francine: the battle for the ban. questions are raised about the limits of presidential power. judges sharply questioned lawyers. brexit bargaining chips. the u.k. prime minister promises on article 50. parliament concludes later today. lendingd second biggest company will pay a higher dividend than expected, after reporting the first gain in annual profit since 2013. this is "bloomberg surveillance." we are expecting breaking news

out of india. -- theanged the policy world bank of india changed its policy stands to neutral. the rupee -- i do not know if you have a chart. the rupee pared some gains as panel held rates steady. they are changing their policy stands to neutral from accommodative. this is a picture that may imply the rupee holding off for a couple of months, in terms of the gains we saw. we will get back to that shortly. first, this is the rest of your market. we are expecting a little bit of fluctuation in terms of some of the currency. european stocks gaining. asian stocks recovered a touch from early losses. this is the picture for the .ndian sensex it was lower as we were waiting for this r.b.i. decision.

european stocks -- rio tinto jumping after posting its first annual profit in three years. we will get on to those earnings with our head of mining and commodities. the vix index a little bit higher, but nothing to write home about yet. the firststraight to word news. here is sebastian salek. lawyers for donald trump's administration have told a san francisco appeals court that the travel ban was within the powers granted by congress and the constitution. the justice department seeking to reverse a lower court ruling that put the executive order on hold. the court said a decision will probably be made this week. australian trade, tourism, and investment minister still wants a transpacific partnership, despite the u.s. dropping its involvement. said plans will be up for discussion at the meeting next month in chile. >> there were a lot of hard-fought gains achieved

through intense negotiations over many years, in relation to the tpp. i do not want -- i know i'm not of other countries do not want games. those that is why i have put a focus on whether we could have, for example, a tpp 12 minus one, given the u.s. does not want to be part of it. seb: melania trump is suing a british newspaper for a defamatory report it retracted. 100 $50 million suit against the publisher of "the daily" accuses the tabloid of harm to her reputation. it ran a story saying her modeling career in the 1990's was a ruse to cover her work as an escort in the sex trade. the u.k. prime minister has kept her plan to trigger brexit on track after a were billion from some conservative party colleagues. theresa may promised a vote on the european union. overcame anration

attempt to give parliament the ability to shape the brexit agreement. the parliament will conclude its debate on article 50 later today. in london may have to relocate 1.8 trillion euros of assets to the continent after britain withdraws from the e.u. according to a brussels-based research group, it could put 30,000 u.k. jobs at risk. the assets are present 17% -- represent 17% of the u.k. banking system. news powered by journalists and analysts in more than 120 countries. this is bloomberg. francine: let's get the latest on global markets. the chief investment officer for global equities and a senior manager at img -- thank you for joining us. when you look at the charts and the markets, they say there is an underlying risk factor, but nothing priced in.

are you overall expecting a correction? >> at the moment, we clearly had a pretty good run in markets. still, we are seeing earnings. while that is happening, there is good fundamental support. if valuations are less attractive than they were -- and that is clearly the case, in fixed income in particular -- i think valuations are, you know, fair. earnings are supportive. but there is not an enormous amount of risk premium there. ,rancine: where do you see james, overall -- i know it is quite difficult to be an economist, because you have had to become a political analyst. there are some he factors in what you do, the consequences of political agreements. i do not know where equities fit in all of this. james: that is right. as a background story, growth is

looking encouraging. but we have such political risk. sent challenges to forecasting not just the u.s. economy, but where the global economy is going. you have brexit in the u.k. there is the raft of elections across europe as well. as you say, it is a politics struggle for economics. are we more or less sophisticated? is it we face a recession worldwide from protectionist trade, or we go a lot higher because of earnings? lucy: at the present time, the correlation is going down, which suggests there is less macro driving the market. some of that is because we are going through the earnings season. you always get that. more depreciation and less correlation. you are definitely seeing that at the moment. we have not had an election in a while. i think we know we have got plenty coming up.

and the negative outcomes are not really priced in. priced in.s it is not as if we do not know they are coming. francine: can we say we may face a global recession if, for example a country labels another country a currency manipulator, and tariffs of 35% go up? lucy: the immediate risk in europe is the concern about the euro. -- the euro if one of these elections goes populist. that is a real fundamental risk. outside of that, protectionism is the biggest concern. we have had a lot of noise. we have not yet seen what exactly is coming down the line. you can look at border tax. you can look at how terrorists impact that.ght until we have facts, we cannot price that. francine: as an economy, the

e.u. is not doing badly at this moment in time. consumption is getting better. there is a little bit of growth. james: that is right. there are some encouraging business surveys, indicators pointing to decent growth, growth moving toward 2% in europe, which is fantastic given the last eight to 10 years. it is very sticky, particularly in france, italy, and greece. we are just not seeing the transition coming through. we see much better news from the likes of the netherlands, from germany. francine: why has it been so difficult to fix unemployment? james: there are structural issues coming through as well, which is making it more difficult. but i think the political risk, the uncertainty we have coming not know thenesses environment they are going to be functioning in, where we could see significant risk of change. that discourages businesses from expansion and hiring workers. francine: do you think 80% of

the bull run is from central banks? or is it growth at companies? interest low environment and qe is the largest part of what we are seeing. but there are real fundamental reasons why tax reform could be beneficial for the corporate sector. policies -- pro growth policies, less regulation, could also help with growth. -- therea 10.3 rating on the chance of that happening that is probably justified, but most of it is the low interest environment. that level everywhere in the world is still going to remain the case, even if they start rising. francine: thank you so much. bloomberg customer, you can watch the show using tv go on your terminal, as well as

the video stream. you can follow our charts. you can also message us ibrectly, using the ivy -- function, with comments, tips, and analysis. let's get straight to the bloomberg business flash. seb: rio tinto says it will pay a much higher dividend than expected and buybacks $500 million in shares. the world's second-biggest mining company reported the first game since 2013 -- gain since 2013. it boosted profits in 2016, eating estimates. the ceo will be joining the team 1:10aybreak america's" at u.k. time. or so growth -- new growth is offsetting costs for diabetes treatment. stablepect shares to be to down as much as 3%. abb, who has walked into global

economic uncertainty, is cutting its outgrowth -- outlook. worth quarter profit came out below estimates. it undershot analyst forecasts. bank says it is turning its focus to southeast asia for growth. the ceo says the move comes after his country's biggest bank africaansion goals for and the middle east three years earlier than planned. have our budgets in singapore, to make it our asian hub. , we have operations encouragement, and we have increased our staff in singapore. seb: that is the bloomberg business flash. francine: think you so much. u.k. lawmakers will vote today on legislation that would allow prime minister theresa may to formally start brexit

negotiations. this happens after three days of debate on the brexit bill. we are joined by nejra cehic. theresa may's party has already forced her to make an important concession. yes, they half. that concession is that u.k. lawmakers will now be allowed to vote, we are told, on the final draft agreement with the e.u., u.k.e it is passed in the parliament for ratification. this came after a number of rebel lawmakers within theresa may's own party were threatening support for opposition amendments. what they wanted was to be able to make changes and then have theresa may go back to the negotiating table. ministerd from brexit david jones late yesterday that would not be the case. arlen would either have to accept the final draft agreement as it is, or reject it altogether, in which case it wto. fall back to the it is an important concession,

but the rebel lawmakers have not yet gotten all they wanted. whatine: take us through will happen today and what will happen if the bill passes at this stage. nejra: so, we are on the third day of debate in the house of commons. and the debates are going to be kicked off again at around 12:45 london time today, after prime minister's questions. more than 250 amendment's were 146 pagerd in a document, for a bill that was just 137 words long. so far, none of those amendments have passed, but the debate will continue, and we expect a boat .round 7:00 p.m. london time we are expecting the bill to pass the house of commons. after that, it moves to the house of lords. if any a minutes are agreed, that could bolster the house of lords to think of their own amendments, which would mean the further delayed.

theresa may is still aiming for the march 31 deadline to trigger article 50. francine: still with us, lucy macdonald from alianza global investors, and james from ing. do you stay out of this at the moment? lucy: there are earnings from sterling at the moment. that is certainly helping. and valuation in some of the more obviously affected areas. i think you can do some trading around valuations. but the thing which we are looking at is corporate sentiment. consumer sentiment is holding up relatively well so far. we are not seeing a big impact corporate sector. for business, there was a big shock, and it seems a bit more mixed. and really looking and seeing whether projects need to be delayed. nursing a bit of that in

staffing. a little delay. some of that in the public sector as well. that, i think we need to watch very closely. -- youe: the ftse chart see the record a couple of weeks ago. the blue line is the ftse price in dollars. this has a lot to do with the pound fall. do you still buy some of these stocks in ftse, or do you buy the index? you view stock markets in dollars. tradek you can -- you through. there are value opportunities , but we have a lot of uncertainty about strategic direction, about what trade will look like. that is going to affect many companies. francine: james, what is your

call on pound? does it go low? james: i think it will do. we are nervous about the upcoming dataflow. ,he jobs data, inflation data retail sales -- we are talking about consumer. francine: it has been strong. james: it has been very strong. but we are starting to see consumer confidence we can. i think that largely affects inflation. inflation could rise 2% next year. we are in negative territory still. there has been a huge swing. thele start to feel it in pocket. petrol prices are up 20%, year on year. francine: if we are getting rid of people -- we do not have the assurance you national skin stay here. you will have a big supply -- the assurance e.u. national could stay here. you will have a supply problem in employment. wage growth could follow. james: you have seen two consecutive months where in plumbing in the u.k. has fallen

-- where unemployment in the u.k. has fallen. if businesses are not confident enough to hire anyone -- we see that drifting lower. a third consecutive fall next week could set more alarms ringing a bell for the underlying health of the u.k. economy. you using dollar denominated because of dollar strength? u.k. -- very strong. some of those very domestic areas look -- francine: you would buy the u.k.? lucy: that is trade, because they are decently valued. globally, where is the value? ,urope, and for reasons we said if some of the politics in europe is priced into stocks you have a better environment for growth. francine: lucy and james, thank

you so much. stay with us. up next, more than 130,000 people tune in for live streaming of proceedings from a u.s. appeals court, the latest battle over trump's travel ban. ♪

francine: this is "bloomberg surveillance." for just over an hour yesterday, appeals court judges in the u.s. sharply questioned lawyers

defending president trump's ban on travel from seven muslim-majority countries. the question is whether states could continue to block an executive order. the lawyer argues the travel ban is within the powers granted by congress and the constitution. we bring in bloomberg's legal editor. still with us, lucy m james. this was quite a dramatic hearing, to say the least. that you doy rare everything audio, where there is no in person hearing. that is because the three emergency judges of the ninth circuit, based in arizona, hawaii, and san francisco, there was no way to fly everyone to a courtroom. i think this is one of the most listened to court hearings in the history of youtube. it was quite dramatic. francine: it was. there were accusations. what are the possible outcomes? tony: they could uphold this day, meaning the government loses and there is no ban on travel. they could reverse the lower court, reinstate the ban.

or there is a third possibility at the hearing. the government lawyer suggested a compromise, where anyone who card, any, a green kind of permit to travel to the u.s., can come in and go freely. it is only people who have never been to the u.s. before cannot come in now. francine: when do we find out the outcome? tony: it could come any time. they said we will try to move as quickly as possible. they did say probably not tuesday. we are past tuesday, so anytime. francine: media reports in the u.s. are saying doctors are not able to come back to the u.s. in your years of reporting, what does it mean for institutions? i kept being told that no matter who becomes u.s. president, the institutions, the separation of power, on the checks and balances. how much will he test institutions? tony: i think you will find a very quick test, because whatever happens in the ninth circuit will go to the supreme court very quickly. as we all know, the supreme

court is down one justice, so the vote could be for-four between the republican justices and the democrat justices, which would uphold the ninth circuit ruling no matter what. that would put an immediate test that would put an immediate test on donald trump saying, i need my ninth justice. i need my justice. why are the democrats delay in me? whatever happens judicially, there will be almost immediate political spillover in the senate over confirmation of the new supreme court justice. francine: lucy and james, the problem is this spills over directly into your world. i imagine one of the reasons tech companies have spoken out so much against the travel ban is their talent gets directly affected, especially for i.t. and services. lucy: indeed. move mosthe companies of i.t. personnel in and out of india. they are really going to find this quite difficult. cognizance which has a relatively large percentage of non-us.

accenture, which is one of our holdings, very few. they have to move in and -- very few they have to move in and out. most of it is local. as an industry, they want to be able to get talent to the u.s., and there is a shortage of talent. not enough software engineers are being produced in the u.s., relative to china, so they need to bring people in. i think it is a big concern. but funnily enough, there is a bigger concern for some indian companies in the u.s. francine: in your world, it means everything he has pledged in the campaign, he has so far delivered on, including thing like this. does it mean we will see a trade war? james: there is a risk. the deficit is rising to the fourth highest -- a four-year high. atre is concern, looking canada, mexico, germany, that he will ratchet up that talk.

if we go down that route, as jack marmor and, if you do not trade, you go to war. that could be a big issue that we keep bottling up. the leader foris our legal team, focusing on trump this week. james stays with us. the world's central banks using dovish messages to deliberately weaken their currencies. the ceo of pimco says the world new olding in a currency war. ♪ .

francine: this is bloomberg surveillance. let's get to the bloomberg business flash. >> india has kept interest rates unchanged for a second straight meeting, the benchmark

repurchase rate was left of a six-year low. as the prospect of more ties to the u.s. federal reserve limits. at the same time, they change their policy stance to neutral from -- trump calledonald a san francisco appeals court ban the president's travel was well within his rights by congress and the constitution, as the justice department seeking to reverse a lower court ruling that put the executive order on hold, the court said a decision will probably be made this week. australia's trade, tourism, and investment minister he still wants a version of the transpacific partnership, despite the u.s. dropping it. up for plants will be discussion at a meeting next month in cjoi -- chile. achievedought gains through intense negotiations over many years in response to our relations to the transpacific worship, i do not

want, to let those gains slip through our fingers, that is why i put a focus on whether or not 12-1, lessave a tpp the united states given they do not want to be part of it. >> donald trump said a british denied him a chance to have a brand and is suing them, the paper website said her modeling career in the 1990's was used to cover her work as an elite escort. the u.k. prime minister has kept her plan to trigger brexit on time. theresa may promised a vote on the final deal with the european union, lawmakers more power to shape the final brexit agreement 293, they will

hold a final vote today. global banks and landed may have to relocate 1.8 trillion euros of assets to the government after britain withdraws from the eu. according to a research greek, that could put as much as 30,000 u.k. jobs at risk. that represents 17% of the u.k. banking system. global news 24 hours a day, powered by more than 2600 journalist and analysts in more than 120 countries. this is bloomberg. francine: the fed and the bank of england are the latest central banks to step into what pimco says our new cold currency wars, the investment management firms claim central bankers are ovish messages to weaken of their currency. someone called the accusation that germany is exporting a weaker euro --

the problem is that -- when you start currency wars, nobody wins , do currencies and countries that manage them realize that? .> it is a challenge we have a mix of politics and economics coming through and it is making it very difficult. , policy down eventually has to be set to the domestic economy, if you look at the u.s., things are looking pretty good, interest rate will be rising in an environment where political risk in europe with brexit and the elections coming up make that very unlikely that we will get any central-bank action. it is a challenge, they may not like it. francine: what does it mean to have to deal with it? if you are mexico, you are powerless, what do you do if you are china? >> you have a geopolitical backdrop also, currency reserves

are we getting, they are trying ,o do something -- weakening they are trying to do something. the geopolitical threat is great with donald trump throwing off be good fory point, the geopolitical backdrop deteriorated is there, especially with talk of a trade war intensifying. francine: what would it look like? what happens if peter navarro continues to label china a currency manipulator? just because they have a surplus, they are cheating america, a lot of economists say the yuan would not necessarily go up if they stop intervening. the issue about fairness and trade and who is benefiting is the big political theme we are seeing right now. if we do see the u.s. continue on and eventually go down the

fs on china, tarif it will be reciprocated and while china exports to -- $450 billion to the u.s. come it exports 120 billion worth of goods to china, it has a negative impact on growth. we should talk about the south china sea, if you start to see countries not talking to each other, pulling apart, if you do not trade, it increases the chances of war and conflict. francine: breaking news from the boe, price pressures will continue to build through how the quite an investment intelligence signal a small do --se in -- this is the giving more detail on the u.k. economy, talking about consumer spending, saying growth from consumer spending is resilient but expected to slow down a little bit. is there a thought that at some

point, you could argue the boe or the u.k. is manipulating currency, what happens to that trade deal between the u.s. and u.k. if we get to that point? >> the risks to growth are well known, inflation squeezing household spending and weakening zoomer spending come uncertainty, businesses do not want to put money to work, where can you get growth? exports, keeping the crazy week supports that story. -- currency weakness supports that story, the bank of england would navigate through that by saying, inflation rose to 5% in 2008 at 2011, we will not get near that, we will look through it, the risk to growth is still there and that allows these monetary policies. francine: where do you see the most pressure in terms of economies growing, the emerging markets, because of dollar

strength? we seeossibly is, if protectionist policies being implemented from the u.s. that is a threat because u.s. is looking very good and if we see through dollar prompts prodding about u.s. companies about keeping jobs in the u.s. and moving them that to the u.s., we see tax incentive for u.s. corporate to bring money home, that suggests less investment overseas and therefore more domestic growth at the expense of potentially emerging markets. francine: thank you. plenty coming up, including surging shale with u.s. output set to increase. energy mentortari -- ministers take. later, building the american economy, we speak to a columbia university professor about his

new book at all things donald trump. tune into radio daybreak europe live in london. this is bloomberg. ♪

♪ francine: this is bloomberg "surveillance." let's get to the martin does market check. mark: it reported its first gain in annual profit since 2013, higher required on private -- iron ore profit. last january, the miners felt to a 13 year low, 515% gain,

glencore, 354. quite incredible gains since then. merck shares slumping as much as 7%, most -- the -- they unexpectedly lost money last year, writing down some of its energy assets it is plain to spin off, reports of two annual losses since world war ii, down $2.7 million in its drilling and supply services unit. in the process of separating out its for energy units as it focuses on a transport operation shares down just 4%, to spread between the french and german yield has widened to the highest since 2002. this is the daily spread between the two countries, that is brexit. u.s. election monday. as we approach the french election in april, possible second round in may, the spread has widened more than it did in

these key political events, toestors beginning contemplate the prospect, even if the poll say it will not happen, marine le pen winning the election. greek bonds, the two-year yield, % and a wrangling between the eu and imf continues about the greek bailout, the country has to repay almost 23 billion euros of bond principal by the finish of august, european creditors want imf approval of the review of the bailout before dispersing the next charge with the dutch, french, german elections approaching, mark gilbert, our own columnist says this is the last thing europe needs is another greek crisis, keep an eye on this two-year yield, very important, francine. 10%cine: it is, approaching

. oil falling a third day after industry data showed u.s. crude stockpiles surged, raisings by duration of rising supply from u.s. your producers is offsetting cuts by opec. reaction from the middle east. we have been speaking to the qatari energy minister. what did they say about the prospect of more supply from the u.s.? with him and he was confident, positive, energetic, he shrugged off any suggestion that the inventories were not coming down in the u.s., more oil coming into the market in the united states, he said, give this opec, non-opec plan some time, we are convinced it will work. then we will reevaluate for the future. here is what he had to say in terms of expectation as to win the market might rebalance. quarter willecond

be a good estimate for the rebalance. and we can see that there are going -- if market -- that process will help clearing more and more of the stock. the report from earlier made it clear that there are around $50 a barrel which will give a boost to a readout in the shale industry in the united states. to what the question as happened after the first time of the opec-non-opec deal, what are the conditions and when might we see a rollover. here is what he had to say on that. time, it isome more regarded to be a little premature to judge. the rebalancing

of the market is going to react, and that is why we kept it open to reconsider the role over -- rollover, a rollover is an option. >> he would not be dragged into a conversation about whether opec have set as a civic price range for their target, but keeping the car -- conversation open, the next opec report will be crucial in terms of understanding the level of compliance which he says is very high. francine: the iranian oil minister says they are having a need for more action. have set a they also price target, according to the iranian oil minister, from a news agency, $60 per barrel is what most opec members are comfortable with and they see a need for rollover. the broader agreement, he was

sitting down and meeting with the venezuelan energy minister in tehran, we do not know the details of those meetings. and a lot of meat -- movement around the opec front and non-opec front, we will watch out for that data in the days to come. francine: thank you. up next, as the rio tinto posted its first profit increase since 2013, we will bring you the latest on the world's second-largest mining company and 81% surge in iron ore prices. this is bloomberg. ♪

♪ i am francine lacqua in london, let's get to the bloomberg is this flash. drop,ofi says profit may new growth to offset declines of diabetes treatment, the french -- bober expects -- x iger has said he is willing to stay on as walt disney ceo beyond his current tenure come he is scheduled to retire in june of next year but said he will stick around if it is good for the company, making the comment with investors after the date reported lower sales

earnings in the last quarter. yum china top earnings after missing his first quarter results since october spin off from its u.s. parent, profit exporting some options were $.17 per share, beating estimates of $.10, same-store sales growth at kfc bolstered results while pizza hut performed worse than expected, the results suggest they had a respectful start as an independent company even after headwinds about currency fluctuations. bank more -- deutsche than 50 -- the firm began reductions in -- the managers did not respond to request for comment and the wall street journal has reported that investment banking head is in talks to step down from his post, a deutsche bank spokesperson declined to respond. saudi ramco has hired an analyst thes it pushes ahead with

world biggest share sale. theeported last month boutique investment bank has their presssted -- office did not respond to any mail seeking comment -- an email seeking comment. postede: rio tinto has first profit increase since 2013, underlined profit increased $1 billion. iron prices rallied by it he would present. lets the to our executive editor for energy and commodities and james knightley is still with us. you, stewart,ith especially for a start like this, iron ore up andy commodities index staying put over the last 12 months, what a difference a year makes. >> iron ore prices more than

doubled last year, still a ways from the high. you can save maybe we have inther $50, the consensus the market, probably looking frosty at the top. theoubt stock policy -- government is putting money into infrastructure, maybe not quite as matter -- dramatic. just to be a little bit negative, if you are rio tinto and relied on iron ore for 40%, 50% of your revenue or profit, that has to be a worry. on the say, at least bloomberg commodities index, not a bad result. francine: you are right. talking about dividends, we saw it with other competitors but rio tinto announcing evident expecting dividends, will it put more pressure on rivals to do the same? >> i think so but the dividend is down year on year, sticking to what they said was to align

much closer to profit, higher than expected but lower historically. history, rather, doesn't put pressure coming yes, but that are restarted, rio tinto will not be changed, it is about investors saying we have been through several years of pain, we understand cost-cutting, now it is payback time, do not go to m&a, give us the my back. francine: how do i look at oil, 53, 50 3.9, 54, how much does it have to do with opec cuts and art briles -- stockpiles? >> under $55 per barrel, some work about stock price, u.s. stockpiles are going up and u.s. production will go out and the prediction from the u.s. government is we will hit if your hide next year in terms of production which is extorting area. opece about $50, that is -- think about opec, what they are stopping is the doomsday

, 20 or into the teens which is what we were talking about a year and a half ago. that's what this -- francine: how does it translate into inflation expectations? does this have an impact in the psychology of consumers? i thought low oil prices mean people had more money to spend but did not filter through that much in the last three years? >> it depends where you are coming in the u.k., prices rose 20%, prices elsewhere rising from -- rising modestly. we have growth and job creation and wage is starting to rise, wages rising faster, not too much a distraction to consumer spending. francine: what do we know about show gas in the u.s., executive orders in terms of non-regulation and pipelines, will weeks for production from shell gas -- will weeks per reduction from shell gas?

i think it is the economics, the permian basin, 20 of m&a activity because cost of come barrel,0, $55 per players are looking at real economic players, that will do a great deal more but -- francine: a consensus -- are they so different that we cannot say, shale gas or shale oil producers are viable at $30, $50, $60, because they are different? $50 toule of thumb is $60 but other arguments but not a battle, that captures a big part of it. francine: what donald trump will do next, do we have idea how does it filter into your economic forecast, wait and see? andou look at his tweets what he is ranting about today which sets it in motion, it is

trade, trade policy, that is what we will look for, will the ratchet of the risks for global trade i could be bad news. -- that could be bad news. francine: thank you. cats are interview with the chief executive of rio tinto. with theour interview chief executive of rio tinto. brexit action ahead, prime minister questions and a debate on article 50, the final vote expected at 7:00 p.m. u.k. time, the final two hours of surveillance, tom keene joins me from new york. this is bloomberg. ♪

♪ hard questions come up president trump's travel been legaligh legal trouble --

drama, the san francisco court of appeal is set to rule, pimco says there is a new cold currency war brewing, bundesbank ceo says u.s. acquisitions of germany over the euro are deceptive. theresa may looks to march, she races down the brexit revels in her own party for a final vote on the article 50 bill tonight. , this is bloomberg surveillance, i am a francine lacqua in london with tom keene in new york. take stock of the court of appeals in the u.s., brexit, currency moves, what i'm interested in in the markets is where you see the first site of a real canary in the coal mine. ,om: i like the risk adjustment the rate of change with risk adjustment from this story or that story, quickly, last night, 6:00 p.m., absolutely extraordinary in america, the first time in over 40 years it began to feel a little bit like

watergate. riveting to listen to the audio of the appeals court. francine: one of the most listened to on youtube for that audience. let's get to the bloomberg first word news. taylor: starting the federal appeals court story, a three judge panel may judge this week on the controversial travel been, no matter the ruling, it will most certainly be appealed to the supreme court, the court heard arguments from both sides from seven predominantly muslim countries, here is one of the justice department lawyers. >> i am not sure i am convincing the court so i want to make one really key point with regard to the injunction, that is that it is overbroad and should be immediately stayed to the extended overwrought even if the court fixed some applications of the order are problematic. of the key issue is

-- betsytates have the devos squeaked through history making vote in the u.s. senate to become the new education secretary, mike pence had to cast the deciding vote in the 51-50 decision. mike pence is the first vice president to café tie-breaking vote to confirm a cabinet member. yetman will no longer let the u.s. run special operations ground missions against suspected terrorist groups, according to the new york times, they are angry at civilian casualties caused in the first commander rate approved by president trump. a member of the navy seals was also killed. is looking todent consolidate his power as early this week he is expected to call for a referendum to approve changes in the constitution. concentratewould all executive power in the presidency and give them greater control over appointing judges. global news 24 hours a day, powered by more than 2600 journalist and analysts in more than 120 countries. i am taylor riggs.

this is bloomberg. tom: thank you. bonds,a check, equities, currencies, commodities, a little bit of movement at elevated stocks, you'll curve plans, 120 one is out, 124, a flatter you'll curve over the last number of days, dollar straight come on to the next screen quickly, this is a very eurocentric chart, euroyen is a big deal, under 120, stronger japanese yen, oil dropped, francine can talk about that, euro swissie comes in as well. francine: european stocks higher a minors, rio tinto with special dividend, posting higher profits for the first time in three years, giving a boost to the stocks we are watching. watching indio, the r.b.i. decision, they left interest rates unchanged, that was a little bit of something to the markets because looking at cuts, 112, -- tom: this is a chart i have not

shown in a while, a spread dynamic within europe, a europe, a within comparison within germany of the 10 year yield and two year yield, the two-year yield went chronically negative in september of 2014. down we go in the two-year yield and the tenure has its own life, here is the narrow spread of the summer. here is the improvement in the 10 year, call it a revelation, a trump affect, this rollover is interesting, if you see this german two-year go below its recent low, that would be a big deal, not there yet, francine. francine: something to watch out for. the queen of charge, this beautiful chart, it passed the tom keene metric, this is the spread between french and german 10 years, a one date net change in yields just why you see a little bit of volatility up and change,percent of the

the red circle is brexit and the yellow circle, u.s. election, the french political turmoil when we hear that fillon may drop out, he is hanging on, quite a bit of volatility which we need to watch out for a month this uncertainty, how markets are pricing risk. thank you for joining us. how do wert with you, price and risk, i am looking at yield and tom is looking at spreads, the concern is that equities do not take anything on board at the moment, ever hire or flat, but asked in the market and we need to look at pinpoints to see whether something ugly will happen. >> typical for the kind of risk we experience today, which is political, focusing not only on europe and the u.s., the political risk is there. what will donald trump do, what

will happen in the elections in france and the netherlands? in germany later in the year? these political risks are difficult to evaluate, how do you do that? no path to used to compute whatever measures of risk. ofis uncertainty, in a sense -- the great chicago economist from the last century, extremely difficult to evaluate, to quantify, therefore, i can see sometimes markets are paralyzed, they do not know which direction to move and at other moments, they overshoot and go in one direction or the other. would like to be the one who has to evaluate the risks of the today. francine: do you agree, i would go a step further in asking you about the crisis, the financial crisis, we realize late what was happening and there were bubbling things under the surface, could we be in a

similar situation? >> we could but hindsight is a wonderful thing, none of these risks have crystallized, not the the greekctions yet, deal has not fallen apart but strains and stresses everywhere which appear to be rising and the deadline dates are some were off, the greek do not have to make the payment until july and it is only february, a lot of things bubbling around but taking portfolio positions and making investment decisions when you have free anxiety rather than a crystallized risk is very difficult. you get occasional bursts of volatility and we settled down and wait for the next news. francine: it -- tom: every wednesday, we will do this -- theory wednesday, we will do 1921, if itknight, is that uncertain out there, as frank knight talked about, can you make a legitimate gdp estimate whether it is a euro, england, or the united states?

can you do what you jefferson does? >> great question, when i am seeing investors this week, i say yesterday is bigger than i -- anytime i can remember, even in 2009, just a question then of how terrible it will be, would be huge uncertainty over donald trump policies, porter tax adjustment, which would make a massive difference to the dollar and inflation, small fiscal easing, big fiscal easing, how will that be structure, what impact will it have on growth come how will the fed respond an economy respond to what the fed does or does not do, the list is endless and it generates a very wide range of equally plausible outcomes on a scale of which i cannot remember. it is very difficult, a half points -- tom: help me with chair yellen and mr. draghi, as we look at knightian uncertainty, they have massive balance sheets and do

not know where they are going and because of fright night and all we know, how do they modeled what will happen when those ballot sheets unwind? >> i do not think they have models to learn or teach us anything useful, i said earlier, it is political risk and i do not think we have models that allow us to get a grip on that. we have standard economic models, macroeconomic models that can deal with a number of risks that are easy to quantify but nothing resembling models that incorporate these political risks. they are really walking in the dark. they do not know which direction they will have to go, which is the problem today. francine: is there anything in your reading and research, that gets it better than others? research from central banks, the academic, do we have to look at past cycles? if only a pass like a look

anything like this when it would make it easier but this is unprecedented. -- past cycles look anything like this, it would make it is your but this is unprecedented. -- make it easier but this is unprecedented. in the u.s., where did we ever have an economy of the length limit for the new administration was coming in promising or indicating it wants to the enormous fiscal stimulus, throwing fuel on a fire that is burning quite hot with unemployment below 5%. you look at the pre-election plans from donald trump, the tax policy did an analysis of his number and fiscal easing he proposed in the first year, 1.8 percent of gdp which is roughly what the economy grew at last year, talking about throwing in demand roughly the rate of the whole growth rate from last year, it does not make sense, but it has not happened, just a proposal, until something crystallizes, how do you respond? prudentialeters of

investment management yesterday was brilliant on the idea of -- can you move the needle given the size of the american economy? any next hour, for the entire hour, jeffrey sachs joins us from columbia university, the arch liberal, out with a new book, his mandate, his prescription for an american after president trump. this is bloomberg. ♪

>> this is bloomberg "surveillance." russiang is warning the beer market was frank at least 5% this year, stunting both prospects for the danish brewer,

the russian business generated almost half the operating profit is that in 2009 but those earnings have plunged because of problems in russia with plunging oil prices and western sanctions, and higher taxes on beer. that is your bloomberg business flash. you have more. francine: we are joined by the carlsberg ceo, thank you for joining us. you had earnings today, warning that the russian beer market will shrink by at least 5% this year, do you see any positive news coming from a weakening ruble, a readout in the ruble rather but the fact you may get better relations with the west -- russia may get better relations with the west? decline inipate a 5% russia because of the ban on the big bottles. the 1.5 liter plus, that has momentd -- that is at a

you get only smaller bottles in the market, they will reduce the volume into the market. on the other hand, we think they will need to -- it will lead to slightly higher margins. we need to be realistic, we have been there for many years, we have had some highs and lows, but 2016 was a good year for us in russia total. francine: the russian market you believe will shrink by 5%, how much of an affect will it mean on earnings in russia for carlsberg? >> not so much maybe on earnings because we are replacing these low volume, low margin big models by higher value, slightly higher margin smaller bottles. tom: good morning. >> good morning, how are you? ,om: i survived the super bowl the uproar over the budweiser

commercial, how big of a headache is craft beer for the traditional beer industry, what do you do about every guy starting a beer company? we think that craft is an opportunity, if you see the history of carlsberg, we are a craft beer already for almost 170 years. we have excellent brands, like jacobson that do very, very well, including brooklyn. and we have the portfolio to grow in these markets were craft is desired by the consumers, we are not afraid. tom: you were a unilever guide her brand is king, you go to cross for work brand is king -- carlsberg where brand is king, what do you do any new digital world, the rules have changed in selling the stuff, hasn't it? >> absolutely and we are renewing our people in

copenhagen and in the markets because we need to make sure we have people that understand the new rules of marketing and digital, and the aspect we make quite a lot of investments to be ahead of the pack when we talk about e-commerce and approaching the consumers in a different way. and having a really digital strategy. francine: are you concerned s, brexit, and donald trump? >> with regard to the trump administration, we have not seen a material impact but our business is not in the u.s. very big. for us, the most important thing is consumer confidence, and that is different around the globe. willpe that geopolitics not influence too much the consumer confidence. francine: thank you so much.

the ceo of carlsberg during a from copenhagen, coming up, a conversation with sir martin sarao, beginning at 7 a.m. clock a.m. in new york. ♪

♪ tom: bloomberg "surveillance." eric,ws flow is expert out of europe, america, a little bit of asia, great yesterday, visiting from hong kong in our

new york offices, he dazzled us with knowledge about the mandarin oriental in hong kong. francine: and the reserves. thank you for making us wiser about the seven bars at the mandarin in hong kong. conversation, a this is important, on dollar dynamics, to the news, the president reportedly, political saying 3:00 a.m. in the morning he is calling up senior staff people about the dollar, the president watches "surveillance" every morning. help us out with the ambiguity about strong and weak dollar, it is a lot of ambiguous moving parts, which does president trump want come a stronger or weaker dollar? >> event on which date and who has been bringing his ear most recently, the mantra has always been a strong dollar is good for america, it was straightforward and clear, we knew where we

stood. now, we have this protectionism play in the new administration, not clear who is leading on the dollar in the new administration , a range of competing views and not clear which one has the president's attention. the key focus so far has been with germany, when i looked at the history of dollar euro it does not scream out that there is a significant problem from the u.s. perspective and right now, u.s. manufacturing export orders seem to be doing quite well. i am wondering what is the focus of this problem, do they want a substantially weaker dollar which would be aged -- gigantic change in policy, hard to imagine it would come up overnight in a tweet. tom: pick up the conversation quickly, here is the dollar ,ndex with the big move up maybe we are near where we need a clear record where you and i go to their hotel. francine: maybe we bring

president trump with us and talk dollar dynamics, who advises the president on these matters? if you does not know yet dollar dynamics, excusable as long as he listens to people within his administration that no, if it is true he calls the national security person, that is probably not the best person to call. >> that is very bizarre but so many things have been bizarre with this man, nothing surprises me anymore. when you look at dollar dynamics, especially for the future, the uncertainty is so great, it seems to me that, if anything, the dollar is more likely to strengthen in the medium run. divergence,use of the divergence in monetary policy, the fed is more likely to be restrictive than the ecb ,ill be, and on fiscal policy something similar but we still do not know the details, it is more likely it will be a fiscal

boom in the u.s. than in europe. these together leads me to conclude that it is more likely the dollar will continue to strengthen. i have stopped making hard predictions, it is too tough. francine: what about your prediction about relations between germany and the u.s.? the war of words between peter an sayingnd mr. widem they are not cheating the u.s. and because the euro is weaker than the dollar, where does this end, is it just noise? becausebly just noise we have not heard from the new treasury secretary for his use on this are obscure at the moment, this is just rockthrowing now rather than sustained, new fundamental paradigm shift in the way the u.s. use the dollar. i agreed that the dollar is more likely to rise them fall, especially if the border tax adjustments which house

republicans are proposing, if that is implement even in a small way, it will be a dollar plus and higher interest rates and easing of fiscal policy. if you have those dynamics pushing the dollar up, it makes sense to be shouting about not wanting a stronger dollar in the hope you will limit the upside. you will not stop the upside given those fundamentals, the market trades on fundamentals ultimately. tom: thank you. we need to please our viewers each and every day, you are it can't even descant young of microeconomics, coming up, a name you may not know, he was just stolen by m.i.t., on brexit, next. ♪ [ alarm clock beeping ]

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up on brexit and jeffrey sachs joining us. all eyes on washington, including the senator from massachusetts last night. here is kill the race with the first word news. taylor -- taylor riggs with the first word news. barred republicans have elizabeth warren from speaking, she read a letter from credit scott king, they said she broke senate rules by imputing a fellow senator. the the code access pipeline on the verge of the go-ahead, the u.s. army will grant energy transfer partners an easement to finish the pipeline after president trump asked for a speedy approval. opponents argue the pipeline would damage sites important to native americans and that it

poses an environmental hazard. first lady melania trump suing a british newspaper that she claims defamed her, the $150 million lawsuit against the publisher of the daily mail accuses the tabloid of making it almost impossible for president trump's wife to cash in on business opportunities watches one of the most photographed women in the world. the daily mail story accused her of working in the sex trade, it later retracted the story. inflation pressures are building in the u.k., new reports that the starting salaries for permanent staff rose in january by the most in nine months, and british grocery prices are now rising after a time of inflation that lasted more than two years. global news 24 hours a day, powered by more than 2600 journalist and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. francine: thank you, taylor. the legal battle over the travel ban had a dramatic day with sharp questioning from lawyers

from the department of justice and the state of washington and minnesota, a decision from the court of appeals in san francisco may come this week. we turn to our legal editor. great to have you, yesterday was quite dramatic, dramatic come along, one of the most-watched things on youtube. they doreal hearing, not usually do these kinds of emergency telephone calls in major cases, we had one judge in arizona, one judge in hawaii, one in california, they were forced to do this. francine: what is the one thing we need to find out in terms of timeline? when do we find out the way this goes? >> by the end of the week, the are intod tuesday, we wednesday, we could have a ruling today but they promise by the end of the week, thursday, friday at high possibility. tom: i was riveted last night watching it on cable tv and the

audio out there, very important, i will last this question throughout the day, did these judges or these attorneys act differently because they knew they had half the world watching them? was what we saw normal, or a different discourse because of the media? >> always distorted because it was an audio conference, not in court, things were a little different but i think the judges acted the way they normally would, the two democrat appointees giving the government a hard time and the one republican questioning the washington state lawyer a little bit more. that is the way you would expect it to go. tom: laurence tribe was on twitter, the acclaimed constitutional academic and biking about the comment, his production was 2-1, camp guys like you predict this, or are they playing the balance game so you do not know what they will think? >> he is much better at it than i am, i am always wrong in predicting but the conventional

wisdom is you have two democratic appointees and one republican, the conventional wisdom is that the state will be upheld and it will be a setback for the donald trump administration and things will go to the supreme court quickly. mr. tribe gave high marks to justice treatment in terms of her preparation and said all three judges seem to be prepared. they only have a few days to prepare, they have a whole staff that gives them their, or do they just lean over the desk and read old cases to get ready? >> they do have a lot of clerks, these are very smart people, all people who went to top-flight law schools, very intelligent and get things quickly. of justiceent lawyers are very good, it is a difficult situation. francine: what is your take, doesn't mean what he said in the campaign will continue to be delivered, or we need to talk more about the economy and that

will come faster, or will we continue with these appeals and these legal issues for the next couple of weeks? >> i am not a legal expert, i about some of donald trump's further actions taken by the courts. it seems to me that this adds to the uncertainty we have been talking about. clear this is an administration that is pushing things quite often without thinking enough about the implications. therefore, it creates so much noise that we do not really know what will happen. that i think is the main problem , it seems to me, apart from the legal implications that are going to come back. that also creates uncertainty in the rest of the world, how should we act, what should we do? we do not know essentially because donald trump may start something but who knows if it

will be constrained by court actions. it is very difficult. francine: how big are the checks and balances from a legal perspective? we have institutions looking after what -- the constitution? can donald trump be countered in almost everything he does if the executive order goes against american principles? >> certainly, the administration is following the ban, they are not blocking anyone from coming to the country anymore, they are honoring the ruling and that part of the government works. francine: what happens next? other rulings? we are is the key ruling waiting for, and after that it goes to a divided supreme court, the supreme court is one justice between democrat and republican appointees. tom: i was confused last night after the third beverage of my choice watching really smart

people, do we just assume they go up to the supreme court, or do they have the ability to stun people and send it back to the lower district court? >> there is always the possibility for surprise but all the analysts are saying this will go to the supreme court record. francine: where do you see the u.s. economy going from here? waiting for inflation, talking about the markets, how much is priced into the markets right now and will it be very difficult for president trump to deliver? >> again come uncertainty is enormous -- again, uncertainty is a norm us but it looks like there will be a fiscal stimulus, how big we do not know, it looks like the federal reserve is more likely to start restricting policies. and all this will do a number of things. the fiscal boom, if strong enough, means demand will

increase and growth will expand in the u.s. the dollar will appreciate. these are the things i can see but do not ask me when and how intense this will be. that is the path -- for the medium run is most likely but in the longer run, it is more difficult to say because we do not know about protectionism, how intense that will be. this may all turn around a situation quickly. difficult to very see. tom: thank you so much, we will continue with the professor and talk about europe and the debt workout we need to see with spreads widening in europe. our team has been working on this at bloomberg since lincoln as president, this is tvgo, way to get the charts we make, here is paul and ian, a gorgeous

chart model by -- you can see all of our charts on tvgo, bonus round right down here, you can send a note to our show are awake,hen they usually they are sleeping at 4:00 a.m., sinden ib -- send an ib directly, we have been working on this for years, loving the ideas of the chart we make for you on bloomberg. do that at tvgo. beautiful city. snow is coming. ♪

♪

taylor: it is time for the bloomberg business flash. denmark biggest company and it quickly posted its second law since world war ii, they are best known for its shipping line , they took the loss by running down the value of some of the energy asset it plans to split off. science is warning that its massive hepatitis b franchise is fading, the company projects the sales of the drugs will be just two thirds of what investors have been expecting, the hepatitis b kills are still huge othermakers for gilead, companies have cut market share. the government of canada will 280 $2 million in interest-free loans to help pay for two jet programs, one is a bombard eac serious which compete with boeing and airbus, the government says the money will help secure thousands of jobs. that is your bloomberg business

flash. francine: thank you. we are talking exit risk, theresa may plan to trigger brexit on plant after she suffered -- survived her own party. grexit talks back on. paul de grauwe is with us. you are good looking at the stress points in europe and the opportunities, are you more worried about the political future of europe and then you were six months ago our are we jumping at shadows? paul: i am as worried now as six months ago. withiggest worry has to do political uncertainty. uncertainty about the french election which i think is key. also, the uncertainty about the dutch election which is coming sooner. these things are very worrisome because they are the result of

movements that we have seen in europe, in the u.s. in particular, that come as a result of the eurozone not doing the things it was promised to do. the eurozone, it was supposed to be something that would enhance growth and employment, it has not done so, it has been worth within the eurozone then outside , it comes back with a vengeance. havepeople who feel they been hurt, whether it is related to the u.s. or not, at least creating a perception that this has something to do with the euro. you see political parties capitalize on this which is a real danger. we have to make sure that in the future, the euro become something dynamic. francine: it may be too late for the french election, this is the probabilities of a marine le pen when, win. stuck at 20%, has

fallen from the 60% in january after the saga about possibly taking his family for work that may or may not have done. what are the chances of a marine le pen win? 33% or higher? >> difficult to say, i do not know, let's put it this way, i do think that it is unlikely she will win the second round and become president of france. it is still unlikely but not impossible, we have seen it before, it can happen. it is not the last election that will come up and if we do not turn around to the eurozone and become -- and make it something positive, it will come back to us, even if this time she does not become president of france, which i think is still very likely. these things will return. tom: we see a lot of people do

mohamedgrauwe 101, el-erian saying the imf is right asut greece, this is france francine just mentioned, the election, huge tension in europe from ages ago. a wider france, germany spread. the second derivative we are seeing, do you see the groundwork, professor, from what you and charles have lectured on, which is we have to do a debt workout? are we any closer to the paul de grauwe calculus, or do we wait for a crisis? paul: the debt problem now is localized in a number of countries. in particular, greece is the most intense problem in terms of debt and how to contain it. really shouldwe follow a different policy than

what we have been doing up to now. we have forced this country into deflation austerity, forcing it to produce a surplus on the primary budget which prevents the country from emerging from the recession and grow again. as long as we do that, this debt overhang will just not finish, it will be there and continue to paralyze the country. we have to be more enlightened about this and, first of all, make sure, the debt restructuring we already have given to greece, do not forget that greece today does not have a very strong debt burden because we have restructured much of the debt. and 10 years, 20 years from now, this will be over and that is when the greek debt overhang will be there and that is when we have to make sure we continue to give reasonable conditions to greece, and promote the country to growth, otherwise it will not solve itself.

tom: the distinction to me as that the previous efforts have been to benefit the debt holders, the elites, the institutions of developed europe, call it dramatic europe to steal a phrase, what if we lengthened that debt? what is the cost to the elites of europe if we take a 15 year piece of the perchlorate 10 year, or five year piece of paper and slam it out to 35 years, what is the price? paul: economically or financially the price is minimal. but the problem is political. the creditors in germany and the netherlands, the politicians in these countries are dead set to announce and to admit that there would be a loss on the greek debt, they do not want to admit

it although they have party taken the losses. the previous restructuring, when you compute the net value of the , less thanace today one hundred percent of gdp, the debt restructuring has been tong on, but nobody wants admit it and as a result we push this country into deflation, preventing it from coming out of the mess. francine: paul de grauwe, thank you very much, he stays with us and coming up, the competition ceo,the glaxosmithkline 8:40 am in new york, this is bloomberg. ♪

♪ francine: bloomberg "surveillance." ,ive pictures from london looking -- there is a bloomberg crane on the right where our new building will be. tom: very cool. francine: not very sunny, day on the bill on

brexit. paul de grauwe is here. i do not know whether the trump presidency means theresa may is much more valuable in terms of security for the rest of europe and if you feel the negotiations will maybe go smoother than they would have a couple of months ago? paul: i doubt it. trump is so unpopular in europe, it theresa may associates too much with him, it may make it more difficult to negotiate. i am not so sure this will help her. she is in a terrible bind. she has been pushed into a hard brexit, it is inevitable, it will be a hard brexit, and yet she still dreams of having the special deals for the automobile industry, for london. francine: do you think none of that will happen? paul: i do not think that will

happen. dreaming about these things, it just will not happen, there is too much opposition in europe. and too many veto players come in certain countries like there is some sympathy in trying to get some kind of deal. a lot of exporters, they want to continue to have deals with the u.k., but are not many other countries that do not have the same commercial interests. they have certain things that will take a lot of importance for them. they will play that game. i do not think -- we have to settle for the idea that this will be a hard brexit. very little in terms of special deals. tom: the chart of spell sterling -- £ is the on distressing,

sterling trade waiting is trading at lehman low's, here is lehman and 2008 and early 2009, a bounce up recently, do you assume currency is the adjustment of last resort for the people of great britain? paul: yes, in a way it is, an interesting graph you are showing. the only positive news in the u.k., because that will continue to mean that there is some stimulus provided to the u.k. industry in particular. that i think is something that u.k. economy desperately needs, otherwise it will be in a worse position. francine: what is the one thing that you think is being mispriced on the market in regard to brexit? cutwe pricing in a complete off or some hope there will be a turnaround? paul: there is still too much

uncertainty about this and therefore the market does not know how to price it. if it is normal risk been markets can easily price things. ,e talked about uncertainty that prevents us from pricing this. that is the key difference from normal risk that you can price it, and in uncertainty we cannot price it, we cannot put a number on this which is continuing to be a problem. tom: paul de grauwe, thank you so much, with the london school of economics, jeffrey sachs in the next hour on his new book and a professor from m.i.t. this is bloomberg. ♪

tom: this morning, we appeal to you. consider spread whining --

consider spread widening in europe. a leading liberal makes an appeal to conservatives. build a smart and fair america. in this hour, jeffrey sachs of columbia. fair and balanced -- three judges listened to both sides on the travel ban. they appeal for clarity. good morning, everyone. this is "bloomberg surveillance ," live from our world headquarters in new york. . am tom keene in london, francine lacqua. stunning to see the immediate delivery of an appeals court discussion. in thee: this is why run-up to the election i was always told that institutions would be tested in america. it depends on whether they would stand the ground. this is what we saw yesterday. review of now, with a this, here is taylor riggs. taylor: a three-judge federal

appeals cut panel may rule this week on president trump us travel ban. what the ruling is, it is almost certain to be appealed to the supreme court. the appeals court heard arguments on both sides. here is one of the justice department lawyers. >> i want to make one really key point with regard to the injection, -- to the injunction, and that it is -- and that is that it is overbroad, even if some of the court thinks the applications are problematic. taylor: one of the key issues is whether the states have the legal right to attack the administration's legal order. vice president mike pence had to cast the deciding vote in the 51-50 decision, the first vice president ever to confirm a

cabinet member in confirming betsy devos. according to "the new york times," the yemenis are angry at civilian casualties caused in presidentraid by trump. a member of the navy seal -- a member of the navy seals was also killed. as well as this week, there may be a referendum for changes in the constitution that will concentrate all executive power in the presidency and give him greater control over appointing judges. global news 24 hours a day, powered by more than 2600 journalists and analysts in more i am taylorntries, riggs. this is bloomberg. tom: let me get to the data. we are going to pause on the bloomberg here to get to the discussion in washington. the curve flattening this morning. a little bit of a risk-off.

getting down into the vicinity of $50 a barrel for oil. euro --d through euro-yen is a stronger yen, weaker euro. stronger swiss, weaker euro as well. these are nudges, little movements, francine. francine: but they could be significant, longer-term. european stocks led by minors. higher profits, and for the first time we see a special dividend. you can see yen. , 112.35.mentioned tom: cool yesterday was two young attorneys against three experienced appeals court judges. mr. can be quite older, the others younger.

mr. flemche and mr. can by. federal offenses have we had being committed by people coming in from these countries? there -- the answer was, there have not been any. >> yes, your honor. these proceedings are moving quite fast, and we are doing the best we can. -- kevine are other cirilli is our chief washington correspondent. i want to go to the inside baseball right now, which is the department of justice attorney had to step aside because the did --ed firm jones day was the department of justice

prepared for what we saw last evening? kevin: i think the administration feels that they will ultimately win this case. maybe not in the ninth circuit but potentially at the supreme court. as far as jones day, that is one of the most powerful law firms in the nation, but especially in washington, d.c. they have definitely been working on every aspect of the administration. tom: we got a window into our judicial system. you are a lot better at this than i am. were you surprised by the intensity of the questions, or is that business as usual in the washington judicial world? kevin: i can tell you that i do not think the administration was surprised. speaking with sources and president trump's political orbit, i do not think they were surprised at the tone of yesterday's hearing because i think ultimately this could be decided at the supreme court. what i will tell you is that

regardless of how this is being portrayed in the ninth circuit, 49% of americans do support president trump's executive orders. speaking anecdotally on the campaign trail, i do not think those voices have been reflected yet in this debate. i would look for this administration to start to highlight those voices, especially as potentially we get to the supreme court level. francine: more than 130,000 people tuned in via youtube alone. what does that tell us about the level of appetite of all things in the united states, and does that change the dynamic? kevin: not just the united states, i think it is all over the world, francine. this case is truthfully the best illustration, if you will, regardless of your opinion on the case, for the first 100 days of president trump's administration. this is the case. this is the moment that best in

capsules -- that best encapsulates all the presidential campaign cycle and of course the first 100 days. this is it. francine: we also heard president trump -- we saw president trump on twitter saying it is a disgrace that my full cabinet is not in place, the longest such delay in the history of the country. got pulled in. out with a big win yesterday for the administration. paul teller, the former top staffer to ted cruz, another big win. democrats did try to flip a last-minute vote. pence brokent mike the tie. up next is steven mnuchin, the treasury secretary nominee. i would anticipate that within the next week. tom: kevin cirilli, thank you

very much. this is well-timed. jeffrey sachs, columbia university. he is a first rate international economist. he has been an advocate for liberal policy and liberal science. building the new american economy is his new book. buried in your book is the paul johnson idea of imperial overreach. how do you respond to this imperial overreach? do the democrats have to stay with the old guard progressives, or do they have to move to a new middle ground to win michigan, wisconsin, to win those voters that have left the liberal whole -- the liberal hole? jeffrey: we have the president who made a claim to those voters that by getting tough on the mexican workers, on immigrants, and on the chinese, that he is going to solve their problems. it is a phony claim, but it is a typical populist claim, which is

it is the foreigners that are at fault. democrath kind of needs to coal your leadership toward the election in four years? sachs go with the jeff liberal bernie sanders types, or do you go to the middle? we are dating ourselves. jeffrey: i do not think it is a matter of being on a particular spectrum. it is a matter of trying to find the truth versus the bullying. right now we have the most extreme populism that we have had perhaps in our modern history, and this president has an agenda which i think is dangerous, and equally importantly, just wrong in its analysis. if we follow this road, we will unite the world against the united states, will we will not

solve the problems of the workers in michigan. francine: how long will the republican party go along with this, if what you say is correct? jeffrey: i think they will go along with it as long as this president's approval ratings are adequate. if they plummet, they will back away. remember, our politicians are basically after two things. they are after short-term support and they are after campaign contributions. ideas do not play too big a role in our political system anymore. if they see the president going down in popularity, they will abandon him. if they see him strong and bullying and fear factors, then you get a lot of mileage out of that, unfortunately, but it is extremely dangerous. francine: it is something that has a lot of mileage in europe and in the u.k. with brexit. even if this leads to trade wars, will the party not see a longer-term concern? jeffrey: i have met very few

politicians these days that have a long-term anything. this is the most relentlessly short-term attention is -- attention-deficit disordered group i have ever known in our society. all they care about is their campaign contributions and short-term approval ratings. the dynamics are very unstable. we do not have politicians looking for the long term. that is why i think some of us have to be thinking beyond the next day, the next week, or the next election. tom: what is the jeff sachs prescription for the senator from massachusetts, senator warren? does she stay strident? does she stay liberal, or does she need to accommodate a middle ? if olympia snowe was in the senate for maine, when she move into a moderate discussion with senator snowe, from another time

and place? jeffrey: i hope there would be a discussion, but we are not going to solve our problems out on the streets with shouting. warren and senator others do is put forward substantive ideas and that we get back to having a discussion about real ideas, not just shouting at each other. all the demonstrations and marches -- i understand exactly where that sentiment is, but without programs, ideas, we cannot move forward. tom: this is important. thank you to martin feldstein for an op-ed in "the new york times" today. here is the new book right here, "building the new american economy." bonus round summer reading. it is thin. jeffrey: even winter reading. tom: winter reading. there is a snowstorm coming.

hour, talk about a steal. this is like dustin pedroia going from the red sox to the yankees. this is bloomberg. ♪

taylor: this is "bloomberg surveillance." here is your "bloomberg business flash." saudi aramco has hired companies on the liturgist ipo ever, porting to a person that according to a person familiar with the matter. saudi arabia wants to sell less than 5% of the oil company, and the sale's estimated size is $100 billion. for the first time, bob iger said he might extend past his

tenure contract. he will remain with the biggest entertainment company past is scheduled retirement in june if it is good for disney. it would be the third time he has postponed retirement. that is your "bloomberg business flash." jeffrey sachs is a columbia university is at columbia university, greatly associated with climate change. what we know about jeff sachs more than anything is that he is the liberal conservatives are forced to read and consider because he actually talked about, heaven for bid, doing something. with not a left-right war him, it is about getting something done in america. here is his new book, "building the american economy." this is buried in the book. sachs and theeff optimism that we need.

i am going to suggest that you are talking to a reagan republican, where ronald reagan said we have to get something done. why can't the other side -- why can't the gop get anything done today? jeffrey: i think both sides fail. obama came in and said we need new infrastructure. he built nothing during the eight years and he had this short-term stimulus. he said we need shovel-ready infrastructure, which is not what we need for the 21st century. he did not put in place the longer-term thinking, here is our power grid for the future, our fast rail grid for the future. we do not think anymore in this country. we just shout at each other. now we have a president who says we need infrastructure. tom: so you are pro-trump? im pro in for -- i am

pro infrastructure. and now he says pipeline? century21st conductivity. that is the whole problem with this country. let's think together. that is the essence of it. francine: and i love the tom quote. numberrite chapter is six, smart machines in the future of jobs. confusing integration with globalization? jeffrey: trump is saying we will build the jobs back, but the jobs are held by robots, artificial intelligence. the efficiency of manufacturing is astounding. it is quite wonderful. but it has income distributional

consequences. it means the wages of unskilled workers absolutely are falling. we see the share of labor in the national economy declining, so we have to do something about it or it not to stop the technological advance, not to beat up in a stupid trade war with mexico and china, but to actually say we like the technology but we have to make sure our societies remain fair. the people who are enriched by this need to help those who are impoverished by this. that is the basic idea of a society. francine: so the basic idea is income redistribution. jeffrey: absolutely, and especially of the case of rich, four,people like trump to younger people who need the -- liken and the health trump to four, younger people who need the education and the health care. francine: it is not a problem of globalization, it is a problem

with how you redistribute the fruit of globalization. jeffrey: that is the whole theme. let's make sure that our society is not only smart and productive but fair and environmentally sustainable. francine: jeffrey sachs, thank you so much. columbia university professor. bloombergon television and radio, a conversation with sir martin sorrell's of wpp. we will be talking to him about currency wars as well. this is bloomberg. ♪

tom: "bloomberg surveillance" from london and new york. thrilled you are with us. jeff sachs -- here is a book read.onservatives need to "building the new american economy." i have five copies. conservatives will rip out the page, rip this puppy up and throw it away. we are not going to do that with jeff sachs. jeffrey: they are going to love it. tom: people think you grew up in new york. you did not. you grew up in middle america. -- in flyover america. tell the truth to what is really happening and they clarify the kind of war on the world populism of donald trump is a typical misdirection. , and it is is rich

getting richer and richer and the technology is getting better and better. the income distribution is going more and more to the top. tom: people look at this as east coast-west coast. francine got the same polarity in the united kingdom. how do in the democrats reconnect -- how do in the -- reconnectte democrats with you? jeffrey: i grew up in the center of the manufacturing power in the world that disappeared over time because of so many mistakes in policy, because of our lack of investment in this country for 40 years. the theme i have been on for years and years is investment, saving and investment, not short-term budget cuts, not short-term stimulus, not shovel-ready projects. but getting back to the idea of investing in our future and investing in infrastructure, in business, and people.

about thatalk anymore. we do not do it anymore. our saving rate is going nearly to zero. this is crazy for us. we do not save but then we say we want to grow. and we say we do not save but we are going to beat up on the mexicans. upset. get you coming up, this is wonderful. this is a professor that francine knows. john van reenen is the giant thinking of innovation. we will do that next. from new york and london, this is bloomberg. ♪

francine: live pictures of london. look at that. it is very turner-esque. tom: gorgeous. francine: it is gorgeous.

withhe house of commons the final vote, we hope, for now. here is taylor riggs. taylor: a rare moment on capitol hill and senate republicans barred democrat elizabeth warren from the rest of the debate over president trump's nominee to be attorney general, senator jeff sessions. from 1986d a letter attacking sessions. broke said that she senate rules by impugning the conduct of a former senator. the u.s. army will grant energy innsfer partners an easement completing the pipeline. opponents argue the pipeline would damage sites important to native americans and that it environmental hazards. inflation pressures are building in the u.k. the starting salaries for permanent staff rose in january by the most in nine months.

british grocery prices are rising after a period of inflation that lasted more than two years. theresa may has kept her plan to trigger brexit entr'acte by making a deal with conservative party colleagues. they were promised a vote on the final deal with the european union. conservatives tried to force may to give more lawmakers more power to shape an agreement. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries, i am taylor riggs. this is bloomberg. tom? francine? francine: thank you so much. let's get more on brexit. a study was just released suggesting there is no an area out in which brexit will be good for britain. a professor from m.i.t. joins us. still with us is jeffrey sachs. reenen, have you had enough after just leaving london?

john: no, i -- francine: what is your take on brexit. -- what is your take on brexit? is it the same fear that if donald trump that led to brexit? all this report does is pull the work together that we have been doing the last few years. there is a benefit to brexit, which is that the u.k. sends less money to europe than it is at the moment. but there's a big cost, and that will be some trade barriers that go up between britain and the rest of europe through the european single market is the biggest market on the earth, half a billion people, relatively wealthy. because of that, trade is likely to fall between britain and the rest of europe, and that will cost us. we can argue about how big dork small that -- we can argue about how big or small the cost is. but the big question here is

what type of brexit we have. if we have a softer brexit, if we end up in a situation like norway, which is outside the european union, it will be less costly. if we have a hard brexit and make a clean break, that will be disruptive and in the long run will cost the u.k. 101.let's go to jeff sachs he was early involved in the capitalism and the certitude of a developing russia. he made international headlines decades ago in doing that. what is the surprise coming for the british people, like the surprises for the russian people decades ago? what is the thing they do not see coming? john? john: sorry. i think the question is in terms of the u.k. people.

the hope that many u.k. people have is that this will be a good thing, old regulations. the early days of trump, the stock market will not be doing badly. but they do not realize there is a lot of benefit to having good trade, by having highly open trade with other countries. tos can be very beneficial raise living standards. people often underestimate the benefits of having trade for investor may -- for investment. tom: to john, you have gone to the land of robert solow at m.i.t. can the united kingdom become more efficient and productive with a brexit? john: i think it is going to be the opposite. splitting ourselves more away from the rest of europe, we will lose foreign investment and we will lose some trade.

for will be negative productivity. that will be a bad thing because thanctivity is way worse not just in the united states but also in countries like france and germany. it takes a british worker five days to produce what a german worker or french worker produces in four days. so productivity remains a problem, and this will not help. francine: can you not see the bilateral trade making up for what the u.k. loses with the e.u., especially if you have a where taxes are so low that we compete with dublin? the government will try to do other trade deals with the u.s. and other countries to offset some of the cost of brexit. but the fact is that because we will not just lose the trade deal that we have with the rest of europe, but we will also lose the rest of trade deals with other countries.

i cannot believe that the deal we have with other countries will fully offset that. same with the u.s. it is the case that it takes many years to set these trade deals, and we do not know what kind of trade deal we will get. of what is about 20% the whole of the european single market is. so we have a lot less bargaining power than if we bargained with europe as a whole. i think in terms of tax, britain already has relatively low corporate tax rates. we could reduce them more, but is the future we want for the u.k. to be some sort of a tax haven, tax paradise, living on the edge of europe? we have to have some taxes to pay for public services. lowering growth comes from making investment long-term, in things that we need like

infrastructure, housing, and skills. i do not think that is the kind of model for a successful economy. francine: does brexit lead to trump lead tol marine le pen as president of france? john: i think brexit is part of this worldwide populist uprising we have seen. -- we see that in trump and also with the popularity of marine le pen. reaction is to the increase in inequality we have had, plus the global financial crisis. average british workers' wages fell. get back to the 1920's for things to be that bad. people are suffering an angry, and they have a right to be angry. but the problem is, diverting the anger against immigrants and foreigners, that is not the problem. , to saysounds familiar

the least. professor sachs, it is such an honor to have both of you together with us. it is the same prescription for the united kingdom as well. your prescription is centered on common sense and the middle ground. how do we get the middle ground back together in the united kingdom, in france, and, for that matter, america? jeffrey: what john is saying is exactly right. but i would say that the real decisions in the brexit case are going to depend on whether the rest of europe has the wisdom to have a rather modest balanced approach right now. europe itself is at risk of falling apart. if the hardline in europe that says we are going to punish the u.k. in this -- that is read around the rest of europe as, "we want out, too." tom: you studied at harvard

years ago. it is up the river from m.i.t. john: where is it? tom: up the river. with marginal improvement from to wto --ic charter did we just pushed international trade too much? did we get to a point where there is no margin gained from trade? jeffrey: it is not really that. we pushed greed in our own countries too much. we allowed income inequality to soar and neglected that fact. us on january 20, 1981, cut taxes for the rich and all will be well. and we have been living that mantra now for 36 years. and trump is going to do even more of it, and it is just nonsense what we have done to ourselves. areuse we are rich, but we

unfair and unsustainable and we are killing our country as a result. that leftagain, is over from the financial crisis, and is it the fault at the end of the day of central banks? back before it goes the financial crisis. inequality was widening. bill clinton took a mainstream, progressive, democratic party to wall street. they had the other kind of party. they had a celebration that goldman and the democratic party would be one. then we had no progressive politics in the united states, so the income inequality sword. then came -- so the income inequality soared. now comes donald trump with a message, blame the foreigners. tom: what kind of margaret thatcher do they need right now? if we are going to be tory and may, what minister

elements of margaret thatcher does the united kingdom need right now? john: the element of ms. thatcher, a positive element, was that ms. thatcher got support of britain being in the european union, having trade with the european union, to help build the single market. the part that ms. thatcher was bad at was allowing inequality to get out of control. there needs to be a positive attitude toward trade, and a lot more need to be -- a lot more for middle done income people. it requires improving schools, dealing with infrastructure, housing, transport. in needs a radical re-planning how to invest in the long run. the success of the -- successive british governments have failed to do that. if that option is taking, maybe

something good can be drawn out of the current brexit situation. francine: john van reenen of m.i.t., thank you for joining us. jeffrey sachs stays with us. this is where you go on the bloomberg terminal to communicate with us. this is where we put our conversations with our guests. you can also contact tom and me and say what i want to hear from the preprocessor -- from the professor is about currency wars. stay with us. this is bloomberg. ♪

tom: "bloomberg surveillance." the best time of the day for francine lacqua and myself.

we speak with jon ferro. he will drive the conversation forward. of wineshared a bottle at lunch yesterday, so maybe there is a little bit of a hangover of that. maybe. francine: i want to know who paid. jon: i think mrs. king took care of the bill. coming up, we will look at the spread between reality and the prospects for doom around the brexit situation. another conversation about how many jobs will be lost because of brexit. the reality is that the dire consequences and the dire occurred.s have not also coming up, a real view into what is happening in china and the commodity market with the chief of the second largest market in the world. that is all coming up, guys. francine: thank you so much. we will have plenty more.

jeffrey sachs is still with us, columbia university professor. we need to talk about dividends. tom has been looking forward to that interview that jon ferro will be doing. this is iron ore, the white line, going up quite significantly. ore can theron other commodities not keep up with? >> people have been surprised by the chinese demand and the resilience of the chinese steel industry. astonishing turnabout in the chinese mining industry. we were talking about the long-term futures of companies like glencore. it has cash that it does not know what to do with. it is giving it back to shareholders. francine: how much pressure will their rivals feel in retaining shareholders? will: it will be interesting to see.

of tinto has a net yield 20%, so it can afford to do this. last time we saw crazy deals, we saw anglo a.l. can -- we saw anglo buy alcan. we will have to see. tom: -- francine: what about china? is china still the biggest consumer? is it because china does not know how to fix it, or is it because of a trade war with donald trump? have hadedies like bhp -- companies like bhp have had a very good year. people are confident in the chinese economy right now, so dividends are holding up.

the slump killed a lot of mines. the other issue is stock in china. there are signals that a lot of the buying is going to stockpiles. we may see some cool down. i do not think people are certain how long the iron ore bid continues. francine: thank you so much. you are heading up all of our coverage for oil and commodities. coming up on "bloomberg markets," a conversation with bruce richards. look for that interview at 10:30 a.m. in new york. this is bloomberg. ♪

tom: foreign-exchange come a very eurocentric today. the spread in europe are a big deal. -- foreign-exchange, very eurocentric today. the spreads in europe are a big deal. it is a grind. these are subtle moves, but this is what the pros are watching. the forex report, to get your morning going. jeffrey sachs is with us, here in celebration of "building the new american economy."

we will talk about the big debate here right now. there we go, "building the new american economy." let's go to the single best chart now. this is the decline in manufacturing in america, and this is adjusted for population. it is a little bit of an odd chart. america builtan sachs tough? how do we get tough about this and build a tough policy to boost trade and manufacturing? jeffrey: that is a great chart, but that is not a chart of american manufacturing. that is a chart of manufacturing employment. that is different, because manufacturing his increased, but employment has decreased, mainly because of productivity. that is really important. we are down to 8% of employment in manufacturing right now because we are a service economy. what is wrong with manufacturing

? nothing except the fact that it is robots doing it. this is a huge plus. these were a lot of jobs that -- tom: but they were the labor. we had a debate with danny at harvard, jeff sachs from columbia. what do we do with the labor that has been run over, who voted for senator sanders, voted for president trump? what do we do for those people who are angry, angry, angry? jeffrey: first you look at where did all that income go -- to the very top. this is the one thing we do not like to talk about in this country. the stock market is booming, the wealth is booming, and they want even more tax cuts right now. that is the big problem. so instead of some fairness in our system, trump says we are going to blame the foreigners. so of course that is absurd. or we are going to bring the

jobs home when the jobs do not exist anymore. that is absurd. those -- so this is a game to take away from the fact that america is booming at the top or it -- at the top. francine: playing devil's advocate, in certain cases if you do not do the tax cuts, businesses will move elsewhere. this is what david cameron and the u.k. were talking about all the time. companies will move to asia, singapore. and the u.s. loses out. jeffrey: we need a smarter tax system that collects more revenue, that is more fair, and is investment friendly. that is not so hard to do. in smart countries, there is a reliance on more revenue collected that goes toward education, health, services, toward infrastructure. we under tax, we leave the rich with everything, and we do not

therefore invest in the future. areo not help those who left behind. so of course we need some tax reform, but not just to slash taxes. this is the mindlessness of our current situation. francine: is there a politician who can do that correctly, that he or she would be electable? jeffrey: if you got together a group of people who understood the basics of public finance together -- i could rattle off a large list of names -- and had a serious discussion with lobbyists out of the room about producing three things -- efficiency, fairness, and adequate revenues -- it is not hard to come up with a good strategy. but it requires getting the lobbyists, getting the billionaires, getting the greed out of the room and talking about the future for all americans, not just a future for the handful of billionaires that own our congress. tom: i want to congratulate on

your book. very thought-provoking. changenot get to climate and the paris meetings. we will do that coming up on bloomberg radio. and we will have him on again for an important discussion. we would love to get him on again with senator sanders. francine? on radio, we will have a conversation with sir martin sorrell, who will be strong on brexit but also infrastructure in the u.s. a very colorful interview with sir martin. this is bloomberg. ♪

jonathan: where is the detail? the u.k. has debates on

triggering article 50. the trunk travel ban desktop travel ban faces -- trump travel ban faces tough questions. welcome from new york city from our viewers worldwide, i am jonathan ferro alongside alix steel and david westin. futures dead flat. yesterday a record high on the dow and s&p, and six days of dollar strength. i continue to look for where the safe haven trade is. if you look at the euro and swissie, the euro down 2/10 of 1%. ,his continues to go nowhere confounding me as they continue to talk about the political uncertainty. crudep a bit, and nymex rolling