considers global synergy. that means cost cuts. yellen and carney are boxed in. and jeffrey in melt and nelson peltz -- and jeffrey immelt and nelson peltz -- we will look to them as well. this is "bloomberg surveillance ," live from london. we welcome you on this friday, october 16. i'm tom keene with francine lacqua. everybody at the desk is speaking italian this morning. babbleaking babel -- on the airplane. it is an interesting friday. i will try to get you ready for your weekend on economics, finance, and investment. here is vonnie quinn in new york. vonnie: a european summit on refugees and it on a stalemate over money. angela merkel opposed -- ended

on a stalemate over money. members of the group are dragging their heels about how much a turkey should get. turkey is harboring 2 million refugees. israeli forces are taking security precautions ahead of friday prayers. police say they will bar most muslim men from praying at a mosque. israelis and 31 palestinians have died in a series of attacks this month. in southern california, several hundred vehicles are stranded on a freeway after a flash flood caused the massive mudslide. it happened on interstate 5 40 miles north of downtown los angeles. no reports of injuries. it could take 24 hours to clear the road. months hemp point for was financing his presidential campaign with his own money, but a government filing yesterday revealed it is being paid for mostly by donations. receivedree -- he has

$3.75 million. donald trump: these pacs are the biggest disgusting thing you have seen. they are controlling the candidates. i guarantee you these candidates -- i would say every single one of them is speaking to their pac. our campaign laws are a disaster. financing for campaigns. minas for simple. i pay my own money. vonnie: you can watch the interview with trump this morning on "bloomberg " at 7:00 new york time. and you snooze, you lose. the l.a. dodgers' playoff run ended last night against the mets. scored, a homes

run hit. run was scored, a home run hit. seeing the mets and the cubs was absolutely spectacular. what a celebration. cannot wait to get back to the excitement of that in new york city. right now the non-excitement of a friday non-data check, just a big churn to the market. we will look at dollar-yen as being important for futures, flat. go on to the 10 year yield. you have got to tell me to strengthen my bowtie. , on. -- come on. francine: you have got me in a flustered. i do not even look at the bowtie. tom: nymex crude quickly here -- $50 on brent, a little bit below that. how is mr. trump seen through a european prism? thinking at are least it is not us in the news.

if he becomes president, there is not really a chance, right? he has a nuclear weapon. i am a little bit concerned. tom: i don't think that kind of drama comes up in the debate, but there is a process of this. the former chairman of the sec said this is normal, and you see this in the early primary process. for those of you in europe, we go through a number of initial hampshire,wa, in new and then it begins in the carolinas. francine: so you are telling me he is stoppable? tom: i don't have an opinion, but i will suggest there is a process here, and the calendar dictates it really starts february-ish. we have two wonderful guests in the 6:00 hour in new york. has come across

the pond -- carl weinberg has come across upon to speak with us. it does not begin to describe his acclaimed career or not doing dumb things in investment. he has been right by not being wrong. how do you not be wrong? you came off the ubs research desk, looked at finance, and a lot of what you did is not getting dumb things wrong. how did you do that? is we invest in global financials when most of the anglo-saxon world was pricing europe, saying that is not going to happen. and we stick with the view, keep long on europe. that ultimately paid off. francine and davide, is the

political cohesion still there? inflation is still there. once you decide to keep greece an end re-profile, which is the noise we are hearing from the imf, and you think we can have that over and now the rest inflation, we're not seeing markets mispricing inflation. carl: the basis effect from the oil price drop is going to come out of -- it is just a matter of simple arithmetic, saying inflation in the u.k. this going to be 1.1% by the time we get to january. in germany it will be about one per 4% -- about 1.4%. how are people going to think about 57 basis points when headline inflation is at 1.1%. the market has big repricing as

they reassess how to see this. tom: the market has to get out in front. when will that occur? carl: when the market looks at a yield, and inflation rate of 1.1% that they are perceiving and saying we are not interested and would rather buy u.s. treasuries. tom: will that be a jump condition? moree: i expect quantitative easing to come out announcedafter the program, and the reason is because growth is not picking up as a shooting europe. inflation has -- remember, in europe, we have a 12% unemployment rate. lots of people are unemployed, and ultimately you only get inflation when you are unemployed. any marginal-- investments will lead to some inflation.

