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tv   Countdown  Bloomberg  September 16, 2016 1:00am-2:31am EDT

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♪ withoute bratislava written, eu leaders gather. deutsche bank says they won't pay $14 billion sought why the united states to settle a security pro. be. >> there is no compelling case of any kind for a rate increase in september. insight according to larry summers, as the probability of a move falls again. the u.s. republican nominee
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fundsa tax cut for hedge from his economic plan. ♪ >> a warm welcome to "countdown" . i am anna edwards. it is 6:00 in london. i'm pulling up the work function on my bloomberg to show how fed expectations have shifted. for have shifted down december. the september meeting looms , and 18% chance of a rate hike now. toe that perspective out , somber, and you get 49.7% below 50% chance of an increase in fed interest rates this year.
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a shift with disappointing data on retail sales yesterday. factory output looking weaker than previously. that realigned people's expectations about what would happen with the fed. the boj meets next week as well. have show you where we been on assets over the last 24 hours or so. boosted, the s&p 500 up by more than 1% on that change in expectations here i. bad data equals good moves kind of story. many markets in asia are close, and this does not go all the way returning to billion dollars lost in recent days. , a weekly loss in oil
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prices, the glut set to continue, less applied irruption from nigeria and libya on the radar as we head towards that meeting in algeria. let's get to first word news. payeutsche bank says it on $14 billion sought by the u.s. justice department to settle an investigation. that's more than triple what some analysts had estimated to be the potential worst case scenario. ,iscussions are just beginning and they expect it will lead to a lower amount. the doj declined to comment. deutsche bank shares lost 6%. donald trump has dropped a major tax cut for businesses from his presidential proposals. muchhange makes his plan less favorable.
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such entities don't pay income taxes themselves, but as their earnings through to their owners who are taxed at an individual rate. hillary clinton has been on the campaign trail for the first time since her stumble. she accused donald trump of using fear tactics. is running the most divisive campaign of our lifetime. be aessages you should afraid, afraid of people whose race or ethnicity is different, or whose religious faith is different, or who were born in a different country. or dogs no innuendo whistles anymore. thes all right out there in open now, so we have to come back twice as strong and twice is clear. >> the leader of the u.k. opposition party speaking to bloomberg, jeremy corbyn said he
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sending his spokesperson to oslo to examine how they manage relations with the eu. maybe we can learn a great deal from norway. it does have a successful come expanding economy, largely based on oil, and is a much smaller society, but they have a strong social democratic tradition. effectivea huge and welfare state and health service. social-basedtheir economy is not different from what we in the labour party talk about. bankingorld's top regulator facing revolt. regulators from germany, italy, and other countries told the committee on banking supervision that proposed changes to risk assessment must be scaled back or slow down.
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-- slowed down. there is some concern that some countries won't adopt the proposals. has urgedggest bank the boj to consider the negative side effects of negative interest rates when it needs. japanese banks have struggled to y from lending. the boj will reveal results of its latest review. global news 24 hours a day powered by more than 2600 journalists and analysts in 120 countries around the world. this is bloomberg news. you can find more stories on the bloomberg. thank you. let's check on the market action in asia. as you say, we have had
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markets close, hong kong, china, taiwan, and south korea for the mid-autumn festival. elsewhere, most markets tracking higher, taking that positive lead from wall street, expectations lowered over a fed hike this year. also that rebound in the energy price, which has helped the crude producers. the nikkei is extending gains in .6%, thesession, up by yen fluctuating, but steady against the dollar at the moment. the wall street journal has reported that boj is split on monetary easing at its meeting next week. it maybeen reported that not be a case of the boj pushing further into negative interest rate territory. rather, they made by more government bonds. a positive session for the nikkei and the region as a whole. you are seeing weakness in the philippines as we saw foreign
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outflows in that market for 16 consecutive days. one .4%, but by elsewhere solid buying, australia helped by a rebound in energy prices, some weakness from gold players, so today is risk on. new zealand having its first win in eight sessions, so a good game coming through there. up by .8%. anna: thank you very much. eu leaders gathering for a historic meeting in bratislava. it is the first in more than four decades without the u.k. highlighted the need for unity within the block. >> this is a crucial moment in the development of the european union. this is the first time the 27 meet with out the united kingdom. necessity tot of
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coordinate and cooperate more and more intensively. we have to avoid 27 different lines of the european union, so i hope the message of the summit is unity. the key question then, what can they actually achieve here? 27 leaders, 27 views perhaps, the watchword is unity? precisely what they have to focus on, to show a time of coming together in a moment when we are within turmoil. they will try to highlight some sort of roadmap for themselves without the u.k. says therellande must be a bratislava plan, how
