the pound tumbles, parliament gives the u.k. prime minister permission to start brexit, but scotland's leader has her own independence plan. 10 year treasury yields raise higher as the fed is poised to raise rates. and steady as she goes. an update to chair for china's economy with industrial data beating estimates. this is "bloomberg surveillance ." i am francine lacqua in london. tom keene is in new york. first of all, you made it in. thanks to the snowstorm, it opened so tom could make it. it reminds me of the winter and the united kingdom, or something like that. where i grew up, this is partly april. but seriously, it is a big storm. it is just starting. school is out. and we are all here, looking forward to it. francine: we are all here, and i

imagine this may impact the trade volumes we will see on the new york stock exchange. first, let's get to the bloomberg first word news. here's emma chandra. u.s. senate republicans think the party should we plan its plan to replace obamacare after the congressional budget office says more than 40 million americans could lose health care. by 2026, the number of americans losing health coverage would rise to 24 million. prime minister theresa may is about to start the formal process of leaving the european union. parliament signed off on a bill to trigger article 50. china's economy held its momentum the first two months of the year.

industrial production was up 6.3% from a year ago. that was slightly less than expected. part of the eastern u.s. is prepared to be buried in snow. half ofe foot and a snow is inspected in new york, and it is already falling. schools have been closed. more than 5000 flights were canceled. and german chancellor angela merkel delayed her trip to washington. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i am emma chandra. this is bloomberg. tom: thanks so much. let's get to the data. noting rates up a little bit. the spread is 124 basis points. oil with a slight bid >>. tomorrow. looking for to that.

1:00 p.m. 3139.ing, 1. francine: i am looking at the 10 year yield. looking at the pound, it is probably the most significant. pound.o i picked up the pound-u.s. dollar. it is unclear why the market is moving. luckily, we have two experts on set. need to dig in a little deeper. topix drops and oil up a bit. me go to the chart. this has to do with the trump bump. canceled inl washington and will not be there until friday. this is the optimism of small business chart. here is the trump bump did everyone in the business knows

this chart. the massive spike up, and what do not realize how rare it was -- back to 1980 -- to have over 100 optimism in the nfib index. this is a rare occurrence in terms of small business enthusiasm. francine: i like that a lot. and i like that you bring it back even 30 years. this chart chart of the 10 year yield. the 30 year yield is in blue. these are technical support levels. these could be significant. i really want to point to the 30 year yield. you are bored of watching the 10 year yield second by second, where 6.4 is considered the break even level, look at the 30 year.

whether the fundamentals will -- there's also a cap on commodities. we will get more on that in a second. joining us is simon french and peter dixon. thank you for joining us. first, talk to me about this chart. treasuries. how significant is this, given the move from the fed rate hike tomorrow? simon: it faces significant downside. in terms of significance in the technical support levels, a a lot of this depends on what guidance we get tomorrow. the mediand stick to position or be more aggressive. but if you look at the data, oil has a weakening price with a strengthening u.s. dollar.

see treasuries moving maturely higher. i think, to a large extent, i agree. to a large extent, the rate hikes were priced in. maintainhe fed will the hike tomorrow. so you may get open movement. within the support and resistance of the moment, help me with where we are in the dynamics of exit -- brexit. levels, ifking new we look at fixed income and foreign exchange and equities? simon: let's start with the

currency story. .21 looks like the levels we saw in october after a hawkish speech from prime minister may. not think we see materials lower. the reason being that there is the symbolism of the end of the month, and it looks like it will be the end of march when article 50 is triggered. depends on what kind of deal the u.k. can get. so people looking to price long-term and sterling do not get new information. information tome dazzle francine. i only do this when there is a blizzard in the northeast. direction is, this weaker sterling. we are getting there. here is brexit here. and speaking of resistance, you have this level here. here.d do tic-tac-toe

i'll be x's. we are heading towards weakness, maybe at 0.93. in sterling francine: is it? >> the problem i have with is some firstere order impact on the trade deficit. the u.k. economy holds up pretty well and casts off the uncertainty on what fundamentally changes when theresa may writes a piece of paper to brussels. you do not actually get corporate change behavior before you get clarity whether she can negotiate the new trade deal alongside the exiting of article 50. back 10: tom brought it to 15 years. i had a much longer time frame. will we have parity in euro

pound? peter: who knows? it is like stepping over the fence towards the edge of the cliff, the fence to keep pedestrians out it we do not know how firm the land is once we get out there. there is more uncertainty it couldin markets, so be up to parity. who knows. it is not my call. >> you brought up some great fb on historical levels. you are looking at depreciation we have seen since sterling top that in november of 2015. trough about 18% to 19% peak decline. back to the imf bailout of the u.k. in the 1970's to see a bigger appreciation of the kind we have

seen. so their material downside from here is difficult to see. tom: we will bring up a chart back here with simon french and peter dixon in a bit. how about programming for the fed? guess it is good the fed -- we are meeting -- they are meeting today, but there is no press conference. the fed decides at 1:00 p.m. in new york. we have a wonderful set of guests lined up. we are honored to bring common reinhardt-- carmen tomorrow at 1:00 p.m. this is bloomberg. ♪

♪ francine: "bloomberg andeillance" with francine

tom from london and a very snowy new york. theresa may is preparing to last weekexit in the of march, according to officials. parliament passed legislation, allowing her to invoke article 50. scotland's first minister announced plans for a second independence referendum. let's get more from anna edwards, who is with gina miller. actually, you are joining us on the line, gina. great to have you on the program. i think she is on the line from westminster. otherwise, i will ask my guests on set. simon, peter, thanks for sticking around. the pound andat we talked about the support levels, is it because of the referendum or is it just that markets are complacent? we do not really have new

information, so there is no point panicking until we have concrete evidence of where we are headed. personally, i think the markets may be a little complacent, because i think they are probably mispricing the degree of resistance within the you in this -- the e.u. that could affect market few weeks the next and months. but i think the trend will remain broadly flat. francine: are there expected to be a lot of zigzags? simon: i think the issue will wax in wayne in the favor of the favor of thene in e.u. and the u.k. andhe u.k. votes to leave the markets will go down, i will wear braces -- that's what i