wencine: one of the things have been trying to get to the bottom of is whether qe in europe has worked. it has not really helps growth, it has just helps currency. one third of it has gone into excess reserves in the bank, one third has gone to pay back borrowed reserves. and one third has gone out the door. that is the cheaper euro story. tom: where did it go out the door, to pay off greece? carl: the capital flows out, and that is probably the only way qe helps europe. it makes the euro cheaper. tom: did it go to new york, the united states? carl: it went to new york, to england, bunch of places. : i have to say i disagree. 2009, the u.s. had 2 trillion losses subprime. they do not care.

they start printing money. so the u.s. prince 30% -- prints 30% gdp. they print 30% of the currency, the euro keeps -- european union keeps talking about it. canonly country that survive is germany and the rest of europe collapses. there is an overvalued currency by 20% as a result of the u.s. and the u.k. printing money first. so the europeans say now it is payback time. so far we only have 7% gdp, and another four. cycleow do we break the within your disagreement? where is the institution that says enough, let's get to normality. i do not see it because i do not see the growth to help. carl: i am more worried about

europe than you are. europe has not fixed its banks and the banks are not creating credit. , but.s. fixed its banks there is no sign of that in your you have identified some banks that have problems, but you have not fixed lending capital. draghi, andmario what i hear him say is you want to wait until there is a mistake to respond to this inflation or deflation -- to disinflation or deflation. i think he is waiting until january. francine: we will take a short break and come back. e.u. leaders are trying to figure out a solution to the continental biggest refugee crisis. the latest from brussels and all that is coming up next. this is "bloomberg surveillance ." ♪

tom: a turn to the markets. red and green -- red and green on the board. vonnie: the u.s. is reportedly expanding its investigation of volkswagen and the sales -- and the failed emissions tests. the u.s. might be targeting vw and its employees for offenses. ranging from pollution to misleading government officials. the world popular to food company is cutting its outlook. nestle lowered its sales forecast for the year by 4.5%. nestle has been hurt by slumping demand in china.

our obama is buying the rest of the youtube of china. popularina's most streaming website. alibaba already owned 18% of youku. francine: thank you so much. the latest e.u. summit has concluded in brussels. leaders seem to be on the same page. that is the understatement of the year. hans nichols joins us from brussels to explain what is going on. some people are not on board. it looks like the eastern europeans do not want to add more money. they do not want to entice turkey to have some sort of deal to stem the refugee crisis, at least at the point of entry into the e.u.. here is how far they got last night. angela merkel seems comfortable 3 billion. turkey upped the ante.

they have no agreement. this morning we heard from mr. erdogan in turkey. he has accused his european partners of acting insincerely. they could potentially accelerate talks to have turkey joined the e.u.. mr. erdogan is driving a tough bargain. cameron showed up in brussels and bow to you pressure and said he would submit a list of clear demands of what he wants -- and bowed to pressure and said he would submit a list of clear demands of what he wants. hans: then you could potentially have a meeting in december about what they are going to renegotiate. if you do not do it then, you do it in march. either way, there will be a few more points in brussels, more meetings, and they have a long way to go to figure out some kind of agreement not only on

the refugee crisis but how mr. cameron willie: sheet with his partners here. there is new pulling out that shows merkel's numbers in germany are falling a little bit. this has been an ongoing crisis for her. she has an internal problem in her own party. merkel does not seem that concerned, insisting that she is going to continue her approach on refugees. one final note, listening to merkel last night at 2:00 in the morning, she seems to be both hurt and confused about what is happening in eastern europe on why they are not being more accepting toward refugees. tom: hans nichols, thank you so much. i can tell you, when you come over to london, this is front and center -- page 34 and 35 of "the times of london," "children drown as migrant boat hits coast guard cutter." francine: it is front page, not number 34.

