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tv   Bloomberg Surveillance  Bloomberg  January 31, 2017 4:00am-7:01am EST

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francine: troubled by trump. gold games and global stocks drop. present firing the acting attorney general amid fears about his unpredictability. they wait for clarity. the latest from tokyo. and trust the people, back brexit. may's message to lawmakers as debate begins on article 50. this is "bloomberg surveillance." i am francine lacqua. first, let's check on the data, because it tells the biggest story, although i would point to
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foreign policy and domestic policy in the u.s. to see what is going on. that is what the markets are looking at. global stocks slumping. gold up. donald's firing of the u.s. acting attorney general seems to be adding to concerns amongst traders about unpredictable decisions in the new administration. up 1.2 see the vix index percent. we have plenty more on your markets. first, let's get to the bloomberg first word news. canadian university student has been charged, following an assault on a quebec city mosque that left six people dead and seriously injured five others. the 27-year-old was charged with six counts of premeditated murder and five counts of attempted murder. although investigators are working to determine the motives, police are treating the incident as a terrorist act. bestdent trump is has president trump has stepped up his criticism of regulations, or missing to overhaul banking
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rules. at an event with small business leaders, he said, "we are going to be doing a big number on signed an," as he executive order requiring government agencies to revoke to existing regulations for each new one issue. the bank of japan has kept stimulus unchanged and left its inflation forecast largely untouched. the central bank is waiting to declinect from a recent in the yen and donald trump's alice's. the boj will continue to buy bonds at the same piece -- pace while leaving key rates and changed. -- unchanged. to recent may will call on british lawmakers to trust the people who voted for brexit, as she seeks to win their backing for a full departure from the e.u. full debate in the house of commons begins later, with a vote held tomorrow. we'll news help 24 hours today, powered by journalists and analysts in more than 120
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countries. i am nejra cehic. francine: global stocks have dropped. gold has gained. that is at concerns -- as concerns about donald trump's unpredictability were heightened by his decision to fire attorney general sally yates after she told staff not to defend the order suspending entry to the u.s. by citizens of seven predominantly muslim nations. we are joined by dusty baker and richard jefferies kavanaugh capital management. think you for joining us. stephanie, what have we understood over the last 10 days of trump in power, how he is going to govern that company? stephanie: particularly given the ban on friday, the immigration order, it seems clear that he is not going to follow protocol. the order did not get checked early and vetted and approved by legal counsel. the department of homeland
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security questioned aspects of it. i think he knows the ban in particular has added to the sense of confusion and chaos within the u.s. government, given all his variety of executive orders. and i think it has unnerved not , but lawyers in the justice department, who are wondering where they stand. you had senator chuck schumer defendinghe was just the law, and that that was her only loyalty, should be to the law, not to follow every issue an order from the president. francine: stephanie, the firing of sally yates, as you say, added to stress among lawmakers but also investors. trump dismissed yates after she said his order was not consistent with the obligation to seek justice and stand for what is right. does he demand loyalty above all, or was he going to change her job anyway? stephanie: jeff sessions has not
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been confirmed. we expect the senate judiciary committee to approve him later today. i'm so he should be in place, assuming there is no blowback from the senate in the next few days. her time was limited in any case. she was an obama holdover that was just acting as a sort of caretaker. but, you know, i think she -- many people thought that if she was opposed to this order, she should have just resigned in protest. however, based on the memo that she issued, she clearly thought the order was legally indefensible, and did not feel comfortable sending lawyers out to defend it. francine: what does this mean for markets? you follow this, i imagine, an hourly -- on an hourly basis. would you ignore it? richard: the keyword was unpredictability. too many syllables to count. unpredictability -- markets do not like that.
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it creates uncertainty. in the short-term, it is important to separate political events from their economic impact. we tend to overlay them, but in fact, the political implication of this happening in the united states at the moment, with the new president, may be different from the economic and market implications. but at the moment, people are not certain. toncine: what i'm struggling understand is, these are the platforms he ran on. how unpredictable is this? richard: i think it is the way that this is coming through. it is coming through very suddenly. it appears that rather than going through due process, he is shooting from the hip. he is signing orders. and i think it is the disruption to the process that is leaving people a little bit unnerved, and saying, if he is doing this all of a sudden, what else might happen all of a sudden that will catch us on the hop, in effect? francine: how are the gop handling this? and who is there to make sure that the checks and balances are enforced? stephanie: well, you have seen
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some republicans, like paul ryan, supportive of this measure. others, like john mccain, have come out criticizing it as unconstitutional. so i think you are seeing a divide their between -- there between moderate republicans who are willing to stand up and provide those checks and balances, versus some republicans who seem to be backing trump regardless of the legality of this. to aine: does it come head? i am not sure if the gop will stick to him, until a point. is there a point where he goes too far? stephanie: i think there is movement within congress to mount a legal challenge to this, to clarify, you know -- in relation to the 1965 immigration act, to clarify what is allowed and what is not. that is where it stands now. thecine: richard, what are markets expecting? i imagine the markets want to know more about his economic policy -- jobs back to america, funding, infrastructure.
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are they concerned about trade wars? richard: i think in the medium to longer term, they might be concerned about the implications of trade wars, of disruption to world free trade. but in the short term, i think the markets have been looking at the impact of the likely policies that are going to be introduced by the new president, saying these are going to be positive for corporate profitability. they are probably going to be positive for domestic growth, if there is a boost to end the structure spending. that, in a sense, has captured market attention up to now. but markets will be concerned by the deeper political implications of some of the things that are happening now. francine: stephanie baker, thank you, and richard jeffrey stays with us. remember, if you are a bloomberg customer, you can watch the show using your terminal, on tv go, as well as the video stream you can see there. stephanie and richard, you follow all of our charts, all of our functions, and can message us directly by using the ib
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function at the bottom of your screen. coming up, as the u.k. parliament starts its key brexit debate, we bring the latest from westminster. ahead, a year of political uncertainty. how is europe's economy faring? we have the latest analysis and data. as president trump steps of criticism of financial regulations, we focus on what the new white house could mean for the financial services industry. that and more, coming up. ♪
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francine: "bloomberg surveillance," here in london.
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here is nejra cehic. nejra: deutsche bank will pay $425 million to settle allegations by new york regulations that it helped wealthy russians launder billions of dollars. the investigation was linked to claims that employees used a mirror trading scheme to move money out of the country from 2011-2014. the u.k.'s financial conduct authority also find the bank over the laundering. royal dutch shell has agreed to sell a package of u.k. north sea oil and gas assets for as much as $3.8 billion to a private equity firm. the move marks a significant step in the energy major's development program. thousands represent of barrels of oil. shell is planning to sell $30 billion in assets through 2018. assetso third quarter
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topped estimates, helped by a weaker yen that boosted overseas profits. the company raised its forecast for net income in the current fiscal year through march by ¥40 billion. nintendo is preparing to roll out a new console, switch, in march. that is the bloomberg business flash. francine: trust the people and back brexit. that is the message from theresa may's government as parliament begins debating a bill that gives for permission to start the political mechanism by which the u.k. will leave the european union. anna edwards joins us from westminster. process fromis the here? how much say can parliament have? thanks, francine. what a view from westminster. the notification of withdrawal bill is going to be debated today and tomorrow here in parliament. the debate could go on until at least midnight tonight. it could be a late one for mp's. process -- this is the second of a 10 stage process. there are a lot of hurdles to
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get to the previously declared deadline, or self-imposed deadline theresa may set, to trigger brexit article 50 by the end of march. we are seeing some reports that suggest there could be a deadline earlier than that, as early as march 9. you get to that by looking at the statements yesterday from the government about how they want to get this through the upper chamber, the unelected house of lords, by mark seven. the e.u. summit is two days later. potentially, we see movement before the end of march on article 50. that will depend on how quickly this process goes. this is the second of a 10 stage process. after the comments, it goes to the lords, and could get kicked back to the commons after that. we will see at the committee and report stage. we already know that labor wants to put forward seven movements. it could be we will get a bit more detail on how the timing is looking over the next couple of days. francine: but how can -- what
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kind of robust debate are we expecting? if you are a lawmaker and the bill says you respect the will of the people, it will be difficult for you to go against it. anna: yes, and that will be the point that david davis is going to make. he is going to say "trust the people." at noon, we will hear from him. he said in a statement overnight, we asked the people of the u.k. if they wanted to leave e.u. they decided they did. he is calling on lawmakers to back the will of the people in that 52% to 48% vote. that will be a problem for lawmakers, although they may want to go with the national will of the people. the labor party calling on its front bench to do that. this is likely to be passed, this bill, that there will be some rebellion. seatsawmakers represent that voted overwhelmingly for remain. they might feel they are betraying the constituent statements tells represent. a slightly more -- constituents they themselves are present.
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a slightly complicated situation, but a bill expected to go through. it is a matter of how much time it makes and how many amendments are made during the process. francine: anna edwards in westminster. we have a great story on the bloomberg terminal, saying that frankfurt and new york maybe the winners, as u.s. banks retreat from the u.k. i want to get richard jefferies -- richard jeffrey's take on this. this is the premium investors demand to hold some of the etf's. this is what we drafted. stocks.acking u.k. it means there is still a little bit of hope in the market that parliament will try to mend brexit so we get a softened brexit. richard jeffrey, chief economist at caps on capital -- cast capital management, is still with us. is there a feeling this will not be as clean-cut, as ugly, as
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cliffhanger, esther risa make he's telling us? she says brexit is brexit. is it? richard: funnily enough, the clean-cut is almost the easiest. things in between are what will cause uncertainty. people in markets have accepted that brexit is going to happen. they have listen to politicians. disruption, aredstanding by people who against brexit, but it is going to go through, and probably within the timetable. it is at that point, i think, that people focus on, exactly what is brexit going to look like? i think the politicians are telling us that it is a clean break, and we start renegotiating from there. francine: that means no access to a single market.