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to strengthen external borders, injecting opportunity of growth, of jobs, particularly for youth, and how to fight the threat of terror. as i say, this is the time of turmoil. we are likely's to see divisions in the eu -- we are likely to see divisions within the eu. independent, poland, hungary, those countries are effortsfor stronger within the countries themselves. the president of the european council saying new powers is not the desired recipe. is it more integration or less integration, the key question. anna: something that jean-claude juncker was talking about
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earlier this week. he sees a path for more integration. these sort of political risks risks. into the economic it could slow down the european economy if we see no ambition coming from the eu and a lack ofxit world, confidence means lack of business and a slower economy in the eu. have run a fund managers survey. the number one risk is not donald trump, chinese evaluation. the number one risk is a disintegration of the eu, southern countries such as spain, italy, greece calling for more spending. on the other side, germany wanting to see austerity. there are key divisions within the eu. saying little shared
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vision could spell concern for the u.k. in their negotiations. anna: thank you very much. stein ats now gabriel oxford economics. good to see you this morning. let's talk about europe and where europe goes without the u.k., what the european union looks like. i have a graphic that illustrates the rise of popular as politics in europe. is this a big threat to the european project in your view or are concerns overdone? >> it is a big threat. not least because these populist intoents, and we can go how you define populism, but they come from different sides of the political spectrum, and beingf them even defy slotted anywhere on the spectrum, but they all stand for more power to the individual nationstate. , again,ht be desirable
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that is a completely different discussion, but it is quite clear that the european union leadership is not thinking in those terms. in fact, it seems to me that one of the biggest risks for europe is exactly this. this got reaction that the answer to the crisis is more europe, when in fact that peoples of europe are saying there is too much europe. less europe ore a looser europe is the answer? do you see that view getting any traction? some countries have been making that case. that's not what you hear from german chancellor angela merkel and others. >> of course ultimately what can they do if the smaller countries the marchagree to
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towards the european integration? you can integrate in the eurozone, but there you have -- i don't want to call them -- what are you going to do if say poland are hungry -- hungry -- , say they don't want to participate. there is no way to force them. you can say to some countries that we will integrate in whatever way we want and the rest of you don't have to, but then you run the risk of some other countries saying well in that case we might want to follow the u.k. the u.k.the meantime, is trying to work out the path that will follow. i spoke with the jeremy corbyn .esterday he was talking about seeking integration from norway.
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this is a conversation we have been having four months, about whether there is another model available. u.k. and thef the different desires of the u.k., yes, we want to have full access for the financial services, but no, we want to control our own borders. i don't think there is a model. jeremy corbyn may like the norwegian model. the norwegians tell you themselves that their model minutes toving 15 implement eu rules when they receive a fax telling them what to do. yes, they can control their fishing waters and have control over immigration, but it is not the model for the u.k. anna: does it really come by fax? trump's hiringld binge. promising to great 25 million
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jobs in 10 years if elected. is that possible? we discussed that next. u.k. labor leader jeremy corbyn gives us his view on what corporation should be paying. one year on from the start of the volkswagen emissions scandal, we look at how the carmaker is clawing its way back. stay tuned for our weekly show, brexit, what is next? all the news and analysis around the vote to leave the european union. this is bloomberg. ♪
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anna: welcome back. this is "countdown". you have the chinese currency on your screen there. to bloomberg business flash. >> thanks.
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deutsche bank won't pay the $14 billion sought why the u.s. after anepartment investigation into the firm sale of mortgage backed securities. that is what some analysts had ,stimated could be the fine more than three times. shares losings close to 7%. u.s. regulators have announced the recall of one million samsung note seven smartphones after more than 90 reports of that treats overheating in the u.s. the move gives the u.s. government to formally ban the phones on airlines and make it illegal to continue to sell them. the world's largest heads fun -- hedge fund manager says there is a plan to cut jobs. that's according to a person who
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saw the note. the letter written by the founder and topics i gives called the changes the renovation and describes noninvestment areas as bloated and bureaucratic. investors is growing to sue volkswagen. it is in connection with volkswagen's failure to disclose to investors it's use of defeat devices that manipulated emissions tests. volkswagen says it always complied and claims these claims are unfounded. the move comes a year after the to duping tested for 11 million cars. that is your bloomberg business flash. anna: thank you very much. says his economic plan would create 25 million jobs in a decade and grow the economy by 3.5% per year.
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his advisor called the plan unique. that is very interesting he has produced a dramatic growth plan that is pretty much self financing. that is the unique thing in american history. the u.k. labor leader jeremy corbyn says he hopes to have a close relationship with the new administration once the election is over, but had this to say to voters thinking of casting their ballot for the republican nominee. >> donald trump can offer you anything other than a rhetoric against minorities or against mexico or muslims or against any particular identifiable group. what you have to have is a to promoteprepared investment, intervene, but above all that cares for everybody, not just a few. steve schwarzman says he
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is unsure of who he will vote for. >> i am undecided right now. i would like to see -- >> if you had to vote today, who? >> fortunately i don't have to vote today. i think that there is going to be changes that occur over the next seven weeks as the candidates realize that just throwing mud at each other is boring. still with us, gabriel stein from oxford economics. more from the candidates about economic plans, certainly donald trump, his job creations plan. 25 million new jobs being boosted employment by the most on record over the coming decade. target, ambitious? back one step, your
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headline says he plans to do this. he does not plan to do this. he hopes to do this. that is the difference. years,ion jobs in 10 that is 200-8000 on payrolls every month, highly unlikely -- 8,000 on20 payrolls every month, highly unlikely. donald trump also says that he would grow the economy by 3.5%. the u.s. trend growth rate today is probably 2%. it is highly unlikely. aim, of course, but politician say a lot of things that are laudable aims, as does jeremy corbyn apparently, and there is no way they will achieve it. anna: what does this do to an investment strategy as you look to the november pictures shaping
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up? this this affect what you see happening to markets? a a key reaction would be hold off and be very careful. right now, it is true that hillary clinton is leading in the polls. i have a feeling that donald trump is likely to win mainly it depends on who the election focuses on. clinton,cus is on trump will win. it the focus is on trump, clinton will win. don't have much detailed knowledge about what they would really do, not to mention that whatever happens, the president only takes office in january, so whatever he or she wants to do, nothing will happen until the middle of next year. the immediate reaction to a trump victory would probably be a price fall because of uncertainty and concern. the immediate reaction to the
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clinton victory, the opposite, but neither of those would the based on any fax. they would be based on sentiment alone. anna: when you look at what equity markets are doing over , obviouslyven days we will talk more about the fed in the central banks as we go through the program, but have you seen a sea change? is this a point where bond yields go higher from here and equity markets are stumbling? what do you see? what we areopefully seeing is a bit of a realization that central banks have to move away from their market dependence. does that mean higher bond yields? in japan apparently that may be one of the aims of the boj coming up. see, but i think right now as i said that markets are in a wait-and-see mode, and markets that central banks are market dependent. markets are central bank
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dependent. both are bad. anna: thank you very much. gabriel stein stays with us on "countdown". 12 months on, is volkswagen back from the brink? we take a closer look. this is bloomberg. ♪
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anna: welcome back. the tokyo imperial palace. up .5%e equity markets on the nikkei 225. we have many markets closed in asia. "debris" is now available. let's take a look at some of the teames that the "daybreak" have put in the new edition. deutsche bank won't pay $14 billion sought by the doj. the investigation into the firm
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sale of residential mortgage-backed security's, that is what this is in relation to, the fee is more than tripled and what some analysts estimated could be a worst case. we probably have not heard the last of that story. we will hear from both sides as we try to get to a final figure. goldman sachs sang the boj may refrain from lowering rates due to its economic assessment. the timing of fed decisions, as well as considerable risks. we will discuss this more through the program here on "countdown". some of the banks upping the rhetoric with regard to pressure on the boj. the bojhe banks urging to consider the side effects of a further cut to negative interest rates. focusing onybreak" bridgewater associates, indicating that it plans to cut jobs. let's leave "daybreak" and turn
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to other matters. the czechoslovakian central bank will remove its three-year cap on their currency next year. let's have a look at how that is playing out in the bond markets. guy johnson joins us on set with his chart of the hour. iswhat we are looking at what i think is an exercise in leavefficult it is to emergency procedures put in place. the boj, once it is difficult as you hit the limits of monetary policy. the boj owns huge quantities of just about every market in japan. the czechs have a smaller problem, but just as stressing for them, and the market is starting to front run it. it shows the two banks may be on the same path.
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may look for a band in it next year. they are trying to exits emergency procedures, but it will be difficult. bikingld see currencies -- spiking. anna: not pleasant developments for anybody. the action them take they did, that started speculation as to who was going to fall off which peg. do you see more of that? have we put that in the rearview mirror? >> when the swiss did away with their cap against the danish , the most important currency in europe still packed, and i dare say that i haven't followed the czech republic, but i do like the beer.
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there,e talking rubbish but i daresay the question will , maybe thearise danes eventually find they will the eurobandon peg. the will not do it, but speculation will no doubt be there, and no doubt will be a contagion among some of the non-peg to currencies. non-pegged currencies. anna: everything in between. thank you very much. guy with his chart making us all think this morning. central bank stimulus is in full force and the u.k. and japan, jeremy corbyn thinks infrastructure investment is the way to stimulate the economy. qe is back on the agenda.