tom: i have to admit it is one of the great observations this week, the scale of this is extraordinary. is this the price of turkey entering the euro? davide: i support the italian prime minister. europe, we have human basically ownership first to support these people. every person, every migrant. what is happening is, because of the politics of the european crisis and because of planning, the european countries are blocking the trade. we as westernf europe, including eastern europe, after the berlin fall, they were migrants then. but the core europe said welcome. that will increase the economy. europe has a democratic issue. we should welcome these migrants. tom: do you agree with that,

carl? there is a long-term benefit, but what about the short-term? carl: it is an investment. they have to invest in bringing these migrants. from a domestic point of view, i agree with that, but these people are tomorrow's taxpayers, the people who will support the dependency ratio when it goes the wrong way. as we have seen here in the u.k., where 1.2 million people have come to england in the last years and have boosted consumer spending and generated an economic recovery, the payoff can come quickly because there are 100,000 immigrants who come breakfasts have to be sold tomorrow. go back toe have to tension, the banks. tom: not that i am wiser about this, but the scale of it is extraordinary. there is no equivalent i can think of in modern times. francine: definitely not one unique voice. tom: we will continue this

discussion. carl weinberg is with us from high frequency economics. davide serra is with us as well. next week, from the royal bank of scotland, a guest will be with us. we will consider the rate requirement worldwide. from london, this is "bloomberg surveillance." ♪

tom: good morning, everyone. "bloomberg surveillance." i'm tom keene, with francine lacqua. the beauty of new york.

carl weinberg is going to help me out with the "morning must-read." gap tos a culture say the least. we talk about this a lot -- tip income is supposed to be declared on your taxes, but this was shocked many of you -- it often is not. we tip in america different than they tip over here in the united kingdom. there will be some changes. the u.k. it is a little bit like the united states. but i was just in oslo, stockholm. you give a big tip there, and they look at you like, "what are you giving me, charity?" francine: also because national

insurance is not like it is in europe. if you have good service you are rewarded, but it gets sometimes offensive. even if someone does not give good service, they still expect a tip. where it is more socialist, it is in the price and everybody pays for it. suggestan respectfully it is all about the tax dodge, and it is going away with charge cards. when -- not ino central europe and southern europe, but they added 12.5% in dining. would you sneak back in and put money on the table? that in new york i find when i pay with a credit card, i find myself tipping more because

that is a percentage of the credit card that is going to be going -- that raises my cost, and now i am paying for -- tom: danny meyer, the great restauranteur in new york, is taking tipping away in his restaurants as well. he is the catalyst for maybe a new regime. carl: and at a few fine restaurants in new york, you will find that. what is the name of that fish place? tom: sushi lacqua. francine: we also have a controversy that some of the big restaurant chains were taking tips and distributing them. , does this tip go to you, or do you share it? tom: carl weinberg, when you look at the u.s. economy, are there good jobs being created, or are they just service sector jobs where

you are trying to get to the next -- carl: absolutely, there are good jobs being created in the u.s. economy. it is not all flipping hamburgers. we have jobs in the real economy, high productivity workers. it is good stuff. tom: carl, safe travels. carl weinberg with high frequency economics. we will continue with mr. serr a. we will cover -- nicholas heymann, thrilled to bring you nick heymann, the new industrials general electric. stay with us. from london, "bloomberg surveillance." ♪ the only way to get better is to challenge yourself,

and that's what we're doing at xfinity. we are challenging ourselves to improve every aspect of your experience. and this includes our commitment to being on time. every time. that's why if we're ever late for an appointment, we'll credit your account $20.