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is that understood by the etf flows you see? the court case -- parliament is going to trigger it, and it goes up quite a lot. richard: it does not mean no access to the single market. we will still have access to the single market, but not on the same basis as if we were members of the european union. we will still be able to export into europe, and europe will still export to us. we do not know the exact terms, what sort of terrorists -- tarriffs might be introduced. we will still trade with europe. it is in europe's interest to continue to trade with the u.k. francine: absolutely, we do not know whether the u.k. will have to pay to the e.u., whether the e.u. will ask too much and force the hand of the u.k. richard: if we wanted to have access to the single market on the same basis that we had access previously, and almost certainly, we would have to pay substantial amounts into the
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e.u. i think the politicians and the prime minister are telling us that is not what brexit means. they are not going for a halfway house. i think they are going for full brexit. francine: what happens to the pound, more weakness? richard: there is the potential for more weakness. careless words from politicians can certainly drive sterling lower. but i would say that at these sorts of levels, the pound is undervalued. on a medium-term view, i think the pound will probably gain value, but there is going to be a lot of volatility. francine: thank you so much for now. richard jeffrey of cazenove capital management stays with us. up next, as your repairs for a year of elections, -- as europe prepares for a year of elections, we bring you analysis of the latest data. ♪
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francine: this is "bloomberg surveillance." growth in france accelerated in the fourth quarter as part of the euro area expansion fueling the ecbbout how quickly should change stimulus. the annual inflation rate rose to 3% in january, ahead of analyst forecasts, which were 2.4%. richard, you look at the underlying growth picture -- high unemployment, rampant inflation above the 2% target,
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and the political concerns. what happens in europe in 2017? richard: if we look at the economic backdrop at the moment, i am slightly more optimistic about the look for this year in growth terms than some people are, and maybe the market consensus. i think we are past the worst in terms of the growth cycle, and the underlying financial problems are past the worst as well. i think we are going to see better growth this year than people anticipate. but of course, there is the political overlay, which is unnerving, and the policy overlay as well. i think these things will cause concern during the year, and policy questions may come to the four by the end of the year. me bring you to my bloomberg terminal. inflation from germany is in yellow, the rate at 0%. 1.7 four germany, german cpi. how do you set policy if you are the european central such
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different economies? richard: that has always been the problem. that has always been the issue for the ecb. how do you set policy for such a diverse economic area? in truth, i think that is the weakness of the whole common currency project. and i have no doubt that if the bundesbank was still setting policy for the german economy purely, it would be pushing interest rates up at the moment. it does have rising inflationary pressure. it has very tight labor markets. knowing the cautious way the bundesbank has operated in the past, it would be raising interest rates. on the other hand, if you look at the italian economy, italy is still a week growth story -- weak growth story, with deflationary aspects to the italian economy which were -- are going to remain a problem. you want to give monetary help to the italian economy on an ongoing basis. francine: as an investment officer, do you buy into the spread between german and italian yields, french and
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german? how do you play europe? richard: i think there are times when you can play some of the fears that emerge within europe, through the spreads. at the moment, it looks to me as if levels in the bond market are considerably too low. the are not discounting deflationary risk which is building up. that is true in other bond markets as well, but it is more true in, say, germany and the eurozone than elsewhere. francine: richard jeffrey stays with us. up next, we talk more about the new u.s. administration and what it means for the rest of the world. we are joined by a u.s. specialist from chatham house. ♪
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francine: this is bloomberg surveillance. i am francine lacqua in london. let's get to the bloomberg first word news. nejra: a canadian university student has been charged
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following an assault on a quebec mart that left people dead and injured. with six counts of premeditated murder and five counts of attempted murder. although investigators are still working to determine the motive, police are treating the incident as a terrorist attack. atsident trump has fired the acting attorney general after she said she would not defend his travel ban. sally yates says it was inconsistent with the administration's to seek justice. the bank of japan has kept stimulus unchanged and left its inflation forecast largely untouched. they are waiting to see the impact of the recent decline in the yen and donald trump's policies. they will continue to buy bonds at the same pace while leaving two key coliseum rates unchanged. willsa may's government
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call in british lawmakers to trust the people who voted for brexit as it seeks to win their backing for a draft law. two days of debate in the house of commons begins later with a vote held tomorrow. global news 24 hours a day, powered by our 2600 journalists and analysts in more than 120 countries. i am nejra cehic. this is bloomberg. francine? francine: thank you. president trump's firing of america's acting attorney general deepens the conflict over his plans to restrict travel for several muslim nations. more than 6 million people have signed a position just petition against it. let's talk -- petition against it. let's talk more about the implications. leslie vinjamuri is with us. richard jeffrey's is still with us. leslie, great to have you in the program.
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give me a sense how you see the first week entire donald trump. when does the conflict stop? leslie: we keep thinking that it will get quieter, but almost every day there has been a new executive order that has created a lot of pushback and consternation and uncertainty. i think it is the uncertainty that surrounds the most recent executive order banning -- immigration and refugees from seven muslim majority countries, in terms of what are the basic rules? we have diplomats for many countries abroad just simply trying to discern exactly what the regulations are, because there are so many people in transit. the uncertainty surrounding this presidency has been extraordinary, and no more since friday. francine: are there any regrets, do you believe, as in the white house about having created this uncertainty and the way this is felt? leslie: where the disagreements with the cabinet, that is where
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we are waiting to see, and who will have more access to the president in terms of making these decisions. it is very hard to know where the regrets are, but clearly donald trump is listening to what is happening. sunday night he came back and said, we do have compassion, and there has been ambiguity about whether green hard -- green card holders are included. regret might not be the right word, but there is attention to the politics that are going on but no sign of regret. there is moving forward on this order. the tweets have suggested a stronger line and that there will be no revisions. the upsetting thing for many people is that people working within the government and military and security experts argue there is no advantage to the executive order in terms of its likelihood of protecting and achieving greater security for the united states. the link to combating radical islamic terrorism is simply not
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strong. the evidence does not suggest this will achieve that goal. francine: who does the president listen to you, or who will he listen to? his party or secretary of state? it looks likenow the president is listening a lot to his political strategist stephen bannon, who has put on the principals committee of the national council which disturbs a lot of people. the news out of the executive band that has gotten more attention. the head of the national intelligence will no longer assume to be at every single meeting of the national security council pretty girls -- andcipals committee, stephen bannon will give us a very strong indication of who donald trump is listening to right now. francine: richard, do you worry that, i do not know if it is badly thought out or mistaken trade war could be started by donald trump and his administration.
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that would actually plunge the world into a recession. foremost,irst and what we have got to accept and realize is that donald trump is deliberately being disruptive at the moment. he is trying to send signals, not just domestically but internationally, that he is willing to be disruptive and he is willing to shoot from the hip. he's trying to change the behavior of others in the world economy. that brings us onto trade. he is really saying, i am willing to do this sort of thing so just beware. we are concerned about trade, but the objective of free trade is a longer-term panacea. we do not have free trade in the world. we cannot have totally free trade, it is not appropriate, but what we want as fair trade conditions. what donald trump has been saying is the trade relationship between china and america in particular is not fair, and is trying to put pressure on to get that changed. leslie: he absolutely had a much more assertive stance toward
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china, as we know. one interesting thing is to think about the uk's position in all of this. theresa may made her visit, they talked about having a u.s.-u.k. trade deal but there are a number of issues making it much more difficult for the u.k. to continue this strong relationship with donald trump. china is likely to be a big issue that drives a wedge between them because britain has wanted to develop a much stronger relationship with china at the same time donald trump is talking about taking on a more assertive role. francine: does donald trump demand loyalty above all else from his administration? leslie: i think last night's news of the deputy attorney general being forced to resign because she said she would not enforce the executive order, is very strong evidence that he is not willing to consider those who are not -- that operate according to the rule of law rather than a deep sense of loyalty and patriotism.
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i think last night was the most worrying signal for many people that we have seen. but of course, we remain, we have to watch this space. it is not entirely clear how consistent that demand for loyalty will be and how quickly he will move on from that. vinjamuri,r. leslie thank you very much. richard, i want to go back to something, when you look at trade wars, from an economic point of view if donald trump and administration label china a currency manipulator i like to believe that china may be manipulating the currency, otherwise the yuan would fall further which would make the u.s.'s life more difficult. richard: i am not sure the chinese are manipulating the currency. i think they are as concerned about the weakness in the yuan as others are, they just do not know how to counteract it. the trading relationship between china and america, and other developed economies is very much
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waited toward one side. it is much harder for western economies to export into china and for china to export into the west. i think it is that balance that the president is wanting to address. the point about the u.k. that was raised before, politically i think this does raise some questions for the u.k. about its relationship with the united states, but economically we are on a different footing. we need to trade very actively with the united states, and we trade with lots of countries whose political regimes we are not articulately comfortable with, and much less comfortable with ben donald trump. francine: richard jeffrey, thank you very much. hisld trump has stepped up criticism, planning to step up the dodd-frank overhaul. he believes law has made it difficult for businesses to get
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loans. michael, what kind of action could we see in terms of legislation for wall street? michael: i think the expectation is that trump would need a lot of congressional support to do a full rollback of dodd-frank, so what you may see is the change be on the implementation and the enforcement of the rules rather than rewriting them themselves. francine: how much of a comprehensive unwinding of banking regulation could we actually see question mark we spoke to a number of ceos and chairman. we are not going back to touch regulation, are we? michael: i think banks would settle for just a pause in the increase in rental -- you have seen a change since the financial crisis and even pausing where we are, and taking stock of the rules i think would benefit the banks. but there could be some change.
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it is tough with trump to know the details. he has made some broad pronouncements, but what that actually means for the legislation itself would be a question. francine: how much does this cross over into your world in europe, and how you look at the health of the banking system in europe if they are not on a level playing field? richard: the health of the banking system is improving slowly in continental europe, slightly better in u.k. and much better in the united states. i think the policy is responsible for that. if we take a step back and say, if regulation was not appropriate writer to the financial crisis, and poor regulation was partly responsible for the conditions that led up to the crisis, it is equally, i think it would be equally unbelievable to believe that we have introduced a new set of rules immediately that are perfect. some changes to the rules now
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,ight not be inappropriate because some aspect of the rules are increasing volatility in financial markets rather than dampening volatility. some changes i think would actually be welcomed. francine: deutsche bank, two fines in 24 hours, is that significant? michael: i think those are a chunk of this russia issue. the bigger piece of it is the doj settlement which has yet to be announced. we will see what the total size is, but i think these so far have come in roughly in line with what people were expecting. but there is still a ways to go on totally resolving the russia issue. francine: michael moore, our banking editor, and richard jeffrey from kaz knows. tokyo, and then later we talk what is next for president
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trump after the executive order and his announcements or test announcements for the supreme court nominee are announced. program.yu joins the for more, to anti-radio daybreak europe live on london's dab digital. this is bloomberg. ♪
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francine: this is bloomberg surveillance. i am francine lacqua in london. mark barton is at the terminal. mark: we are up. we were down for a third day of the u.s.e firing attorney general, adding
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concerned about the unpredictability of the new administration. stocks are rebounding. the msci is declining today. yesterday we saw the drop following from donald trump halting some immigration. it is up in january, up for a third month. banks leading the advance up by 1%. the yen was up earlier. ignore the headlines that say the yen is gaining. it is concerns over trump's measures trumped the boj decision, the boj keeping its asset purchase program to control the yield curve unchanged. the u.s.clining in after trump fired the acting u.s. attorney general for refusing to uphold the border, his order banning citizens from seven predominantly muslim countries into the u.s. the boj raised its forecast,
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expecting improvements in overseas economies. dollar-yen, this is a great chart. the demand to hold french bonds over bunds, that is the blue line. the stocks have fallen to at least a 30 year relative low. that is the white line, a turbulent week last week for the republican presidential candidate. yields rise yesterday, something that went largely unnoticed in greece and portugal, in france, in italy. that is something we have got to keep an eye on. francine: thank you so much, mark barton with some great charts looking at the franco german -- and what it could mean. japan has left stimulus unchanged and governor kuroda remains confident he is on track to boost their economy and inflation.
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speaking with us is the former top currency official for the finance minister. kuroda is mr. satisfied with the current state of the japanese economy. we are growing at 1%, which is reasonable for the macroeconomy. inflation is it 1%, and deflation is over. i think that is a good reason for mr. kuroda to become somewhat optimistic. francine: let's get more with bloomberg's global economics policy expert. what did governor kuroda have to say about president trump? >> following the boj's policy meeting, he was peppered with the number of questions about the impact of donald trump. he said in terms of the effect on the u.s. economy, you expect
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to see more growth, not enough details yet, but with the hot button to push was what donald trump has said about trade. what mr. kuroda said as he does not think there is a threat of global protectionism spreading. he said if it did, it would cause the economy globally to slow down so it is obviously something he is watching. he was also asked about donald trump's ban on some immigrants from some countries. it has certainly created all kinds of reverberations around the world. he declined to comment, but a couple of people i have interviewed said that yes, this ,s something that is unsettling potentially having a negative impact. week he told our bloomberg news team in tokyo that when trump's fever breaks he sees dollar-yen going to 100.
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oneold me yes, this is just more reason the trump fever is raking, and they see that move -- is breaking, and they see that moved to 100. the bank of japan is not weighing on a weaker yen, although a board member i spoke to says she thinks he is and this is unsustainable. sooner or later she said the boj needs to realize that monetary policy alone cannot get the country on track. there has to be fiscal policy. and his administration have to make that happen. francine: did he give any hints about removing stimulus? no.leen: in a word, it does not look like it is coming anytime soon. he expects the core target around 2% in 2018, and harkening to this idea you need fiscal policy and monetary policy
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together for deflation. too early to discuss exit strategy, he said. he said the boj is only halfway to reaching the 2% target. the yield curve is having a strong easing impact. he said the economic environment is set for more wage growth. remember the spring labor negotiations are lying ahead. and the unions push for more wages and get when he is increased? they have not been able to in the past. as far as the currency, most people were hoping to hear something definitive. he said it is desirable for foreign exchange rates to reflect economic fundamentals and it is not only about interest rate differentials. he said it is the ministry of finance that controls the currencies, so he reminded us it is not really the bank of japan's responsibility. when you look at it, the glass is half-full for governor kuroda.
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they are certainly not going to add stimulus but they will not take it away or add any tweaks with the yield curve control. that is what we got from the press conference today. francine: thank you so much. richard jeffrey is still with us. i interviewed governor kuroda many times and the glass is always helpful, and yet he is struggling -- is always half full, and yet he is struggling to keep a handle on the yen. forard: i think the problem the bank of japan and japan generally is that they are trying to use cyclical policy tools to address a problem that is deeply structural, and i do not think they are anyway close to getting out of this long .eriod a very slow growth your correspondent was saying the bank of japan is probably happy and quite optimistic about 1% growth. half the rate that an advanced economy should be achieving. the problem that i think is interesting, if you look at japan there are symptoms they
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are that we can look at and say, they can be applied and the problems can be applied to other economies. if i was in italy i would be looking at japan saying, we have some of the same issues. rapidly aging economy, deep structural issues, heavily indebted, those have come together to force this. slow growth in japan and are emerging in italy as well. francine: richard jeffrey, thank you for being with us. let's get straight to the bloomberg business flash. nejra: deutsche bank will pay $425 million to settle allegations by new york regulators that it helped wealthy russians launder billions of dollars. to claims that deutsche employees used a mirror trading scheme to move money out of the country from 2011 to 2014. bank 163 find the million pounds over the laundering failures. has agreed toell
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sell a package of u.k. north sea gas assets for his matches -- two chrysler holdings. it marked a significant stat in the divestment program. they represent about 115,000 barrels of oil equivalent. planning to sell $30 billion in assets through 2018. nintendo's third-quarter earnings topped estimates, helped by a weaker yen that boosted overseas profits. they raised their process for net income by ¥40 billion. nintendo is planning to roll out a new console in march. that is the bloomberg business flash. francine: global stocks have dropped as concerns about president trump's unpredictably does on predictability were heightened -- unpredictability
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were heightened after firing the -- let's get more with michael mckee in new york. what has been the reaction to the firing? michael: democrats of course are hailing sally eight as a hero, republicans as a traitor. a lot of people in the legal community are split. they feel if she had a serious objection to the order she should have resigned, like the time when richard nixon fired the attorney general over the person that was investigating him. that is -- it does not change the situation, does not change the lawsuits against the administration on behalf of people who were kept out of the united states. that will still go forward. the new acting attorney general
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said he will enforce the president's order and defendant in court. francine: what is on the agenda for today? michael: the big news will be when the president announces his supreme court pick, that does not come until tonight, 8:00 p.m. washington time. he is signing an executive order this afternoon and we do not know what it is. many people waiting to see what kind of person he picks for the court. , botho top candidates relatively well thought of but very right wing. democrats have promised to fight over that. if you think the whole issue of immigration was an issue for democrats, the supreme court pick is going to be a real war. francine: when are we expecting the cabinet to be approved? when are we expecting the full cabinet to be working? michael: it could be until
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february before that get some of the people who are on the president's cabinet list into office. we should see rex tillerson confirmed by tomorrow for secretary of state. today it elaine chao of the transportation department. jeff sessions if he gets through the committee today will probably can test probably be confirmed on friday, but there are some like steve mnuchin who have always to go. francine: michael mckee with a good update on insight into president trump and what he will do today. surveillance continues, donkey will join me. -- tom keene will join me. we will give you all of your markets, this is bloomberg. ♪
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francine: troubled by trump, gold and the yen are in demand
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after he fires acting attorney general sally yates after questioning the legality of his executive order on travel. clarity on theor strategy of trump and the direction of travel for the nations currencies. debate,nt prepares to giving her permission to trigger article 50. good morning, everyone, this is bloomberg surveillance. i am francine lacqua in london, tom keene in new york. it is 10 days into the trump administration, and the markets are trying to figure out what everything means, what his next step is, and what it means for trade wars and their positioning. tom: the markets have been very quiet. i would suggest we did not see this saturday massacre of watergate years ago last night, but it is a nation in shock. i do agree with you, the brexit debate in london very important
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this morning. debate isthe brexit extremely important for two reasons. i think there is a little underlying hope in the markets that there will because is attached when article 50 gets triggered, and of course we look to the euro area, the other side of the negotiating table. 1.8%tion rate is rising to . this is what we have been talking on surveillance for about three months, the inflation rate is diverging so how does miller -- mario draghi set policy for germany and italy? if you aggregate the countries, it has grown 0.5% for the quarter, in line with estimates. not much movement on the euro but there is movement on the pound. let's get to the bloomberg first word news. taylor: p round fired the attacking -- p round has
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attracted the -- fired -- the yates said she did not think it was legal. the new acting attorney general has been a u.s. attorney general in virginia, and has ordered government lawyers to defend the ban. debate begins today on a bill against prime minister -- that gives theresa may permission to start the brexit process. off five dayscks of discussion and says lawmakers will consider a simple question -- do they trust the people who voted to leave the european union? kept its stimulus unchanged and its forecast largely untouched as they are waiting to see the impact of the recent decline in the yen. the boj also wants to see the policies of the trump administration.
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they are still far from the 2% target. foundan they may have melted nuclear fuel underneath one of the reactors. it was one of the worst atomic disasters in history. they may send in a robot as soon as next month to determine how radioactive the material is. global news 24 hours a day, powered by our 2600 journalists and analysts in more than 120 countries. riggs.ylor this is bloomberg. tom: thank you so much. equities, bonds, currencies, commodities, second day in a row . we are watching european paper. a little bit of curve steepening , 28 basis points. that is a little bit of a trump on trade, but i'm going to call everything a turn. turkish lira strengthens, mexican peso strengthens. francine: i would point to this
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euro area inflation surging to 1.8 which intensifies the debate on ecb. you are right to watch for the german-france spread. concernsing on surrounding the predictability of the administration -- unpredictability of the administration. tom: this is something francine has been way out front on. this is not a basket case like germany, a basket case maybe like italy. this is the france-germany spread. here is the advent of the year, and we used to note the strong complacency about a strong germany, france, and europe. here is the average line through this turmoil, and absolutely critically the difference in yield the french and german 10 year has broken through that average line. francine, as you mentioned this
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is linked in to the vote, the gaining of le pen. it is a big deal to see this cut above that average line. francine: that is a great chart, tom. i want to bring into my chart because we have this 1.8% inflation for the euro area as a whole, much more than expected and largely driven by higher oil prices. has called into question the appropriate degree of monetary policy by european central banks. germany is at 1.7%. if you have a country at 1.7% you do things differently than you would for italy which is at 0.5%. this is a problem for the european central bank and this may be the problem at its worst. gold advancing along with yen, president trump's firing of the acting attorney general has increased concern. joining us is robert skidelsky.
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yu also. thank you so much for joining us . let me ask you a very simple and complicated question. world view the trump administration 10 days into the nugget ration. ? robert: he seems to be unpredictable and the markets do not like uncertainty. this was the platform on which he ran. robert: the general trend of his policies is predictable but this succession of executive orders and rather arbitrary character of his first week does disturb not know what do
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the direction of american trade policy is going to be. you do not know what the future of the banning of travel orders going to be. it is meant to be 90 days, 120 days. what after that? of course there is all the uncertainty arising from brexit as well. i think the markets are in a volatile state. we do not know what is going to happen. francine: and yet the markets have not been that volatile. are they still hanging onto economic policies and infrastructure spending they hope donald trump will reveal shortly? geoffrey: the direction of travel is clear. i think it is the haphazard way is concerningdone markets, but they are holding on to the hope that ultimately it is going to be implemented. will see tax reform and stimulus.
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-- we will see some tax reform and stimulus. tom: thrilled to have both of you with us. , one ofert skidelsky our leading historians of the middle 20th century. mr. mussolini adored maynard james supposedly, and there was a quote in the vicinity of 1926 where he simply said fascism, while it agrees with mr. maynard james. are we seeing a fascism light? .obert: i do not think so i think it was a very different set of circumstances, and we have also not experienced anything like the great depression. the great depression was the big radicalizing force, and we avoided that. to james is not inappropriate, because i think trump is what i would call an instinctive keynesian. the elements of the policy, infrastructure spending, tax
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cuts, and protectionism are all sort of what one would call it instinctive reactions. not, what we have not got is any theoretical justification, and that is why i use the word instinctive. tom: geoffrey yu, what is your view on economic growth at ubs on the united states, but for that matter on the european sphere? is economic growth going to come to the rescue of these tumultuous times? geoffrey: we actually think more so in the u.s., and bearing in mind even before the election there were signs in the labor market. we were achieving velocity in terms of wages, and there is momentum. his stimulus gives us an extra kick in the u.s. we could surprise on the upside. in the eurozone, we saw
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surprising to the upside growth. the question is, while markets discount the populism and politics in europe and not look at the good growth numbers? francine: thank you both. stay with bloomberg for all of the latest on president trump. we will bring coverage of his announcement of his pick for the u.s. supreme court. look for that at 8:00 p.m. in new york, 1:00 a.m. london. this is bloomberg. ♪
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francine: this is bloomberg surveillance. francine lacqua in london, tom keene in new york. in ar: for the second day row, deutsche bank has agreed to settle claims it helped wealthy russians launder money.
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they will pay $204 million to british regulators to solve the investigation. the jim banks said it would pay $425 million to regulators in new york. royal dutch shell is cutting down its debt low by selling oil and gas fields are up to $4.7 billion. forsler is buying those $3.8 billion. shell became swollen with debt last year. the biggest bank in italy is expecting a $12.6 billion loss for 2016. 's booking one-time charges related to its turnaround plan. they are hoping cost cuts can clean up their balance sheet. that is your bloomberg business flash. francine: president trump has fired the acting attorney general for failing to defend his immigration order.
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she was an obama administration holdover. for more, we are with michael and also with us is lord robert skidelsky and geoffrey yu. first of all, we hear that the conflict is escalating. how is the gop dealing with this , and what are the checks and balances in place? balancesthe checks and are still working, but there is a lot of concern on both sides of the aisle where president trump takes this from here. the legal cases continue, lawsuits against the ban are ongoing, and there are a lot of concerns about some of the fallout from this. people who may have had their green cards taken away and are being kept out of the country perhaps illegally, that is something that has to continued .o be fought it raises questions about the
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leadership of the justice department in the meantime. we do have an acting attorney general from the eastern district of virginia who says he will carry out the president's directions, but for some people it is not an exact parallel to the assassination of the nexen administration, but rings that to mind -- nixon administration, that brings that to mind and raises the stakes for the president to get nominees confirmed. francine: what do we understand about the president's psychology, does he demand loyalty above all else? michael: no one really knows what he is thinking, but that is the story people are telling. some of the things he is asking people to do, say go out until some falsehood to the press, maybe a loyalty test. the interesting thing about jeff sessions, the attorney general nominee, he was on the judiciary committee when sally yates was confirmed. we have a quote from him we are
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he asked her whether she would follow the law. views thef the president wants to execute are unlawful should the deputy attorney general say no? yes, thees said attorney general should stand up. tom: mike, you beautifully triangulate. sorry, i cut you off. mark: the attorney general has an obligation to follow the law and the administration. tom: this is sort of like the saturday night, judging to sell, and all of that. lle and all of that. we have an attorney general pending, jeff sessions. was he involved directly or indirectly in the termination of the acting attorney general? we do not know that, do we? michael: we do not know.
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he involved is was in the drafting of the muslim ban order, as some are coming it. he was asked about it. he said he has been giving his advice for many months, but the specific order it is hard to know. tom: he is going to be in front of a senate judiciary committee today. is this uproar enough to sway marginal republicans not to support their guy? michael: probably not, because sessions' fingerprints are not directly on this but it will be a contentious vote in the judiciary committee, and once it gets to the floor. tom: are you and i having a flashback? michael: it does remind me of that. tom: what year are we talking about? --hael: watergate francine: what year are we talking about? michael: watergate. francine: time for my morning
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must-read as it ties into what michael was saying. in a bloomberg view article, the increased burden imposed by the trump tax may be outweighed by in regulation.s make no mistake, the trump tax israel and it seems to be getting bigger every day. we are back with lord richard skills -- lord robert skidelsky and geoffrey yu. when you look at what donald trump trying to give back to the middle class, will his great experiment work? we have tried the funding and infrastructure, but the projects are far and few between. robert: everything depends on its impact on the business businessy, and community. if they think this is a package that is going to stimulate the american economy, then i think
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the american economy will probably be stimulated. this is what the name of the game is. it is the effective policies on expectations that is crucial. the broad direction seems to be correct. they do need more stimulus spending, and the american recovery has been reasonable that is quite mediocre in terms of historic trends. a lot more people are not in the job market at all, they have actually left it. so there is some gap which needs to be filled, and if the private sector is not doing the investing in the government has to, and the tax cuts will also be stimulated. i think what is interesting is that protectionism. this goes right against the orthodoxy of the postwar period. it has been all liberalizing and globalizing. trump has been saying america first. francine: i wonder if that will
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lead to a new world order. robert: that is an interesting and key question. francine: thank you so much. on bloombergorrow surveillance, an exclusive aserview with jeff immelt they react to the latest order on immigration. we talk new world order. ♪
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tom: what a day, what a news
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flow. stay with bloomberg for our coverage of the house judiciary committeejudiciary and the testimony with mr. sessions of alabama. robert skidelsky is with us. , the u.s. secretary of defense, the u.s. badly underestimated the magnitude of russian humiliation and losing the cold war. routeduring is routed -- in russia's perception, underpinned by a large dose of paranoia and a misreading of post-communist history that the west and america in particular has aggressive designs on it. willaranoia of mr. putin, mr. trump accentuate it? robert: i think the paranoia is not just confined to putin. i think they just felt that they
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suffered this huge defeat, and then they felt that the west sort of rubbed it in in the expansion of nato into the baltic countries and so on. as russian power receded, american and western power is expanding. i think that explains a great deal, not only of the anti-liberal turn in russia but it's regulation. old president trump increase the paranoia -- will increase the paranoia? all indication is that he thinks russia.eset all mr. putin wants is to be treated seriously, like a partner, and i think president trump has made noises to suggest that is possible so i think the paranoia will be there, the clashing values will continue, but there should be a calmer period.
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francine: this also goes back to the russian economy not being great in terms of firm footing, and therefore the powers that be want to do see better abroad. geoffrey: i think for countries like russia, and china as well, the ultimate legitimacy is proving that we stand up to the people. they will have different expectations about the global environment. in pushing assertively on the international front, as a qualified distraction but ultimately it is domestic conditions that matter. just geoffreyigo yu and robert skidelsky, this is bloomberg. ♪
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tom: good morning, everyone. i am tom keene in new york. coming up, the cato institute on immigration, on refugees and
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migrants in america. looking forward to the conversation. first word news, here is taylor riggs. taylor: the fight has escalated over president trump order that bars citizens from seven predominantly muslim nations from entering the u.s.. the president has fired acting attorney general sally yates, an obama administration holdover. she did not think the order was legal. dana beenreplaced by to a -- boente. on unemployment internet has fallen to its lowest level since unification. it dropped to 5.9% this month. the number of people out of work fell by 26 thousand people. the german economy expanded by about half a percent in the fourth quarter. finance industry's main lobbying group has shifted its tone on brexit. the sitting u.k. generationonce in a
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opportunity for bridge repurpose its investment and trade policy. that is seen as a boost to the prime minister strategy. the group opposed brexit last year. in a report critics china will overtake u.s. as the country with the biggest nuclear power capacity. will almost triple its atomic capacity by 2026. china has 20 nuclear reactors under construction, another 176 planned or proposed. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. i am taylor: rigs -- i am taylor riggs. francine: the bank of japan is waiting to see how beneficial a decline could be before making any further moves on stimulus. tomorrow, the feds turn to decide on thursday we hear from bank of england. we are back with robert skidelsky. thank you for sticking around. lord skidelsky, when you look at
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the middle class big angry and what donald trump is trying to do to address that, and you see with brexit, what role do central banks have been inequality? how can they react, doubt, and adjust? important, the recovery policies, which have been left to the central banks him at that is quantitative easing, buying assets from the private sector, have actually increased inequality. and by definition, they have. they are buying assets. they are meant to be portfolio rearrangements as a result which should be stimulating them up but most people do not have portfolios to rearrange. so the evidence is, inequality has grown as a result of this -- this particular scheme for recovery. i think the mistake is, the government has left it to the
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central banks because they were so scared about their fiscal positions, they said, ok, any stimulus that needs to be done this that increases inequality and will increase the sense of the middle class they're not doing particularly well. francine: jeffrey, will that change -- geoffrey, will that change? we could tend to be protectionist lead to currency wars, but can the ecb actually force politicians here to do the same? start spending more to get us out of a crisis? >> i think it is much harder for the ecb. with the currency union and draghi and facing down lawmakers several times over the last few years, especially from germany. why hasn't there been any structural reform? i think you he is not about encouraging fiscal stimulus, but provide governments with the fiscal space to engage in structural reform.
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once saying, structural reform is difficult even in good times. imagine how hard it is to do it in bad times. the central banks are trying to give them that space. has it happened globally? not really. tom: help me with what kind of conservative president trump is. i do not believe he is a burkey and conservative -- berkian conservative from a million years ago. what kind of conservatism do you observe in the united states and in the populist anger that seems to move country to country? >> well, he is a populist, isn't he? he combines elements of conservatism and radical. i mean, i think the radicalism comes from's during things up. -- stirring things up. ofis responding to a mood disenchantment, which is not only in the united states, but behind the brexit vote in the u.k. and behind the rise of
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so-called right-wing parties. right wing is not the correct term for them. you can call them extremist parties, but they are not right wing because they have elements of left-wing policies. particularly, job creation. tom: if we're effort in toward a pursuit of happiness, help me with our checks and balances. do we have in america that checks and balances we need for an extra mr. president, as you put it? >> no, i think the great anderence from the 1920's 1930's is that the american constitution does actually impose limits on what the president can do. i am not a lawyer. i am very unclear, actually, about what happens after 90 days and after 120 days. these bans are temporary. are they meant to lead to a permanent visa policy or not?
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does it have to be approved by congress or not? there is been little comment about that. -- there has been very little comment about that. these are temporary measures. where do they go into the future? francine: and where does the dollar go in the future, geoffrey yu? know so far, and it could change, as lord skidelsky has said, we do not know where the dollar ends up by the end of the year. >> there's a significant body of opinion out there. i do not necessarily agree with the physical sub would be enough to enrich sufficient demand in the u.s. that it could offset impulse.flation half the fed seems to believe it. maybe more, maybe less. i am skeptical. francine: your skeptical because it is priced in or because it comes from a low base? >> the dollar has moved a long
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way already. can the dollar sustain, even make gains from here? on the other side, we see protectionist measures, we can see that inflation as well. that throws it a whole new set of problems. which the fed may be eloquent to deal with. tom: within your economics and lord skidelsky's study of politics, d.c. the the coffee of correlation that will lead to stable -- do you see the cacophony correlation that will lead to stability or instability? i am asking geoffrey yu. i don't want to hear from you, lord skidelsky. >> i will be quiet. >> i think the market is assuming we will find a way forward. investment and spending. that is one component. it also makes us all susceptible -- look at gold.
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tom: we thought margaret thatcher would bring stability. are we going to be a general sense of stability, lord skidelsky, or do you sense instability in our extremism, as you put it? >> we live in a period of flux. i think all of these attends to forecast rings precisely are going to be invalidated. we are in these waters. we have a president of the united states who wants to stir things up. we have the possibility of political turbulence in europe. we don't know what is going to happen by brexit. we went markets to stay stable. in fact, they're just as much at sea as all of the rest of us. francine: actually, the markets are stable because of central banks -- >> but what about the spikes? that is a sign. that is a sign of instability.
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francine: what is the new world order? if we do see some kind of trade war, what does that mean 2, 3, 4 years from now? >> it means the program of globalization is going to go into reverse. that are lots of things point in that direction anyway, even without explicit protectionism. there is more and more concern that jobs are being lost as a result of globalization that are not going to be replaced. people are worried about that. even if the jobs -- even if the level of employment remains the same, the jobs being created are not as good jobs as the ones being lost. that is a major fear all over the western world. tom: robert skidelsky with us with geoffrey yu. coming up, a most important interview on bloomberg daybreak: europe's to he is an immigrant. he will speak to the team. chief executive officer and the
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supporter of the president. ♪
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francine: you can see westminster. we will get to the building, and an update on consumer spending. you can economy -- the u.k. economy copy to lift consumer confidence, though they have not fully shaken off their gloomy view for the outlook of 2017. we will get 20 more from an edwards. first, but get to taylor riggs. taylor: billionaire warren buffett loaded up on stock after the u.s. presidential election. in an interview with charlie rose, he said berkshire hathaway
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bought $12 billion of stocks since donald trump was elected. he did not say which securities he picked. buffett is critical of the president bush of 4% growth in the economy. volkswagen car buybacks in the u.s. the end of boosting auto sales. back the vehicles because of the emissions cheating scandal. that will leave the automaker to essentially mimic the u.s. government and its cash for clunkers program. that lord americans in the buying cars during the recession. bw could spend up to $10 billion subsidizing new vehicle purchases. swedish fashion retailer h&m set a new annual sales growth target of as much as 15%, including results from the chains expanding online division. the company entered 11 new online market last year and plans to add six more this year. h&m was to quarterly earnings that beat estimates. -- posted quarterly earnings that beat estimates.