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the government put in 385 billion, another 60 billion recently, the japanese government has used qe several times to stimulate its own economy. what we would envisioned is a 250 billion government investment, and the rest of borrowed at low interest rates. the point is to set up a well-funded investment tank that can give us the infrastructure we need. state of railways and broadband in parts of the country, particular the rail infrastructure in the north, northeast, northwest, absolutely crucial that it needs upgrading. we might hear more about that from the chancellor and taxation. which areas would you want to see higher taxation in the u.k.? >> i want to see corporate taxation levels at the level of the rest of the oecd. we seem to be going on a
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downward spiral on that. i don't think that is a good way forward. i don't one is to be an economy that is offshore of europe. thatted to be investment comes in on the basis of attraction of a high skilled and highly made abated workforce. -- and highly motivated workforce. you have talked about some of the changes you want to see and the investments you want to see, including broadband. notion ofs the re-nationalizing any infrastructure around broadband. shoulde the parts that be re-nationalize, and the parts that shouldn't? >> the train operating companies should certainly be publicly owned. it is a natural monopoly and we pay for it ourselves. in the case of the broadband infrastructure and telephone infrastructure, it is a requirement on bt as a formerly
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public owned company to maintain that social infrastructure. socialto maintain that model they have. if they come to the government and say you have to take a stake in us, that would be an adjusting development, but that has not happened. there has to be a primary provider of a universal broadband service, and it is in the privatization of bt to do that. anna: you don't have plans to re-nationalize anything else? >> no. anna: jeremy corbyn speaking to me yesterday. he seesmmers says no compelling case for an interest rate increase. he also said the central bank needs to make sure that another recession is not looming. another recession columns, the fed is going to have very little room to address it. likedon't have anything
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that 500 basis points they had to start, and that means they have to lean over backwards to make sure another recession does not come. jean-claudeile, tree shade tells bloomberg that he has confidence in the fed. the federalee what reserve board will do, but the open market committee will do. i have full confidence in their bet decisions, but it has to done on the basis of the u.s. situation. in, gabrielwith us stein at oxford economics. let's talk about the fed and what you think they should do. larry summers not holding back on his view. he does not think there is a case for increasing interest rates. your thoughts. >> he's wrong. the fed should raise rates. as you know, they should have
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raised rates a couple of years ago already. let's look at this for a moment. the economy is in a long-term expansion. is below par, not the strongest we want, but continues to grow. there is no sign of any recession on the horizon. the fed we know is desperate to normalize monetary policy. fedrobably means lower funds rate than in the past at the peak, and what is stopping them is two things. be data dependent. they are not. they are market dependent. they have this fixation on preparing markets, so they start talking months in advance that we might possibly consider raising rates and everything something, then happens, some data point comes in, and they can't raise rates and they have to restart all over again. they raised rates in december. they probably should have raised
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rates once or twice this year. they need to move away from this. let's look at the timing. if we assume i am right and they , if theyaise rates don't raise rates in september, they will certainly not do it just before the presidential election if as we discussed earlier donald trump becomes president, they will not do it in december. we are then talking 6-7 months down the line again. the time to raise was in the past. it is again now and next year. anna: you mention some of fed officials -- the fed officials want to wait. there is clearly something wrong if the state of the labor market is as it is, and the state of the economy is as it is, and we have not created inflation. waiting for inflation, is that a reason to wait?
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>> we have full employment and no inflation. on the point of who is saying what from the fed, there are hawks and doves, so to my mind says we need to raise rates, i just think, well, that's what you would say. says we should not raise rates, again, that's what they would say. changes his views or someone like john williams from the san francisco fed, if someone was dovish like janet yellen herself said a jackson hole, to meet that is much more important. anna: speaking against your typecasting. let's talk about other central banks. is increasingly in focus
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because of what will take place next week. i know you are fascinated by this conversation about what they are trying to achieve with quantitative easing if they want to steep in the curve. is fascinating. they now realize that negative interest rates, while they have some advantages, they do you wrote profitability, so that is bad. restore thattry to by steepening the yield curve. thehe past, we were told whole point of qe is to flatten or invert the yield curve to make it cheaper to borrow long-term, so the boj is caught in a dive them a. they don't want to -- in a dilemma. they don't want to cut rates. assets, a huge chunk of a third of all jgb's already. what are they going to do? up view is they will step their purchases by another ¥10 trillion, but won't cut interest rates.
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are reaching the end of the line on what qe can do. my own view is and has been for years that the boj should and ultimately will be the first central-bank to implement some form of helicopter money. are not the first girders to say that around this table. what we might get next week is stronger forward guidance. >> that would be a appalling. anna: thank you very much. gabriel stein stays with us on the program. it was unearthed that the automaker had duped the emissions test on millions of cars, and now volkswagen is still weathering the storm. nearly defeat device spelled defeat for the group? you on theve program. where does volkswagen stand one year after the crisis? has this been well-managed to
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the extent possible? i think it is fair to say that this has been a very dramatic year for the company. if you look back one year, the stock market was plunging, a lot of insecurity and speculation swirling that volkswagen is a company might actually fall apart. the pricester erected, it does seem they do have a better grasp. associatedde, the costs, it would be too early to say that they have seen the worst yet. they just have a better potential picture of the financial fallout. anna: you think they are through the worst? >> i think the big question is are the legal proceedings. we have black rock joining a group of investors suing volkswagen for damage claims. aboutk by now we are
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600-700 lawsuits. to the cfo last week in berlin, and he said while it is too early to say they will overcome the crisis, they do have a better handle on it than a year ago. anna: challenges still exist for the company. what are the the obstacles from here that they need to overcome? >> one big obstacle is in europe. thatmer groups are pushing european car buyers get compensation payments similar to what volkswagen has agreed in the u.s. turn into potentially a very substantial amount given that in the u.s. we are talking about 400,000-500,000 cars. in europe, 8 million cars are affected, so that could trigger
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costs. the other big obstacle are the pending lawsuits. much.thank you very we will continue to watch the story. coming up on the program, russian rates. will the country's central bank cut later this morning? we are alive in moscow for a look ahead. at 7:00, back to bratislava, where european union leaders meet without the u.k. for the first time in four decades. what can they achieve? we focus on the fifth ahead of next week's policy decision. this is bloomberg. ♪
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anna: welcome back. this is "countdown". it is early in new york. a fairly flat open.
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many asian markets close, but we have seen that bounce in the u.s. equity market yesterday passing through into asian equities. let's get the bloomberg business flash. thanks. deutsche bank says it won't pay the $14 billion sought by the u.s. justice department. that is more than triple what some analysts estimate it could be of potential worst-case. the company says discussions are just beginning and it expects they will lead to a lower amount. the doj has declined to comment. losinge bank shares close to 7% in after-hours. u.s. regulators have announced a recall of one million samsung know seven smartphones after more than 90 reports of batteries overheating. the move gives the u.s. government the option to formally ban the phones on airline flights and makes it illegal to continue to sell them. the world's largest hedge fund
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manager has indicated a plan to cut jobs. bridgewater associates told clients that it has 1700 employees, up from 1105 years ago. by letter which was written top executives called the changes a renovation and described some of rich waters noninvestment aries as loaded, inefficient, and bureaucratic. areas asestment bloated, inefficient, and bureaucratic. volkswagen's failure to disclose its use of defeat devices, saying it had always complied with rules. themove comes a year after german carmaker admitted to duping the emissions test for as many as 11 million cars. hsbc has defeated a class-action lawsuit by investors who lost
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money in the burning -- bernie madoff fraud. a judge threw the case out, saying the court lacked jurisdiction over the bank. that is your bloomberg business flash. anna: thank you very much. bank of russia delivers its latest rate decision this morning. a cutists are expecting despite the governor's defense of the central banks moderately tight policy. for more, let's bring in our moscow bureau chief. how much of a cut could we see today? >> hello. we are looking at a cut by 50 basis points to 10% from 10.5%. that would be the first cut since april. anna: that is the expectation.
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they have been targeting inflation. what could prevent the bank from cutting? >> as you mention, there was the unscheduled speech by the central bank governor in defense of a moderately tight policy. come it came down in august, but inflation expectations for the year ahead are triple the central bank's target inflation rate. that could put a hold. that over are seeing a long-term horizon, cut today and perhaps loading -- holding longer than expected. anna: thank you very much, a preview from what to expect from the rumson -- russian central bank. we will leave the russian story there and talk more about some of the things happening here closer to home. , theoe meeting yesterday interest rate decision, no
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change, and no change expected. you expect there will be a further cut? >> yes, i do. they were pretty clear about it. if nothing has changed byte november, that is when we will cut rates. two interesting things to look for. first of all, governor carney has ruled out negative interest rates. i would not pay too much attention to what he says, because it never seems to work out the way he says things, but airing in mind the u.k. of economy seems to have weathered the referendum result better than expected, bearing in mind if you look at leading indicators that things are looking rather better than expected, not just pre-referendum, when we were told there would be a disaster if written voted to leave the eu, but also the immediate reaction in july. confidence is up, credit growth
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, retail sales are are right car sales are good and so on. it may well be that if the economy continues to surprise even slightly on the upside, the bank says we are pretty close. if we rule out negative interest rates, we are located closer to the zero bound. maybe we should hold off and wait to see what happens in the new year. i would personally put the chance of a cut and further -- in and november november slightly above 50%, but not terribly much above 50%. anna: finely balanced then. we are with the threat to the u.k. economy come from? how with the mechanism work if we were to see a weakening from here? you are right to point out the strength and resilience we have seen in some of the a tech, but there has not been a great deal of eight. a lot of that has been sentiment
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indicators. sales,e had money, car retail sales. anna: from the retail side of ,hings, things look resilient but what about construction and business investment? >> that will certainly take more time before we know. that is one threat. another threat is that the pound strengthened significantly. anna: i wondered if yesterday that was what that line was about, that we could still cut rates to keep the pound from strengthening. that is certainly a target. the other threats, what happens in the u.s. presidential election and what goes on in the eurozone. in the eurozone and the rest of again, same picture we have seen in the u.s. so far.