it's our promise to you. we're doing everything we can to give you the best experience possible. because we should fit into your life. not the other way around. tom: fencing, i will bet you $100, -- francine, i will bet you $100, mets over the cubs. we need to go to the home of the

new york mets and get our news. that would be with vonnie quinn. there are other new store is making our topless. the refugee crisis -- angela germany and francois hollande of france met with other european leaders in brussels. to slow wants turkey the surge of migrants to the continent. turkey has more refugees than any other country, more than 2 million. a new report says u.s. forces expect the taliban and activity at an afghanistan hospital that was mistakenly attack. the associated press says american analysts knew about the hospital, but that it was also used to coordinate militant attacks. he was fired upon, killing at least 22 patients and staffers. three dozen homes in central

texas are consumed by a wildfire. residents are being urged to evacuate. a fire in that area two years ago destroyed homes. and nevada needs gambling licenses. that means extra costs for companies. the games are already banned in five states. those are your top headlines. back to francine and tom. you sonnie quinn, thank much. we are waiting for general electric news. we could continue our conversation with diabetes sara. -- with davide sarah. serra. davide francine: when you look at a lot of the banks, we have citibank not know what the banking landscape will look like because we are expecting more

provisions, regulations, but actually, will we have a big investment bank three years from now? davide: the answer is yes. the reason is because i think, in my view, europe is four or five years behind the u.s. they started with quantitative easing, but now we are catching up. thatu see the profession the progression of the economy, in the u.s., it is happening in europe. what is happening in my view is you now see proper management coming into these institutions. i think james gorman of morgan stanley -- he refocused the institution from trading. you said in the large u.s. firm -- citigroup is shrinking. is the distinction here that these are quantitative

people? particularly mr. gordon -- mr. gorman -- are the days over of the swaggering bank ceo of? davide: yes. in my view, that is very important. you need to be profitable. what does that mean? myself as a central banker, i provide liquidity. banks priced for the new utility banking? davide: in my view, they are. there is upside to banking both in europe and the u.s., and the reason is simple. they are going to have the same earnings as utilities. tom: and this is like nestle, a food-boring utility stock. thathat can station -- but consistent cash flow gives you better volatility down the road. francine: you are seeing, for example, thanks struggling

because of their exposure to the emerging market. so the utility becomes messy if you have big market share, emerging markets, and they end up spending because of the slowdown in china. davide: your point is absolutely valid. you are going at four point -- at 4%, 5%. they should be rated 13, 14 times. tom: within this is the idea of critics want u.s. banking to be more zurich-like. ubs, is it a simple -- davide: the answer is not more leverage. tom: excuse me -- more cash. davide: more cash, less leverage. the market starts pricing at a higher level, a lower base of earnings.

level ofto have a high earnings, and the multiple caps were shrinking because in reality we were taking that profit thanks to leverage. now leverage is shrinking, and the value of whatever is less will go up. the branchot see system across europe like we do in america. what will the courage being in terms of layoffs? tens of thousands or hundreds of thousands? structural change, i think of industries that fundamentally changed, like phone systems. davide: i am with you on this. u.s. banks -- if you see the footage inside the wells fargo banks, it shrank by 80%. -- they make two or three branches, and then they have marginal ones. that has not happened in europe yet. it is going to happen. the winners are the ones who havestand this, and i

branches in the nordics. they have already cut 40% of the branches. francine: if you look at it this way, there is the u.s. -- people i would imagine our 80% online. tom: two major bankers told me they completely underestimated the speed. francine: then in the u.k. you have 50% online. talking pakistan, we're italy and spain. we are not used to doing things online. amazon is just starting in this country. do you give that transformation five years or 10? davide: i give it less than five. checkbooks were gone 10 years ago. i still have friends in the u.s. who carry a checkbook. because of the european integration forcing everybody to be on the same payment system,

that means that as soon as consumer behavior changes, then the acceleration will be fast. that will happen in the mobile phone industry. there were more mobile phone users at the beginning of -- tom: give me that camera shot where i am leaning forward. me in with his grandmother. did you see that, how he did that? am i that much of a fossil? francine: do not answer. tom: i get no love from the italians. italian allabble the way back on the airline. coming up, we are looking at the single best chart, my chart of the week that came out earlier in the week. we will visit the shock and awe of u.s.-u.k. disinflation. it is "bloomberg surveillance."

