office, pledging to unify the nation after nine years of conservative rule that culminated in the biggest protests since the 1980s and the impeachment of his predecessor. He took 41 of the vote. Chinas Producer Prices rose more slowly than expected in april, adding two signs to a potential easing of global inflation. And downed to 6. 4 from a 7. 6 gain in march. Consumer prices in china rose 1. 2 in april, slightly more than expected. Probablyof england will not make any policy most before brexit negotiations are concluded according to the National Institute for social and economic research. This comes ahead of the latest policy decision tomorrow, where no rate change is expected. But economists say they will lower the growth predictions. Apple has become the first u. S. Company with a market value of more than 800 billion. This is after the stop price rose to 159. 99 yesterday. Inle shares climbed by 1 3 2017. Global news 24 hours a day, powered by 2600 journalists and analysts in more than 120 countries around the world. This is bloomberg. Guy thank you very much. The democrats have a juiced President Trump of catastrophically compromising an inquiry by firing james comey. Believe the move undermines the investigation into russian interference during the election. President trump says the bureau needs new leadership to restore public trust and confidence. To be honest, the read across into the markets is not there yet. There you go. There is the futures. They are not signaling a great deal of concern. Lets talk about this from a political angle. We will get to the markets throughout the program. Lets bring in stephanie. We are also joined on set by keith wade. Brutal. It was not sugarcoated. It was delivered, as mr. Comey was on his feet, addressing an audience. Put this into context. Give me a sense of the magnitude of what we have witnessed. I think this is huge. And as we have seen from the reaction on the hill, you have republicans and democrats criticizing the decision, saying and compromises the Russian Investigation and the increased calls for the appointment of a special prosecutor to take over that russia investigation, but the manner in which he did it is also very strange because the reason for his firing was his mishandling of clintons emails, a case he had praised comey for. And Jeff Sessions had also praised his handling of clintons email investigation. And then we have the letter to comey, where he says he thanks him for having said to him three times that he was not that trump specifically was not under investigation. There are a lot of questions that this raises. Some people are saying it is so huge they are comparing it to firing of Archibald Coxe during the watergate scandal. It is a huge, huge move. Tom stephanie, i have been up all night on this. I think the best service we can do now is to link together the events from 5 40 yesterday afternoon. Do i understand correctly that we saw the firing of mr. Comey and then just a bit later, cnn reported that mr. Bente of the court in alexandria is going to move forward with some form of formal grand jury investigation off of russia and mr. Flynt . Can you link those events together . There is a series of events where you see trump intervening to try to put an end to this russia investigation and quiet it. We had the involvement of nunez, the House Intelligence Committee chair coming to the white house, getting a special briefing, not informing the rest of the committee. There were various points that make it look like there has been some kind of cover up, or an attempt to cover up. Tom Rod Rosenstein seems to be the front of this. He is the Deputy Attorney general. And in 1973, the attorney general son, mr. President i will much do that. The Deputy Attorney general said, i will do that. And then the solicitor general said, i will do that. Were you surprised that we did not see resignations last night i senior legal officials of the administration . Well, i was surprised that Jeff Sessions involved himself in the firing of comey because he recused himself from the investigation. Why he did not just park this decision with tom Rod Rosenstein. Right. Rod rosenstein is a key figure because if there will be in appointment of a prosecutor, it is up to him to do it. Does he have the guts in the political independence to proceed . Many people feel this is the only way to restore confidence in the investigation. Tom a critical distinction here is mr. Rosenstein needs the Senate Republicans to cover his back. That is understood and we are beginning to see that overnight. Francine and the relationship between the party and the president tom it is becoming a little confusing. Guy im still confused about the timing of why no . And thinking about where we are right now. I am also. Us about the optics. I am also. Curious aboutso the optics. This seems like an odd time to fire your fbi director, right ahead of a meeting with the Russian Foreign minister. And not call comey in. Make it a public humiliation, not inform him personally, allow him to find out from the news when he is not in washington, giving a briefing to fbi agents in l. A. , and he would not have made this a quieter affair. So, there are a lot of questions about the timing and the motivation. We know trump had been considering doing it for at least a week if not longer. So why he decided to action now, those are many questions that remain to be answered. Tom we will have a great john dean quote overnight on all of this. It seemed to be, stephanie, almost elements of the rosenstein letter dictated by other people. I am not going to say the president. As you know, if you read that letter, a lot of it tom it is long to begin with. Very long, but a lot of the democrats would agree with criticalhey were very of his handling of the clinton investigation. And his comments in july and before the president ial election. I think the white house thought the democrats would support him in this decision and are shocked they are not. Out d there is flat everything else, including islthcare legislation pushed it will all go. It will all continue, but they will be distracted. Guy which is why i am so surprised that the market has not reacted in the way you might have expected them to do, if you take that thought a little further. Stephanie baker, thank you very much ended. We have not spoken with keith wade yet. We look at his take on what this will have on the u. S. And global economy. Coming up, senator Elizabeth Warren. We have the interview overnight with the senator. We will play that out at 11 00 a. M. U. K. Time. And we get a continuing sense of what really is happening in washington. Surveillance, plenty coming up. We will talk about what is happening with the reflation trade and deinflation trade. Then, markets and asset prices, and reference it back to what we are talking about. He will talk about the bank of england policy and how it is unchanged. Remember, it is super thursday. This is bloomberg. Guy china Producer Prices. They are rising more slowly than expected in april, adding signs that this reflation trade we have talked about that chinese ppi went up vertically is starting to fade. It climbed 6. 4 from one year earlier and that was below the estimates and down from 7. 6 . Meanwhile, cpi prices rose 1. 2 in april, slightly more than expected. Lets talk about the reflation trade and join key keith wade. He is still with tom and i. The china factor is detracting from the reflation trade and then we have what is happening in the United States and the fact that the market has roundtripped on the reflation trade there. Is it done . Pretty much. I think it has been a case where the reflation trade kicked off after trump got elected. We saw a lot of improvement in the business survey. People began to price in the stronger world economy. I think the hard data will follow through. We think u. S. Gdp will pick up for the second quarter. But i think the market has moved on and we are seeing that coming through in the Commodity Markets in particular. We have seen a selloff in oil and industrial metals. And that is coming through into the china cpi. Tom there are surprises in the dynamics here. You studieddel at the London School of economics. We have wendy carlin coming on here later from ucl. If you look at the dampening of reflation, is it within conventional models . I think what has surprised people is, we have had the stronger growth coming through. We have not even see wages pick up, the labor markets continue. The conventional models are there, but they are being pushed to the limit. The economists dont really know tom i agree. Do the Central Banks not really know either . They dont know either. Tom does guy johnson know what we are doing . [laughter] guy that goes without saying. Draghi says he will only withdraw stimulus when the economy can be sustained without stimulus. Tom that is right. Guy therefore, the pale on Monetary Policy will be enormous. The ecb and fed and other Central Banks have had loose policy. The fact that inflation stay low will limit how far the fed ultimately has to time. For the ecb, there is a real question about what draghi is doing because the economy is improving. Two they need to have do they need to have guy inflation got to 1. 2, but that could be a blip. Tom as you have mentioned, guy, within the political cacophony at the moment was it eight days ago that we were in paris . Guy yes. Tom things are moving a little fast. We were with keith wade. Coming up, we talk to him about the dynamics of brexit, maybe not like the comey fire in washington, but there it is. The news each and every day. Stay with us. This is bloomberg. Guy welcome. The bank of england probably will not make any policy moves before the brexit negotiations are concluded. Think about the timing of that. This comes ahead of the bank of englands latest policy announcement tomorrow, super thursday. No rate change expected. We are trying to get an understanding of what a very quiet carney things right now. Not much news, to be honest. Meanwhile, one month to go until