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two days of initial debates on the government article 50 bill. if passed, it will give theresa may of authority to trigger brexit. westminster.is in the process starts today, but what is the likelihood that actually parliament asks for some kind of clauses attached to when they trigger article 50? anna: it is quite a high likelihood we get requests for those so-called amendments attached to this bill. it is the view notification withdrawal brill -- bill. this is what the supreme court said the government has to get through parliament so they have to effectively ask for permission for theresa may to trigger article 50 of the lisbon treaty. what we will learn over the next two days or so, just how the timing is going to work out here and how many of the so-called amendments, many to be brought by the labour party and in
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particular the scottish national party, how many of those will be attached to the bill. francine: are they sticking to the timetable? it will be triggered by the end of march? anna: that was the declaration that theresa may made last year, wasn't it? indent may or by the end of march, sorry, was the declared timetable. it was always a big date. there seems to be suggestions perhaps the target they could be more like march 9. you get to that by taking what they said yesterday about wanting to get this through the unelected upper chambers, the house of lords by march 7. there is a eu summit two days afterwards. that is why some are suggesting there could be the potential to the formal decision to leave the european union on march 9. there is a possibility we bring forward the timetable a little bit. tom: all very serious issues. gauge for us the distraction that is president trump an hour
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swallower a -- soiree in washington. is it a removed idea across the atlantic or, not the debate, but just the daily events in parliament? much part ofery the conversation. we had a session of questions yesterday from secretary boris johnson where he talked about what impact this was going to have on his people, and that particularly passport holders from those seven countries. part of theuch debate. it is also part of the debate because many people are suggesting the closeness of the u.k. to the u.s. is one way the u.s. tries to give itself a bit more of a stronger hand to play in the brexit conversation. but there are risks, of course, given the applicable nature of
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president trump's policies at this time. tom: anna edwards, thank you, from westminster. geoffrey yu, let me bring up this chart. an original chart. you get the actual chart. this is the current account deficit of the united kingdom. geoffrey yu, do you have a prediction of further deterioration wear that white line -- where the white line goes down to a worsening flow of capital for the united kingdom? >> on the contrary, we think it is going to improve. with the depreciation, and sterling, especially the income balance, that is going to start to turn around. last year we saw strongest repatriation of profits. the currency is doing its job, and we don't think we will need
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anymore. tom: i what to make clear, bring up the chart again, this is where the gloom crew is looking for a weaker sterling. suggesting maybe it migrates up to this kind of flow, which ,ould be much more efficacious if you would, for the prime minister. francine: i think underlying that, when we had the supreme court ruling forcing article 50 to be triggered through parliament, i think it gave a little bit of hope, maybe false that theree markets will be clauses attached that will make it a little better. lord skidelsky, what will the u.k. look like an eight months? >> i agreed with him, i think the current account deficit will narrow. in other words, depreciation will do its work. how is it going to play out? i don't think she will have -- theresa may will have much difficulty in getting her article 50 approved in the
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timeline she has allowed for it. i don't think there will be any reckoning amendments. no reckoning amendments will be passed. there may be some minor amendments. and the guillotine procedure will be used to expedite the passage of the bill. i think all of that is going to go reasonably according to plan. i would expect it to, anyway. on the question of whether u.k. economy will be in eight months time, all of the forecast were wrong when they said a brexit vote would slow down the rate of growth. pretty muchsort of economic -- in fact, growth speeded up. what were they thinking about? appreciate -- they did not understand psychological impact of brexit. i think it cheered up a lot of people. this is a british temperament.
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we are on our own. and thanks for that. francine: there you go. the weakness and pound probably helped a little bit. >> the economic part of it. francine: we will be back. robert skidelsky, house of lords member, geoffrey yu stay with us. you can follow along bloomberg tv. look at that. you see tom keene and me and 3-d. you can follow our interactive coverage, providing you great charts and graphics. you can see our guests, tate in. also, ideas. comments and a little feedback. greatly appreciated. we have much more coming up. this is bloomberg. ♪
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francine: this is "bloomberg surveillance." tom, let's get to france because we have gdp figures from the eurozone and french growth accelerated in the fourth quarter, adding to positive omentum and eurozone after germany and spain both posted solid growth figures. robert skidelsky and geoffrey
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yu. how do you look at the french equation? gdp is growing a limit better, but unemployment is still a big number. >> that is where you can send to see a divergence -- you can see a divergence. demand driven growth as well. at this stage, i think clients are more about the politics and 10 to dismiss some eurozone numbers. tom: what does it mean for ecb policy? -- francine: what does it mean for ecb policy? >> i think draghi will hold the line. we saw how he performed during the last round. deadly --will and that in itself is a bit of a tightening. i think the test will come when german data really starts to pick up.
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tom: help me here with the idea of a separate french franc. we talked about the italian lira . can a french franc compete with deutsche mark? >> well, hypothetically, given the competition between the two i don't think there is that too much in terms of cross competition. yes, they can find specialization. in the event, i do not think a direct float to compete. go back to the snake. if orascom stores, then you get a free flow. i don't think it is going to be that dramatic. tom: can we go back to the snake? lord skidelsky, is aims at store near to think about reversing 30 years of currency change. >> no, i do not think we will go back to the snake. there may be a breakup of the
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eurozone, but that will be -- you know, that will be greece in the mediterranean countries doing something on their own. i think france and germany will stick together. they are committed. there may be a smaller eurozone coming out of it. are not as great in the eurozone on the whole now. tom: we will leave it there. thank you so much. in the next hour, we link the equity markets and all of the news flow from washington, kevin cirilli will join us. ♪
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tom:: at a monday nine massacre. the president fires the acting attorney general.
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-- call it a monday night massacre. the president fires the acting attorney general. markets this morning churn as politics trumps economics. don't tell the fed. chair yellen and her committee will meet, announced tomorrow. do you need a committee to tell you to go to cash? good morning, everyone. this is "bloomberg surveillance ," live from our world headquarters in new york. i am tom keene, with francine lacqua. extraordinary events in washington. we will go to kevin in a moment. extraordinary events in london as well on brexit. thecine: we are covering first day of debate in parliament about the bill, which parliament needs to pass to trigger article 50. i know looking at history, we are talking and making parallels with richard nixon to the firing of this attorney general. 2017 is different. when you look at brexit and president trump, we need to live
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in the president -- we need to live in the present. we do not know what this new world order will look like six or seven months from now. tom: right now to give you a news update from washington, in new york with "first word news," taylor riggs. taylor: president trump has fired acting attorney general -- the acting attorney general for refusing to enforce his acting immigration order. she told staff not to enforce the ban, targeting citizens of seven muslim nations. she says she did not think it was legal. acting attorney general is dana boente. president trump announces his first nomination to the supreme court tonight. according to people familiar with the process, he will select one of two appeals court judges.
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either thomas hardiman of pittsburgh or new gore such. -- or neil gore such. secretary david davis kicks off five days of discussion. he says lawmakers will consider a simple question -- do they trust the people who voted to leave the european union last year? the bank of japan has kept stimulus unchained and its inflation forecast largely untouched. the bank is waiting to see the impact of a decline in the yen and also wants to see policies of the new trump administration. rate is faration below the boj's target of 2%. global news 24 hours a day, powered by more than 2600 journalists and analysts in more i am taylorntries, riggs. this is bloomberg. francine? tom? tom: quiet markets right now. equities, bonds, currencies, commodities. just one screen here. i did not want to spend too much
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time on it. a churn to the markets all in all. dinner shows a decent forecast forward. francine: this is what i am looking at. and i will doing, a special board later in the program. inflation tilting toward the upside in europe. inflation at 1.8%. overall, stock split much unchanged. higher.index, 2% 12.12. tom: i am going to go over this quickly. you have been watching this. why is it important that we see an elevated, steepening spread of france versus germany? goes to howis investors are looking at the french election.
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it is very different from the way the president is chosen -- from the way the president is chosen in the u.k. and in the u.s. pen, were marine le anti-euro and wants to leave the euro, and anti-immigration -- that contrasts with francois fillon, now considered a flawed candidate because of the scandal involving his wife. that is why people are pricing that in a little bit more. i am looking at a sample -- at a simple etf chart. this looks at u.k. stocks and it tells us in the last month .nvestors posted $261 million that is the trend. after the court ruling that needs parliamentary approval, a little bit of wishful thinking that brexit to be softened if you go through tournament -- through parliament. tom: to help us with the events, kevin cirilli joins us, our
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chief washington correspondent. i do not know what is going to happen tomorrow. i certainly did not know on monday that today would happen as well. how will senator sessions be greeted by the house judiciary committee today? are they going to ask him point blank, were you involved in the firing of the acting attorney general leeco kevin: -- of the acting attorney general? kevin: yes. this is going to be a key focus. i would anticipate comments from jeff sessions later today on the latest travel ban. i think that he has a slew of confirmations so good because the democrats do not have enough in the senate to block him. that being said, this is a very contentious issue. there are many republicans who are uneasy with this simply and theof the messaging lack of messaging surrounding it. tom: within your reporting, is there any sense of humility or
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changed behavior within the stephen bannon white house, or is it business as usual as they move forward? kevin: i think this is a form of nuance, and that is that the administration and trump are standing behind steve bannon, as well as stephen miller, the senior policy advisor. where there is frustration is with the messaging or the rollout of the policy. that is where i think the distance between several camps inside the white house lies. francine: kevin, is the white house looking for conflict or trying to minimize conflict? kevin: i think that they are looking to get across the agenda that they campaigned on. for senator mitch mcconnell not to have talking points on this policy, and for there not to be surrogates coming to defend the policy over the weekend, that shows that perhaps all of the
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different people inside of the white house either were tepidly supporting this at best or were unprepared for the rollout at worst. inside the white house, there is a lot of conflict it out the messaging surrounding this. that could reverberate because republicans i talked to are concerned that president trump used too much political capital on this. francine: do we know where rex tillerson stands on this? and will the president listen to him? kevin: every indication would seemingly suggested -- seemingly suggest that president trump has want int he does not entire cabinet of people who always agree with him. that said, rex tillerson has taken a position that traditionally is more business friendly, traditionally more conservative in the sense of pre--trump era conservatism. but many people in the business communities from silicon valley
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to major large financial institutions have condemned this ban. up, andin, to wrap this i am sure it will get more bizarre as we move forward, whatever the outcome, is "you're fired" the new mode of this administration? is this a one-off that we saw with the acting attorney general, or is this going to be a theme? ." u're fired yates is someone that the republicans have argued is an ideologue. you could see the administration saying that they were democrats, but the administration argument on sally gates is that she is an ideologue. tom: kevin cirilli, thank you so much. our chief minnesota vikings ,orrespondent is brian belski
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was again disappointed by the lowly vikings. can we just have a talk without politics? is it possible? ryan: i am -- : i am taking a deep breath because you completely -- i think that the issue he was just speaking about, in terms of are you fired , you're fired is the new mantra, the key thing is, who is the first cabinet member that leaves after they have been put in place? tom: let me cut to the chase. with the immense blur that we are dealing with, have you changed your investment view because of the cacophony we are dealing with? brian: that is an awesome word. no, because at the end of the day i am an investment strategist, not a policy strategist. take a look at where earnings are, where the economy is going to be, we continue to believe that we are in this massive
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market that is massively underground by the retail investor the last eight years. this has been all about institutional driving prices higher. we have the best companies in the world here in north america, including canada and the united states. that is going to drive investing into fine investing for the next 10 years. so in a nutshell, no. francine: even if donald trump engages the u.s. in trade wars? brian: francine, good morning to you, by the way. francine: good morning. brian: i would say this. i think the trade issues have been way overblown. company x is importing they will be charged a certain tax, and if they remained they
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will be given a certain credit -- that is number one. number two, america is still the world's largest economy. we will see stronger growth on the industrial side. if you give and you take a little bit, we are so much focused on the take, take, take in terms of potential trade wars , i think the market -- we are way too reactive in terms of being relative to knowing what is going to happen. francine: what have you learned about donald trump in the last 10 days? the president on the campaign trail talked about immigration. he gets into power, he deals in his way with immigration. he has talked about china as a currency manipulator. how can we be sure that he will not do that in the next three weeks? brian: what have we learned in the last 10 days? this is a president that is very busy.
