manus: trump fires the acting attorney general after she refuses to uphold the president's immigration order. standing past the bank of japan. stimulus unchanged as policymakers race to assess the impact of the yen's slide. we have the latest from tokyo. u.k. lawmakers begin a two-day debate on the terms of brexit. we are live to westminster. ♪ manus: welcome to

"bloomberg daybreak: europe," right here in london. i'm manus cranny. anna: and i'm anna edwards in westminster. good morning. theresa mayecause and her government are trying to get 137 word brexit bill, the eu notification and withdrawal bill, through the comments and through the lords to meet that self-imposed deadline of the end of march. that is what we will learn over the next couple days. to what extent is she going to have a free rein to get on with that job, and to what extent are her hands going to be tied in terms of the timing? all the details with amendments, plans werech iis the from mp, who were overwhelmingly further remain side, but a lot has changed since then. that is what we will talk about over the next few hours, as we build our way to the start of the debates at noon. let's check in on the breaking news and the risk radar as well.

manus: we have one of the global brokerage houses -- the stock has doubled versus its competitor. ¥17.3come at 17. billion. a year ago was ¥35 billion. you can catch all the coverage from the editors. first overseas profit in seven years, a bigger u.s. exposure -- that is the critical leaning in point for nomura. overseas pretax profit came in at 34.1 billion, versus a loss last year of 19.9 billion. a third quarter profit of 180.4 billion. just a little bit of a mess on the asset management fee, 55.1 billion, down from last year. ins a success for nomura terms of delivery for third-quarter numbers. go to top go if you want the

details. let me take it to the chart. it was all going so terribly, terribly well, wasn't it? sell again, interest-rate differentials. the transformation from, perhaps, to the whipping boy. this is dollar-yen, and this is the u.s. election. thdown went the yen. but has that moment come into question? last week, it was the spat with mexico. over the weekend, it was the immigration policy. in the past 24 hours it is the firing of the interim attorney general. and the market has gone risk off. the question the market is asking itself is, is this the start of a great isolationist trade? let's talk about the risk radar. anna, you mentioned it -- the dollar dropping with the yen on the bid. dollar index down. no huge, calamitous reaction,

but more a slow, mellifluous drift. it's down .25%. and again, what you have is a strengthening against most of the developed currencies. money going into gold, and we haven't seen that for a while. 120 gold is up nearly 5% in the month of january so far. the s&p, those of the futures checking in, down .6%. he wants to do something big with dodd-frank -- what might that mean with the banking stocks? the biggest losses in november election is what we saw on the cash market. there's a risk off sentiment across the market. manus, fascinating to see those moves coming through on the u.s. equities. yesterday, in response to what we are seeing from donald trump. let's get the first word news --

lots to catch up on with shery ahn. shery: good morning, thank you. president trump has fired the acting attorney general after she said she wouldn't defend the controversial travel ban. she was ousted hours after saying his directive was inconsistent with the agency's obligation to seek justice.the white house says she betrayed the department of justice for refusing to enforce a legal order designed to protect u.s. citizens. mr. trump stepped up his criticism of financial regulations, pledging to post crisis banking rules at an event with small business leaders. he said "we will be doing a big callingn dodd-frank," the legislation a disaster. the president's comments came as he signed an executive order requiring government agencies revoke two existing regulations for each new one they issue. the bank of japan keeps stimulus unchanged in its inflation forecast.

the central bank is waiting to see the impact of the recent decline in the yen and trump's. policies. the boj will continue to buy bonds at the same pace, leaving two key policy rates unchanged, forecast by all economists surveyed by bloomberg. pay $425bank will million to settle allegations it helped wealthy russians loan billions of dollars. the investigation released trades handled by their moscow office between 2012 and 2014. sources say the bank is also close to a settlement on the same charges in the u.k. global news, 24 hours a day, powered by over 2600 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top . i'm shery ahn. bloomberg. anna, manus? manus: thank you very much. the central banks that takes this week's proceedings off, the

bank of japan announced its first decision since trump. took th took to office. largely unchanged as it waits to see the impact of the recent decline in the yen and president trump's policies. let's get to the bank of japan in tokyo with kathleen hays, standing by. great to see you this morning. the bank of japan is still miles away from its inflation target, so i suppose the question islary didn't to do more? well, because it is doing so much already, manus, and waiting for the impact of everything as done over the last couple years to bear fruit. in a very small way, it is bearing a little bit of fruit. the bank of japan did nudge up , anddp forecast to 1.3% this was widely expected. today we saw industrial production slowing, retail sales weaker, but there is still a hope that the weak yen will

boost exports, helping corporate profits and maybe feedthrough to higher wages. that's where the week parts of the bank of japan paradigm is trying to get its inflation to move higher. inflation is an optimistic target, already in place at 1.5%. no one expects it to change. that is where the bank of japan's fingers are crossed. the short-term rate is at -0.5%, the 10 year yield tethered at signal that there will be any change made yet on yield curve control. to ake earlier today former bank of japan policy board member. she thinks a sooner or later the bank of japan will have to decide if the target ¥80 trillion or 0% on the 10 year. she also thinks that some point they have to it knowledge that the prime minister has to step up and get more done to boost the economy and inflation.

anna: kathleen, anna here. good to see you. what are we expecting to hear from a press conference later in the boj governor? i read quite a lot recently about the extent to which the boj is banking on a stronger economy, and how much they are hoping that donald trump going to deliver on the fiscal side, for example. howut isn't it interesting just a few weeks ago it was a very optimistic view of the w the world had, feeding through to a strong will global economy? now, of course, it seems to be that risk is on again and the yen is strengthening because people are so concerned about the reverberations of donald trump's immigration control policies, firing the acting attorney general, and more. any questions he gets from reporters gathered here inside the bank of japan about donald trump and the latest on what it

means for the japanese economy and the bank of japan, that should make headlines. also, anything he says on exchange rates in general. the yen went past 1.20. i spoke to the chief currency strategist in japan for bank of america merrill lynch. he is looking for the end to over shoot again, but this is one of the things the bank of japan is counting on. says on exchange rates in general. the yenthe yen has turned in thr direction. what will governor kuroda say about that? anything he would say about yield curve control -- you have to be careful about hinting at a change, because so many bond traders around the world would react quickly to that. the bank of japan doesn't want to rock the boat. they want their policies to have time to bear fruit. they will wait and see what happens. i think that is what we will here today. but corona could make some ways. maybe not as many as donald trump's. anna: yeah. it's all relative, isn't it? thank you.

we will see how happy they are with the yield targeting plan, and that it is being tested in the markets. kathleen hays in tokyo, thank you. we will keep the conversation around the boj. we are talking to mr. yen, his informal title. he's the former vice finance minister, the professor of -- 8:15 u.k.oining us at time. mr. yenet's see what has got to say on what he calls the strengthening of the yen, given the political risk -- that -- juliette saly is standing by in asia -- we have a risk of sentiment. good morning. juliette: we do. as you were saying, that strong yen, strong gold, u.s. futures are being sold off and we are

seeing asian equities under quite a lot of pressure today. week.will be closed all you can see the weakness coming through from the asian markets, in japan is really leading the losses today.it is closed down by 1.7% , the lowest close for japanese stocks in about a week. also a fair bit of corporate news, falling the most in six years after it flag day profit downgrade. australia also being sold off, down by .8%, mainly due to weakness coming through in the energy players. if you have a look at the yen, it certainly has a spike against the dollar when we heard that president trump had fired the acting attorney general, quite strongly against the dollar. much, thank you very rounding out the markets from hong kong. our top story -- president trump

has fired the acting attorney general after she wouldn't defend his controversial travel ban. hoursaides was ousted after saying that the directive was inconsistent with the agency's obligation to seek justice. it was an executive order, and it has been met with protests and criticism from wall street and from the compounds. let's bring in the macro strategist over at bnp paribas. thank you for joining us. if we look at the past seven days, an elevated spat with mexico, a travel ban on seven mainly muslim nations, firing the interim attorney general -- one has got to ask the question, are we moving? are we beginning to understand? is this an anti-globalization presidentitting in the white house? has tempered a little bit on the travel ban, and here we are firing the attorney general overnight. what do you make of the volatility this president is

infecting? >> good question. the way we look at things in thinking about the economic and locations of these policies -- mexico's economic applications, not just for mexico but also the u.s. this is something that has been in the spotlight for some time, all throughout his campaign you saw mexican equities and the mexican peso really respond to the polls. there is already a lot of testament. then we have to think about the more recent relevance of the immigration policy and what happened overnight. there, the economic implications are more limited. the countries where there is the ban in place, they don't have strong economic ties. what we are looking forward going forward, to things. -- two things. one is more reticence toward china, and tax policy. is good have huge implications, both positive and negative. anna: michael, anna here.

i know you believe that the dollar is going to get stronger. is there anything he could say, then, around china, is there any level of diplomatic falling out that could result in you questioning that strong dollar trade? it must be based around a continuation, to some extent, of havelobal tradeflows that benefited the u.s. consumer in recent years. >> very good question, anna. are trying to look at this, there's a lot of uncertainty around exactly what trump has planned. mexico is a little bit of a litmus test between the way it is going about his negotiations. with china things are slightly different. they are not in a free trade agreement, so that is likely to make the negotiations more difficult. in terms of that view of the long dollar, we still have a lot

of focus on the european economy. the fed said this week -- they are likely to say everything is on track, inflation is rising, the unemployment rate is declining. this is all very conducive for a fed rate hike. it means even if you get more tensions globally, the fed will probably still have to be quite aggressive on rate hikes, and the dollar will continue to be one of the best-performing currencies. manus: let's try to further. the stage is set for a robust u.s. i have a job for you. this is soft data versus hard data in the united states. you have confidence rising quite aggressively. the survey measures confidence forecasts over the past month. the hard data isn't exactly catching on. retail sales factory production,, it simply isn't there. forecasts over the past month. thewhen you look at the domestic story in the u.s., do you want to be more exposed to u.s.

equity story? do you still believe wholeheartedly in the equity story and the trump trade versus paring it back, taking it off, because he could get some anti-china, anti-japan rhetoric sneaking in? or is it all about the domestic story? >> with domestic story, if you are a consumer, is reasonably strong. all of trump's policies indicate that wages are likely to increase going forward. i think it makes a lot of sense that you are seeing the soft increases. where there is more uncertainty is if you are corporate. on the negative side, you have trump's uncertain rhetoric and moving around a lot with policy agenda. on the plus side, you have what he is suggesting for taxes, especially allowing corporates to bring home, repatriate their foreign profits and invest in the u.s. that could potentially be extremely bullish. manus: the kind of member i am hearing is $200 billion in terms of repatriation. does that fit with your model?

>> yes, that makes a lot of sense. manus: ok. you stay with us. here is your day ahead. let's get you set up. 6:30 u.k. time, the bank of japan governor, haruhiko kuroda, will hold his press conference. we are on the ground pending the rate decision. we will get the gdp inflation figures from france and the eurozone. here in the u.k., the house of commons begins its two days of initial debate on the government's draft law, giving prime minister theresa may the authority she needs to trigger brexit. we also get earnings out today. apple, exxon mobil, h&m, and pfizer. busy day. anna: and not surprisingly, we will cover a lot of that on the program. coming up, the boj. we had to japan after the central bank holds firm on stimulus and the yen continues

to rise amid trump concerns. u.k. lawmakers begin two days of debate ahead of a parliamentary vote tomorrow. i am live in westminster, taking stock of trump as thedebate ahey president as he stands firm on his travel ban. we consider how it is going down in the middle east. this is bloomberg. ♪

gone 3:22 in tokyo. a beautiful day at the emperor's palace. it's not such a beautiful mood, the yen rising, risk off as donald gone 3:22 in tokyo. trump fires his interim attorney general. the yen the other major story of the day. dollar-yen on the move, gaining. the political fallout from trump's immigration policy is outweighing the bank of japan's decision to keep stimulus

unchanged. dollar-yen on thethe bank of jan forecast largely untouched. professor ofw is a management and information at the university of shizuoka. great to have you with us. always great to get your opinion. here we are, another day, the bank of japan stands firm. no shock. but corona has had a real -- but corona has had kuroda has had l boost from the yen. but you would say it's not the bank of japan we should focus on, its the actions of corporate and individuals, and that worries you. >> yes, very much so. there's so much that the government and boj could do, but it has not really been saturated by the corporate and individuals, and there is little they can do. it has been exactly one year since the boj introduced in interest rate. in the beginning, the housing loans doubled. but after mr. trump became the

president, the rates in japanese housing has risen. you look at the january figures, it's back to where it was. if you look at savings, savings -- deposits in japan, in december, it's a record high level. is corporates and individuals are basically regressing back into conservatism because of course there is an ambiguity in the external factors, but they really aren't taking the risks they should be taking. become that really has the biggest problem of what we are facing right now. anna inijiro, it's london, good to see you. you say that companies aren't individual -- companies and individuals going back to conservatism. how can they get more foreign workers into japan to boost the population? is that anything like a small success story for abe? >> let me just say, better late than never, but it is always too

small and too late. and of course we really need to boost this. you look at the effective job offer to applicant ratio, it's at a 25 year high. if you look at the demographics, it's very clear what the problem is. the second set of targets -- it's all toward structural, transitional problems. unfortunately, these things have to be propelled, but we are moving very slowly. this is partly due -- the first part of the conversation we had, this risk avoidance, excessive risk avoidance nature by japanese corporates and individuals is really hindering the future potentials, i think, for the japanese economy. manus: seijiro, if we look at the bank of japan in isolation, what is the risk that the bank of japan is going to be forced to do more vicariously because

of this shift in the yield curve in the united states of america? do you think they will be forced to do more? strongest, bute miles away from 2%. >> actually, i think it's very, very clear that their target of 2% -- nobody really believes it, considering it such a drastic of the-- but the fact matter is that i think the boj really has -- they really are running out of hands. i think the market might be asking for these minute areas, but as you reported, there's a lot of sensitivity among forces, which might i the boj to do things they don't want to do, which is abide by the market. certainly that is regressing, and i think that's unhealthy. anna: seijiro, thank you very much for joining us. good to get your thoughts from tokyo. a professor of management

information at the university of shizuoka. we will talk more about the u.k. when we come back. we are live in westminster. u.k. lawmakers will be talking about brexit. this is bloomberg. ♪

manus: a shot of hong kong harbor. 6:30 a.m. in london, 7:30 a.m. in paris. let's bring you breaking news. the french economy gdp, for the fourth quarter, grew by .4%, bang in line with estimates, but double what we saw in third quarter. france doing their bit for the great european recovery story, as some would suggest. .4% for theeurope, french economy, 1.1% on an annualized basis. that still lags germany and spain, but they are stoking the debate.

you see this inflation debate in germany -- this is going to stoke the inflation debate at the european central bank. will they stay fully committed to quantitative easing? that is certainly going to be good news for the french. household spending and corporate investment spurred fourth quarter expansion. domestic demand contributed .6% of the growth. trade,, .1%. this is where you want to be for daybreak, we have the main stories making this morning's edition front cover. the president of the notice states of america, a play on his popular tv series, you are fired. trump's decision, to fire america's top law officer after she refused to defend his executive order on immigration. anna? anna: yeah.

the next story that daybreak focuses on his around the banking sector, in particular deutsche bank's deal with new york state, requiring the german lenders to pay a $425 million penalty to resolve charges that it helped will be russians launder billions of dollars. some of these cases do take -- that story could be moving on. manus: finally, we look at h&m's margins and inventories, which will be the focus of their fourth-quarter earnings. they are out a little bit later on today. let's get into markets. nejra cehic is standing by. dollar-yen on the move, equities on the move, china is on vacation -- how is it playing out since we have kicked off the daybreak show? nejra: well, you say things are on the move, and they certainly are, and the move is away from risk. there are even more concerns over the latest decisions by president donald trump, firing his u.s. acting attorney general, deregulating the travel bans that we saw yesterday.

let me show you the cross asset picture on gmm. singapore, ftse down. south korea down, reopening after the holiday. nikkei down 1.7%. in the fx space, a weaker dollar. the bloomberg dollar index posting a second day of losses. you mentioned dollar-yen, it has just dropped -- now it's up. also after the bank of japan left policy unchanged. then if we take a look at what's happening in the fixed income space, the 10 year treasury yield is down from three basis points, and we are seeing yields tick lower. australia lower. gold has dropped off the board, but it is up for a third day 0 per ounce as money moves into safe haven assets. moving over to asian stocks, the msci -- it's falling the most in

six weeks, tracking those losses in the u.s. and pretty much every industry group is posting declines on the msci. , i talked wtrs about dollar weakness, and you can see most of the major currencies gaining against the greenback. the yen is out in front, sterling higher as well, ahead of the house of commons debate, that bill on brexit. then you can see the aussie dollar ready much unchanged. the euro unchanged, but overall it is a weaker dollar story. looking at u.s. stocks, because this is a question as well of u.s. assets becoming less attractive to investors -- yesterday we saw u.s. stocks post their biggest loss since the u.s. election. the vix jumped the most since november, after we had been talking about low volatility. looking ahead to the market open, you can see the purple line that i have added, the s&p 500 futures declining as well.

manus? --us: nejra, anna anna: i will pick up, thank you very much. let's get to talk about oil, shall we? nejra has run us through various market elements, the let's talk about oil. it is set for its third monthly decline since october. bloomberg markets yousef gamal el-din and joins us with a chart of the hour. yousef? yousef: i am thrilled you are fighting over me. we are seeing downward pressure on crude and u.s. pressures on track for a 2.4% decline in the month of january. we have spoken many times before about how the rebound in oil prices is going to be constructed for the u.s. shale industry, and it's the oil focus.ion that is in the key here is 5606. i've focus. added current u.s. oil production in white.

day. million barrels per the eia forecast is for 9 million barrels per day by the end of 2017. it gets interesting with comments from the chairman of the natural resources board. they are saying you're both wrong. you'll see 9.5 million barrels per day by the end of the year. that's off the back of that rebound in oil prices. we are also watching out for american inventories, eia data still sticking to the highest level in three decades. the bloomberg survey we have done is forecasting a 3 million barrels bill last week. this is in contrast to what the money managers are feeling in terms of where this is all going, because they are no the most optimistic that they have been in a decade, according to cftc data up to january 12 for. goldman sachs sees it at $60 per barrel. plenty of interesting indicators to drive trading today. manus: they get very much.

-- thank you very much. we had the beginning of kuroda's news conference with the bank of japan, and he is telling the market that japan's cpi is at about 0%. growth is to exceed potential until 2018. he'll continue easing until cpi sees 2%. he says nobody believes this 2% target at all, u.s. yields and stocks have risen on hope for new policies in regarded donald trump. he will adjust the policy is necessary. dollar has yen is virtually unchanged. the yen has strengthened over the past two days, we will of course be speaking to mr. yen a little later on in the program, with kathleen hays, in terms of his view. a former japanese finance minister.

u.s. stocks have risen on hope of new policies. details of u.s. economic policy are not clear yet. corrode it closely monitor the u.s. economic policy. -- can go to tea liv they are all giving their opinions in terms of where we go next and there are a couple great articles about this morning's bank of japan statement. let's return to the u.k. anna edwards is down there. article 50 day, the beginning of the great debate. you will be cold for two days. how chilly is a going to be in the chamber of westminster behind you? what's the agenda? setting up for us. -- set it up for us. anna: a complex process, to simplify things down. this is the conversation around article 50 bill, formally the eu notification of withdrawal bill. the supreme court said theresa

may can't adjust trigger brexit by herself. she needs the ok from parliament . the government came forward with a bill that was 137 words long. if you keep it a civil as possible, attract is little debate, they can't get this through parliament as quickly as they can to meet the self-imposed deadline. "the times" in london is suggesting they want to do it as early as march 9. a to be said about the timetable and that is what we will learn over the next couple days. to what extent will the more how muchparties -- will they let this bill go through, because they want to respect the will of the people, and how much will they want to attach amendments to it, perhaps tie the prime minister's hands in how much flex ability and freedom she has to negotiate the kind of brexit she wants versus the brexit they want. it will all be about timing, and here are the details around brexit. manus: let's talk about voting. opposition, may

well table the amendment. how many mps -- do we have a sense of how many mps will back the bill, and how many walk away? some in opposition of already resigned over this. anna: absolutely. the labour party was given a really strong message that if they are on the front bench of the labour party, the shadow cabinet, they really need to let the bill go through. they don't want -- jeremy corbyn doesn't want his shadow ministers to stand in the way of this, seems to. be blocking the will of the people theresa may had the majority in the house of commons, but not in the house of lords. things could get more complicated next week when we get to that, in the weeks ahead. theresa may's majority, 16 is a working majority. then we had the labour party, and they have said formally, although there will be rebellion from the bench, that they want to back this bill. if the snp that liberal

democrats -- snp said they will bring 50 amendments, lib dems will vote against the bill unless it contains the option of the second referendum on a final, negotiated brexit with the eu. that is not likely to be forthcoming. they will probably not back this bill. but it probably will go through the comments. two days of debate this week. manus: and you will cover it blow-by-blow. let's bring michael sneed back into the conversation from bnp paribas. anna will watch the great debate. i find it interesting. the u.k. has capitulated, gone from screaming for passporting, saying the greatest opportunities for the u.k. lie beyond europe over the next 10 to 15 years. it's amazing, the shift in everybody's thinking about the opportunities of brexit rather than the negatives. >> yeah, definitely the case.

one of the things that plays into that is the tone from europe. whilst theresa may has been giving the markets some optimism, the negotiations will go smoothly and there will be a transition deal, the tone from european leaders continues to be that negotiations will be tough. they need to start looking in terms of the scenario. anna: michael, i was reading something in your notes which i thought was a very brave call. expect brexit to slow in 2017. why so? what is that going to do for the pound? do you think that takes the downward pressure of the u.k. currency? >> a key thing here is that we have a lot of european events over the coming year. the election in france and in germany. it's unlikely that the negotiations are going to make a huge amount of headway until these events of past. this will probably create a

vacuum in which there will be no news flow, and no news can be good news, but typically against a backdrop where the market is holding very large short sterling positions. manus: if we look at another line you have in your notes, you talk about the bank of england. not event simply has countined the possibility of the bank of england shifting gears after nearly 18 months. you suggest that this is actually a risk. quantify that risk for me. put a time frame around it. what could cause that about turn? >> this is an interesting thing that people haven't been paying attention to. the u.k. economy has been doing pretty well, and if it wasn't uncertainty, the bank of england would probably have to raise rates at a similar pace if not faster, than the feds,. to quantify it from a pure economic sense, it looks at the

gauge of unemployment rate. that says that positive rates should be a 3.5%. by no means am i saying that's were policy rates should go to, but it gives you some idea of the position of the u.k. economy. a very nice trade we like to play -- anna: michael -- >> anna? anna: yeah, so what does it take for the bank of -- tell us about the fixed income. what does it take for the bank of england to move away from their start into a tightening start that you described? >> i think the key thing is what the market is currently pricing versus the balance of risk we expect. our base case, the bank of england will be raising rates. of the market is pricing in hardly anything over the next two years. if theves us a chance, bank of england starts to say it will not tolerate continuous rise of inflation, weakness of

the pound, other inflation affects. that does give a chance for the rate markets to refine. -- refire. you play both situations, if the uk's situation improve, the bank of and one needs to raise rates. manus: and that is all we have. you potentially -- >> you can see it's deepens over the last three or four months, but compared to where it was in early 2015, it's still fairly flat. manus: potentially -- so that straigh's trade a. trade b? >> this will also do well as they negotiate and more has to be priced in. 10-year gilt will selloff and the yield curve will steepen. anna: michael, thank you very

much. michael sneyd stays with us on "bloomberg daybreak." plenty more analysis on the u.k. story from here. michael, thank you. eyes on europe with a raft of elections coming up. we consider the risk for european equities. taking stock of trump. as the president stands firm on his travel ban, we consider how it's going down in the middle east. the big week for central banks. the boj holds firm that the bank of england in the fed are yet to come. lots more to talk about. this is bloomberg. ♪

manus: it's just gone 6:49 a.m. in london, 1:49 a.m. in new york. let's take you to some news. s&p futures are down by .3%, the markets are decidedly in a risk off sentiment, money going into dollar-yen and gold.

this is in relation to deutsche bank, a regulator in the united kingdom fines deutsche bank a total of 163 million pounds in regards to money laundering. deutsche bank has decided to finish and agreed to an early settlement. 163 million pounds for money laundering control failing. they say they found efficiencies and deutsche bank's aml control framework. that deutsche bank performed in adequate due diligence. this is an early settlement by deutsche bank, and of course we are waiting to see a little bit more on the litigation side from deutsche bank. that's certainly another one off the books for john cryan. let's see how the stock reacts to that. i think the bigger issue for banks is donald trump's latest that to the world, saying

he will do something huge to dodd-frank. deutsche bank settles early. 163 million pounds. let's get to juliette saly. juliette: manus, thank you. nomura's third-quarter profit doubled after an earnings revival abroad made up for a drop in brokerage commissions. japan's largest brokerage says net income climbed to $620 million in the last three months of 2016. the firm is on course to post its third annual profit abroad in seven years after eliminating 900 jobs. pharmaceuticals plunged in new york after a court ruling invalidated a patent on its top-selling multiple sclerosis drug. the ruling could open the door to generic competition for a drug that accounts for almost 20% of sales. generic drugmakers had argued that the patent never should have been issued. teva says it will appeal.

unicredit estimated 11.8 billion euro net loss in 2016 after setting aside more money for bad loans and nonfarm charges. italy's biggest bank estimates its ratio was below the requirements. this is the fourth quarter to come of bad loans. it will release results on february 9. that's your bloomberg business flash. manus: thank you very much. let's talk a little bit about banks and european risk. michael sneyd still with us. we just had another small piece theater when it comes to deutsche bank. unicredit -- had theater when t banks are front and center -- the profit update will be disappointing. $13 billion for your loss,

higher write-downs for unicredit. unicreditbanks are still strugh litigation. do the banks pose a subliminal threat under politics? >> is an interesting question. -- it's an interesting question. you think about the banks' role and the european economy, it's very large. different from the u.s. one of the problems is holding back not just the banks but the whole european economy is nonperforming loans, particularly in italy. this is a and i touched on when i was last here. that is something which is going to be very slow to address. however,hat backdrop, financials have done very well over the last few months. that steepening of yield curves globally really benefits banks. one interesting thing you have seen is, if you look at financial cdf, that has declined over the last few months whilst

the spreads in europe have widened. its a big and between the risk prices in the financial sector and the government sector. manus: let's talk about the curves. what i have for you is a series of curves -- italy in white, france in blue. to being coming back an issue. spain is where you want to focus your mind in terms of positioning and in terms of trade -- why? what is the trade and why? >> at b.n.p. paribas, we are being short on spanish bonds. we are looking for 10 year government bond yields to rise. it's similar to the story we have in the u.k., spanish 10 year yields should go up in either your best case are worst-case scenario. which means when you have an environment like we have at the moment, where there's a lot of uncertainty, the distribution of outcomes broad, trades like this

are what you want to focus on. do you think the risk premium around european politics -- is there too much of that in equity markets in europe? vary by market? we spoke to goldman sachs in asia, and they were saying that some investors in the asian region were may be overestimating the political risk. >> it's really interesting. i focus on the cross assets, and when you look across different asset classes, a matter of risk premium is priced into europe. when you look at cash equities, they have done well mainly as a function of the loose financial conditions. where there's a lot of risk premium is bond markets, particularly over the dutch and french elections over the coming months. if you contrast that to the fx market, there has been very little risk priced in. the best way to assess this is looking at the bond market -- it

has a very flat curve, which is really a reflection that there's not enough risk premium. manus: why is that so repressed? why is that so heavily repressed in the fx market? on a daily basis we are seeing bigger daily moves. >> it's more -- the moves have been very small in fx. people are really willing to pay the premium. manus: best hedge he would put in terms of looking at the global risk? what you think is the best hedge out of your bag? >> we are still expecting inflation to rise, particularly when you look at trump's policies. it was interesting over the weekend, he gave an interview about his policies creating high costs for households. he says that will be the case, but it's going to create more jobs in america. yields.n trades, high manus: michael, thanks for being

here. michael sneyd from bnp paribas. a line for deutsche bank, cooperating with other regulators. more on that story. this is bloomberg. ♪

♪ >> trump firing the attorney general after she refuses to uphold the executive order. the bank of japan keeps stimulus unchanged as policymakers wait to assess the impact of the end slide and trumps next move. deutsche bank sued over money monitoring -- laundering. you can lawmakers begin a debate on the terms of brexit. ♪

anna: welcome, i am live in westminster. manus: county down to the article 50 debate. a warm welcome to the show. breaking news an hour, this time of the retail sign. of fourth quarter net income 5.9 billion. slightly bigger of 5.46. the margin of what they make, 50% about what the market was looking for. setting new growth targets. they will increase sales by 10-15%. this is an local terms hurt year. a plane to open 430 new stores. 430 newn to open stores. who said it retail was dead?

they will continue to roll out at -- into six new markets. more breaking news from nintendo. this time they are cutting their -- 20ing outlook for billion yen, down from ¥30 billion. batteringt somebody out of the park, ¥70 billion in terms of their quarterly earnings. into no on the technology side cutting their outlook for the 20 billion, that is what they are telling the market today. how does all this translate into a market? the actions of the president of the united states of america has wrestled the equity market.

is the united states channeling is really -- suspended isolation by the president, are we overreacting? london down by .9%. harris off by 1.1%. gdp numbers better in france. 0.4% growth. market looking for 0.2%. moves on the days trade. let's move it into the risk radar because you are seeing a move across the world. ,t was going terribly well [inaudible] -- dollar-yen, down. flat on the dollar been index. still some $1200 is on the line of its best months.

gold is coming back from the height of the day. as in the futures down .6%. first word news, lots to catch up on what donald trump has been doing. president trump has fired the acting attorney general after she said she would not defend his controversial travel ban. hours after she said he was inconsistent to with the agency's opposition -- obligation to seek justice. refusing to enforce a legal order. president trump stepping up his criticism of financial regulations, pledging to overhaul postcrisis banking rules. be doinge are going to a big number on dodd-frank. pulling the legislation a disaster.

the comments came up as he signed an executive order requiring government agencies to revoke to existing regulations for each new one of the issue. he said he will announce his decision at 8:00 p.m. washington time. japan left stimulus unchanged. the central bank is waiting to the recentact in decline in again and donald trumps will see. the doj will buy bonds at the same pace while using to policy rates unchanged. recent race government will call on british lawmakers to trust the people who voted for brexit. initiating the uk's formal archer from the eu. today we have the comments getting two days. initial dates -- debates will be held tomorrow.

global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. you can find more bloomberg on of the bloomberg at top . a look at asian markets, we really are seeing the firing of her -- of the attorney general. normally we would check in china but we have many markets closed across asia for the lunar new year holiday. we've seen the nikkei down 1.7%. the lowest close in a week. we saw the yen on the slot to say kevin as he saw the firing of sally yates. also following the doj decision. governor saying protectionism could slow the global economy but he does not expect it to say. energy players coming under significant pressure there.

widespread selling across the region. investors really feeling out as we see more caution until we get more clarity from the trump administration. it is but a good anyway for stocks. the yen up .1%. 113.65 manus: more breaking news. worthn testing assets $3.8 billion. --se of cover approximately royal dutch shell for the development process continues with some of the oil majors. another company we are watching his deutsche bank. the bank has reached a wondered 60 million pound settlement with the u.k. regulators helping what

the russians launcher money. a day after they struck a similar deal with the new york department of financial services to q1 or $25 million. this is clearly the debt and getting litigation done and dusted. we have matt miller standing by. give us the details. another moment of reconciliation with the sca. matt: deutsche bank getting illegal worries out of the bank. onl-year earnings as well thursday in frankfurt. is the biggest fine it has ever handed out. for money laundering. deutsche bank also settled with the u.s. regulators yesterday to the tune of $425 million. this is a $163 million -- pound fine. deutsche bank putting away or paying out a cool $629 million to get rid of these money

laundering worries from the regulatory side. they still could face a criminal probe in the united states. this is all going to be member trading scheme that deutsche bank allegedly used to get money out of russia, tens of billions of dollars out of that country from 2011-2014. it kind of clears the way. clear outn trying to these illegal worries, it has been one of his main goals with his strategy to provide deutsche bank. the shares are up 8% year to date. there up 15% over the last 12 months. it will be interesting to watch the share today. how they react. down day for markets, futures are indicating a down day. it will be interesting to see of deutsche bank can go against that trend. manus: thanks very much.

let's carry on with the trump seen. executive order banning citizens from seven muslim agents -- nations. the response from the middle east, tracy is in abu dhabi. the response is beginning to show itself in the iraqi parliament. yesterday they passed a motion -- tracy: setting a reciprocal ban on u.s. citizens using visas to get into the country. that is a nonbinding measure but it is indicative of the sort of second order effects that we may begin to see unfurled around the world. don't forget there are many big oil majors with a big presence in the iraqi market including companies like exxon mobil.

they have u.s. workers that are going in and out of the country on and on off basis regularly. begin to comehis back and hit the united states. it is a nonbinding measure so we will see what the government actually does in response to that recommendation. what kind of financial impacts are expecting to see? that is the big question. i know you and manus were just talking about the global risk off sentiment that seems to be in the market today. interestingly we have not seen much of an impact on gold markets themselves. that is probably because the most liquid and accurately -- the traded market are not in countries directly affected by the ban. saudi arabia did not even moved yesterday, it was completely static. things could begin to change if we see this executive order

begin to evolve. on that note i have to mention we have a trump eight at yesterday telling bloomberg tv that the country's involved are not finalized and a country like saudi arabia could be under consideration. i don't need to tell you that if saudi arabia were to be included in this man of that would probably have an impact on its markets. certainly on local political ones that have been in place for many many years. thank you very much. very well put. thanks for coming in. i am on top life go. you deal with money on a daily basis, dollar-yen is recovering. the markets seem to take these shakedowns, elizabeth of a

and then recover. he has not done anything about tax, china, or japan. those are the cornerstones of risk to markets. guest: protection is over owns. there is complacency in the markets. i think the market is also confused. the low predictability of the show inr running the the united states is a source for concern. not a disaster at this stage. i think we have a roadmap as we said earlier. roadmap, we know what the president has been saying during his campaign. we should not be too surprised about what he is going to implement. ishink clearly the risk underappreciated and we should be relatively -- we should not

be surprised if there is a pickup in volatility. anna: a pickup in volatility. good morning. when you measure in such key -- uncertainty and the protectionist impulse, the promise of his skull expansion, where do you, down? will this be positive or negative? guy: the market will realize we're not deviating too much what he has been saying during the campaign. crops now that they are actually hitting the news, the market is willing to put some level of risk on what could come next. because of low productivity of character. , for thewilling speaking rentals will prevail. -- fundamentals will prevail. as long as there is understanding on the future implication and a low level of surprise going forward.

manus: warren buffett was on charlie rose on friday night saying that he would expand or has aggressively expanded his purchases in the united states of america. he would not quantify. do you still believe in the great reflation trade. do you still want to take more risk in the united states relative to your country peers? investment,se an you want to focus on what could go right rather than spending too much time on what could go wrong. if you put forward what could go right, whether the policies that should be implemented going forward, the u.s. has a bright future ahead of itself. i think the market has as well alluse it is not pricing in of these policies will deliver.

now perhaps because of the complacency in the market, the market is willing to perhaps been if it and spend more time on what could go wrong. at the end of the day i remain positive and i think the u.s. will come back to what it is good at, which is a liberal market. anna: looking at the bright side, what does that mean for the u.s. dollar? do you think the u.s. dollar goes higher under donald trump? fundamentals, the fact that global growth is accelerating. the u.s. economy is powering ahead. i think there is generally some support for a higher dollar.

it is also going to be supported by the fed actions. interest rates going forward. obviously the fed is going to look at the policies being implemented and what it means for the economy and inflation. at the end of the day i believe ahead andion is going will probably be supported by financers. the risk is we get overexcited macroeconomics and underestimate the pace of , thatst rate increases would put some sort of a rain on the dollar. we have the federal reserve on wednesday, there seems to be a census the tim cook -- the bank of japan stood still. japan stood still. an update wednesday and the bank of england upgrade.

guy: the elements here is that over the last five years we went through a deflationary concern that most markets work looking for potential might interest rates. now we are starting to see some sort of an inflection point where we move in the direction of travel for inflation expectation. increases in interest rates. that is why a think they are behind the curve and we should expect the policies being pushed forward. we should expect 3-4 rate hikes this year and maybe 4-5 next year. manus: the consequences of that on the u.s. treasury curve, that but by the end of this year it depends on how the dollar reacts and how the fed

reacts. manus: there you go. is your business flash. we have juliette. take it away. juliette: thank you. pay 425 bank will million dollars to settle allegations by new york regulators that it helped wealthy russians laundered billions of dollars. the investigation relates to allegations that employees used trading scheme to help them of move $10 billion out of the country from 2011-2014. the u.k. financial conduct bank 163 find the million pounds over the laundering failures. fourth-quarter profit also doubled, and earnings revival saysd, japan's brokerage that incomes climbed to $620 million of the last three months of 2016.

pharmaceuticals plunging in new york after a court ruling invalidated -- its top-selling middle school her sister. drugs thatition for count to 20% of sales. that thes had argued patent never should have been issued. it said it will appeal. unicredit estimated and 11.8 billion euro net loss in 2016 after setting aside more money for bad loans and one-time charges related to the turnaround plan. says it'sggest plan ratio was below the requirements because it lost charges to cover bad loans. final results on february 9. that is your bloomberg business flash. thank you very much.

the bank of japan kept the stimulus unchanged and that is the way to see the impact of the decline in again and the policy from donald trump's administration. a busy week for central banks, going to be a busy week at the here from jupiter asset management process. continue one before we go to the bank of japan. i have come from a presentation where they said in the absence of real clarity from donald trump, they want to put more money into private equity. it want to take money out of bonds. they want to check the allocations. you would say to move toward to defendant areas -- two different areas. guy: we are in a relatively low interest rate environment. private equity makes a lot of sense. extrapolatee can

the news of the last two days cap hope that the president of the united states is not going to continue to far in that article or direction and focus on the program policies he wants to elements. i think some good things will, for the u.s. equity markets but also global market simply because it will trickle down to the last -- the rest of the world. high interest rates will be good for cheap actors today like financials that are still very low multiples. i think if we focus on cyclicals, financials in general, if you believe in a reflation trade. we are shifting away from the deflation to inflationary pressures. these are the type of sectors you want to be focused on. do you invest three much in domestic growth in the united states? comedies that do well if

domestic growth is driven higher rather than those global names that are exposed to globalization threats? tax cuts will definitely be very supportive but also income u.s. would also be very beneficial. it was create some sort of a mini boom for the u.s. market. they left to be quite careful. it will produce inflation and it will force the fed to be active. you have to be quite careful that if we can stick to some gradual policies being implemented, not too much in one go, it would be very supportive for not only market sentiment but consumers and so on. andink that will create produce wealth creation. financials, we will see

operating leverage starts to pick up. code-7 costs for so many years earnings and revenue starting to pick up in different parts of their business. it will be quite beneficial. we had the bank of japan. a lot this week. it was so easy. so again, by the dollar. yield differential was there. corroded did not have to do a great deal more. it is difference now. politics are at play. protectionism is potentially in play. does this shift your thinking in japaneseyen and exposure? guy: focus on good things, that is but the markets has been doing. is a currency

refuge. at the end of the day you can understanding that kind of uncertainty out there and you don't want to change any of that. really keeping both ends of the curve relatively low to continue and support this recovery in japan. anna: do you think they can keep going with this policy of spending money -- targeting the yield curve? does it make sense to do those things together? g i suppose it makes sense. to: all means are good create a reflationary environment. as soon as written inflation will start to pick up, this policy will be reviewed. the final issue i want to have a is you

bullish view. we are overpricing european political risk, yesterday saying europe will deliver 8%, deliver is simple. you on europe? that theare saying risk for europe is being overpriced. two sets of important elections coming next year. some of them caught up in some mess. i think that is very bad news for france because i believe he is the best vandidade so far. it could be overpriced but i think he valuations are very low. manus: thank you so much.

make sure you stay tuned.

♪ manus: welcome. your first trade at the cap says in -- wat what are we ching? investors digest the firing of the acting attorney general. it is still well below november highs. we can see, the