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tom: good morning, everyone. breaking news from london and new york on the general electric company. the key headline i have seen is the idea that they will retire float. clearly they are redoing some financials here. what do you see off ge this morning? francine: it is better than expected when you look at operating verticals. i think you are on the money, tom. it is all about, look, we are getting some breakdown. division, health care, pretty

much in line with transportation, aviation. tom: this is this idea that we continue to see and underestimate, which is use of cash, retirement flow. the big number of 30 billion, i do not have a ratio for that. we will give you share reaction. francine: it is ahead of what is expected. tom: this is the backdrop to recall not an activist shareholder pushing for control, but mr. peltz coming in with a solid minority interest in maki it clear he is happy with what he sees with jeff immelt. is just going to be manager of the decade -- is jeff immelt going to be manager of the decade? cgede, it is something to state globe -- stay global -- to see ge stay global. france,if you cge from

to italy -- if you see ge from france, to italy, there are fantastic engineers than the consumer products. they have the culture of investing on the industrial side. jeff immelt has done an amazing job. he inherited a company that had the aura of apple. this is so important. pick up on this. the idea that over the last 10 1% perhey have maybe year shareholder return. i cannot think of any country where we ignore the 10-year-back immeltbecause of jeff and mr. rice and others, pulling it forward to a new this stuff. francine: and i was thinking, how do you get that? i do not know if it is adoration, but it is absolute trust in management from shareholders. immelt and his

senior team have said this is the one plan, right or wrong, and they have diligently extracted capital. i believe that is gone. that is kind of a strategic call that gets you to where g is that to where ge is right now. i single best chart happened earlier in the week in london. quiet across the floor in london headquarters when this stunning number came out -- back to 1960, weak u.k. inflation. 2%, the bluethe line there. how important is this from mark carney? the chief economist of the bank of england has said we need to look to this. core inflation is not as bad. tom: and we were talking with

carl weinberg earlier about this perceived inflation. bad is inflation, and good is inflation. in london have more cash in their pockets and they will spend it. effect is athe oil one-off. it will increase consumer spending power in europe, and that is good. tom: does the perceived inflation give us a developed-world yield curve that benefits the banks, where in every case the wind is behind them and they will do better? davide: of course they will. over the last five years, you have your -- central banks decide on pricing, and you have a business that sets up its own markets. banks cannot. tom: where is the single opportunity in europe? , think rbc capital markets talking bank of america is uniquely undervalued because

they have been so bad. where is your bank of america in europe? davide: there are three of them because we are a split country. you have one in france. they will benefit. tom: will emerge? davide: no, because the regulatory environment will prohibit it. the third one is in italy. they are three domestic franchises with more corporate banking abroad. tom: you did not mention deutsche bank. lineup -- david focus earlier. francine: it is very difficult. tom: what is a cross merger? come on, francine. interstate. that is what they call interstate. tom: she gets angry at me and she switches into italian. francine: words -- i cannot say

them. the reason why deutsche bank will not be able to merge with anyone is they are carrying a $2 trillion balance sheet. what happens, there is no merger. there is one that will not benefit out of rising rates. account is too small as a percentage. tom: let's go to photos. we have some joyous photos. vonnie quinn, what do we have? vonnie: number three is vice president joe biden and south korea's president. she will meet with president obama today. they will talk about the heightened threat of nuclear weapons in north korea. let's move to number two top photo.