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there is a recovery. it is not great. hopefully good news. anna: hopefully we will hear more about that today. thank you. up next, no britain and bratislava. the eu economy. this is bloomberg. ♪
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. . .
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>> in bratislava without britain, e.u. leaders meet to discuss e.u. minus the u.k.. plus -- >> there is no compelling case of any kind for a rate increase in september.+++
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anna: no hike in sight according to larry summers as the probability of a move falls again and trumpnomics. dropping a tax cut his economic plan. welcome to "countdown," everybody. i'm anna edwards. a warm welcome to the program. it is 7:00 here in lont. -- london. a pretty positive session in the united states. more on that in a moment. let's get to the futures and take a look. could be a little weaker at the start of trade although markets taking a little time to work out which direction we may adopt. either side is the flat line coming through from futures. the asian session was quite strong. you can see where we have been. in the u.s. section we saw strength in the s&p. apple one of the strong drivers of equity markets in the u.s., up for a fourth day as expectations rise around what they could do with their new
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iphone. energy stocks were stronger in the u.s. a host of countries are closed. south korea, south korea, taiwan. we have japan moving pretty strongly higher. a little bit less concern in markets today of about what any move by the b.o.j. might be and what they might do to the banking sector in the japanese market. now mix in there as well down .5%. we're headed for a weekly loss on the oil prices. we're all building towards that meeting in algeria in the weeks to come. let's have a look at the bond market. a focus on some temporary snap back in bond yield or whether it is something sustainable. we're 1.9% on the yields for the u.s. keeping its head above water. the the 10-year japanese still
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negative minus 0.03. >> deutsche bank says it won't pay the $14 billion sought by the u.s. justice department to settle an investigation into the sale of mortgage-backed securities. that is more than triple what some analysts estimated. the company said discussions are just beginning and expect they will lead to a lower amount. deutsche bank shares losing more than 6% in afterhours trade. donald trump has dropped a major tax cut for businesses in his presidential proposals. the change will make his plan much less favorable for private equity partners. the republican nominee had out thed the proposal for a 15% tax cut on income from such
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businesses. meanwhile hirn has been out on the campaign trail for the first time since his stumble on sunday's 9/11 memorial event. she accused trump of using fear tactics. >> donald trump is using the most divisive campaign of our lifetime. his message is you should be afraid of people whose religion or faith is different or if they were born in a different country. there is no innuendo or dog whistles anymore. it is all right there in the open now. we have got to come back twice s strong and twice as clear. na: the leader of the u.k. labor party -- jeremy said he is sending a spokeswoman to examine how officials manage relations
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with the e.u.. norway is in the area giving it access to the market but not in the e.u. itself. >> maybe we can learn a great deal. after all it has a successful expanding economy. albeit largely based on oil. it is a much smaller society than ours but they have a very strong social democratic tradition. they have a welfare state and health service. the mod obviously their socially based economy is not that different from what we in the labor party talk about. anna: the world's top banking regulator is facing a revolt from european banks. regulators from germany, italy and other countries said proposed changes to risk assessment must be scaled back or slowed down according to two people with knowledge of the matter. there is concern that some countries may not adopt the
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standards. and japan's biggest bank has urged the bank of japan to consider the side effects of negative interest rates when it meets next week. they have struggled to make money from lending since the policy was introduced in january. the b.o.j. will reveal the resultses of its latest review. some economists are expecting another rate cut. global news 24 hours a day. analysts in more than 120 countries. you can find more stories on bloomberg. this is bloomberg. anna? anna: thank you very much. let's get some breaking news and nd m&a news. it has been the subject of a bid by harbor over in the u.s. we're getting another response today. they say the harbor vest offer
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undervalues the company. they say they have had other approaches. they urge shareholders to take no action at this time. they see conditions in the private equity market continuing in the near term but they are saying then that shareholders should not accept this offer. we brought you this story a little bit earlier on this month on the 12th of this month. they went straight to shareholders for take it or leave it offer. one of my colleagues saying that you don't get much more hostile than this hostile offer that was harbourvest.ble by let's check in on the asian market action. julia? >> anna, yes. a lot of markets closed in asia today including here in hong
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kong, also china for the mid a&m autumn festival but elsewhere we are seeing solid moves coming through. a little bit of relief for investors after what has been a very volatile week. there are reports that bank of japan may not indeed push further into negative interest territory when it meets next week. the nikkei closing higher by .7%. we have also seen tech stocks do well on the broader topics, japan display up by 12% on the back of that run that we saw in apple in the u.s. australia finishing the day higher by 1%. we have seen gains coming through from the likes of energy stocks. crude rebounded. elsewhere, southeast asia are looking quite good. singapore, nonoil domestic
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exports coming in today. they were flat for august. the a good gain coming through from singapore and new zealand. this was in the red. the regional index up. asian investors rallying on the back of that wall street lead. a fed hike pushed out once again, anna. anna: to you. e.u. leaders gathering for a meeting in bratislava. the first in more than four decades without the u.k.. martin schultze highlighted the need for unity within the block. >> this is a curable moment in the development of the european union. it is first time that the 27 meet without the united kingdom. there is a lot of necessity to
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coordinate and cooperate more nd more intensively. it is a coherent united kingdom line. 27 different lines of the european union. i hope the message -- anna: caroline hyde is on the ground for us. caroline, martin schultze talking about coordination cooperation, really wanting to present a united front to the united kingdom. >> precisely. that is what the 27 leaders who are gathered behind me in this bratislava castle were trying to put forward. a road map. a bratislava plan. that is what holland is calling for, the president of france. trying to focus on where life goes. post brexit. we heard from germany's
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chancellor, angela merkel talking about the e.u.'s very existence being this question saying it is a question of war and peace as they satellite rise in populism. rhetoric coming from martin schultze about the need for unity at a time when things are splitting apart. the response to a brexit world, the u.k. out of the e.u. means further integration and more focus on stronger powers in the e.u.. that's what draghi wants to see, a monetary and political union. on the flip side, you have the european council head talking about the realization that is not the rest my many want. you have poland and hundred angered by the fact that some are questioning whether their principles are in line with the e.u. and angered by the need for immigration quotas. i think we will get a slight
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outline for agreements. they will be outlined about 6:30 p.m. local time. you're going to hear talks about strengthening external borders. talks about a defense policy coming together, germany and france. something they could never do when the u.k. was a member. talks of fight against threats of terror and focus on inspiring investment and opportunities for those in the e.u. anna: what does this all mean for the economic prospects of the e.u.? >> that is a key question when you have the likes of southern european countries. france, greece, spain. talking about the fact they want to see more spending. meanwhile merkel and the dutch want to see more austerity continued. not a big splash of cash. there is division. barclays is worrying about.
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saying it could spell lack of confidence and business. be a survey of global fund managers stay number one terror risk is not donald trump becoming president o of the u.s. number one is disintegration of the e.u.. this is why you're seeing such emotive language coming from a woman, angela merkel who is in a large part very restrained and sensible but talking about war and peace, i think this is a crisis in the heart of the e.u. and they want to show they can stand together at this time. this is one of many meetings, i'm sure, anna. anna: thank you. many in a series. caroline hyde live in bratislava for us. with us here ises a chief investment officer. let's talk about the threats that europe faces and what that does to your investment strategy. i have a nice graphic that shows
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the populist democratic threat that seems to be rising within europe and europe tries to work out where it heads from here. so far the big countries are talking about more, not les less europe. how does that stand up against this kind of democratic challenge and what does that do for your investment case in europe? >> this rise in populism that you talk about is not just within europe, of course. t is elsewhere in the world. behind the rise of donald trump, the populist feelings amongst the electorate. the rising anti- globalization sentiment. it is why really john claude juncker was talking in his address about europe being under threat. this is an existentialist threat for europe and the reason why national leaders are pursuing
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their own agendas rather than agendas that are about the unity of europe. o it really is a big issue for europe. i suppose at the end of the day, it does present a threat to the future economic growth prospects of the region. anna: with that is the political and economic backdrop. do you worry about that with your strategy or say that might be the case and people are still going to eat bread. therefore i invest in those companies that i think will weather this storm? >> well, as far as our own strategy is concerned, and our positioning is concerned, we have been overweight equities. which has been, you know, a good position to have given the strength of markets in recent months. we have recently cut back slightly from a moderate overweight position to a slightly less overweight
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position. we have taken the money out of europe. we're still overweight europe, because actually the numbers look pretty decent. you have yields in europe that are much higher than elsewhere in the world. and europe is also at a much earlier stage of its business cycle. there is a scope for the business cycle to run longer than there is for the u.s. or the u.k.. on the face of it, europe still looks good. it is just those long-term growth prospects that i think you have to question to a greater extent because of what is going on with the issues that we talked about. anna: peter, thank you, peter stay with us. up next, no compelling case for a fed hike next week. is he right to discuss that? this is bloomberg. ♪
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anna: welcome back. this is "countdown". a pretty gloomy day it looks to be in store for london. we are 7:19 in london. 8:19 if you're watching in berlin or paris. the pound fairly stable against the dollar. after that no change decision from the bank of england yesterday. deutsche bank says it won't pay the $14 billion sought by the u.s. justice department. that is more than triple what some analysts estimated could be a potentially worst case. let's get more. our european finance managing editor joins us. great to get your thoughts this morning. what is in store for deutsche bank? we're hearing they are being asked to pay this $14 billion. that is not the end of the story. it is going to be a bumpy ride ahead. they are rebuffing it for the
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time being. investors will be looking at the metrics that were applied to other banks that have settled similar cases. those were smaller fines, looking at $4 billion or $5 billion. they are pretty much priced in but we won't know that until the agreement. anna: there is the intention to settle but the price is this question. >> they will be looking at conduct issues. there is no one size fits all in these cases. we saw the stock in the u.s. trading drop more than 6% when the news broke. anna: this is all in relation to mortgage securitieses, investigations in the u.s. is this something that goes back years? >> yes, it does. most of the u.s. banks have come and settled this. you have some of the european banks still in a similar stage to deutsche bank.
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there might be some cost to others as well including u.b.s. for example. anna: looks like they face remember regulatory probe pertaining to other issues. peter is still with us. regulatory threat. run one of the reasons you stay away from the banking stock. >> absolutely. past bad behave is still being punished. i think it is going to continue for sometime. this $14 billion fine, as you say i guess in the end they are not going to end up paying nearly that much but it is still a huge amount in the context of an $18 billion market cap. it is a huge issue. the other problem we think is going to continue to plague banks is interest rates will stay very, very low for a long time. they have been low for a long time. that is not the case. back in the 1930's and 1940's nd 1950's.
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anna: deutsche bank shares in e u.s. were trading week r weaker. we should watch this share at the open. let's talk about the u.s. interest rates. larry summers says he sees no compelling case for an increase in september. he also said the central bank needs to make sure another recession is not looming. >> if another recession comes, the fed is going to have very little room to address it. they don't have anything like the 500 basis points they have had historically and that means they have got to lean over backwards to make sure that another recession doesn't come. anna: peter is still with us of course. those were the views of larry summers. he doesn't see a case for a hike. i got a different view from gabriel stein in the last hour. what is your view? >> larry summers is one of the
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big proponents over the secular stagnation thesis which i have a lot of sympathy for and he not just summers but a number of very economists claim some serious structural issues that are causing growth to be extremely low. things like rising wealth and income inequality and low productivity growth. all of these things are causing growth to remain low. it is very hard actually to address these issues. so i suspect that the reason why summers is saying there is no case for an interest rate hike are largely related to these issues that he points out about stagnation. he is also referring to fact that there is not enough going on in the way of public sector stimulus in the face of what is very weak private sector demand, the government has to step in and do something.
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and the government in the u.s. and naturally elsewhere in the world, they are following these -- following these austerity policies and expansion policies. there are more calls for fiscal spending. thes not happening soon enough. the presidential election. anna: that looms large in november. what do you think about investing in u.s. equities as we have seen in the last week or so taking play. people asking whether central banks around the world would continue to support assets in the way that they have and people sold "everything." we saw lots of people going into cash. i have a chart showing the s&p bouncing off some technical levels. do you think -- whether you like the technical story or not, do you think we have some underlying support for equities? we saw bad data out of the u.s. leading to a rally yesterday. where do we head?
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>> we have been overweight equities, which i think has broadly been correct and we have been underweight the u.s. for sometime. that hasn't necessarily been the right position to have. the reasons for that are i pose twofold. one we think u.s. equities are expensive. they are expensive in absolute terms and relative to history. s there u.s. is late cycle. although the cycle can continue for sometime because it is late cycle and later cycle in other parts of the world, there is less of a case for being overweight in the u.s. and other parts in world like europe and the u.k.. anna: peter, thank you for your thoughts. peter of seneca investment anagers.
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remember, deutsche bank is being asked to pay $14 billion. they don't want to, this in relation to an investigation in the u.s. 7:26 in london. next -- that's it for "countdown". "on the move" is next. ♪
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>> 7:30 in london. 8:30 in berlin. i'm guy johnson. caroline hyde is in bratislava. here is what we are watching. no way u.s.a. deutsche bank says it won't pay the $14 billion sought by washington to settle a mortgage-backed securities probe. how far will the stock fall at the open? europe threatens to revolt over bank capital rules. they have had enough.


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