the u. K. General election, theresa may has set out to woo the socalled middle england, whatever that means, using a jo inint tv interview with her husband, showing her softer side. Rival, jeremyain corbyn, launched the labour partys program for greedy bankers and heartless bosses, ripping off consumers. Keith wade is still with us. How long will the bank sit on its hands. If it is until the brexit negotiations are concluded, that will be a long time, three or four years. I think they will be moving upwards, but i think we are looking at two or three yeras as out. And we are looking at something that would come as the result of some fiscal stimulus. We have to see those negotiations concluded to some extent. But at the moment, the economy now is beginning to exhibit these signs of the brexit affect. It is beginning to slow down. We have seen a pickup in inflation and Consumer Spending come under pressure, the economy grew at 1. 3 quarter on quarter in the First Quarter. Much weaker than what the bank of england expected. They have to factor that into the inflation report. Tom where did the weakness come from . Was it consumption weakness, investment weakness . We dont have the full breakdown, but it looks like it was consumption weakness. Restaurants and hotels got the brunt of that and that is understandable. It is hard to see where the consumers have been as strong as they have been because Income Growth has been squeezed as a result of the fault and the pound. It was inevitable. Guy do you think anybody else would join the view that they have to come through now . There is some talk that he will do that. But, i think it is fairly unlikely. I think they want to keep their heads down, given the election coming up. They dont want to do anything that could disrupt markets. The pound is super competitive at the moment and we do see an improvement in global trade. The eurozone, our biggest market to trade, is picking up, and that could help u. K. Exports. The consumer is 70 of the economy. If the consumer is slowing, you have to have a lot of export growth to offer. Tom when i look at brexit, i think of mr. Juncker. This Prime Minister may going to focus on mr. Juncker, or is he just a sideshow . He has been quite controversial, but ultimately, the decision will be with the politicians, particularly with angela merkel, whoever wins the german election. Tom he did not mention mr. Macron. And mr. Macron. They will be driving the process. They have the most weight. Tom am i right, guy . Mr. Macron is old news now . Guy there is a nice piece about germanys enthusiasm for mr. Mac ron. Keith wade will stick with us and up next, we speak to the man who was taken a two year break from amazon to do some pro bono work for italy. This is bloomberg. Guy wednesday, nine 30 in london. You are watching bloomberg surveillance. Tom the markets are there. They are not moving off the major news out of washington. Im not. This goes beyond anything to do with the markets to the constitutional structure of the United States. Guy do you think it wants to figure it out like the rest of us . Tom this is almost a macron trade we are seeing. A little bit of an adjustment in the last hour. 113. 83, yen. Euro continues to show safe havens. Feel, but that may amend as we go to the morning, particularly if the president tweets out in the morning to he tweeted lace last night late last night. President is hard to read. We get more tweets and maybe that changes peoples views. Tom we are watching to see what the Senate Republicans do. We had six Senate Republicans really step on the affairs of last night. Guy lets run you through a few more numbers and give you a heads up on what is happening broadly. E. U. Futures are down. U. S. Two year is significant. The market is pricing in june and increasingly september for the fed. The bloomberg pound Index Trading at a 2017 high. That is significant. European stocks going nowhere. Tom lets get to our first word news. Nejra President Trump has fired comey sayingjames the bureau needs new leadership to restore public trust and confidence. According to the white house, his sacking was recommended by Jeff Sessions and is stepping. Has been leading an investigation into russian medley into the election and into moscows possible links to trumps associates. It is the only the second time in the fbifs history as chief as been fired. President as new has taken office in place unify the nation after nine years of conservative rule that culminated in the countrys biggest protest is 1980s and the impeachment of his predecessor. The left leaning politicians win took 40 of the vote. Chinas Producer Prices rose more slowly in april. Ppi climbed 6. 4 below economist forecasts and down from a gain in march. Consumer prices in china rose 1. 2 in april, more than expected. Apple has become the first u. S. Company with a market value of more than 800 billion after its stock price rose to 159. 99 yesterday as investors bet the axt iphone will sparure resurgence in sales. News 24 hours a day powered b