told tom. but whether the administration will choose to add into the problems of potential terrorists , those of a kind of things that will only come to light as you start to see the u.k. behave more according to the current regimes and the kind of nontariff standardization of products and markets. as you mentioned, they have until -- they go to march 27 or march 30. .u. wille that the e decide in two days. my question is what is the time on of these negotiations? is it still a two-year window? agreedss the two parties

to extend it beyond a two-year horizon, then at the end of two years, there is either a deal or the u.k. falls out on wto deals. may is on record that she would rather know deal than a bad deal. i guess the question is on the short run, how much can be achieved the next six months ahead of the key german election? there may be a couple of things for the u.k. to grab hold of, if we can get a bilateral agreement migrantsghts of e.u. to stay in the u.k. francine: simon and peter stay with us. let's get to westminster where anna edwards is joined by brexit analyst gina. secretary of state for exiting the e.u., gina.

the commons and lords backing away from amendments that would have given parliament more of a say. what is your response? disappointed the amendments were tied to the bill. it is right that the bill went through. what i am now looking at is thinking in 18 months' time, mrs. may promised a vote on the deal or no deal. because that commitment was not included, i would be thinking if there was not a proper vote in parliament, then there may well to theed to take a back courts because of the judgment in my case, which said they needed to be an active parliament if individuals rights would be impacted. anna: when do you make that decision? because it is not enough that she makes the promise. you need to see something else. gina: a political process --

promise means very little. we have to see how the negotiating process goes. but we will know, very close up if wet 18 months, to see will really get that vote. if she doesand -- not, that is when we will seek the court's advice. anna: there is a suggestion that there needs to be a deal or no deal decision at the end. that there would not be time to go back to the e.u. and ask for a third option. gina: two years is not long enough for this anyway. tapestry in our society. it will take time. two years is not realistic anyway. at the end of the day, mrs. may should be realistic about the transition periods required. what i am arguing is whatever the time is that they

negotiating package comes back, there needs to be a debate in active parliament. anna: she has made that promise, wasis it enough -- and it enough for some of the tory rebels to fall in line. but not you. gina: my fight has always been about elementary sovereignty. and if parliament has its say and votes, as adjusted in the article 50 bill. you can argue how effective they are at their jobs, but the fact is they have voted. if they vote, there is no need for me to step up. but if the government tries to bypass parliament again or decide to invoke anything, such as the henry the eighth clause, and other shenanigans, then i would go back to court. anna: would you talk to other partners to share the bar -- burden of doing this.

gina: i hope in time people see that this is about the process and what is best for britain, and not about being bullied into an exit package that will harm us. anna: has anyone to just the day will help you out in forcing more safer parliament? gina: there were a handful of people joining me funding wise, but i hope there are a huge amount of people now who understand the complexities of this as we go forward. the people did vote to leave. did they vote for mrs. may's version of leaving? that is what we have to debate. your -- shes the said two years is not enough to give us your rundown of how this camtime table runs. gina: it is not something you can answer. europe could be in a very

different place. it is a nonsense questions asked. no one has a crystal ball. however, it is also nonsense on politicians to say no deal is a good deal. anna: gina miller, standing partner of scm and the miller of that landed in the supreme court just months ago. francine: thank you. do you think the two-year is manageable, the two-year limit? and if it is not, should the priority be to extend the amount of time negotiating? peter: it is not realistic, for sure. mind, it will in not be two years. it will be 18 months and possibly even a year, depending on how the election timetable in europe pans out. so we have a very short window here.

i think the thing which the u.k. really needs to do is ensure we have some kind of transitional mechanism so that we can work towards a final deal. because we will not get that final deal in the spring of 2019. francine: what do you make of scotland? andld scotland just leave negotiate and see what happens? peter: it is an added convocation. the scots make the decision as to whether they want a referendum, but it is up to was posted to grant it. my guess is westminster will be so distracted and easy dealing with brexit legislation that they will not be able to give time to scotland. i think they will try to keep that question in the long grass as long as possible. tom: help me with real rates. in theoss, among others u.s., is looking at financial repression to continue and continue.

with the brexit distraction, do you assume a lengthier financial repression in the united kingdom? peter: effectively, that is what it is. i know we talked a little now and then about the possibility that a bank of england would want to raise interest rates, but the reality is that until such time as governments step up to play with more fiscal help, all of this has to be done by monetary authorities. tom: after the budget of last week, is the united kingdom the united kingdom of austerity? simon: it remains firmly in austerity, probably into the next parliament. we have the head of the office of budget responsibility saying yesterday that the government had yet to lay out plans on how it would achieve a balanced budget or the surplus target it

has paid we are clearly in austerity territory. of key is that the pace austerity, the fastest in the g7 regime, hasbourne now passed. what is the one thing that markets get wrong over all? are they jumping at shadows when it comes to risk, when it comes to the dutch elections and french politics? simon: i think -- you did a great article earlier in the week around the impact of the french election. where we get resolution one way or another. i do not think you will. you either have a lame-duck president in the form of macron, who wants further integration or marine le pen, who once to tether monetary system apart. that prevails through the french

election into the italian election. these questions keep coming back until the key crossroads in europe which either means further integration, or we start to talk about a different eurozone with a smaller group of conversion. francine: do we find out whether that is the case this year? will get some we indications, but i have said many times that even if marine le pen does not make it to the nationale willnt not go away. francine: what is one thing that will drive equities? ?undamentals and political risk >> well, one is lack of alternatives elsewhere. as long as central banks price yields in europe, you will see .t going into equities

but that is heavily priced. if things were to go wrong, economically or maybe politically -- we could be ripe for a tumble. but most investors will stay in equities, because the returns on that are still higher than bonds. francine: peter dixon, thanks very much. to an will speak infrastructure guru about what he hopes to get out of the trump inflation. a conversation with the mayor of london. this is bloomberg. ♪ live-stream your favorite sport

at the airport. binge dvr'd shows while painting your toes. on demand laughs during long bubble baths. tv everywhere is awesome. the all-new xfinity stream app. xfinity. the future of awesome. francine: latest breaking news from u.k. lawmakers. meetoe's shahada does not

the standards for deputy governor. she is coming under a law that of pressure. didn't it know whether charlotte hogg will resign or whether ito not know will cause her to resign or not. reviewingll, they are her position after she admitted she did not disclosed to the central bank that her brother works out barclays, which it regulates. she was appointed chief operating officer in 2013. then, she was made deputy governor, due to start in a couple of weeks. she was widely seen as a possible successor to mark carney, certainly the chosen one. tom: her brother was a barclays and she did not disclose it? francine: right. her brother was at barclays and had a very prominent role in terms of markets and banking. the problem is the bank of england regulates barclays. the brits do not like conflict

of interest. theynot say there is, but are saying she should have disclosed it when she got the job in 2013. all our guests help us with this. is it something she left off the form or is it a witch hunt? >> i think it is cumulative. it is not just a lack of disclosure, it was also the fact that her testimony to the wentury select committee into quite a lot of detail and her attitudes towards monetary policy. and by her own admission, she is shortages.ary that is what the cry is about. herit really exposed ability to challenge the consensus. for quite a lot of treasury select committee members, the consensus is to dovish and too anti-brexit.

she was not prepared to stand has off a side her commercial background in give a different perspective to challenge the group think they have been going after. tom: help me with how this compares and contrasts with the system of governors of the federal reserve system in america. pride in thet background of people. help me with this deputy governor versus a given vice-chairman or governor at the fed. hogg: the route charlotte has taken, she was in santander in their commercial banking system, then came into the bank of england as the chief operating officer. , andas moved to the npc her role in the fpc, where they are providing regulatory oversight in the banking system, makes that compline -- conflict

of interest regarding her brother important. but in the fed, there are external members brought in from outside. charlotte hogg is not that pichai was brought in from the commercial banking sphere, not the economic sphere. academicics fear -- sphere. committeethe treasury recommended a revised, but at the time, the chancellor of the exchequer said he still supported brown. >> this is different in the charlotte hogg is an internal bank of england candidate. so the question is more significant. going back to the word tom used, "witch hunt" is not a bad word in one sense.

past 12 months, the treasury select committee has put a lot of pressure on the bank of england and has wanted, to make ay, sacrifice of someone from a senior they giving beneficial. i am sure there are one or two people happy to make mark carney that sacrifice, but now they have found a victim in charlotte hogg, who is an unfortunate victim of the bank of england getting politicized. francine: is this a way of getting back at mark carney? she was almost hand-picked by governor carney. >> it could be construed in that sense politically. she did not give particulate alien testimony, and she left herself open to the left took when i came to the failure to disclose conflict of interest. so i do think there was a sense,

potentially, that this is an attempt at carney. tom: how will governor carney respond? he will stand by charlotte hogg. this is a governor who has made it clear his exit plan. the conflictlishes he comes into with the treasury select committee. i think he will stand his ground, but i think there will need to be some clear guidelines around the conflict of interest and potentially, she becomes a steps of the ftc but aside her other regulatory oversight roles. tom: tell our global audience hawks of thees and bank of england. i not even sure where the potential deputy governor fits in. give us a double or hop update of the bank of england.

dove or hawk update of the bank of england. peter: mdc officials would characterize themselves as -- would not characterize themselves as either one or the other. are one ort there two people who described themselves as being slightly more dovish and the sense that they like to see more monetary easing. kristin forbes, who is about to head back to the u.s., is arguably one of the more hawkish candidates. tom: very good. peter dixon and simon french, stay with us, please. a snowstorm on the eastern seaboard of the u.s. will not get in the way of a federal reserve system meaning. the storm equivalent to the storm of 1660 seven in the

united kingdom. the fed decides at 1:00 p.m. tomorrow. stay with us. ♪

francine: this is "bloomberg surveillance." francine from london and tom in new york. one to send in some tobler make up for these know, tom k first, here's emma chandra. emma: a new report on the republican plan to replace obamacare could leave republicans in a bind. the plan could force 14 million americans to lose health coverage by next year, according

to the congressional budget office. senator lindsey graham suggests the party should rethink the legislation. there is reports trump has given the cia authority to conduct drone strikes against possible terrorists. in europe, prime minister theresa may was warned she will face more testing over brexit. there is a report that she would have to go through seven more getting permission to start the brexit process. there is a blizzard warning in new york city and surrounding areas. we could get one foot and a half of snow, and the wind could get up to 55 miles per hour. there is a winter storm warning for the rest of the northeast. more than 5000 flights canceled.

global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i am emma chandra. this is bloomberg. you so much.nk breaking news out of the boe and charlotte hogg has now resigned as deputy governor, voluntarily. we were just talking about it with our guests. this was after lawmakers that she was not fit because of, and she was making about brexit and also because she did not disclose the fact is her brother was working at barclays. hogg resigning as deputy governor voluntarily. these are comments we just got through and email statement by the bank of england. we will quickly check on the pound in a second. i do not think there is much because of this. the pound moving on the fact they are trying to call a second but alsom in scotland

the triggering of article 50. we also want to talk about the swiss national bank. central banky meetings thursday. volatility inh the swiss franc. it could keep it at 0.57%. let's get back to simon french and peter dixon. what is your take on swiss franc? it will be harder for the swiss national bank to defend it. peter: it is, particularly when you look at the size of the balance sheet, which is way over 100% of gdp. snb intervenes, though more vulnerable it becomes to swings in the exchange. at some point, it is setting itself up for a nasty correction. the good news is it is

the highest since 2011 pay then it becomes bad news, which is the backdrop of a weak euro and that that inflation is driven through this effect, from the flight into the swiss franc when we were worried about chinese growth. and then the commodity story and the higher oil price. there is little correlation. the growth story is we have been pursuant to that. when they removed the lower peg against the euro, swiss exporters have been vocal about the impact that would have on business. but they have managed to cut that off, for the most part. francine: what is the one thing they could do? these are external factors. simon: the snb can use the meeting of central bank

governors and finance ministers to encourage a more set of behaviors around currencies. because the swiss have been brought into the fold by the trump administration regarding being a currency manipulator. the amount of fx they have spent afloat the swiss franc means they are on that target list for countries that have been active in the market to underpin their trade performance. they want to avoid accusations of that. the more convergent behavior, the better. tom: we will talk about this in the next hour. the idea of a central bank that has to wait for data and then to react. we call that after the fact. help me with the swiss national bank. are they ex-post? they have to wait for the money to flow in before they can

strengthen the frank? peter: i guess that is true. they are increasingly a prisoner of international circumstances. investigators is not really play a role for them anymore. they are setting themselves up for correction. if capital were to flow out of ,witzerland to any great degree it would change the dynamics of the s&p's policy reaction. that is the great dilemma. you cannot have independent monetary policy on a fixed exchange rate. with earlye out 2015. this is a jump condition. down -- strong swiss franc. this beautiful recovery. then rolling over right down. what is the catalyst for bold action by mr. jordan again? opinionf he thinks the

polls in france and elsewhere ,ill drive the euro lower still that he will need to get ahead of the curve in terms of his reaction function. i do not think he does. i think he will look like the -- hopeus and hope that is the core strategy, the one that says we do not anticipate parity with the euro and less as a result of political fictions in the eurozone. and therefore, that, ultimately, will be what is front and center thursday. much,ne: thank you so peter dixon and simon french. if you are a bloomberg user, go on to tv to watch the show. tv, and u.s. tv, europe wait for to buffer. we have the headlines.

let me move backwards a little so you can see some of the cool charts. you can also pull up my charts over tom's charts. and you can see the other things we have been doing, the breaking news. and right here on video, you can also ask russians to a guest through us. and send love notes to tom keene. this is bloomberg. ♪

francine: this is "bloomberg surveillance." bloomberi am francine lacqua in. 2.3e is an estimated billion euro investments after reporting solid traffic growth in key markets including spain, france, and chile. francisco reynes massanet, thank you for joining us here. first of all, you are a great person to speak to to understand the health of the economy, understand your hopes were winning contracts in the u.s.

for infrastructure spending. if you are to give a grade of possibilities for abertis, would it be an a+? to pay a: it seems thank god that opportunity will be to come. but it is too soon. we should wait until congress and what is approved. everyone has been speaking about the potential opportunities in the u.s., but we have not seen anything solid so far. -- you areou have pitching for contracts to build roads in the u.s. has the tone and language changed since trump got elected? francisco: we have not seen it yet. we are not a constructor. our business is about advancing the future cash flows that stocks will bring into society. ist we are now waiting for the clear determination of what they want to do.

francine: does the mood in the business feel better than six months ago? francisco: it is early to say that. we do not have a clue about what is going on. francine: because you're worried about politics? tommy what you worry about. , our business is more about be solid contracts we may be awarded by the different administrations. most framework is the ofortant thing in lieu security. having a line term view is a must. we do not care who is voted in. we care about the conditions in which a contract has been awarded. tom: you cross the newport bay bridge in rhode island, and it is four dollars or something like that. americans have a hate affair with holes. in five or 10e years we will be a nation of private toll roads?

the solution to jump forward the repair of bridges and roads? that is not only in american solution, it is a worldwide solution. no money tont has spend or priorities as an indication of where they should be spending their money. plus whenture is a you have people like us who are prepared to spend in infrastructure and get paid through the traffic. then i think we are becoming a solution provider for these lack of budget problems. what is different about germany and switzerland and their attitude towards your work versus the u.s.? why does it perceive, to me, that they have perfect roads, trains, and bridges, and america is falling apart? to be honest, i am

neither german or american. my answer will be more theoretical than practical. what we have seen in the different countries where we operate is that they needs of vitalling a certain attitude the payment for use is more .qualizing for every citizen that and america, there have been other opportunities and priorities for investment. but now, they realize that they are really behind in the quality of infrastructure they may have. and their quality of living is clearly higher than the level of infrastructure they have. that is why i think that the imposedper use will be in time in american society. francine: where is more strength? at the various countries you operate in, where do you see the biggest strength? francisco: our approach to

business is clear in three pillars. number one is our financial resilience. we tried to install a solid capital structure in order to maintain the level of investment commitments through the time. number two is our commitment for and road safety would invest money in trying to build the safer infrastructure for our users. the third is about technology. there is no doubt that, in the next coming years, there will be an important change in how technology plays a role in tolls and motorways and transportation. and our adaptation to these trends and technology will help us. francine: are currencies and currency fluctuations a headache? every currencies are certain headache.

but the most important thing for an investor like us is to self hedge the debts we may raise in the currencies where we operate. thank you so much. we greatly appreciate your attendance today. is and infrastructure in spain. coming up, we will talk about the fed meeting -- the fed deciding at 1:00 p.m. neil dutta, next. ♪

care hangsa's health

in the balance. should we say 1/3 a trillion dollars or let 24 million go uninsured? congressional budget office lets republicans know the score. this morning, sterling weekends. moments ago, the bank of england shaken. the deputy governor resigns in disgrace. and school is out forever. thank you alice cooper. at least until it stops snowing. a nor'easter gripping the eastern seaboard, going back to the great snow of 1717. this is "bloomberg surveillance ." live from our world headquarters in new york, i am tom keene, where it is partly april based on where i grew up. francine lacqua in gorgeous london. snow is different now. they canceled the economic flood --theyyork's soiree canceled school. note price there. it is amazing that neil dutta and him schoenholtz darkened

nholtz darkened the door. francine: this could be significant when you look at the market will do. now, it is sort of light, so i would say no. that may be in the afternoon, you get ebb and flow. is a nor'easter, so you can get huge and very hands and serious snow. this from washington all the way up the eastern seaboard. let's get to our first word news. here is emma chandra. senaten the u.s., some republicans adjust the party should rethink of a plan to replace obamacare after the congressional budget office estimated 14 million americans could lose health coverage next year. senator lindsey graham said the party should slow down and get it right pay the cbo says by 2026, the number of americans

losing health coverage would rise to 24 million. the bank of england deputy governor charlotte hogg has quit after a parliamentary committee said she did not meet the standards required for the role. this after concerns that she did not disclose her brother worked at barclays, which the central bank overseas. prime minister theresa may is ready to start the formal process to leave the you at the end of march. at the end of.u. may. as tom and francine were discussing, part of the eastern u.s. is prepared to be buried in snow today. forecast in --ns blizzard conditions forecast in new england. more than 5000 flights have been canceled. and german chancellor angela merkel displayed -- delayed her

trip to washington. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i am emma chandra. this is bloomberg. thanks. there is the zew news on bloomberg. there is the banner -- what a control room. controlled and measured amid the blizzard of the german zew a little below estimate. 637.t now, the year at 1.0 we will talk to neil dutta and kim schoenholtz about the yield. sterling at 1.2128. that is from big news from the bank of england. francine: it is. the deputy was almost forced to step down -- was basically forced to step down. you are looking at the pound paid you have to look at the treasuries. the yield near its highest level

of the year. i also want to show you what we are seeing in oil. below 49. this is, without a doubt, my chart of the hour. not only do we see the possible second referendum in scotland, we know theresa may has power to check your article 50. i do not know whether she will send a letter or an email or fax it to the commission in brussels, but we are hearing she is preparing to do it over the next couple of weeks. england deputyf governor stepping down after lawmakers criticized terri paid you wonder what happens to the pound that. tom: the blog at bloomberg markets quite harsh about the inguage in what is going on the bank of england. and what an extraordinary afternoon with the release of the congressional budget office score paid i have not seen -- with the for

release of the congressional budget office score. the victor in this analysis? >> there is something in the report for everyone. the administration, as well as house speaker paul ryan's thece, are confident that $337 billion budget revenue number that came as a result of this report is going to be enough to silence critics, particularly those in the house freedom caucus and in the tea party, to push this bill through. not costaying it will the government a lot of money. egg win for their ministration. but i talked to tea party folks and ultraconservatives. they have concerns about how they argue the plan will incentives.lize tax democrats are for housing on the fact at least 14 million people could lose health insurance. tom: in the first year, and it

goes out to 24 million in the next decade. this landed with a flood -- thud in the senate. when will the senate pickup serious condition of -- consideration of what the house has brought? kevin: watch carefully. the blizzard has put a damper on things, but watch for how senator mike lee and senator rand paul react to this, especially on the house floor, and if they do things to try to work this. but also, the weather could delay this. tom: did you see what young cirilli? as usual, someone in washington made an excuse about the weather. [laughter] they have one snowplow in washington. cirilli almost did not come in.

[laughter] francine: you know the parallels between washington and the u.k. are quite a lot to give me a sense of who donald trump is meeting with in terms of foreign leaders this week. has with angela merkel has been postponed because of their weather and that one snowplow in washington. he is also meant to meet the saudi crown prince thursday. who will he get along with more? kevin: with trump you never know. about two big meetings in terms of foreign policy later. lots to talk about with the saudi's, including foreign , and howd immigration exactly they can work together on national security and oil. it goes with chancellor merkel friday, two big things. one, economics, trade. how will we he interact with the e.u.?

and. tom: foreign policytom:, of course thank you, kevin cirilli. what a pleasure to have neil dutta and kim schoenholtz. right now, we have to look at the jump in yields. go to the chart. -- in yield.t a surge we are just buttressed against resistance. the you anticipate a real move up in the two-year yield? neil: the two-year yield has broken out. tom: a little bit. neil: that is the yield most sensitive to economic activity. in my view, it is moving to the right and labor markets are continuing to tighten. so i think now is an opportune time to take short positions in

the front of the treasury curve. that means yields continue to rise. we are probably closer and now to what will resemble a normalized tightening cycle from the fed. kim, help me here. this is the work you have done whatstephen cecchetti on an institution can do. do you believe chair yellen can get out in front of what mr. dutta observes in the market? a good job.e doing they are keeping pace with the state of the economy. my guess is if all goes well in the rest of the world, the u.s. will do reasonably well. the fed will continue to tighten, maybe even faster than neil suggested. but there are risks from europe and china. the biggest one right now is the

french elections, which could turn the euro area upside down. at a notei am looking by jim bianco, at veteran u.s.tment analyst, on investment yield. he says if they wait for the three year yield, they should cap for pain. let me show you my chart. you have the 10 year yield and the resistance level you were talking about in white. in blue, you have the 30 year yield. what is the resistance like on the 30? neil: i think yields generally move up and down together. the yield curve is steep, still. there is a magic level on the 10 year yield that will sink the economy. you have seen the yield curve flattened somewhat. and has since stabilized. what is important to realize is we have had a pretty significant back up in interest rates since

the election over the last year. despite that, the stock market is still up. significantly. , in that is telling you is some respect, this is a backup in yield supported by underlying economic activity, not only in the u.s., but global. tom: we will come back on thistom: in talk with kim schoenholtz and neil dutta. p.m., carmen0 reinhart joins us. and the former vice chairman of as the fed decides at 1:00 p.m. tomorrow with scarlet fu. this is bloomberg. ♪

♪ francine: "bloomberg surveillance with francine "bloomberg surveillance and tom from london and new york pay the bank of england's" deputy governor, charlotte hogg, has quit in the last half-hour. a committee said that she did not meet the standards required for the role. lawmakers were considered sheet -- were concerned that she did not disclose her brother worked at barclays. ,et's bring in scott anderson who covers the bank of england. give us a sense of how embarrassing this is for the bank of england. this is quite uncomfortable and and there is in. it seems to be a case where this is more perception of conflict of interest rather than an actual comput of interest. lawmakers have said they do not theeve charlotte hogg liberally misled anyone in terms of a connection with her brother

at barclays and that there has not actually been a conflict of interest while she was chief operating officer. but now that she is the new deputy role for market and banking, they have not met those standards -- she has not met those standards. francine: will this tank governor carney? scott: no. it was a case of she was an appointment by mark carney ansi has close to mark carney. markuld be a case where carney is losing a close and loyal ally institutionally inside the bank, because she bankaw a -- spearheaded a overhaul, but also in terms of interest rates. they will make a point that her strength does not lie in economics, more -- but more in the private sector.

it could be the case that carney has lost two aspects there. francine: the boe is down one voting member of this month, right? scott: we do not know the specifics yet. the mpc is meeting at the moment. this will be her first meeting. we do not yet know, and we're trying to find out from the bank , about whether she will vote for interest rates this month. she did say that there would be a transition period, so we do not know if she will continue to vote while she works through that. francine: give me a sense of how long it will take to find a replacement for her. scott: you would like to think wouldhe treasury communicate that they would go to the next rank, the next down, and approach them to see if they

would take over the job, but it could be months. normally, it takes months to fill this kind of position. and there may be a whole process , a competitive process, that needs to be gone through again. francine: scott hamilton there who covers the boe. tom: thank you. with us, kim and neil dutta -- kim schoenholtz and neil dutta. that herhere is brother was at barclays -- baloney. this is about if members want someone in the federal reserve system to have monetary policy expertise. she was out of mackenzie. she has certain skill sets. but there is a point where you want a stan fischer-like person involved. mark carney is first rate academic. i get that. but they are not kim schoenholtz.

do you need monetary theory in the leadership of a central bank? kim: it is good to have a balance pay the fed has moved towards having a lot of talented professional economists at the leadership level and in staff. is it really what this is about at the bank of england, having a stan fischer telling people what to do? kim: i can only say the bank of england is extraordinarily robust and i am sure they will withstand this. tom: do you give a damn if someone has a phd from brown or yale? the you need that to be comfortable, or can you take your shot at hogg? is important to have

both academic economists but also market practitioners at the central banks. sh.: like a kevin war' think if you have a phd, you are somehow smarter than everyone else. if eating right about big economic policy is a prerequisite to serve in government, there would be no phd economists serving in government. it is important to have a healthy balance. what is going on now with the far,s may be going too where legislators are basically dictating certain seats captured by certain industries. for example, community banking. this is one of the things where it is odd for people to not get behind it. .ven if they may not make much sense sterling really has not moved up on this news.

francine: we are trying to figure out if it is market jitters or something to be expected as there is more news coming out. we will be back with neil dutta and kim schoenholtz. coming up later today, conversation with sadiq khan, the mayor of london. york..m. in new this is bloomberg. ♪

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there has not been any flex ability or sensibility towards scotland since becoming prime minister. she seems single-minded and determined to go ahead into brexit. that is not what scotland will do and that is not the inclination of the scottish people. francine: that is the former scottish first minister, criticizing theresa may. bloomberg's and edwards is in -- bloomberg's anna edwards is in less minister -- in westminster. it seems there had be expectation that perhaps she would call the referendum this week. now nicholas surgeons -- nicole

sturgeon's move for another referendum, that debate rumbles on. but now we are being guided towards the last week of march is where we expect to see the triggering of article 50, anniversary of the signing of the treaty of rome, with celebrations taking place in rome that day. with a divisions among the conservative party. what are then you divisions and fractures in the tories? they have always been a fractured party. the issue of the year of has long hung over the conservative party. we saw that in the previous vote. we did not see that much rebellion from the conservatives, who may have been minded to defy the government. many of them were likely to defy the government, saying they were waiting to get assurances and

verbal commitment from the government about whether there would be a proper role for parliament in the final deal and the decision on that deal. they must have been reassured enough that they decided not to so we saw theds, brexit bill passed. now we wait for the triggering of article 50. francine: thank you, and edwards. duttal be back with neil and kim schoenholtz. we also speak with the former u.k. chancellor of the exchequer. at 10:30 a.m. in new york, 2:30 p.m. in london. this is bloomberg. ♪ live-stream your favorite sport

at the airport. binge dvr'd shows while painting your toes. on demand laughs during long bubble baths. tv everywhere is awesome. the all-new xfinity stream app. xfinity. the future of awesome. neverimes square will shut down. we know that from decades of experience with snowstorms. toch snowstorms going back

1888, hi norma's march storm in new york, when the two feet. emma will have more in a bit. be careful out there. first world our news. emma: in the u.s., under report on the republican plan to replace obamacare could leave house republicans in a bind. the budget office estimates plans could force 40 million americans to lose health coverage by next year when the entire house is up for reelection. when republican senator am a lindsey graham, suggested the party may need to rethink the legislation. there's a report that president trump has given the cia's secret new authority to conduct road strikes against suspected terrorists. that is a significant change in policy. under president obama, the cia used drugs and other forces to locate terrorists in u.s. military carried out the actual attack. in europe, british prime minister theresa may has been warned she will face or test in

parliament over brexit. -- has atave to face least seven bills as part of the process, exposing her to ambush by lawmakers. the times report came after a one parliamentary backing to start the brexit process. the northeast and u.s. is bracing for a late winter hit of heavy snow and high winds. there's a blizzard warning for new york city and surrounding areas. we could get a foot and a half of snow here and wins it may gust of 255 miles per hour. there's a winter storm warning for the rest of the northeast. more than 5000 flights canceled. we will keep you updated throughout the morning. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. tom: thank you. neil dutta and kim schoenholtz with us. here is a newly minted tome.

this is like watching paint dry, except it is so damn intelligent you have to read it. it is readable. , kim, isentence for me you try to bring as of today on all of the stuff we don't want to read about. nearly seven years of additional perspective. rise like you are a lot smarter about dodd-frank -- guys like you are a lot smarter about dodd-frank than your seven years ago. >> i hope so. we have learned a lot. dodd-frank in many ways was a law that required regulators to create new rules, and they have created several hundred new rules. we have would a lot about the process. there is a way to sum it up. dodd-frank is a very inefficient in some ways, but the choice act, which is the proposed replacement for dodd-frank, would actually make the system less safe. so if i had to choose, even if i don't like the inefficiency, i

prefer safety. tom: francine lacqua just spoke with jamie dimon. i was a justine knows to the penny what is additional -- i would suggest you knows to the penny what the cost is. it has been onerous to say the least. is the cost worth it or are we just for ourselves before the next crisis? >> there are definitely ways to reduce the cost. we would love to see reforms that would cut the cost. if you're going to do so, you can do it in a way that does that make the system less safe. you would not remove the strict supervision of the most risky -- the largest, most risky, most complex institutions in the u.s.. play donaldng to trump. i'm to my alec baldwin imitation. no, i'm not. what is the one chapter the president has to read to understand how to make a better choice about choice? >> the executive summary summarizes it all.

it tells you how to make the system safer and more efficient. there are ways to do both. francine: how can you be so sure it does not sow the seeds for the next financial crisis? youe really ever know when relax regulation what happens next? >> that is exactly right, francine. you want a system that is robust to all surprises. we're not going to be able to anticipate exactly what will trigger the next crisis. we want the institutions that are most risky, that is, the most complex, interconnected, opaque institutions in the economy, to be very safe. we can do that -- and it is still relaxed supervision and regulation cost for most banks. 99% of the banks are too small or too disconnected to be systemic. to threaten the system as a whole. we can make it safer and more efficient. francine: do you think u.s. banks will still play on

international regulation field? to get out of the system completely? >> look, u.s. banks that want to play a role internationally need to be sensitive to the rules in countries outside the united states as well as in the u.s. the basel rules are for internationally active banks only. the largest, most internationally active ones. they want to do business abroad and their very successful at it. the fact that capital has risen for u.s. banks over the last seven or eight years has made them more robust. it has made them better competitors on the international arena. is this good for the economy in the u.s. or is italy good for wall street? -- or is it only good for wall street? that, you know, it is interesting you're talking about safety and security. this is sort of a civil libertarian argument. casenk you could make a

that productivity in the u.s. has been quite weak over the last several years, and that the regulation or the reregulation of the financial industry is one reason why that is the case. if you look at the financial productivity sector, it has been quite weak. that has been holding up productivity in the overall economy. i mean, this is something that can be looked at with public policy. generally speaking, u.s. banks are in a much stronger position than they have been in the last 10 years. tom: i need the cliff notes. here's the book "regulating wall street." kim, yet the luxury at nyu of michael spence. let's combine this together in the analysis of regulation. what are the unknown unknowns that the banking community, the government community, and the main street community needed no? never see the threat coming around the corner.

tom: i totally agree. >> that is going to happen -- when i said earlier i thought europe was a big risk, those are the obvious ones. we need the system to be safe enough for the ones that surprise as. -- surprise us. tom: is more cash on the balance sheet the only thing solution to deleverage our banks, which jamie dimon in the new head of age sbc -- hsbc? >> i don't think it is the only solution, but the most important one. making sure that financial institutions are funded with equity, substantial amounts of equity makes them safer. it gives them the right incentives to manage risks and it means the rest of us are cushioned if they take losses. francine: professor, where do you see the biggest risk? is it nonperforming loans in the chinese sector or some kind of crisis in china or liquidity or elsewhere?

>> i was it is the french elections. i worry that if they follow through on the program to withdraw france from the euro area, to redenominate the currency, that could trigger what one economic historian once called the mother of all financial crises. francine: isn't that what we said? isn't that what we said about brexit? we are still here. we survived. think so. u.k. has run its own currency ever since the black wednesday. it is very different to exit from a monetary union that it is to exit from the european union. to redenominate ones currency would involve great uncertainty about who owns what. we would spend a lot of time in courts for years to come. there could easily be a run on banks in countries that were to leave the currency area. tom: kim schoenholtz, thank you. pros.ly pro book for

coming up, we will speak with derbyutta about the fed tomorrow. 1:00 p.m. tomorrow. scarlet fu and myself will hold court over the fed decide. stay with us. this is bloomberg. ♪

francine: this is "bloomberg surveillance." let's get to the bloomberg business flash. bill ackman has raised a white flag. he's purchasing capital management has sold its entire stake in the embattled drugmaker valeant. shares have fallen 90% since its peak. it is estimated he may have lost

$2.8 billion and possibly even more. toshiba may sell a majority stake in its westinghouse nuclear unit. the japanese company is struggling with construction delays and a multibillion-dollar write-down in the business. toshiba made the announcement as a gain approval to delay the release of third-quarter earnings until next month. the company estimates it will need to take $6.2 billion write-down, but has not yet had auditor sign off on the plans. u.s. justice department is investigating bmw over how it handles overdue payments for military members. according to document obtained by bloomberg, bmw says it does not know how many of its leases may be affected by terms of the law that has penalty is against -- and guilty -- has penalties against blizzard employed. that is the bloomberg business flash. francine: thank you. election. the dutch he promised her and leader of the freedom party last night went head-to-head in a televised debate. wine no party is set to

more than one fit of the season the dutch parliament, the popularity of the freedom party is being seen as a bellwether for political sentiment around europe. great to have you on the program. what are the real chances of anti-muslim winning tomorrow? >> it is not decided yet. second and most of the polls. he is no can that quit prime minister of the liberal party. it is still very exciting because a lot of people still have not decided who to vote for. francine: what happens if wilders does become prime minister? will he have any kind of majority? what happens to the market and the economy today after? >> well, the chances he will actually become the prime minister is rather small because in the netherlands, will the system that you have to form coalitions to be able to form a

stable government. the chances we will get an absolute majority is almost zero. so we have to form a coalition, but that is the hardest part because, basically, all of the parties have excluded to be in a coalition with him. the chances are that he could win the elections, but he will not become the dutch prime minister. francine: all right, is the rhetoric ugly? we look at france, we look at brexit. have you ever seen a netherlands that is so divided? >> could you repeat that? the conversation ugly? we were looking at the date -- debate and it was jobs. they were threatening each other, the credibility and integrity of the other. have you ever seen it so ugly? >> well, there was an interesting debate yesterday. basically, the implications were the people who tend to vote for

wilders, he was very well able to get his message to them. on the other hand, he really attacked the prime minister just as hard. tom: -- we will leave it there. corina, thank you so much in amsterdam with this story. we will focus on this through tomorrow, most certainly, the election in the netherlands. with this, kim schoenholtz and neil dutta. ring up a chart if you would. this really goes to the subtleness. kim, own to start on this with you. this is nominal gdp in the netherlands. this is the netherlands we know. ok, there was a crisis, and then it was flat, and then there is this very subtle rollover here. kim, is absolutely crucial to keep the animal spirits in the nominal gdp going. even in a prosperous netherlands, they have not been able to do it. >> look, the euro area has been

threatened for some time with deflation risk. the good news is, they're probably now coming out of that. the bad news is, it has created a lot of political risk. tom: this goes to mr. draghi. we have a central bank derby today. this is a sideshow for mr. draghi from the other major headlines. but once again, it is about a lack of animal spirit. >> well, sure list of it that is not entirely surprising. we had a major financial crisis in 2000 and 2009 that started in the u.s. and went globally. part of the problem for europe was a lack of an aggressive response early on. so it is not surprising to see animal spirits not coming back in europe the way they have come back, for example, in the u.s., we had a very aggressive fiscal and monetary response. i think the lack of animal spirit has to go primarily to the response out of the european

central bank early on after the crisis. tom: francine, bring up the chart one more time, this is critical. it is absolutely important we understand that nominal gdp in the netherlands is below where in 2007. 2008 have meanwhile, the u.s. is we appear economic growth. francine: right, but i imagine -- part of that is monetary policy from very different areas. going at different speeds and levels. do you believe the eurozone will survive in this current state? >> yes. i mean, shorting it has been a little maker trade. i think that is a political unit at this point and the cost of breaking up our two great i think even for most politicians in the euro area to bear. that being said, i think is pretty clear it is not an optimal currency area. tom: we're going to come back

here with kim schoenholtz and neil dutta to wrap up, particularly, as we drive for to tomorrow's fed meeting. don't forget the snow. nyu, their off for the next six days because of the blizzard. how about tv ? tv is very cool. you need tv . there is kim. forget about that blowhard. you can come over here, click on this. you can get to a previous segment of brilliance. you can steal our chart. down here in the lower left corner, you can discuss united kingdom's snow blizzards with francine lacqua. tv . it is not a bad thing. ♪

francine: this is "bloomberg surveillance." tom, we're just getting an update, charlotte hogg about an hour and a half ago resigned after criticism from lawmakers for failing to disclose that her brothers works at barclays, a bank which the boe regulates. there was discussion and we just found out that she will vote at

this week's monetary policy meetings. questioningwere whether they would have a decision meeting or she would be included. we now have confirmation she will vote. dot waybe she will do a down at the bottom. who did that? bullard? yeah, bullard. i'm kidding. this is a big deal. charlotte hogg and a lot of other discussions. thank you to our guests for their perspective on the bank of england. let me do the foreign-exchange report. it is on sterling. this is before the resignation of the governor. simon french saying it would be a big deal. single best chart. we did this just for neil dutta of renaissance macro. in shoulder notes also here --kim schoenholtz also here. this is a taylor riggs rule. thank you, john taylor of stanford for tweeting out our

use of his rule. we're honored that officer taylor would pay attention to bloomberg. he watches it every morning at 2:00 a.m. i don't know how he does that. the taylor rule way out front. i overlaid on this the dots. three year.o year, do you care the dots are that far behind in the rule? >> no. tom: can you expand on that? >> clearly, if the taylor rule was correct, the economy would our headg so hard that would be spending. inflation would be much stronger than what it is full clearly, none of those things have happened. it is hard to argue the fed is behind the curve. maybe it is by no taylor rule, but i can speak to a flaw in a feature of the taylor rule. interest rates are not the 2% for they have assumed to be

all this time. tom: and dazzling our global withnce, kim schoenholtz the taylor rule, the me get rid of these previous marks. i can do that. nehru. is the plug-in of whatever nehru is, do you have a clue where nehru is within the taylor rule? >> not a better one than the federal market committee does. their judgment is as good as ours. we are probably very close. francine: how do we know when we are close? >> it is unfortunate, but the way we know is whether inflation are both wage and place -- rights inflation starts to rise. we are seeing that. we are seeing wage inflation start to pick up, actual inflation rise a bit. i think that is why the fed is going to be tightening because they are now confident that inflation will rise to their target. they were not confident until relatively recently. francine: this is all missed a catch 22. we have the data, but it took fed presidents to talk the market up to believe they will hike. our the markets looking at the

data and not looking at inflation and wage growth, only listening to what presidents are saying? >> that is a fair criticism. you can easily make the case that this is a rate hike that the fed sought. we basically saw a march meeting play out in real-time over the last couple of weeks. i think that is a problem. clearly, you have to ask yourself if we got the jobs number and we did not have all of this fed rhetoric, with the markets have in price for rate hike in march anyway? i think probably yes, but they did not really let that scenario unfold. tom: what will you listen for within a press conference at tomorrow's meeting? >> i think yellen will be fielding a lot of questions on fiscal policy for the office reason, that is something they're looking at the outlook. banker comingral the head of the fed, is going to be discussing that is politically sensitive, obviously. within the statement, i would be looking at two things. first, i think the fed should

upgrade their language. and whether they continue to closely monitor financial markets. usually, that signals a heightened level of caution. tom: thank you for coming into our world had quarters. way, therel, by the are two snow shovels. you can dig your way out lexington avenue. neil dutta and kim schoenholtz out with regulating wall street. this will be a movie, fourth of july, 2019. tomorrow at 1:00 p.m., look for them. the fed decides 1:00 p.m. tomorrow. this is bloomberg. that is snow in times square. ♪

♪ charlotte, a possible

successor to marconi resigns as theresa may gets the green light to exit the european union. fed officials begin their two day meeting. over thease of hikes next three years up for grabs. 14 million without insurance and premiums. in republican governors are fighting back. >> a warm welcome on this tuesday, march 14th. i am david westin alongside alix steel. jonathan ferro is off today. you did better than angela merkel, you made it. isyou can see new york covered with snow. angela merkel didn't make it, but fed officials will meet no matter what. i like that dedication. david: you know that washington shuts down with even talk of snow. we will get out of the sn