♪ >> markets caused for breath after this week's stock ponds and commodities. a big week for the world central banks. president erdogan tells bloomberg that turkey central banks should continue to drive rates lower. brexit opportunities, how will ireland whether the shock? we have an exclusive interview. i am frenzy in london. they sent me over so that we are not together so that we can give

you more global perspective. we are talking brexit and pound. tom: lots to talk about into the weekend. i would suggest you need some sleep. the idea of deutsche bank. it is percolating. it is there. it will be a theme throughout five hours of surveillance today. francine: it feels like they are a theme every other day. let's get to first word news. >> u.s. secretary of state john kerry has abandoned efforts to salvage the cease-fire in syria. he said it was pointless to move ahead without a major gesture from russia. the u.s. accuses russia of failing to use their influence to stop the fighting. assad blames the u.s. for their troops collapse. is blaming thean u.s. for refusing to extradite a

person he accuses of starting a failed coup. request must work its way through the judicial system. us tryn to us and let him. they said the court will decide. i'm sorry, but we cannot wait for this kind of decision from this kind of court. this crime was not committed in the u.s. it was committed in turkey. let us make the decision. >> erdogan is also unhappy that the u.s. is using kurdish fighters to battle the islamic state. he says you cannot use one terrorist group to battle another. a protest over the shooting of a black man was mostly peaceful. demonstrators remained -- demanded that police release video. said hely's lawyer

cannot tell if he was holding a gun as police say. british foreign secretary boris johnson says the uk expects to begin brexit talks early next year. the uk will submit an article 50 letter triggering the formal start of leaving the european union. the eu said the uk should not wait too long. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i have taylor rates. this is bloomberg. tom: thank you. , iave to catch up on a cat have not read up a note on the downing street cat. 112.uro is let's get through it. a little bit of yield in the 10 year. growing equities and yet under 100. , and this really

plays off of the presidential debate on monday night, dollar-peso is weaker. thatine: i quite like because of the debate and donald trump. because to point vix you can see it is gaining a little bit of traction today. 2.5% overall. petering out a touch. -- 1.3001. what governor corona pointed to and suggested five hours after that, yen is strengthening. it on the euro is something we will monitor throughout the day. really looking forward to speaking to professor calomiris.

this is sort of a said chart. -- zen chart. back 30world trade years. that is the 10 year moving average. let me say it again. the white line is the 10 year decade-long moving average. all you have to know is the growth of world trade has declined 40% plus since the peak in the late 1990's. that is an extraordinary chart. it speaks to the new globalization we are in. very different from what we learned a number of decades ago. francine: it feeds on the same fear that their is a real sentiment of anti-globalization. i am here on set because the irish finance minister is coming in. stocks.ooking at i'm looking at uk stocks. after reaching record values

relative to their european fears , i suspect this is all related to currency and pound depreciation. little bit of concern, but it did have an impact on currency when you look at a lot of the data coming in in terms of consumer and retail sales. again, they look a little cheaper. joining us for the hour is rupert harrison. he is a analyst at black rock. he is a former chief of staff to george osborne. an expert on brexit. no pressure. thank you so much for joining us. what do you make of the week that was possibly not to signal divergence of central banks? >> the big message from japan and america was carried on -- carry on.

a little bit of yield, lower for longer. people have been thinking are we going into a new regime, central banks acknowledging the limits of what they can do, i don't think that is the case. francine: is that dangerous that we get more and don't know how to come out of it? >> it is important to think about how resilient your portfolio is. we have the debate on monday, the u.s. election as a potential shock. i would be looking at inflation. do we see any signs of inflation outside the u.s.? that seems to be the only thing that could fundamentally bring this to an end. there is no sign of that at the moment. tom: what is the dynamic between london and the rest of the united kingdom? how is the rest of the united kingdom doing post-brexit versus the enthusiasm of london? >> i think the data across the

uk -- obviously it is surprisingly outside. when it comes to consumers and the labor market, look, the chart we saw at the beginning of this, the message that we are learning is that the impact in the uk will be a little like the political process. it will be a long, slow drag. there is still a long way to go. the interesting thing in the last week or two is weakness in some of the investment numbers. if there is weakness in the uk, it will come through boardrooms and gradually affect the labor market. in most of the uk, people may be starting to see some price impacts if they are eyeing an iphone that is more expensive than it would have been. the general impact will be long and slow. tom: here is what we have learned this week. it is important to frame these

views. bring up sterling, and the red line is the outlier hsbc call at the end of 2017. weaker sterling. that is stunning. the blue line is from morgan stanley, which parallels hsbc to the end of this year, and then critically, morgan stanley in blue to purchase from hsbc in red. it is a litmus paper for london. what does sterling do? wrapped around your determination of inflation? >> it is on inflation. the bank of england has sent a clear signal that they are using possibility in their mandate. we should not pay too much attention to that in the short-term. it is much more about the underlying dynamics.

the big uncertainty is to what extent is brexit a demand shock? and to what extent is it a supply shock? that will affect the longer-term dynamics quite significantly. quite ashe move is they a demand as it is supply. francine: what have we learned this week? >> not much. francine: what is the basic case scenario, hard grexit? >> that is my basic scenario. you have to work backwards from one of the red lines. it is clear that we need something hard on immigration, and emergency brake is not enough. you need a cap on immigration that is below current levels. i think no central budget contribution is a part redline for the political process. that lead you towards not an eea

solution. we are heading for full brexit. and a very detailed bilateral negotiation, and the big question is how long that will take and how far a bilateral agreement can re-create some of the things we had the moment. that will be challenging. francine: thank you very much. rupert harrison from blackwell. -- blackrock. michael noonan, we will be talking about some of the red lines. five phone 30 a.m. in new york. this is bloomberg. ♪

♪ francine: this is "bloomberg surveillance." i am francine lacqua with tom

crean -- keene. economy nearargest stagnation in germany's service economy offset an improvement in the manufacturing economy. the gauge is now just above the point that divides expansion from contraction. a german newspaper reports that commerzbank may cut as many as 5000 jobs, about 10% of their workforce. commerzbank is germany's second-largest lender. the yahoo! data breach was worse than originally reported. the company says an attacker stole the personal information about the 500 million yahoo! users two years ago. it was kicked off in july -- tipped off in july.

yahoo! is alerting those affected. that is your business flash. francine: deutsche bank's financials are said to be causing concern among german politicians. that is according to people who asked not to be identified because the meetings were private. let's get to our bureau chief, chat,. we suspected that politicians would be talking in closed doors about deutsche bank. >> you are exactly right. they are putting it on their radar screen. politicians read the news like we all do. they see the bad news coming out of deutsche bank and start talking about it. in this case, it was social democrats, they are the junior coalition in the chancellor's government. they had some talks about this potential big fine in the u.s.. they expressed concern about this. they were talking about deutsche

bank's finances. there was not any discussion about government involvement, simply putting it on the radar screen. francine: it would be, and i know that the finance minister was there in february after we had all of those concerns about cocoas. there were no concerns about deutsche bank. what is the worst-case scenario? >> ultimately, it would be that the government has to step in. of course, we had a bad news regarding potentially commerzbank today that they may be looking at a significant number of job cuts. that was a german media reports. the german government holds a huge stake in commerzbank. we had us talks that presumably happened between commerzbank and deutsche bank about a possible merger a month ago. they have put that on the back burner for now. the government is watching very closely. tom: for our global audience,

frame how deutsche bank is received across germany? is it like the mother bank? is it like bnp paribas in france? it is the mother bank here in germany. everybody knows it and has a relationship with the bank. one issue for the government is that no politician would want to have to step in and rescue a bank that has employees that are making millions. that is the last thing they would want to have to do. that would be quite troubling for them. you also have the issue that germany is just one year away from a federal election. we are waiting to see if chancellor merkel will announce that she is running again. no politician wants to have to step in and run the bank. francine: thank you so much. our bloomberg bureau chief. rupert harrison is still with us. i have a chart.

i will ask you about this specifically. is can see, the level similar or close to what we saw in february. there are definitely concerns. is this concern on the bank or sentiment of what a lot of your paint base are going through, which is negative rates and no growth? >> i think it is both. ofis also the poster child its core market, how do you make money if you are a european bank in a low interest rate environment? we see similar problems in portugal, the italian situation, that seems like it is dragging on. the whole sector is struggling with how you drag yourself out of this low interest rate environment. it will be long and slow. francine: the ecb is starting to look at that. the boj called for a review. theyard on wednesday that

are worried about the banks, and so they are trying to mitigate. >> there are some recognition that this might not go much further. the ecb is subsidizing the banks directly. that is a backstop in a sense. it does not change the big picture, which is look at the business model and prospects of profitability, and it is hard to see this environment how you right out of that. tom: rupert, bring in this chart of what we learned on monday from oecd. this is deutsche bank. sorry, if iine, i'm was teaching a course on lawnical analysis, the deutsche bank on the right is ugly, ugly, ugly. you have an economic slowdown in europe and how will that affect the banks? rupert: they will take a hit. a lot of our analysis suggests

the eurozone is rolling over. take a step back, the last couple of years they benefited hugely from currency depreciation. all those effects are rolling on. it is hard to see where the next leg of growth comes from. growth is rolling over. it is hard to find positives. tom: rupert harrison with us. in our next hour, he is an advisor to governments of europe , without question, one of the giants of financial economics into our macro economics. professor calomiris

♪ i am francine lacqua in london. this is a global surveillance. it is time for our morning must list. here's what president erdogan said about the country's central bank. cutssee less central bank as a steady and central cuts. because it is not right to make sudden moves up or down that could contain some violence that could create a tremor in the benomy, but i believe it to beneficial to continue this steadily. francine: rupert harrison is

still at. when you look at this great interview, first of all the talk about everything and was firmly in charge. he said he has full control of the markets. rupert: he is definitely in charge. in a sense, that is reassuring from a market point of view. it is not a bad thing for markets to have a strong man. we like turkey debt as a broader class. into yourlooking assets, that will continue. assets in turkey and brazil, and i like mexico, but there is kind of a trump effect there. we quite like it. tom: this this our future, technique economic growth -- tepid economic growth? rupert: i hope not.

there are challenges, look at the exit and donald trump, slow growth is grading challenges. -- creating challenges. politicians stick to what we know works, stick to education, stick to keeping local trade as open as possible, stick to policies that can make localization work forever unlike -- globalization work for everyone like minimum wage. francine: thank you so much. we speak with michael noonan, the finance minister of ireland. we will be talking about how he sees negotiations going. this is bloomberg. ♪

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focused on the debris out of bank of japan and the federal reserve trying to migrate toward presidential debate on monday evening. angry over a police shooting and south carolina, a peaceful night of demonstration. a curfew was imposed. demonstrators called for the release of tapes showing a black man shot by police. the family's lawyer said he cannot tell if the man was holding a gun as police say. in tulsa, oklahoma, and white police officer has been charged with manslaughter or killing an unarmed black man. video shows the man walking away from the officer just before he was shot. china's president is starting to put his stamp on the world's largest political party. since april, he has replaced more than half of the communist

party's officials. major changes are expected before next year's party congress. next topoints its leader in 2022. a new study warns that the european union has more to lose than the uk if brexit leads to limits entree. it said that 5.8 million european jobs are linked to trade with that uk. and really -- global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. francine: thank you so much. european countries more dependent on trade then ireland. they are having to deal with elected a herbal treatment for apple. treatmently favorable

for apple. you always give great insight into what you're dealing with. at the moment, there are a lot of headwinds for the irish economy, and yet brexit could be a positive. you could attract talent and be a bigger financial center. we think there: are more negatives than positives. supports 400,000 jobs. we have the complications involved in ireland. we don't want the uk's only land border with the european union to be 40 miles from dublin airport. it is true that we have a strong financial services sector in dublin. about 38,000 people working. there are a lot of inquiries since the brexit vote. people are assessing their position in london.

we have not had any decisions yet, and we will not have until -- francine: what do you think the position will be? i know article 50 has not been triggered. what could be the best possible outcome? minister noonan: the best possible position for ireland, which is the only thing i can talk about, is the position after the settlement will be very close to what the position was before the settlement. we would like the uk to have full access to the single market and free movement of people. common travel area for centuries with the uk. we would not like anything to upset that. it will be a difficult negotiation. francine: what are the chances that your position will come through? if you look at the red lines and

some of the talks we have been hearing from politicians, this idea that we have similar agreements to what we have now, and yet brexit happened, it seemed unlikely. minister noonan: europe is very good at resolving difficult problems. i have been there for six years, and what looked intractable on the base, can we find a solution rather than another problem, it usually works out. very good negotiators. this is quite difficult to. if you look at the campaign of britain not wanting to be involved in some type of european superstructure, once they decided to leave, that will not happen. they will not have european commissioners or membership in the european parliament. that is gone the british way. the single market. are looking at

this and saying, of course we would like the uk's if apple access to the single market, but they cannot have the advantages of the european union without carrying out the obligations. things likeons are paying their way into the european budget, but more importantly the free movement of people from different parts of europe. these are the kinds of issues that will require a very skillful negotiation and compromise. tom: good morning from new york. you were financed this desk minister -- finance minister. are you optimistic that continental europe can do and ireland and clear their banking markets? minister noonan: i think they are making progress. if you look at statistics across the european union, there is low growth and all european

countries. significant growth in some countries. we are growing at 4.5% this year. spain is at 3%. slovakia at 3%. there are other countries that are down. generally, the movement is forward and positive. pursued bylicy being the central bank is also working at a blank -- and influencing investment. we are looking at a smooth cfius if it were not for brexit. this is a serious issue. tom: let me do a sales campaign. this is not anglo-irish. this is deutsche bank in 2016. maybe they should do with the irish did with michael noonan. i would like to know how you define the nascent federalism of your.

define -- europe. the fibrous federalism that prime minister may will face. minister noonan: prior to brexit, when there was speculation about how they would amongthe european answer my finance colleagues was a more integrated europe would be the way to protect financial institutions. there is now a departure from that. nobody is advocating that where i work anymore. europe approach is that has a series of problems, and these albums are impacting -- people inre impacting different countries. they are impacting so strongly that they are moving away from traditional support and moving to fringe parties. rather than having more integration, the approach now is

to take these problems singularly and solve them singularly. there is a more practical approach now. i don't think prime minister may face more demands of integration. francine: there has been talk of you selling off part of aib with an ipo in the first half of 17. are you sticking to that timetable? minister noonan: i'm keeping the option open. there is no reason we would not sell. we have a variety of considerations when we talk about selling the shares. one of them was to use the resources to reduce the debt. we got tenure money to its go .rom 0.33% we'll have these other constraints anymore. the decision now will the best value for the shares.

i will sell at the best time. it might be in 2017. there is no decision yet. francine: this has to do with the market and the price you would get. minister noonan: that is the only issue now. there were other issues previously about macroeconomic management of reducing debt levels, but we have all that in a good place now. tom: thank you so much. michael noonan with us, and will continue through the hour. later on bloomberg , david weston in conversation with jack welch, the former ceo of general electric. no doubt, jack welch undercurrent politics and on corporate pricing power. this is bloomberg. ♪

francine: this is "bloomberg surveillance." lacqua in london. we had great conversation with the finance minister of ireland. for more on growth and the challenges facing policymakers, where once again with michael noonan for this exclusive interview. the problem if you're a politician is that there is fear , growth is ok, it is not great. ireland has already been through a lot. what is your next they fear? -- big fear? what advice can you give to other finance ministers? minister noonan: the biggest fear is financial instability. that affects support for populist parties. get a stake ins

government and key european countries, they are parties that appeal on popular issues but don't have coherent economic policies. that would be very significant. there is a series of elections coming up in europe, 2017 will tell the story. ,e have elections in germany france, holland. probably a third election in spain. if central parties are successful in those elections, the situation will stabilize across europe. the political stability will ensure that moderate policies are pursued and the growth trajectory will continue. what we don't want, people in government who don't know what they are at, and policies that are not moderate being tried out

as a pilot study in europe. it is beginning to grow. we are over the uris -- worst in europe. the euro is quite strong now. 2017 and the election results will be significant. francine: how would you describe your relationship with the european commission? minister noonan: it is business. we think the decision made by them was the wrong decision. we think it is based on fragile legal principles. we are appealing it. we have strong grounds for appeal. that, there is a process. they constituted themselves as quasijudicial. they made a decision. we are appealing it. then there is an appeal to the european court of justice.

it will probably take four years, maybe more. tom: i just heard speaker ryan of the economic club of new your time and time again, debt u.s. corporate tax structure. tell me about your actual experience with financial engineering? indexes for financial engineering for apple and other internationals? minister noonan: tax avoidance to give it its name is governed by clever lawyers finding mismatches between tax laws in two jurisdictions. it is international. the solution has to be international as well. lawsve been mending our since 2013.

the double irish and all these things are a matter of history. we have been on the forefront of the oecd reforms. we are taking a leading role. in terms of the u.s. tax law, if you look at the apple situation, very low tax payments by apple, and that is true. is u.s. companies operating abroad don't turn taxr liability for tax into payments until they repatriate their profits. they have 3 billion dollars worth of tax liabilities that were generated overseas. apple otherat companies don't have a life really it is that they don't have to repay it until they repatriate.

there are several debates on how it might be resolved in the u.s. tom: i will take your points on that. let's look at the apple chart. a lot of people look at this as being the ireland moonshot of delayed tax liability as you said. what is your advice to president clinton or president trump to finally get america's tax laws in line with ireland's? minister noonan: the g 20 has return --ng the tax reform agenda forward. the oecd has, a year ago, brought out reports and made recommendations, and internationally these recommendations are being subscribed to. ireland has subscribed to all of them. america under president obama has been a league participant in the g20 driving the cap

reform agenda forward. significant progress has been made. it is not for me to advise american presidents. if the american authorities continue to work with the oecd to find international solutions to international problems, that will be the best course forward. francine: do you think the fines the u.s. imposed on deutsche bank are in retaliation of the fines that europe imposed on apple? minister noonan: it is an interesting series of coincidences. i have no evidence that it was a kind of countermove to compensate for apple. this morning, there is a suggestion that wto is going to ask for 22 -- 22 billion from airbus. isnow people will say this the hostility between europe and america in tangible form.

there is no evidence of that that i have seen. a look to be separate decisions made on the basis of the facts. francine: thank you so much. michael noonan, the irish and its minister. -- finance minister. this is retreating a little bit. dollar holding its line. we will get back to some of the brexit conversation. this is bloomberg. ♪

♪ tom: good morning, everyone. "bloomberg surveillance." i'm not going to call this breaking news, but it gets your attention on what was a quiet friday. this is brent crude higher. there is, up $.80. a modest move. the headlines are fascinating. saudi arabia and iran said to have ended oil tops in the app. -- talks in vienna. you have the idea, saudi is said to be ready to cut output if

iran agrees to freeze. "bloomberg surveillance" is not certain of these headline sequences, but nevertheless, oil has moved. francine: it can. we need to look at the spike and remind ourselves that it is next tuesday or wednesday that opec members meet in algiers. this may be preliminary talks ahead of that. tom: something to knonote. rupert harrison is with us. when i find interesting is not so much oil moving, but the idea of shocks. read calomiris, he is with us for the next hour, he said weaker systems can lead to shocks having value. what is the shock for your united kingdom? rupert: we just had a big one.

it is how wide you spread your model. the headlines like that, i would be skeptical about iran freezing out with. -- output. globally, capacity is still too high relative to demand. the u.s. election is a shock that will affect everyone. tom: going to the presidential debates, give us an update on how you perceive the election. it has been a tomato is 30 days. how do you perceive what ms. clinton and mr. trump are doing? rupert: i don't want to say this, that it has echoes of the feeling we had during the brexit campaign. you start out with an assumption amongst people that it will be

fine, hillary clinton will win. similar feelings ahead of the brexit vote. you cannot assume that. it is very close. you have big events coming up like this debate on monday. we have no idea how these two candidates will come across when they're sending next to each other. that is a big unknown. you have to see this as essentially a 50-50 outcome over which we have very little insight. francine: what does a donald trump presidency mean? issue. it is a slow burn prospects for trade are negative. that is already the case. it is hard to see much progress happening around the world entree. i think the initial reaction would be a risk off reaction because he is a huge unknown. if the main impact of donald trump in office was a fiscal

expansion, a tax cut, that could be positive for risk in the medium-term. edge.hard to have an tom: thank you very much. rupert harrison from black rock with us today. it is the ultimate friday interview. charles calomiris of columbia business school will speak on finance and economics and the challenges of deutsche bank and european banks. us.rd conard will also join the mets win. that is all you need to know. the new york mets land. this is bloomberg. ♪

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after the bank of japan, after a confused yellen press

conference, markets are quiet. all eyes on deutsche bank, the japanese yen, and the mexican peso. clinton and trump rehearse for monday's debate brood who will be on and/or off the message? to saverimal scream america's middle class. this is "bloomberg surveillance ," high from our world headquarters in new york. i am tom keene in london. francine lacqua, we tried to get to the weekend reading, and i'm sorry, francine, everybody migrates to the monday evening debate. francine: this points to the debate we will bring up on monday. the other one is that we were hoping, expecting the markets may be pricing in a touch of central-bank divergence. we got convergence, 100%. tom: we are going to dive in here, this linkage.

in the back of your econ 101 textbook, nobody reads it. we are going to dive into the linkage between finance and economics. calomirist to charles in a moment. here's taylor with first word news. taylor: u.s. secretary of state john kerry has abandoned efforts move ahead with the cease-fire in syria. the u.s. accuses russia of failing to use its influence over syria's president bashar al-assad to stop the fighting. the president of turkey is blasting the u.s. for refusing to extradite an exiled cleric he blames for the field coup. after the failed coup. for the failed coup. >> we are together in nato.

we want him given to us, and let us try him, to do what is needed. but they said the court is going to decide. i am sorry, but we cannot wait because this crime was not committed in the u.s., it was committed in turkey. so let us make the decision. erdogan is also unhappy that the u.s. is using kurdish fighters to battle islamic state. he says you cannot use one terrorist group to destroy another. in charlotte, north carolina, a third night of protests over the shooting of a black man was mostly peaceful. s relativest scott' said they could not tell if he was holding a gun, as police say, when they saw the video. johnson told sky news that in the beginning of 2017, the uk will submit an article 50 letter

triggering the formal start of leaving the european union. 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: right through the data check here. it is a little boring, but this is what we do on "surveillance." nymex crude, 46.14, just after that spike seems to be adding off here. there seems to be -- seems to be ebbing off here. trading off presidential pulse as we go to monday's debate. francine? francine: this is my data check. i want to show you a little bit of vix because we had quite a week.

we saw, thanks to the fed, is petering out. down to 0.5%. it was interesting listening to the irish finance minister. yen, 100.91. tom: thank you for going back to london. you and your entourage alone clean up the traffic on park avenue. traffic got better between 57th jolie and where angelina films that movie at the waldorf. let's get to the bloomberg. this is a great chart that is unspoken but understood by any and all in economics. it is a zen chart, a simple chart for francine. that is the decade-long moving average of the growth of world trade. 1980's, a boom in the up to the 1990's, and in the

ofat rollover in the growth world trade, and we are below where we were on a 10-year moving average. a 40% decline in the growth of trade. call that, francine, the global animal spirit. that is a huge deal for any and all. francine: it points back to a very moderate growth worldwide, and it also puts back to the fear of protectionism, and countries looking inward. this is my chart. it is quite simple. it basically shows that after reaching record values relative to european peers in the aftermath of the british vote, the brexit vote that you see in the red circle, this is what the ftse index is doing. it is trading at its lowest level since february, relative to the euro stocks 50. according to this, the relative value, you take -- uk stocks are

made cheaper, tom. tom: interesting. i have really, really been rating for this moment -- really been waiting for this moment. charles calomiris addresses any and all governments. he is a professor of finance at the columbia business school. financialnow links dynamics into macro economics like charles calomiris does. where have you been? greece for starters? charles: don't blame me for that. i am a bookish guy. i hang out in the library in the office. tom: what i am seeing right now is a major disease. i am seeing really top-flight macroeconomists ignore the commercial banking system when they do their analysis of negative interest rates. what is going to be the damage of that approach? are already seeing

it. we are seeing huge problems for bank equity, but those problems for bank equity values translate into low bank lending. it is that connection that i have been emphasizing to my friends in central banks. i have a big surprise for you. when i called them on it, guess what they say -- "you are right, we know that." the low interest rate environment is hurting bank lending, "but we have a big advantage from it. depreciating the dollar." they think other central banks will not counter their moves, which will x out any depreciation of the dollar. since when are we involved in any depreciation as an exercise to the central banks? i cannot even believe the idiocy of what is happening. tom: bring up the deutsche bank chart. what we do always in the media is look at the y axis.

slope matters. in have the ackerman boom green. a set of lower highs, and the ugliness of deutsche bank. thelie, your research is on x axis. what we have here is a chronic continental europe that cannot clear its market. what will be the catalyst to see u.s. behavior in european banking? charlie: deutsche bank is getting zinged from every possible direction. the low interest rate environment, the fact that it's , in investmentas inflationestroyed by and the american economy, it is a trifecta for them. what is going to turn it around? it is hard to say. monetary policy will help deutsche bank like everyone else, but also a little bit more

sensible regulatory environment. i do not mean lower capital requirements. quarter, howafter axisjohn cryan clear the x to a better bank? charlie: the regulators are pressuring banks to lay off assets and lines of business. i do not think that is a trip to creation greater value . i actually believe universal banking creates value. ultimately, thanks our partners with the state. if the state decides they want to kill you, you are in trouble. it is sort of like, how do you make a marriage work when you are married to someone who is insane? francine: we would not know anything about it. tom: how do you save a marriage

of someone is insane? he was looking at me when he said that. succeed how can a bank when married to the state, and the state is insane? francine francine: charles, who is insane? regulators, central banks? charles: it is sort of all of the above. it is not so much the problem of strict prudential regulation, it is the micromanagement of banks. deutsche bank is under continuing fire, as other banks are, from being prosecuted for whatever sins the regulators think they might have committed. it is a constant no-win situation. the central banks are a major drag on the banks. tom: i never thought we would have this conversation five years ago, seven years ago, when

and we sawmoving action in the united states. later today, what a treat this is. markets," edward heiman. look for that later this morning. this is bloomberg. ♪

francine: this is "bloomberg surveillance." i am francine lacqua in london. let's get straight to the "bloomberg's newsflash" with taylor riggs. taylor: the yahoo! data breach was worse than originally reported. the company says a hacker sold personal information of 500 million yahoo! users two years ago. yahoo! was tipped off in july

when it received a report that a hacker with selling credentials on the black market. yahoo! is notifying those affected. facebook admits it has been telling advertisers users were spending more time watching videos than they actually were, which may have artificially boosted market spending on popular products. the error has been fixed and advertisers have been formed -- have been informed. that is your "bloomberg business/." tom: there are moments when the wind shifts. bring up the chart. i am sorry, francine, if this goes to the sky. i do not think it will get there. it will be interesting to see where facebook is in five years. this video-counting issue is a huge deal for digital media. with anublicists

overestimation of 60% to 80% on video. this is a big deal this moment for digital. francine: of course it is a huge deal, because if you say that facebook gave advertisers inflated video view metrics, are they counting it wrong? have they simply inflated the market, or -- does the need to be another way of looking at this? tom: precisely. what is the way they are going to count video? the same excitement this week in economics. just to wrap things appear as charles calomiris -- michael mckee. it really was historic, you and i sitting with scarlet on the set and the amazement of the yellen press conference. week forthis was the impossible to root out. they have conceded they will do maybe one rate increase, the bank of japan recommitted to

lower for longer forever. they took the time limit off of that. there were ongoing to us that the bank of england is going to cut again, and it has been a great week for assets. take a look at the msci world stock index. it is right here. it is all-time high and still going up. and we had bill gross say the reports of the bond market rally have to be put off again. tom: the number one thing you and i know is that right now there are x number of people writing do a gloom, the world is coming to an end. i do not ask how you respond, but how do optimists like abby joseph cohen respond to that? michael: a lot of people think you are not building bubbles yet, and a lower for longer stimulus we are getting from the various banks is helping. the problem that we have is that it is not a couple she what they set out to do.

they want to raise inflation -- the problem that we have is that it is not accomplishing what they set out to do. they want to raise inflation. the global inflation rate is going down, not up. latera bet that sooner or this is going to turn around. so far it does not seem to be a sign that that is going to happen. francine: charles, this was the week where we could have a -- where we could have had a bit more than virgin's among central banks. what we got was much -- where we could have had a bit more amongions -- divergence central banks. i am not sure the plaza accord is going to work. this is the reason we invented the imf, was to prevent the competitive devaluations, to coordinate around exchange rates, and of course it did not work. , i do not think

there is a politically viable alternative to natural central banks -- to national central bank operating without coordination. what we are seeing is, we are dealing with scarce resources and nobody is growing very quickly. the central bank's want to appear to do something, so we get into this bad equilibrium of competitive devaluations. francine: it is unclear how you regain that equilibrium. should take a.s. leadership role because it is the lead central bank, and it should start to raise interest rates. i think that would be a positive for the economy, ironically, the cousin of the effect it would have on banks -- because of the effect it would have on banks, it also breaking this cycle of competitive devaluation. tom: michael mckee, thanks so much. "surveillance" will be fascinating through the morning as well. professor calla meares -- professor calomiris, thank you

so much. coming up, jack welch of general electric, on "bloomberg ." this is bloomberg. ♪

tom: so this will be interesting, francine, a potential debate. nobody is pulling dog years, though bank. they will be rehearsing through the weekend. is something that you would think the right would do about those pratt millennials.

-- about those brat millennials. lionel shriver -- i was having a beverage of my choice last night with megan murphy, and i was brutally insensitive and she decided to come on the show this morning. i love what she writes here, but she sounds like a mr. trump supported. what is going on? megan: what she is trying to put out is the fact that hillary clinton is grappling on the left with how do you gain the support of these people who seem fixated on certain issues that bernie sanders has raised? and that she in her campaign has been disciplined about not tracking in toward.

i think on issues like financial, tax, how she is going to reform -- tom: it is brilliant. i am lost. monday night, secretary clinton is going to track toward sanders, or is she going to track toward ronald reagan and go for the middle? megan: i think she will track any way that she can avoid a personal beating from donald trump. tom: lester holt is going to have a hammer, and when trump goes mental, he will throw the hammer at donald trump. we are really going to see monday is a personal showdown of two candidates record high unfavorables at this stage of the race. insurveyed, found people states like ohio and pennsylvania who are using monday as a template for how they will decide the race. what they will be really watching for is to get beyond

this sort of personal, brutal debate and look at what people are going to say about the economy, how they will grow the economy, how they will keep the nation safe, how we deal with these issues that we are grappling with. that is what monday is going to be a showcase for. francine: how many undecided voters do you think there are in the states at the moment? of the debate will be on substance, and how much will be on everything that is around it? megan: the advance word that we hear from the trump cap is that it will be very personal -- from the trump camp is that it will be very personal. that plays out. at the end of the day, people will be looking for assurances, the last remaining undecided voters, for who will make their case, for who will make my future better, who will make the future better for my children, my parents, who will make me

feel that this is an america that i believe in, that i support? that is the one thing that is missing from her message. tom: monday night is going to be fascinating. megan: it is going to be one for the ages. come to hofstra. tom: i could care less about presidential debates, this one is different. megan murphy, helping us with all of our debate coverage through the day monday and in the evening as well. our special coverage -- look for that. mr. trump and mr. clinton -- and mrs. clinton with a first presidential debate. how about getting out front with some good discussion, michael mckee and marty schencker. ♪

francine: i am back in london. yesterday we were talking about clearinghouses, and you are asking me about -- actually,

we heard from the ceo, saying 100 styles and jobs could be at risk as clearing leaves the uk. we are also watching a lot of corporate news and international foreign policy. let's get to "bloomberg first word news" with taylor riggs. assist -- protests in charlotte for a third night remained peaceful. a curfew was imposed. police who was shot by -- his family watched the video. u.s. secretary of state john kerry has abandoned efforts to salvage a cease-fire in syria. speaking in new york, he said it was pointless to move ahead without a major gesture from russia to end the violence. secretary kerry: we cannot go out into the world and say we have an agreement when we do not.

nor can we tell our partners when there is -- nor can we tell our partners that there is a cessation weather is not. crisis whensolve a one side refuses to avoid escalation. al-assad blames the u.s. for the truce's collapse. xi jinping is starting to put his stamp on the world's largest political party. since april, he has replaced commonest party's top senior officials. likelythese officials is to emerge when china up with next top leader in 2022. a new study warns that the european union has more to lose leads thek if brexit limits on trade. 5.8 million european jobs are linked to trade with the uk in britain, only 3.6 million

jobs are dependent on exports to the eu. global news 24 hours a day, powered by more than 2600 journalists and analysts in more i am taylorntries, riggs. this is bloomberg. thanks so much. a lot of support for governor romney the last time around. we will get to the politics in a moment. this is a celebration of a book a lot of people not so much on the left, but a lot of people just talk and talk and get upset about. inequality" is classic. what is the biggest myth of inequality we have every day? the biggest is that -- i argue that the binding constraints to growth today are a willingness and capacity to take risks, largely entrepreneurial risks in today's

economy. the second is properly trained talent. it is no longer savings. what happens is that as the workersgh to low change, we get more risk averse savings. we end up with money on the sidelines. tom: can government policy or programs shift investment back to the united states at the margin? ed: i make one proposal that would shift back, two that would accelerate growth. one is -- charles, you may not like this, but i recommend issuing a dollar of import licenses for every dollar of exports, so that we balance trade and we do not end up with the rest of the world's risk-averse savings. we have no use for their savings and they said on the sidelines and they export our employment. you cannot buy for $20 when you

can buy for two dollars and be successful. economy,owledge-based we do not have much use for those. we can shift the mix of immigration from low skilled to high skilled. if you look to the future -- tom: good luck with that. i had a beverage of my choice when i spoke to senator lieberman in connecticut about just what you're talking about eons ago. nothing has changed. francine: i wanted to see if charles disagreed or agreed with what we heard from ed. charles: i prefer other ways to solve the problem, and i liked his other solutions that have more fun them -- more .undamental to do with training those are the key things we should be focusing on. i do not buy the idea of secular stagnation, that we are stuck with low productivity and with this on achieving or

underachieving economy. i think he is right about that. i do not think we necessarily need to limit capital inflows into the united states. the reason we are getting so many capital inflows is because we have a superior financial system. i do not think that -- that is part of our comparative advantage. francine: you were mentioning productivity. andshould we view uber airbnb? it is unclear how that gets accounted for in current economic metrics. some measurements say productivity is higher than it needs to be, but i think that has been looked at pretty carefully. productivity growth has probably slowed down. one of the arguments i make when into your capacity and willingness to make risks -- with you have a near infinite supply of unskilled labor, you will not see business investing when you can get labor come as much of it as you need. tom: i want to go to a great

quote, to edward conard's book. churchill, winston churchill. this has nothing to do with the presidential debate. ed, wilbur ross was on the other day. who iuld be the one guy would think would agree with wilbur: you are not. state your ambivalence for mr. trump off that usually inflammatory quote. come on. policyhink you have descriptions that i do not agree with. tax and trade -- you cannot have

quotas. in the case of immigration, he overlooks the fact that we get eaten alive by baby boomers and china's military strength and growth. you will not clamp down on immigration and solve that problem. tom: george bush senior was pulled out of the pacific ocean at midway. he came out this week and said he is voting for the other party. are you doing the same thing? vote forl never hillary clinton. that is poison in the long run. you can do redistribution in the short run but it will have negative effects in the long run. will you hear that is new from mr. trump on monday? ed: i do not think we will hear much that is new. learn show that he will from his advisors and come up with logical proposals. francine: how does hillary clinton need to play it? ed: having watched hillary in

the debates, i expect her to do more of the same. she will forward her message, which is tax the rich, redistributed everybody else, that that will bring prosperity to everybody else. she will depend on people not looking far into the future and focusing more on the short run than the long run. is valuabley that to me in the short run, they will not understand the long-run effects, and some people are going to vote for that. francine: how significant is the debate? do they make up their minds? for the undecided voters, what kind of impact can one single debate actually have? ed: i think the research that i have seen says the debates do not have that much effect. most voters have made up their minds. i think negative advertising has an effect. i think most people understand what hillary stands for, which is higher taxes, higher spending. we already have 36% government

spending as a percentage of gdp when you add state and local. she wants to up it. we do not really understand what trump wants. tom: you have the blurb of the year on the back of your book. help me out here. "i respectfully disagree with ed conard's book, but i respect that he makes his case." i have an agreement with john micklethwait p will not come on unless i quote churchill. we will have him on after we quote mr. erdogan of turkey. from london worldwide, this is bloomberg. ♪

francine: this is "bloomberg ." veillance i am francine lacqua with tom keene. let's get straight to the "bloomberg business/." new stagnation in germany plus service economy offset an improvement in many factoring -- in manufacturing. gauge is just above the point that divides expansion from contraction. the london stock exchange warns that 100,000 jobs could be cut if the job is clearing financial transactions leave london because of brexit. there are very few financial centers outside london that could accommodate clearinghouses.

thatman newspaper reports commerzbank may cut 5000 jobs, 10% of the bank's workforce. commerzbank is germany's second-largest lender. next week, the ceo will present his plan to boost profits to the bank cross board. that is your "bloomberg business flash." francine: receptivity and aired a gun says the country's erdogan told our bloomberg editor in chief, john micklethwait, lower rates are needed to give credit to business. cutssee the central-bank as a steady, careful, and balanced cut. because it is not right to make sudden moves up or down that

could create a tremor in the economy. but i believe it would be beneficial to continue this steadily. and right now, this new demonstration of the central-bank, since they took cuts,, carrying out taking into concentration special interest rates policies of the government, and i think this is an important signal, especially for investors. my hope is that the other banks will take the signal that the central bank has given, that they also heated and accordingly that they opened the way for investors. however high you hold interest rates in the country, you remove that much investment from that country. a country where there is no investment, cannot talk about

development. you can end the talk about development in a country with investments. in this issue, we still have not seen this speed and stability in investments that we wish to see. if interests were low, investors would get credit immediately and start to invest. when interest rates are high, they cannot invest. right now, despite this, our investors are making investments. i say let's look at america as an example. europe, japan. and accordingly, let's bring interest rates as low as possible. erdogan inresident one of the few international interview since the queue happened over the summer. coup happened over

the summer. what was his main message? he is saying we are open for business. >> very much so. this is a generally strange thing. he said that his approach is, the way to get rid of inflation is to cut interest rates, which i know tom keene, who follows economics between medieval history and baseball. that is erdogan prosthesis. he will repeatedly say -- that is erdogan's thesis. that werepeatedly say have very high interest rates and inflation and they have come down together. it is an unorthodox approach, but given the amount of power he has in turkey, i think that major huge amount of difference. -- i think that makes a huge amount of difference. francine: is it likely that we will get more? john: what he talked about was

the gradual stream of them, and that is what has happened. there's a long history between erdogan and the central-bank. he did not like the predecessor, and people around him have --ked about the idea that now he has someone he likes controlling it, and he is following it. tom: you are making a circuit here. you speak with erdogan -- john: a democratic strong mentor your the final. tom: i do know that. theuss the similarities of way it changed over a longer than decade tenure, and what are the distinctions between the two? john: one, they are democratic strawmen, people who have this habit of winning elections while --the same time suppressing

erdogan denied this in the interview, but there are 120 journalists in jail in turkey. they botha that emanate is one of strength. the second bit is this element of nationalism. it is very much about make turkey great again, make russia great again. those are the things that push them forward. to be fair to erdogan, when he came in, he unleashed a lot of economic reforms, along with the islamist stuff. it is difficult to claim that putin has unleashed many economic reforms. tom: what is the integrity of turkey's borders. -- what is the integrity of turkey's borders? does mr. erdogan assumed the southern border of turkey has changed? john: probably not, from the point of view that he is so worried about any kind of changing of the borders. the moment you start changing the borders, you start saying

there is a people who go across several different borders, why didn't they have a state? he's decline -- he is inclined to stick with the map. francine: it surprised me that he says he does not care at all about the global rating agencies, yet when you look at turkishormance of the stocks, it seems investors worldwide choose to ignore the politics because they just want yields. john: what they do is that -- he actually said that he does not care about the rating agencies. even if people have low opinions about some things that rating agencies do in the past, most people would not accept that. but this idea that he has his own brand of economics and others should get used to it, that is the prevailing image that he wants to go for. micklethwait, thank

you so much, our editor in chief of bloomberg news. this will be playing throughout the day across our media, this conversation with mr. erdogan. most interesting, to say the least. we will continue on this linkage between finance and economics, with charles calomiris of columbia. this is bloomberg. ♪

tom: a generous fx report before we talk about generous electric. yen, 107 point -- 101.70. monday's debate? francine? francine: bloomberg is up westin, jonathan ferro, and alix steel. david: we will have jack welch committee former ceo of ge, with us for a full hour to go over what has happened to this week, to talk about ceo leadership, and maybe we'll talk about mr. stumpf. we will talk about mr. erdogan as well. will he be investing in turkey echo we have a big show coming up. tom: in the few minutes that we

have left? calomiris from columbia university. janet yellen says we have to get out in front, be in front of it, and then she would switch around two sentences later and say we need to wait for evidence and be ex post. which is it? there is no way to tell. the fed is completely adrift. i think the interesting story here is not janet yellen doing this. tom: i know right where you are going. charles: she has been doing her her in the headlights in news briefings, so i do not get much information from those. eric rosengrens, has decided to come out and push back. it is not insignificant that eric has made his career academically in research on

financial institutions. he understands the link between monetary policy and the financial sector, the banks, and he understands the continuing risks of inflating bubbles. that is a very significant outcome, mainly because he has consistently been such a dove. we are just getting news that the treasury secretary, jim o'neill, has just resigned from goldman sachs. what is your take on brexit? charles: i argued at the time that brexit would not be a big story globally, and i turned out to be right about that. reasonht that the main for that is that there are not a lot of alternatives to london as a global financial center within europe. i think it is a joke that ireland or frankfurt could become a substitute. there are some major issues for the u k, but globally i did not see it as a big deal. i thought it was an inflated rhetorical discussion, a little bit like the current election

campaign. tom: rosengren on the left, calomiris on the right. what is the summation for continental europe? charles: for continental europe, i think the same issues become only worse because the banks are in a weaker position because the economy there is in a weaker position. we are looking at a banking system that is not really recovering, and monetary policies are making it worse. tom: charlie keller meares returns on bloomberg -- charles calomiris returns on bloomberg radio. michael mckee will get you prepared for the debate. seven clock p.m. in new york. ♪

david: markets take a breather,

that after this week plus said induced rally in stocks, bonds, and commodities. elongated that first for the biggest weekly is vance -- weekly advance. david: keep on cutting. president erdogan tells bloomberg that turkey pot central-bank should continue to drive rates lower. welcome to "bloomberg ." i am david westin with alix steel. jonathan ferro is off today. alix: now there is a pause all across the market unless you are long -- buying long data treasuries. david: the markets were all going up, and today it seems the markets are saying let's take a minute here. alix: we get 12 speakers between next monday and thursday. if you want more federal confusion, you will definitely getting it. that he will deftly begetting it. david: