francine: deutsche bank drops again. announcing concerns the lender cannot withstand pending legal penalties. contagion fears. financial stocks drag equities down. 99 and counting. it has been almost 100 days since the brexit vote and britain's economy is still flying blind. we bring you are recent brexit show at 9:30.

fromme to "the pulse" live london, i'm francine lacqua. we have a great show lined up. at 9:30, we have our weekly show " brexit, what's next?" now, we speak to the italian ambassador to the u.k.. does renzi's referendum also pose the same risk as the brexit vote? then we bring you a panel discussion. post-brexite latest data. first, to the markets. we are getting breaking news out of deutsche bank. deutschenderstand the bank ceo speaking to employees. this is why we are looking at deutsche bank. 7%.all down we had this great new story yesterday saying that deutsche bank clients are set to reduce

some of the collaterals on trade. the ceo writing to employees saying that market forces are harming confidence and banks overall. rdlyainly investors are ha confident in the markets. crude oil 47.15. the volatility index gaining 6.3%. let's get straight to the first word news. marcus: thank you very much. japanese consumer prices feel fo -- fell for s ixth straight month in august. a rise in industrial production points to modest third quarter growth. u.k. consumers appear to be shrugging off initial brexit concerns as their worst fears about the economy are easing. increasedence index six point in september, regaining the ground lost after

the vote in june. household expectations for their household finances improved, as economy.utlook for the business confidence remained low its long-term average. a private gauge of chinese -- indicates expansion in september and further signs of stability. the manufacturing pmi reading came in in line with estimates. with the economy stable for now, and home prices in major cities soaring, analysts are betting the policymakers will switch from easing to a tightening mode. tradinghore yuan is lower against the dollar this morning ahead of its official admission into the imf basket of currencies. it becomes one of five global reserve currency is tomorrow alongside the dollar, the euro, the pound and the yen. beijing is hoping for a boost in the yuan international usage

with his share of global pavements. global news 24 hours a day powered by 2600 journalists and analysts in more than 120 countries. francine: thanks so much. deutsche bank shares have plunged to record lows as concerns intensify about the health of the german legend, fears about the european banking center. in's cross to caroline hyde frankfurt. we just had this memo from the basis for there is no speculation he goes through some of the positives including the liquidity reserves, more than 215 billion euros. overall, what is the mood like in frankfurt? is one of the mood concern that the crisis in confidence becomes a real crisis. behind the, gloomy in frank for. we see the share price dive,

because it was a bloomberg news's yesterday that started to rattle nerves. hedge fund clients, millennium ten, had already started to take some of their cash off the table. still,of 800 clients but we're starting to see those fears rise about doing business at deutsche bank. goldman sachs put out a note saying liquidity position stood 124% liquidity coverage ratio. that is better than bnp pa ribas, but it is still the capital concern. size of the fine? this is a crisis of confidence. deutsche bank has been coming out and saying clients are sophisticated. they get it. but maybe some of the retail investors don't. francine: thanks so much. again, deutsche bank saying that

it is fulfilling all cap requirements. this is a memo bloomberg news got hold of, a memo the ceo john cryan has written to employees. he says, the reason behind the market action is market forces. he says there is no basis for speculations. he reminds his employees that deutsche bank liquidity reserves are more than 215 billion euro. let's welcome james evan. we're also joined by the bloomberg columnist. very quickl, a question. if you are john cryan and every day you see your share price touching record lows, do you need to address your employees to make sure you do not lose to makeor do you need sure that shareholders understand what the plan is? james: i do not think it should be or, it has to be and. he also needs to speak to his

customers. and there is a fundamental challenge. deutsche bank sits within the ecb. the ecb policies are externally difficult for all european banks. through whatk us we have learned. i'm going to bring you up-to-date with this memo. this is john cryan commenting to staff saying that deutsche bank has fulfilled all capital requirements. the liquidity reserves are more than 215 billion. he says there is no basis for speculation. and yet, even yesterday, we understood that deutsche bank clients were reducing collateral on trade. so, there is something going on, or at least there is fear out there. towhile cryan is right reiterate those numbers. i do not see why he says there is no basis for speculation. a lot of fears about what is coming tomorrow, the u.s. fine,

exactly. i think the market is pushing for more. saying the same numbers day in day out without the capital requirements and we do have 220 billion, the market wants more. what is happening now with the contagion on the u.s. markets and european markets, that might be the cap needed to get politicians to say something. francine: what does he need to do? does he need angela merkel to step in? does he need to start -- how much do we know about what is going on behind the scenes? >> i think you don't feel sorry -- you feel sorry for john cryan because a lot of this is out of control. the last thing you want, the worst outcome is a capital increase that is driven by an client confidence. without any clarity on the numbers. this has to go above cryan. it has to be germany, the u.s., the ecb. francine: is there a concern with the, often with market

psychology, that this gets ugly unless something -- i do not know if it is drastic or there is a backstop in place? james: i think it goes to the heart of what the central banks have been doing in terms of having very low interest rates, which makes it extraordinarily hard for banks to make an appropriate return on capital. your capacity to weather the storms and to replenish her capital is limited. francine: but nothing has changed since monday, apart from market fair. which is unfounded. ow car crash across the financial world because of negative interest rate policy. because of the fact that we have negative rates. we have negative rates covering 25% of the world. that is an extraordinarily difficult environment for which banks have to operate. francine: i was on a panel where it was clear that the blackrock chair was saying negative rates,

i do not understand a lot of the models. what will the industry look like in three or four years from now? >> he also said that banks were un-investable. i do not know how smart that comment is, but i'm interested in contagion. deutsche bank, if this was just deutsche bank, we might be saying something different. but this is spreading. solid banks that are normally perceived well are being hurt. us. equities, too. it is obviously not the same kind of situation as in lehman. there is more capital and the system, but clearly, investors get scared in the same way. if solid base are looking to someone to do something. francine: who is the person to do something? if you look at the share price -- 10 euro 1.3. is there a level at which the government has to intervene? john cryan saying that the uncertainty doesn't justify the share fall.

it what does? james: this is now in the hands of governments and not central banks. to the banks run mandate. that mandate is quite fixed. they do not have the capacity to use fiscal policy. and i certainly think that there is always a straw that breaks the camel's back. fine coming out of the adverse news coming out of wells fargo. it has diminished confidence. people going, do i want to take the risk? can't see how they are going to make money. this is not one of the ways to make money. it's governments coming to the table and saying, let's get real about how we're going to engineer a better global economy. it is not going to be down just to central banks. pulling the levers. we have to have coordinated fiscal policy. we have to have a strategy where by the banks and transmission

mechanisms can be profitable. francine: thank you so much. stay tuned. we will speak with the commerzbank cfo on the job cuts and stability of the german sector coming up at 12:00 p.m. london time. plenty coming up, and we look ahead to the final quarter of 2016. and opec. cut we look ahead to what will be moving markets. does renzi's referendum pose a brexit-sized risk? and 99 days of brexit or since the referendum. we get another -- out of the u.k. economy. services and manufacturing data at 9:30 in our weekly brexit show. this is bloomberg. ♪

francine: these are your markets this friday morning. stocks overall are sliding because of deutsche bankj jitters. yen, gold and bonds gain. commerzbank down 7%. just ays, rbs -- there's lot of concern from investors about the financial health of germany's biggest lenders. that rattling investor

confidence. this is the vix index. it is gained 6.8%. quite a good benchmark of how people see risk. i think it is coming. 5.3%.aining off the days highs. it's also the final day of the third quarter as we move into the final months of 2016. global rates low and political risk in the form of the u.s. election and. the italian referendum will continue to dominate the environment for more on what to watch, james bevan is still iwith us. i don't know whether i should ask you how do i make money. how do i make money -- not lose money? vix will benk the going up. after all, you just have to look at the two to 10-year spread.

it tells us we're going to have to have a higher vix if that relationship is to persist. francine: on the banks, we talked for little bit about how it could get resolved. it seems like it may get messy. it may be protected -- p rotracted. james: there are some great opportunities within the natural sector. tactically to take opportunities out of the mess. i would identify the fact that the netherlands and luxembourg are doing relatively well. i would say that some of the domestic banks in eruurope are well placed. icole, for example. when when things about developed marking banks and operating an emerging base. one sees reservoirs of opportunity. and real growth opportunities. so, i would be looking at hsbc, standard chartered's. but for me, there is a relatively tactical bet. at financial

regulation and litigation will make it hard for the banks to make sustained profits. i think the -- there's a much more rosey future. francine: like prudential. but then we have concerns on china. worry about china in the short term but i look at the emerging middle class in the far hugeand i see a opportunity for projected to generate strong capital return. i would have prudential as a long-term core holding. francine: commodities. we have this opec agreement. unclear to me -- james: i don't want to go there. if you said to me, how do i build a portfolio today? i would say i would build a core in quality defenses, companies with high return on capital. looking at you unilever. companies that i think --

fantastic companies. a fantastic company. i think it is incredibly cheap. you think about the return on equities for shareholders. francine: your basic concern is no recessions. otherwise, these companies will be slapped. i do not think there will be a recession. i think there is a for the economic slowdown. we will have a positive policy response. that will be good news for equity valuation. in terms of how one allocates assets, i am overweight exiting and using risk budget fully and then environment. francine: what is the one thing that you think markets are mispricing? but the people are worried they say i'm still invested. when will it burst? if, at all? james: i do not think that government bonds well blow that far, because we are going to be in an environment where growth is low. inflation is low. i think we will get a pick up in

inflation in the next six months. in 12 months, we will be back to facing inflationary pressures. i think the credit spreads, in tight.elds, are too and what we need to have is a major failure in junk bonds. and people go i've not been paid nearly enough to take that risk. for me, that scenario is looking quite frightening right now. francine: thank you so much. renzi'snext, referendum. does italy's vote pose brexit -sized risk? we speak to the italian ambassador to the u.k.. we are also looking at live pictures from jerusalem. morning, world leaders gathering there for a final farewell to the former israeli

leader shimon peres. those are live pictures of present obama addressing the crowd. we will have plenty more news on the top stories. this is bloomberg. ♪

francine: stocks sliding in europe. deutsche bank jitters means

there is a boost for haven assets. another concern among markets -- italy. italy votes on a referendum on which the prime minister has staked his political future. he backtracked on his political future a bit. as the economy struggles with sluggish growth and the banking dector weighed down by ba loans. i'm delighted to have the italian ambassador to the u.k. great to have you on the program, because italy, after a lot of -- is always consider the naughty child in europe, the onw e where the next problems will come from. should international investors focus so much on italian banks? >> no, i don't think so. actually, you mention a number, that number isut

the number of the, no n-performing loans. then if if you look at the net figure of bad loans, this goes down to 85. haveo match this 85, you 122 collaterals of real good assets. so, there is no problem of instability of risk of systemic crisis due to mpl. of course, there is a huge backload of mpl's due to the recession. and now the government, the private sector as well, have started the process to speed the andet of mpl's, to offload consolidate this burden on our banks. to make them more effective. francine: do you worry about the referendum?

we have to explain something to our global audience. it's unclear whether -- if this referendum does not go through, what we are left with in terms of political risk. >> i do not think there is a risk of political instability in italy following the referendum. if the referendum is won, rnenzi will be empowered, will be politically even stronger than he is, particular in this moment whether rest of europe is facing elections, uncertainty and so on. if the referendum is lost, anyway i do not see any instability because in our system, it's the president of the republic who ultimately takes the decision about the government. so, i expect that the president of the government would ask renzi and the government to soldier on. this has been said, also, by the no campaign. they do not expect the

government to fold following the referendum. francine: ambassador, thank is so much for now. we will be back and talking about brexit. we would do our weekly show " brexit, >> next? -- what's next?" ♪

francine: welcome to our weekly brexit show in london. i'm francine lacqua. we round up the conversation that will make you smarter about what is next for britain and europe. this is " brexit, what's next?" we are getting breaking news out of the u.k. economy. we have loads of things to go through. first of all, the economy grew 0.7% in the second quarter. that is a better-than-expected figure. it is more than was previously estimated. so, that u.k. economy in the 0.7%.d quarter up then we have the current account deficit at 5.9% of gdp for the

second quarter. lve deeper into some of the data that has come to through the month of july. the index of services much better than expected. we were expecting months on months of 0.1%. it has come up at 0.4%. and also we had a revision for the earlier month. that july figure, ro servic-- for services. the pound 1.2967. the brexit stories that matter this week. let's get to markus karlsson. marcus: the bank of england began its corporate bond buying on monday. bonds of bae systems were among those purchase. the central bank plans to buy 10 billion pounds worth of corporate debt over 18 months. meanwhile, the deputy government of the bank of england defended

this to me this measures the central bank took in august. speaking at a bloomberg most influential event, she says britain's economy was being hit hard by the referendum results. no doubt looking at the data that we face that the u.k. is expressing a sizable economic shock in the wake of the referendum. any reduction and openness or the need for reality resources will necessarily imply a slower rate of growth for the economy. moreover, the reality of the protective process of withdrawn from the european union means we still know very little about the nature of our future trading relationships and this uncertainty is weighing on business investment. trade secretary has extolled the virtues of free trade saying that encouraging exports in new markets will be the key to closing the account deficit. >> the european union has a

massive surplus in goods with the u.k. who does it harm more if we end up in a new tariff and private? --environment? it is in everybody's interest that, as we move forward, we have at least as free a trading environment as we have today. anything else may not harm the politicians and institutions, but it will harm the people of europe. it's the people who should be at the forefront of our thoughts. markus: data o ut today shows u.k. consumers appear to be shrugging off initial brexit concerns. the confidence index increased six points in september. regaining the ground lost back in june. forehold expectations personal finances improved, as did the outlook for the economy. business confidence remained below its long-term average. global news 24 hours a day

powered by more than 2600 journalists and analysts in more than 120 countries. back to you. francine: thank you so much. this is the picture for the banks. we need to look at the banks because it is the biggest story in the markets today by far. maybe a little bit of reprieve from all of those brexit concerns that are not materializing into numbers at all. deutsche bank down 5.5%. commerzbank down 6%. commerzbank coming out with a couple of headlines. this is following the board meeting. this follows yesterday's announcement and it's before the news conference we are expecting in 40 minutes from now. comments bank saying it is suspending its business for the time being. -- commerce bank saying it is suspending its business. it is confirming the strategy plan that was told reporters yesterday will be put in place. the capital ratio -- we had john cryan saying in a memo, don't worry. we are ok in terms of capital for the moment.

capital ratio is rating comfortably above. finally, now we can focus on brexit. george osborne has stressed the need for the closest possible economic and financial relationship with the european union. speaking to bloomberg in his first interview since leaving office and the wake of the referendum, he warned of the consequences of a hard brexit. >> my view is we should be ending up with a softer brexit than a harder brexit. the economic consequences of a harder brexit will be more severe. francine: let's welcome back the italian ambassador to the u.k. and the director of a think tank policy research -- at net wealth investments. we are going to have a lively discussion. you'v ebeen involved advising

the italian government on economic matters. what are you hearing in terms of soft versus hard brexit? areeems unclear, if you german and you want red lines, that we will do anything but a hard brexit. >> so i hear around here in london. of course, we would like to see the closest possible ties between the you -- the e.u. and the u.k. that italian investors, like japanese investors at the moment, are putting on hold further investments because they want clarity. they want to understand what the future relationship between the union and the u.k. will be. of course, for this country, for this government to take a decision, we expect a decision that will be taken as we respect the decision taken with the referendum, but it is obvious and prime minister renzi said

this to the bbc yesterday, that we cannot, we hope there will be a very close relationship, but you can't have the right of a member of the union with the duties of a third country. there must be balance between rights and duties. francine: you were the economic advisor to boris johnson. what is the thinking on his side? boris since advised i stopped being at city hall -- regardless of that, i think the key way to look at this is in the economic and financial services. i think the terminology soft brexit does not help anyone. the choice is between the clean versus messy brexit. a clean brexit is a clean break. and the politics comes in as well as the economics. a clean brexit means of focused on sovereignty and migration.

francine: let's not call it soft or hard. let's call it access to the single market with passports or not. then terms of access to single market. that is different to being in the single market. with a clean brexit, you take the view your outside the single market. in terms of your default position. once you trigger article 50, it is up to you if you want, and politicians into want to negotiate, you have to bear realityyou have the that you have to depend on the other 27 countries and on the european commission. what the needs is clarity about its own position, and then this book deal on top of that. on top of that. the auto sector, the city, other parts of the economy have their own positions. francine: it seems very clear, the position for the e.u. is red lines. if you do not give an on

immigration, then you renegotiate. what exactly do we know is a position of the u.k. government at the moment? >> we're not too sure. what we know is that actually, they have tried to play what i think a very dangerous game by, for example, not saying anything about the european residents that are here now. and and that is very unfair, both on people living and working in the u.k.. and on the member states. so, they are obviously holding e.u. nationals here to hostage, if you like. so, there is a hard kind of approach behind what we're hearing from the prime minister. and i think it is disastrous. utterly disastrous. francine: how would you fix it? i think wenest, should begin negotiations nc where we get to. and then we should go to parliament and we should debate it fully. then, when we have the outcome and we understand the implications, 0-- my view is we

should go back to the public and tell them what we have negotiated. francine: ambassador, there are hundreds of companies, italian companies, invested in the u.k. there are hundreds of thousands of italians living in the u.k. how do you reassure them? given that we do not accept me know the position of anyone at the moment. >> i don't think that any government here in the u.k. would be ready to send back a couple of million of european citizens. so, i think that the rights will be respected. it's different when it comes to the future. we do not know what will be the possibility for other european, other italians if they want to comment settle here. but, of course, there is a connection between the single market and the freedom of movement. our investors would like to see the u.k. in the single market. citizens would like to retain freedom of

movement. but regarding this, i wonder whether, since it is all about taking back control, if control has been exercised to the complete potential which is offered by current e.u. regulations. if you read what maybe two people dead. if you read the e.u. directive 38 of 2004, you can send back e .u. citizens if, after three months, they are out of work or without a concrete perspective of getting work. now, what is the problem is that, of course, to implement this directive, you need registration. you need to accept the idea of registration. many people tell me, this is un-british. then if you speak about taking back control, you must accept that you need tools, national tools to exercise that control. and e.u. already gives you part of those tools. >> in terms of the -- i agree

with what amber is saying about the e.u. nationals, but i think we should respect those. but it does not go easily. there are three issues. sovereignty, migration, and single markets. if you want to have control of sovereignty, and you one to have control of migration, that does not mean no migration, it means low migration, you have to be outside the single market. that is the starting position. i've imagined this weekend, the prime minister might well, given the conservatives have their party conference, announce some clarity not about the detail but about the timing, because i do think article 50 needs to be enacted sometime in the first half of next year. the big disappointment is the previous prime minister did not do any preparatory work. the bank of england has to begin in credit because they prepared for all of the 12 he's. -- all eventualities.

francine: because nobody was expecting brexit. is that fair? >> so, if you weren't prepared, why did you call the referendum? francine: because -- >> no, but the irresponsibility of not preparing for an outcome like this is unbelievable. and long-term, this will be one of the most damaging like using the prime minister has ever left to this country. so, it's extremely disturbing that a, we do not have civil service capacity. that we cut back on the civil service and now we have to expand the civil service/ i think you'll find that fiscal expansion becomes fashionable in britain again. >> and necessary. francine: first, to the ambassador, what will europe become for no one? is there more integration? we need to be stronger together. or will it be europe that learns lessons from brexit and starts reforming?

>> well, all the possibilities are open, can be either way. but we hope that this will help to focus politicians' minds to try to single out what are the real preoccupations of the citizens? what are the real necessities? instead of talking again talking new architectures, new initiatives, we get a response to the need of security, which is really coming from -- >> and this is what we are going to see in the italian elections. this is going to be the next shock, in my view. >> no, i don't think it will be a shock, because, as i said, the president of the republic is the ultimate decision-maker regarding the future of the government. and i suspect that, even if the, should the referendum be lost, and we have elections anyhow in so, it would ask the

prime minister to go on and the government to serve on until the next election. so, i don't think it will be any political instability. >> not to italy but to the european union. francine: it is also maybe the perception. there is a clear, rezni's has backtracked on his referendum -- renzi's has backtracked on this referendum. i do not know how to model things. the problem when you look at the strong data we've had since brexit, so you want to call it -- i admire your british stay calm and carry on, not calling it hard or soft but missing and clean -- but how do you model either? lastat we have seen in the three months is that financial armageddon and economic collapse as was predicted by the bulk of the remain side and predicted by george osborne -- francine: we have not trickled article 50. >> but we -- we have not triggered article 50. >> the reality is that the u.k.

is that state of the economic cycle where it's slowing down regardless of brexit. the policy easing for the bank of england was justified. the weaker pound also was justified. i think anyone who looks at the economy needs, we need to see a fiscal boost. some of the modeling, is the economy and then we need to have the transition into the article 50. >> i think it is really wrong to suggest that we have to wait for the impact of this. we have already -- sterling, the day of the vote, sterling to the vote was 1.50. today it is 1.29. i just come from new zealand and from brussels, and i tell you that is more expensive for britons. were theorer than wwe day before brexit. and it has not gone through yet to prices.

. and the impact will be wage cuts and that is coming through. every time that a brit goes into a shop, they are going abroad. they are buying hollywood movies, buying iphones. anne would agree with me that the current account deficit that was sizable and still is sizable, in my view suggested the pound was well overvalued regardless of the brexit vote. the brexit vote, i think anyone who thought that there would be a leave vote would've anticipated not only a weaker pound but also low rates. i think the weaker pound is justified. in terms of the economy. the inflation feature is something we do need to watch. he will be a big challenge not just in britain but in other countries. >> exactly. the pound fell after the crisis. it made no difference whatsoever, it seems to me to our export capacity.

we did not -- francine: in retail sales, it gave a little bit of a boost. ambassador, what is the number one question you get? does mateo renzi call and say, what exactly is going on? u.k. politics is a lot like italians since the brexit. it depends. is anecdotale evidence that there are investments being put on hold. so, i'm worried for the medium and long-term consequences, because when you reduce investments, then, of course, there is contraction in the economy. so, for the time being, consumption is going well. we are not seeing any negative result. but in the medium and long-term, if there is not a solution which reassures investors, you will investment,ction of and therefore, consequences on

the economy. francine: do we have a timeline problem? even if we trigger article 50, we do not know what traders, what assets you have? at the same time, the investment you are talking about. you can't just wait around. >> it is a whole host of issues. global as well as regional as well as domestic. if you decide to trigger article 50 and at the same time get all to work to thell assumption that the u.k. believe the e.u. at the end of that period, then you start to remove some of that uncertainty. there is still a two-year negotiation, but the important point of a clean brexit issue starch control your own destiny, and you actually have a clear default which is actually either trading -- >> that is really ambitious. francine: one last question and we do need to take a break. we can push back and say you control your own destiny in a world where everybody is looking

inwards. what do you control in terms of new trade agreements? >> carry on. >> in terms of trade agreements, we have to remember the e.u. very regulatory, very protectionist driven. trade agreements are there to protect certain sectors against other sectors. therefore, when you try to get rid of the tariff war around the helps u.k.that consumers. in terms of a trade agreement, you have to do it against the backdrop where you've already decided to leave the e.u. because there is no reason why all the 27 countries are going to agree to something unless we have a stronger bargaining position than just going in for open arms and heavy negotiation. francine: i was taking more about the u.s. and china. >> to be i n control of our destiny one we have capital mobility, when investors can choose -- is illusory.

we may well be able to negotiate trade deals but that is a long way down the line. isthe meantime, capital flowing out of that country, and that is a really big problem. ambassador, you are a master of diplomacy, a master of negotiation. if you were the uk, how would you go into the 27 countries and get a better deal? >> i was trying to remember that the agreementneed of the 27. i would avoid trying to divide the partners and play one against the other, because i would try to be constructive to get to an agreement which is acceptable for the 27. from that point of view, i mean, your interestin is not really helpful, i think . you should accept our condition because you have, we have a trade deficit and so on, because

it does not take into consideration that the trade deficit, for example, it is only with a couple of countries, not with 27. and again, there has been a lot of talking of un-democratic european union, faceless bureaucrats, but in the end, it is run with democratic principles. and you have to agree with 27. so maybe one country is enough to block an agreement. wouldn't discount the possibility of emotional reactions. if you are bullied, this country an oere was after all emotional decision. they a bit odd that consider on the other side everyone will be rational. francine: -- there is quite a lot going on with the banks.

what was said to be the best quarter of the year is ending on a sour note. it is the last day of the quarter. this is on concern on the financial health of germany's biggest lender's. it is rattling investor confidence. that means that today on the markets we are seeing more demand for haven assets include yen, gold and sovereign bonds. this is the picture for deutsche bank, the epicenter of a lot of the concerns, were investors and markets are focusing. down 6%. commerzbank down 5.5%. growth,talking about negotiation tactics. let's now focus on monetary policy. actually, you were talking we bay givinglaud the them. if beginning is corporate bond buying program this week. to applaud the bank of england. the central bank plans to buy corporate sterling over the next 18 months. meanwhile in our bloomberg

offices on wednesday, the boe's deputy governor says that you fisher's could ease policy as early as the meeting on governors- that the could ease policy as early as the meeting on november 3. the boe would " obviously act." we started a conversation with you saying people forget how much mark carney has done in the keepof the brexit vote to stability. yet, he has been dragged into this political mess in certain ways. can he do much more? >> i'm surprised he got drained into the political mess -- dragged into the political mess, because i thought the bank was prepared. in terms of easing, i think the bank has said it adds 5 billion pounds to the economy over the course of the full years. i think the bank has a bias to ease.

that does not mean they will necessarily ease. if recent data is sufficiently healthy. i do not think the bank will be doing anything in terms of anything suggesting any tightening any time soon. they need to focus on wages and the escape velocity of the economy they used to talk about. even though the economy seems terms, ok, in cyclical business investment has been soft in recent years. still is soft. there is still vulnerability to shock. the ecb and the bank of japan are still likely to be easing policy. the fed is likely to be on hold. i think the bank of england will keep rates low for some time. as we've seen, the corporate bond buying, they still have to push through some of their -- francine: what you were alluding to was higher inflation, because of imported prices. that would be a nightmare because then they have to ease. >> exactly.

it is not happened yet. and it is going to take time. the big worry is the deflation. but i just think we have gone as far as we can possibly go with monetary easing. i think the burden on the bank to carry all the adjustment of this is just extraordinary. my worry is that the treasury, which has been so hostile to fiscal easing, is now having to do a u-turn. and it takes time for fiscal expansion to have impact. but it lasts. the oecbd, the imf, the federal reserve have all become extraordinarily shrill about the need for fiscal expansion, but governments have been dogmatic about undertaking up. now is their time. >> we are likely to get the chancellor hinting at it. francine: a spirited conversation. thank you all for joining us.

coming up, well, we will have plenty more on brexit. tom keene will join me from new york. this is bloomberg. ♪

francine: deutsche shares are down amid concerns the lender cannot pay legal penalties. some clients reduced exposure. contagion fears in the sector. the final trading day of the quarter. it has been almost 100 days since the brexit wrote, and britain's economy is still flying blind. i am francine lightweight in london. tom keene is in new york. all about the banks.