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he is acting and managing the white house in the united states government like a business. we have not seen that for a long, long time. i know that there was a bit of an issue with not only his schedule. he is acting like a ceo. my schedule -- and i am far from the ceo -- changes almost hourly. this is a gentleman that is extremely busy. people are not used to that. in terms of immigration, he is sticking with what he is saying. he owes it to the people of america that voted for him, and he won the election, by the way, to stick with what he was saying. not all decisions are going to be met with positivity, with the stock market up 6% after the election and we had a nice little correction yesterday. this is pretty normal in terms
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of how stocks and markets react on a near-term basis. it is still very early. francine: brian belski, thank you so much. coming up later tonight, we will bring you live coverage of president trump's announcement of his pick for the u.s. supreme court. this is bloomberg. ♪
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tom: "bloomberg surveillance." thrilled you are with us, on economics, investment, finance, international relations, and politics. we have become a political show. francine lacqua on brexit in the united kingdom.
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she is in london. i am in new york. many other themes, right now, with brian belski, and daragh maher with hsbc. i want to go to central banks. i would like to focus on the swiss national bank. it has moved in the last couple of days. bring up the chart, if you would. what has moved in the last couple days is a stronger swissie. come on. rollover one, rollover two, a little abrupt, and here is another rollover. do you just presume that we are going down here and the smb is going to act again here echo -- is going to act again? daragh: i looked at dollar swiss. the swiss franc is doing nothing of its own accord. that is exactly the process you described in that chart for euro
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swiss. the swiss is entirely beholden to events. tom: is janet beholden to events after what we have seen over the last 10 days? daragh: is in a remarkable? we are a few days away from a fed decision. we don't really care. tom: no, we do care. people are watching. daragh: it is a huge event, but we do not seem to care that much. idea that the the world has shifted to be politically driven markets. that is why we are reacting to every tweet and every headline. it is good for bloomberg news because we have plenty of material. but from a central bank perspective, they have lost some of their grip on the market. that remains the case. francine: they are looking elsewhere to try and understand what donald trump will do for
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the u.s. economy. am i right? and what does that mean? do you automatically assume that the havens are back in play in 2017? daragh: everyone is trying to work out what donald trump is going to give us. which trump are we getting? at the moment, since the inauguration, we have been focused on executive orders. they all act on things like trade and immigration. they do not act on things like tax cuts and dexter spending in the juicy bits -- and extra bits the and the juicy markets are looking for. we are getting back to the yen acting as kind of a safe haven. but the correlation between dollar-yet and risk assets are pretty weak since trump has been elected. we are looking for the differential with the u.s. 10-year yields because the bank of japan is keeping japanese 10 year yields capped. dollar-yanis like the go-two
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dollar-yen is like the go-to currency. ,rancine: this is the dot plot which has not changed since december. if you look at the futures of federal funds, rates go up at the end of the year. dots are pricing a little bit more. who is right in this? daragh: we have been here before. is it a rerun of january from last year or the year before? this uncertainty about what trump is going to deliver. and the market is very guilty of now casting, once again -- we are fixated on immigration, these kinds of elements. and the focus will shift as we move through the presidency toward those tax cuts, deregulation, after spending -- deregulation, extra spending.
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i think you will see a re-calibration. the fed remains on track for that kind of trajectory that the fed has penciled in. francine: we will be back with brian belski and daragh maher. coming up tomorrow, and exclusive -- an exclusive .nterview with jeff immelt they will also be talking dollar strength. this is bloomberg. ♪
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tom: kevin cirilli and michael
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mckee with coverage out of washington today. anna edwards and others on parliament. london, tomqua in keene in new york. did you know there is a fed meeting tomorrow? did you know it is a fact there is a jobs day on friday? brian belski with us. this is a great chart of the drive from 10% unemployment down to 4.8%. it has been extra very. we get one more month of obama drops before we get trump jobs. -- over obama jobs before we get trump jobs. a metric to be watching over the next several years as we reinvigorate employment in america. whether or not that comes from capex, which we think will be a major player number -- tom: you do think it will kick in? brian: the incentive for companies to reinvest in
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themselves via capex has not been there. tom: trump reflation -- do we get a dollar stronger yak of do you assume a stronger dollar? daragh: if we get trump reflation, we will get a stronger dollar. weaknessolate dollar and we still have this point toe -- this period of reflation. all of these elements -- and also the fact that not just on u.s. reflation. we are seeing reflation elsewhere in the world. it is a straightforward story for bonds, but for currencies and relative gain, less straightforward. the dollar is strong in the first half, retreats in the second. francine: when you look -- it was sharpest in the technology industry because of the
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immigration ban. will it affect earnings? brian: i think the immigration ban has less to do with what is happening in technology. there are a couple of things that are more important. number one, we don't know what the repatriation bill looks like. technology companies have the largest amount of cash relative to all s&p companies overseas. number two, very important, technology is the largest sector in the s&p 500. it is the easiest therefore to be underweight. tom: coming up, and exceptionally important interview on immigration. the immigration expert of cato will join us. this is bloomberg. ♪
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taylor: this is "bloomberg surveillance." eli lily earnings coming out right now. a beat on revenue.
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coming in five -- coming in at 55 8 billion. at fiv $5.8 billion. the fight has escalated on president trump us order to bar citizens from seven predominantly muslim nations from entering the u.s. he has fired acting attorney general sally yates. she did not think it was legal. gates was replaced by dana boe froma former prosecutor virginia. --mployment adjourning me unemployment in germany has dropped to 5.9% this month. the number of people out of work fell by 26,000. the german economy expanded by half a percent in the quarter.
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and there are signs job creation should continue. the city u.k. now calls it a once in a generation opportunity. it is seen as a boost to prime minister theresa may strategy. the group a post-brexit in last year's -- the group opposed brexit in last year's referendum. to triplech is trying its atomic capacity by 2026. there are 20 nuclear reactions under construction. another 176 are either planned or proposed. global news 24 hours a day, powered by more than 2600 journalists and analysts in more i am taylorntries, riggs. this is bloomberg. tom: thank you so much. the gentleman with the most -- the gentleman with the most
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impact over the weekend was a young international relations student at cato institute. david bier as the -- is at the cato institute center. wonderful to have you on the show. you suggest that immigration is codified with lbj in 1965. what does mr. trump, senator tillerson,ven rex not understand about the immigration act of 1965? david: what they do not understand is that it specifically bans discrimination based on national origin. for many years the united states did have a very discriminatory immigration system. in thes enacted laws 1920's that band almost all immigrants from outside western europe. but in 1965, congress amended those laws to specifically give
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inh country an equal shot ban immigration system and this type of national origin dissemination that president trump is trying to implement with an executive order. tom: i want to full day your work with noah feldman of harvard law. he will join us on "surveillance" on bloomberg radio today. the thrust of mr. feldman's analysis is that mr. trump is trying to make us a christian nation. he goes toward the idea that we are mimicking poland, bulgaria, and slovakia as well. do you have a sense here of a christian nation will be part of our immigration debate? david: there is certainly an toward theanimus among the advisors of donald trump. but i do not think that that is
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the principal issue here. it is really more of a categorical prohibition on certain countries, certain nationalities. he is really focusing on groups of people and profiling, but i do not like to bring in the idea that it is mainly a religious test. there are many muslims who are still able to immigrate under these rules. rules,e discriminatory but i do not see the idea that we are suddenly going to become a christian-only nation. many faiths will still be welcome here, even under these rules. francine: david, you believe this order, the executive order is actually illegal. where do the checks and balances come from? have they worked so far? david: so far we have seen some preventing full implementation of the orders,
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preventing the removal of people who have already arrived in the united states. going forward, we are looking for the course to suspend implementation of the van for people overseas. last night there was a lawsuit filed in seattle by the american immigration counsel that would the argument that i just made about national origin discrimination to the courts and let here it -- and let them hear it. and let's see those rules blocked as well. many commentators say that 2017 will test the american institutions and the american democracy. what happens if president trump ignores institutions? david: look, the rule of law is a very precarious thing in the united states and every other country. if the president decides he does not want to follow court rulings, that is a very dangerous overstep of his authority.
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it is a violation of the constitution, and there is really no going back from that because the next president will do the same thing if he can get away with it. really the only recourse would be impeachment in that situation, and so far the have notns in congress stood up to donald trump in the way that we would expect given the actions he has taken in violation of the law already. tom: part of the power of your analysis and message is that you are with cato, and arch libertarian -- an arch libertarian institution. what does mr. bannon and president trump not get about cato libertarian theory? david: what they do not understand is principally the rule of law. we have defended -- or we have attacked president obama repeatedly for violating the rule of law, even with the
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immigration actions that he took. we wear one of the few institutions that were both arguing that his actions were illegal as well as now donald trump's actions on immigration. forof the principal bases libertarianism is the rule of law that protects our liberty as individuals. francine: there is a school of thought that donald trump is also putting these travel bans , and destabilize europe one of the most contentious issues here is immigration and refugees. does that make any sense to you? onid: i think he is focused the united states. i would not subscribe to that theory. this is something that he promised throughout his campaign , that he was going to do this, that he was going to ban certain regions of the world, and he is
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following through on his promise. it is a campaign promise that he has fulfilled. tom: david, one final question. help me here with the appeals court of the united states. what is the makeup and character of those courts as we move through the process? they varyl, throughout the entire united states. we are seeing challenges in different circuits all across the united states. certainly the ninth circuit has a reputation for being a little bit more on the side of liberalism when it comes to immigration. some challenges have already been filed out there, as previously mentioned. but they really vary to a great degree across the entire united states. tom: david, congratulations on your work. thank you for joining us today. david bier, with the cato institute. dollar mark and brian belski --
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maher and-- daragh brian belski are also with us. what does he do to nominal gdp and the animal spirits that buttresses revenue, or do you completely remove this debate from what corporations will do? brian: we think this particular debate has nothing to do with how we are going to run -- tom: corporate behavior will stay the same? brian: corporate behavior has this new boost of confidence. it is almost like we are becauseting the economy of the loss of diminished returns with respect to monetary policy. now we are changing the chess pieces and it is about fiscal policy, incentivizing companies to grow again. we have this new confidence in terms of how we will run our business, based on the structural change with regulation, what we see with tax
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cuts and with respect to cash coming back. it is a new day. tom: let me throw on a chart with trump reflation. we have shown this many times, the election the next day. here is reflation, and the real question in here. we have really found a brian belski like stability here in the belief that we get to reflation. francine: my question to daragh -- do you agree, or do you think that some of the policies put in place can hurt the recovery? daragh: i think what tom's chart shows very well is how fickle market moving is. with all the juicy bits out of donald trump's campaign and said he is going to deliver on these. we have now spent january navelgazing, saying he is building a wall, clamping down on immigration.
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let's extrapolate that out. we have to get some balance, and this is the difficulty. when we have uncertainty, the market is going to flip-flop, and there is that constant reassessment. that is what we need to do. -- youse you need to will be in and out every day and you have no view essentially. tom: on bloomberg radio, i mentioned noah feldman will join us and drive forward the discussion on religion and immigration. before that, james stavridis will join us from the fletcher school. we will talk to admiral stavridis about general mattis. this is bloomberg. ♪
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francine: live pictures of westminster. you can see big ben there on the left. as parliamentay is set to debate the bill that will trigger a article 50. on a little bit of news households and spending. british households are still spending, the pound following casting a little bit of doubt on the outlook for spending. we would get back to that in just a minute. first, let's get straight to the "bloomberg business flash." warren buffett loaded up on stock after the u.s. presidential election. he said berkshire hathaway is about -- has about 12 been --lars of stocks since the has about $12 billion in stocks since the trump election. nintendo posted third-quarter earnings that beat estimates. profit was boosted by strong
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sales of the new pokemon game. plus the weaker yen increased overseas sales. nintendo is preparing to roll in the new gaming console march. for the second day in a row, deutsche bank has agreed to settle claims that it helped wealthy russians launder money. to britishay money regulators to resolve a money -- dering francine: the u.k. house of commons today begins two days of initial debate on the government's article 50 bill. if passed, it it will give theresa may a path to brexit. it comes down to whether parliament trusts the people. it will be quite difficult for them to go against the will of too manye and attach clauses to this.
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what david davis says, that this is the point of no return. it is not a vote on whether to leave the e.u. or not, it is a vote on whether to go with the will of the people, whether parliament trust the people. that said, the labor our position -- the labor opposition party says they will not go against the vote. the scottish national party could change the shape of the kind of brexit that theresa may eventually wants to put forward. francine: give us a sense of when we expect theresa may to trigger article 50. i was looking at "the times" this morning, and she may look at doing it at the european summit on march 9. this is a new development that we have had in the past 24 hours or so. basically we are going to get the debate today, and the house of commons is going to vote on this.
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andas been kept short simple to try to avoid amendments. then it goes to the house of lords. this might go to the house of that wouldrch 7, and then potentially allow theresa may to trigger article 50 at the e.u. summit on march 9, which is earlier than the initial timeline. we were hearing it would be triggered by the end of march. tom: did her trip to washington change the debate this morning? nejra: not really. it was aiming to be achieved with that. but it would not highlight the special relationship between the u.k. and the u.s. this than what we have had his 1.5 million people sign a petition asking that donald trump's visit, his state visit to the u.k., actually be blocked. guess what -- the house of
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commons may have to think about whether to debate that, too. is very muchmp casting a shadow over what is happening in the u.k., but in terms of the debate happening today and the vote we could have tomorrow, the visit to the u.s. will not change that. what it could potentially do is strengthen the u.k.'s hand in some way, whether negotiations get underway. we do not know when that is going to happen yet. francine: thank you so much, nejra cehic in westminster. let me bring you to the bloomberg terminal. 107.33.urrently at p navarro, trump's traded by the, came on the air at the time and made the same comments to us. he said that germany's use of currency exportation means they are cheating the u.s., and that
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this currency exploitation is an obstacle. he clearly came on surveillance three months ago right before the donald trump election and he said he firmly believed that china and germany, because they have a surplus, are cheating america. tom: extraordinary. is mr. navarro aware that the euro is not just germany gekko what is the waiting -- what is germany with -- thegh: clicking two of three boxes that would line it anfor what they call enhanced surveillance. who has been the biggest manipulator of the dollar and the exchange rate so far? i would say it has been trump. there were three big dips in the dollar since january, prompted conference,
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comments he made to the "wall street journal." tom: we are going to come back with dara marr -- with dara amar and brian belski. "tv go" andpe in you can watch for all of our tom iss charts that showing. you can talk directly to the producers and tom and myself. this is bloomberg. ♪
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francine: coming up shortly, it is "bloomberg daybreak: americas." francine: we will be hitting hard the deadline that just the peter navarro comments. the other part of it is the risk premium in the market. you see the euro jumping on that how much of a risk you need to be factored into markets all across the board? we are leading
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those two themes throughout the three hours and we will talk with tom barrack, is a good of chairman of colony north star. he obviously has president trump's year -- president trump's ear. tom: the foreign exchange report. euro,l turn to the because that is the news front and center this morning. not all that much going on. 1.0749., daragh maher is with us from hsbc. brian belski is with us as well, from primeau capital markets. this chartr knows well. this is the synthetic euro, including an inverted deutsche mark. here is what you need to know. here is where the euro began. here is a strong euro, diminishing german exports, and down we go. is that exploitation or manipulation? do we really need to see this
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euro weakness before mr. navarro and mr. trump? daragh: i do not know what he is suggesting. he will flag germany's in or enormous trade's surplus. what is the solution? do we go back to the national currencies? i think the levels that we have now reflect this middle ground, as a long-term chart shows. this is the middle ground for the euro. you are right to take a step back. the danger is, we will get trapped in every minutia of every day move. it will go lower for the next six months. i do not know whether that will keep navarro happy, but maybe it will. francine: what is the fear on the markets? thatear on the market is because of what navarro says, there will be tariffs. is,gh: i mean, the thing the market has to react to headlines. we are all kind of wired for that.
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so you see headlines like what we just had, and i guess the obvious of -- the obvious reflex is that everybody buys and you get a 1.5% move. i guess we may get a headline in the opposite direction and we may all be explaining why the dollar has gone down. are we extracting a big picture story for this? i don't think so. reflex worryarket that i have to jump on a headline and less just do it. tom: daragh maher and brian belski, thank you. we will continue on bloomberg radio. tonight, the president and the supreme court. this is bloomberg. ♪
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guy: conflict escalates in bc. president trump fires the
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attorney general for refusing to obey his executive order. the fed convenes to consider a fiscal stimulus package. the stock markets pullback from record highs. and eurozone growth accelerates, inflation surges. the debate intensifies within the ecb about the future of its stimulus program. good morning for our viewers worldwide. this is "bloomberg daybreak." in the markets, the headline drops from peter navarra, the trade advisor to president trump, who has some comments on the euro. uro-dollar spikes by .5%, $1.07. futures are trading water. it looks like the euro and germany are very much in the firing line of this traded ministration, with the current account surplus coming out of germany. alix: the risk premium reverberates all throughout the market. vix up 15% in the last two days. as

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