delivering the welcome address at the 81st annual s&p conference in aberdeen. she said the snp will not hold another independence referendum unless it becomes a priority for the country. francine: we are hijacking the show. tom and the "surveillance" team have been working hard in london , co-anchoring with england's finis. -- england's finest. he has also had the opportunity to take in the sights and sounds. tom and be feeders -- he is actually taller. , how talls asking me

is tom keene? 6'5", right? tom: very exciting. congratulations to peter, our chairman. francine: and i have a present for you, to make sure that you leave the country. ta-da! tom: very good. oh, my word. on, guys. this says monday, doesn't it? they do this in the stores so beautifully. it just says monday. do it again. buy me an italian bow tie. i'm really in trouble there. .hank's to all of our team francine: tom is going to radio. we will be back in a couple of minutes. that is coming up next. ♪

francine: welcome back. you are watching "bloomberg surveillance." a very nice skyline. that is where tom keene is going back to, getting on a plane to

new york this afternoon. it is time for your forex report. we have been talking about yet. a lot of the analysts -- about yen. a lot of analysts coming through. euro-dollar,w you the dollar gaining a little bit of ground as the data has been refocusing traders. the fed, left, right, and center. the odds are decreasing by the minute. one thing you also have to keep an eye out for -- this is the turkish lira. in the last 10 minutes or so, the turkish military has shot down an aircraft at the syrian border. it is still unclear who that aircraft belongs to. it was spotted inside turkey's airspace. that brings back nervousness about geopolitical concerns, especially in the middle east.

vonnie quinn is in new york. vonnie: walmart is looking for ways to save money after the decline in earnings. the company says some u.s. stores could be close. that could be closed. sfx entertainment -- that is the company that isanizes music events -- it proposing a buyout. robert zimmerman wrote to the board about buying out shares he does not already own. is eithers sunny side up or -- a survey by a finance analyst says the all-day breakfast is causing chaos in some restaurants, crowding kitchens and slowing service. francine: thank you so much. davide serra is still with us.

we went around the world in 45 minutes. geopolitical risks are very difficult account. when you look at the concern that britain may leave the e.u., what is the probability of that, and do you look at that and say britain looks very tricky right now because of that risk? davide: that is the biggest geopolitical risk in the next 12 to 18 months. the referendum, unfortunately, i have a feeling, will not be as clear as it should. the latest poll is that the majority of people in england understand the clear economic benefit of having access to the largest market in the world, and that will prevail. london was based on trade. francine: why do you think it is close? because the campaign for and against will be -- davide: there are different

political issue -- there are different political interests. europeanof having a supervisor, a european market, lowers their own market share. that is having a smaller pie with them having a bigger pie. easyjet -- i love them. i fly with them all the time. people smile, it is effective. we use it for business, and it is becoming one of the -- is becoming the second largest airline in europe. so there are two visions at work here. tom: you follow banks. what is the probability, 30%, 40%? davide: i say lower. the market is pricing it lower. the ftse will be much lower, and the pound will be lower. tom: big banks will move -- francine: big banks will move

out? davide: big banks will have to move out. trades will diminish. remember, just take airplanes. there are about 65 million flights a year out of the u.k.. 60 are with europe, seven with the states, 10 with the rest of the world. davide, thank you so much. the ceo and founder of -- " is up next. they will bring you a great interview. this is "bloomberg surveillance ," streaming on your tablet, your phone, and bloomberg.com. ♪

stephanie: our interview with donald trump is coming up. income inequality and waller. present -- income inequality and walmart.

and banking in india. the head of one of the country's biggest banks talked about the economy that may be growing even faster than china. stephanie: will come to "bloomberg ." i'm stephanie ruhle. boy, did you have a big day yesterday. stephanie: i had a big day with the presidential front-runner, the one and only mr. trump. david: i cannot wait to get to that interview, frankly. i want to introduce matthew winkler. thank you for being with us, as well as mark halperin. respect," the afternoon program. great to have you with us. we want to start with vonnie quinn. vonnie: