♪ francine: the south african president is set to tell communist party leaders he plans to sack his finance minister. charles evans puts the possibility at just two hikes. brexit battle. pay the u.k. will have to to leave the eu, article 50 will be triggered tomorrow. suisse ceo says he has breathing room to consider

options. in london, we have a packed show for you. and through the week. a lot of focus on brexit. first things first. checking in on the markets. a selloff. the selloff of the riskier assets has eased some much. best has eased -- has eased somewhat. the one i want to show you is rand. the president of south africa plans to fire his finance minister. we will keep an eye on the emerging markets and we will talk commodities as well. rand: the south african has slumped this morning after the president was set to tell the senior leaders of the communist party that he plans to remove the finance minister. that was according to three people who were at the meeting. a spokesman said the people were

misinformed. the u.k. brexit secretary david davis says the u.k. will not cough up the sums of money that eu officials are saying it will need to to leave the block. jean-claude juncker says the to forecast set around 50 million pounds. the bill is set to be an early source of disagreement. scottish first minister nicola sturgeon is expected to win backing today to pursue a second independence referendum. she wants to hold the vote by spring of two dozen 19. the ceo of credit suisse has said the bank has made massive progress in its restructuring. he added that the firm has enough breathing room to consider alternative capital raising options. it has been a busy 12 months with a lot of progress.

clear about backing in february. it has helped us with our global restructuring. we have paid -- we have made much progress. trump will sign an executive order to combat climate change. obama made promises. measuresdent's stopped short of leaving the climate accord. security features include a 12 sided design, a hologram and fine lettering. the mostcalls it circulated coin in the world. global news 24 hours a day powered by our 2600 journalists and analysts in more than 120 countries. i am nejra cehic. european markets have

followed asian indices and the dollar higher. selling riskier assets. doubts remain about implementation of his agenda and how it could affect the rates. spokeicago president giving his assessment of the central banks rate path. >> to the extent that i have more product -- more confidence, that would be a good indicator that i could support three. two might be the right number if there is more uncertainty. if there are any modest concerns about whether or not he will get that. and if things really take off, if we have continued strong growth and if inflation picks up, we could get posture. taylor whoohn invented the taylor roll says the fed to stop talking so much about the rate path. >> they have indicated three

during the year. that is not too much different from what they have been talking about. some are talking about four. as long as they continue with it -- remember, last year as they talked about three or four and they did one. the idea would be to continue with the strategy. do not talk too much about it. it is clear what they need to do. there does not need to be that much discussion. francine: let us bring in jane fully. great to have you on the program. we have heard from a couple of said presidents and john taylor. too much on how many interest rates and when. also the possibility that we are focusing too much because the fed like everyone else is concerned about fiscal policy. it is difficult for them to

predict what he will be able to get through congress. without knowing that, it will be hard to know exactly how many interest rate hikes need to be done. from that point of view, we could say that the full guidance given to us why the fed is more cloudy than it used to be. francine: how do you see the health care bill failure? there were a lot of questions in the market yesterday whether it would mean the president would struggle to put his economic land in place. >> the health care bill was one thing. we need to see what he does. there is a common theme. one of the reasons why the health care bill failed was the amount of debt that the congressional budget office did say that given the aging population, the budget deficit will be rising and the debt will be rising and all of this was a constraint for the conservative

republicans. most are expressing concerns about the deficit and the pressure of the aging population. on that will be a constraint the tax cuts he will also be able to get through. i think there is the risk that there was too much optimism in the equity market price and certainly in the price of the dollar. i think the market could still be vulnerable. francine: does that mean you still think the dollar will weaken? 110 fororecast has been year end. i think there could be more risk in the forecast. if you see the volatility that we saw in the markets yesterday, how will that pay -- play out? >> more politics. there is a lot of bad news. dollar, i doto the

think there is too much news in the pricing. i think we could see some volatility. politics are most at play. and is the greatest risk for volatility. francine: i don't know if it is the 10 year yield in the u.s. or the dollar -- what is the one thing we should be more worried about? >> there are concerns in both. inflationary trade. your personal view on the reflationary trade will limit both of those. for the dollar, there is too much good news in there. i think we have seen a lot of short covering recently and that is on the perception that may be populist politics is not the great risk this year. particularly given this debate which has become more relevant about ecb policy. better than expected european

will i think the market debate ecb policy. and that could give more left to the euro. francine: one more question. u.s. -- is janet yellen calling it noisy? i think we are right to be careful or cautious about the gdp index. francine: thank you so much. jane will stay with us. we are joined by jim rogers. great to have you on the program. welcome to our london studio. what worries you on the markets right now? we are seeing volatility. >> the central bank of america has no clue as to what it is doing. they are going to ruin us all. interest rates at levels we have

never seen in history. this is all going to end very badly. you do not have to worry. you have job security because someone will have to report all of this disaster. francine: let us not talk about my job security. but central banks will push back and say we do not know what would've happened had we not done what we had done. know what would've happened. more bankruptcies. a horrible year and then everything would be fine. i know how it is going to end. it will end badly. pain, in had the scandinavia in the early 1990's, they had this problem. several people went bankrupt and they started all over again. and scandinavia has been fabulous after three years of horrible pain. this is the way the world works. propping up zombie banks is not

the way the world is supposed to work. all, jane,irst of what is your take? have central banks put us all in despair or have they done their job? allowed theave economies to sustain employment at the cost of low productivity. if they would allow us to be open to these risks -- yes, we would have shocks that would force us to become more productive and competitive. but that would put a lot of people out of work in the short term. but the short-term could drag on for 10 years. the only problem is in hindsight, it took about 10 years for those employment levels to go down. >> it has been nine years. we do not have much to show for it except staggering amounts of

debt worldwide. and many pension plans are going broke. insurance companies are going broke. francine: but there is growth around the world. again, had we taken the pain in 2009 or 2010, by now things would be great. as in scandinavia. early 1920's,the they raised the interest rates, they balanced the budget and had a terrible two years. if you take the pain, you clean out the mistakes and you start over and then things boom. francine: what was that have looked like -- had we taken the pain in 2009? >> there would've been other people including lehman brothers. francine: it would have been very ugly. >> but what do we have now?

strange elections because no one is happy. everyone in the world whether it is europe or asia, we know something is wrong and we are trying to figure out what to do. maybe the solution is donald trump. some people think that is not a solution but a problem. this is why many people in the world know something is wrong but they do not know what to do so they take it out on politicians. francine: jim rogers and jane foley will stay with us. we will begin you to more interviews with fed presidents. of st.ay, james bullard louis. if you are a bloomberg customer, you can watch us on tv . jane.n see jim rogers and you can follow all of our charts. reach out to shows directly. you can even ask the guests a question. directly message us using your bloomberg.

ericsson is to book extra expenses of as much as $1.7 billion in the first quarter. the company says earnings will be cut by around $1 billion because of recent negative developments related to large customer projects. it will also look higher restructuring costs and write down some assets. more than two years after being ousted from pepco, -- pimco, he has settled. virgin atlantic is bracing for a loss this year as the slump in the pound ways on bookings. -- weighs on bookings. the ceo is thinning management. but the company is unlikely to be able to offset the losses.

that is the bloomberg business flash. francine: the u.k. brexit secretary david davis says britain will cough up nothing like the amount of money that eu officials say it will have to pay to leave the block. says the u.k.cker will be expected to fork out around 50 billion pounds. the bill is said to be an early source of disagreement soon after brexit is triggered tomorrow. 5 billion pounds invested in the u.k. in the next 3-5 years taking its total commitment to about 40 billion. states willher gulf also push for a post-brexit free trade agreement with the u.k. has continued to be an important market for us. we already have more than 35 billion in investments in the u.k.

we have put in an additional 5 billion pounds. our main focus is going to be on infrastructure, technology, and some real estate sectors. make this announcement in the same week that the u.k. will trigger article 50 to start the brexit process. is there any scenario or deal that the u.k. might make with the eu if there is not a deal before the two years are up that would make the u.k. less appealing to you. -- wethe last 10-12 years have been investing in the u.k. and europe during the financial crisis. most of our investments are long-term. we are not looking short-term.

that is the way we would like to carry on our investments. thatere have been reports you have been discussing a bilateral free trade deal to be activated when the u.k. does leave the eu. and are youhe works working on it to be ready as soon as the u.k. triggers this departure? >> we welcome the gcc community. side, we will encourage such discussions with the gcc. jim rogers is with us as well as jane. thank you both for sticking around. how much lower does the pound go from here? bear the bad news in mind. we think the dollar could be

going lower also which should give cable a choppy arrangement. it could be more vulnerable. we are looking at sterling pushing lower. what isfficult to know exactly going to happen with these brexit negotiations. we have the divorce till. we have had that 50 billion number out there. if the u.k. can negotiate that down, there could be a little relief coming through. couldgotiations on trade make sterling very vulnerable indeed. leave, why --'s if the scots leave, why won't sterling go down? looking at a risk for

the union. this is a potential risk. >> the scots have a lot of oil. francine: we do not know if they are going to leave. >> we are just talking about currencies. >> that would certainly drive sterling lower. the price of oil is a lot cheaper than when they did their budget negotiations a couple of years ago for the first referendum. >> they do not have gigantic debts. their budget program is going to be quite interesting. it is not necessarily something that scotland can afford to do but that is highly debatable. irrespective, i agree with you. if scotland were to leave and the polls show that the scots want to leave, that would be a worry for sterling and we have got to keep an eye on northern ireland also. francine: it is also a question

of timing. we do not know when there will be in referendum if there is going to be one. >> there is no question the u.k. is going to leave. the u.k. citizens say that is what they want. as an outsidee is investor, what will happen with the currency? will the scots leave -- if they do, they will take their oil. and you look at the uk's balance of trade and balance of payment without the scottish oil, what ,s left here, little england does not have much to sell to the outside world anymore. francine: what do you see europe becoming? is that the bigger concern? >> more disruption. theircians can then make name by saying "let us leave also."

there are many politicians who are now inspired. francine: thank you so much. we will go back to some of the polls. higherce, we see a percentage of support. the bank has made enough progress in its restructuring program that it can consider capitalizing options. yvonne man spoke to the ceo. way, it is a positive thing that all of this is trading place. when we began in october, we need 11t we would billion in capital. we have made a lot of progress. we set out to grow profitably. reduce costs. strengthen our capital position. legislation.

we have made a great deal of progress in 12 months. higher margins. we have reduced costs by 1.9 billion. our target was 1.4. capital, we started at 2%. 2016, we were at 12.4. the sru,d it has been a busy 12 months and we have made a lot of progress. the ipo was a capital backstop. that has helped us. in the restructuring period. and we have made so much progress, a can consider all of our options. and that is all of the data i can give you. yvonne: are you speaking with other banks? .> we are considering options we have been clear since

february when we announced our options that the ipo was an option. that was the ceo speaking to us in asia. let us talk south africa. the rand has plummeted after the president told senior leaders of the communist party that he plans to fire the finance minister. spokesman for the anc says the people were misinformed. let us get more from jim foley and jim rogers. -- jane foley and jim rogers. rent versus dollar. the first red box is when we heard yesterday that the finance minister, who was supposed to meet with investors, has pulled the back.

thewe understand that president told communist leaders that he was going to fire him. >> this is all about politics. last year, the south african rand was one of the best-performing emerging-market currencies. but it is vulnerable to what might happen with the foreign minister -- with a finance minister who is the darling of the market. the president is very concerned about the popularity of the anc which has on down. he was like to give out some social benefits. the finance minister is much more cautious. aside,ere to be pushed the south african crew grand -- the south african rand would fall. wants to keep a sensible grip. if he goes, the south african rand could fall further. >> would you invest in south africa? >> they will just print money

again, why would you want to purchase their currency? buy in what you can south africa, you can buy in russia or china a lot cheaper and a lot better. francine: what is your favorite emerging-market? >> russia at the moment. stoppedas oil prices going down, i hope i am smart enough to purchase a lot of rubles and a lot of russian government bonds and maybe shares. francine: inflation is very high. >> interest rates are also very high. you and i are not the only ones that know that inflation is high in russia. the russians are honest about their inflation. the americans and the brits are not honest about their inflation numbers. i know that you are taught that

you purchase what is hated. francine: you buy where the is warrenthis buffett's strategy. buy don't think you anything if you think it is going to go down or at least that is not how i invest. will go up that they someday. and often, in my investing career, if you buy things that are hated, that means they are unpopular and depressed and often-- and they are francine: -- francine:how can the world talk about refugees? this is bloomberg. ♪

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♪ is bloombergs "surveillance." i am francine lacqua here in london. but it did a bloomberg first word news. rand afterh african

the president was said to have told senior leaders of the communist party that he plans to remove the finance minister from his post. that was according to three people at the meeting. a spokesman said the people were not -- were misinformed. the u.k.-brexit secretary says written will call but nothing like the sums of money eu official said needs to be paid when the country leave the block. days after the european commission president said the u.k. will be expected to fork out around 50 billion pounds. the bill set to be an early source of this soon after brexit is triggered tomorrow. the ceo of credit suisse says the bank has made progress in its restructuring efforts. he said the firm now has enough breathing room to consider alternative capital raising options he on a long-standing plan to lift art of its swift -- with baking unit. >> a busy 12 months.

the ipo was a capital back stock and we were clear about that in february. it has helped us. with restructuring period. we have made so much progress we can consider other options. >> the u.s. house intelligence committee house democrats have called devin nunes to step aside from the panels russia probe and donald related to trump's presidential transition after he said he met with a person on the white house grounds you secret intelligence documents that he used to bolster donald trump's claims of surveillance by barack obama. the new one pound coin enters circulation in the u.k. today. design, as a 12 sided hologram, and find letter he, the royal mint chief executive calls it the most secure circulating coin in the world. global news 24 hours a day, powered by more than 2600 journalist and analysts in more than 120 countries. i am nejra cehic. this is bloomberg. francine: with less than four

weeks until the first round of voting, candidates hoping to be the next president of france setting up to business leaders today, hosted by employers organization and we are there. what are the concerns of french businesses regarding the presidentials? >> emmanuel macron is the first candidate to speak, been here for 45 minutes trying to answer questions from business people and the concern is the fact that hewants to keep the 35 week, responded he wanted to add flexibility to it and have some agreement in different sectors to see if you could increase the work week of the average french people. if you look at the programs of the other candidate who will all respond to this audience of their biggestay,

concern is the protection this program of marine le pen and the fact that she wants to leave the euro. had an interesting opinion poll this morning, 55% of startups prefer a manual micron as a candidate -- emmanuel macron as candidate and small and medium companies favorite marine le pen, big businesses, 45% prefer filon as their candidate. francine: is the issue of -- how key is the issue of immigration? >> it is a concern among the french people. it is a security concern, given france has had to face terrorist attacks over the past two years. ron said that marine le pen was lying and she claimed she

could ban even legal immigration. she fired back, saying macron was too soft on immigration. marine le pen is the strictest on immigration, she wants to cap immigrants to 10,000 per year and add a 10% tax on foreign workers. she wants to reinstate border controls. filon have a softer approach. , his priority is to deal -- theyugees and priority among the french people is on the economy front, the top three priorities among the french voters are the jobs, french power, and welfare

protections, immigration comes as number four in this election. francine: thank you so much. let's stay with immigration and how it has driven the rise of populism in europe, or not. my next system says the system in dealing with refugees is broken beyond repair. systemext guest says the in dealing with refugees is broken beyond repair. welcome to "surveillance." with us is jim rogers and jane foley. this is an important book. i do not know how many politicians will read it. do you believe that fixing the refugee crisis means politicians losing political capital in europe? >> no. the refugee crisis has been badly misunderstood. as if the solution was to bring refugees to europe. most refugees are not migrants.

they have had to flee their homes. and they stumble across the nearest border to the regional havens. most syrian refugees have not come to europe, even when the doors were opened. they are in jordan and turkey and lebanon. the tragedy is, they are not allowed to work. the solution to the refugee crisis is not bring them here. where they are unemployed. it is to take drops to the refugees in the havens. francine: that is a great idea but how do you do that in practice? and what can european leaders do to make that happen? easier can make it much for european business and international business to take jobs to the industrials. i have been working with the government of jordan. next to the biggest refugee camp is a huge industrial zone. until recently, european

community had trade barriers on jordan. we persuaded them to lift the trade barriers. spent on a tiny minority of refugees in europe will be better directed giving incentives and making more feasible for businesses -- francine: perception is an -- important, would not that be seen as the eu giving things away. donald trump got elected, western countries want to be inward looking? >> not at all. western businesses has always been international. it has already offshore to thousands of millions of jobs. in turkey, germany has done huge amounts of altering of jobs do turkey. that has not cost jobs in germany, that has created jobs in germany. >> it seems to make sense that

if you build factories where the refugees are, that saves everybody a lot of money and somebody is getting a lot of money on all these people coming here and feeding them. it makes sense to me. francine: you were saying a lot of politicians in europe are saying to get out of the euro and bring jobs back to the euro. >> are we talking about whether politicians are having brains, that is a different conversation. francine: is it brains or political capital? citizens will not afford them. >> what i thought he was saying, we are spending a lot of money on x, why don't we spend money on y and build the factories. ? normally immigrants are very good, people who will leave their country are energetic and smart and ambitious and driven people. america was built -- we used to pay people to come to america because we wanted those brings. singapore, they used

to beg people. francine: how do you explain the election of donald trump and brexit? >> that is a different conversation. francine: they are interlinked? >> to some extent, immigration in europe and the u.s. has not been managed very well. if you go back to what america did once upon a time, we baked people to come and paid them to come. singapore did the same thing. if you organize and manage who comes, you can prosper. francine: is there a leader in europe that gets it more than others? >> absolutely, britain has arnie got it. they haven't guessed already gotten it. -- they have already got it. our biggest supermarket placed a lot of orders in jordan and some of the jobs with the jordanians and some to refugees.

your many is trying to do that. this is a unifying proposition. >> donald trump would fire you. >> he would not because refugees should rightly be a unifying matter of compassion, not a divisive issue of, do they come here? >> i did not say i would shoot you. francine: if you look at the elections in germany, one of the big worries about angela popularity was that somehow her moral stance on refugees would come back to haunt her. were we getting it wrong? jane: she did something wrong because her popularity went down. there are misconceptions in europe about immigrants and i think they are the soft target. reasons people voted for brexit, reasons people may have voted for donald, maybe blaming immigrants when the problems are

not of the immigrant creation. we have had a lot of static capital incomes for a long time and have wealth inequality which makes people feel unhappy. this is not because of immigration. these are more structural reasons people are unhappy. immigrants are a soft target. >> she is right, immigration is not the cause, it is in effect. -- blames itmes it on foreigners, they have different skin, their food smells that come easy to attack foreigners and politicians have attacked foreigners for hundreds of years. francine: are developed nations better at dealing with this? a backlash against the foreigner or outsider, people outside your community in certain cases. you do not see the same in developing nations. >> most refugees are in 10 haven countries around the world, all

of them for. ethiopia -- all of them poor. ethiopia is a home to millions of refugees and have adopted the jordan model, created industrial zones and chancellor merkel is enthusiastic about it, she went to visit these zones a couple of months ago and is backing them. >> who is against it? sounds like a brilliant idea. >> this is a winner. francine: it is always about the money. >> not about money, the money has already been spent. 'sople are queasy in the ngo that are desperate in the humanitarian only model. , the high commission on refugees, which only has a mandate, free food, free shelter . that is not what refugees want, they want jobs. >> i want free food and free shelter. francine: thank you.

jane foley and jim rogers staying with us and we talked china and commodities next. up, china's fed is at a dangerous level, more next. this is bloomberg. ♪

♪ francine: this is bloomberg "surveillance." i am francine lacqua in london. china's debt has ballooned. thatore partners say rising debt levels will eventually disrupt the nation's economy. >> china is a mess and at some point it will blowout. they have a lot of debt which is

unsustainable. is $23ey supply in china trillion, our money supply, deposits in banks is $13 trillion. they have another $10 trillion and something like 11%, increased $2 trillion in the past year. francine: let's get some thoughts with jim rogers and jane foley. m, you are an expert on china, you focus on china a lot, bullish or bearish? >> i am not a next for on anything that's an expert on anything -- an expert on anything. china has a lot of debt. there were no loans 15 years ago, nobody would lend money to or in china. beijing has said that they will let people go bankrupt. in america and in europe, we do not let people go bankrupt but

china says if you fail, we will let you go bankrupt. they will shock a lot of people, scary a lot of people, including me. it will be good for china to clean out the system and people will start over. i wish in america they would let people go bankrupt. francine: i have always been told the chinese authorities will manage their debt they hold a lot of an gives an indication they would let someone go bankrupt to let steam out but overall it is very well-managed. jane: going back to the beginning of last year, the pace at which debt has accumulated. shortly this meant that nonperforming loans would increase and that people would fall on their faces. however, just as we said that at the beginning of last year, but there was actually -- china managed it, managed to muddle through. throughtill modeling

but if china allowed the system to clean out these bad loans, we are in for a shock. it at hyman is right and china will blow, what will happen in america and europe? francine: this is a serious point, if something were to happen that is bad in china, if it is a financial crisis, how far does it reach? reaches everywhere, it is the second-largest economy in the world and the largest creditor nation in the world. in 1929, it blew up was not just america, the whole world was affected. it would happen again. francine: we are talking about china going through a hard landing for a long time. i do not know what the channels of communications were in the 1920's but it has been telegraphed enough, hasn't it? jane: if they are serious about

reform and getting the bad companies outcome of the bad debt, allowing companies to fall , that is when we will have the shock. this is about timing. >> i hope they will let them go and they say they will let them go. america and europe and japan, the rest of us will be badly affected. whether it starts in china or in tokyo, does it matter, we will all be affected -- doesn't matter, we will all be affected and it is coming. francine: some people agree with you and some people do not. always fun to have jim rogers. and jane foley. thank you both. up next, the rand gets battered. they are ready to fire the finance minister. your market update is next. this is bloomberg. ♪

♪ francine: this is bloomberg "surveillance." i am francine lacqua in london. let's get to the bloomberg business flash. the company says earnings will be cut by around $1 billion

because of recent negative developments related to large customer project. ericsson will book higher restructuring costs and lock down some assets. or than two years after being asked from pimco, bill gross has settled a legal dispute and the company will pay him $81 million after dedicating a new founders room at its headquarters in honor of gross and others who launched the firm in 1971. -- a china company says it cannot contact an executive director for a week. that is in the first detailed statement since defending its shares after a sudden 85% plunge. they say the manager of the treasury and cash operations has taken a leave of absence and does not want to be contacted. that is the bloomberg business flash. francine: let's get to the market update. risingtocks and europe

debt in europe rising. -- stocks in europe rising. this is the big currency move, yesterday the dollar rising against the rand with the rand slumping against the dollar, the biggest decline since november. up until friday, it was the best performing major currency against the dollar. 10.5%. how things can change quickly in emerging markets currencies. the president zuma is ready to fire finance minister gordhan. he allegedly spoke to south african timeliness. -- communists. he was told to return home from a road trip he set up, came to the u.k. yesterday and has had to return home. they have been occurring for at least six months. the dollar stabilizing today. little changed after falling nine out of 10 days.

below where it started out the day after the donald trump election victory. yesterday, the dollar fell, it was -- analyst beginning to pare back their forecasts. that is the white line. yen for the15 dollar. this is a great chart showing the correlation of how these commodities moved. there is a convergence right now between gold and copper, gold falling while copper rising yesterday. the inverse was happening yesterday. copper intraday yesterday falling to the lowest level since january and gold rebounded 11% since falling to the 11 .onth low in december

copper has fallen 5.5% since rising to an almost two-year high in february. gold is falling and copper is rising. francine: we continue in the next hour. tom keene joins me. we will talk to -- about currency and a little bit of gold and anything in between. i am looking at brexit, article 50 triggered tomorrow. we will be looking at the ends and outs of what negotiations between what theresa may and the eu will look like. we need to also look out for rand. it is moving as president zuma is set to tell an ally he will fire the finance minister. ♪

♪ francine: the rand plummets, the south african president said to

tell party allies he plans to fire his finance minister. brexit secretary says britain will pay nothing like the sums of money eu officials have floated as annexes bill. stokes the possibility of two likes this year on an uncertain outlook for inflation. this is bloomberg "surveillance." i am ranting loquat in new york --francine lacqua in new york --francinene is in lacqua in london and tom keene is in new york. an update on the trump administration with possible hearings on connections with russia. tom: it is interesting, away from what we do, but trump and russia, i need a report on how the prime minister did in scotland yesterday. a jumble of things today. francine: let's get to the bloomberg first word news. trump willsident begin aggressively undoing policies designed to keep the

carbon cutting promises the u.s. made with almost 200 other countries in paris. he will sign an executive order that starts unraveling a number of rules aimed at fighting climate change. he said he wants to get rid of what he calls job killing restrictions. lawmakers in scotland expected to support the call for a second referendum on independence. wantssh first minister permission to seek the legal means from british authorities to hold a vote by spring of 2019. he said he is frustrated with the british decision to leave the european union. in africa, the finance minister gordhan appears to be on his way out. zuma president has told -- president zuma said he will fire gordhan. he will hold meetings with investors and return home from london. gordhan has tried to keep spending in check and avoid a junk credit rating with the rand down almost 3% today.

and otherasked banks financial institutions to increase lending to manufacturers. the government wants them to boost medium-term credit to improve factory, technology, especially for smaller businesses, part of a campaign steer speculative lending away from china's real estate market. 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: not the panic yesterday morning about the market adjustment office health care collapse. a little bit of a bounce today. the bid is shaky. shaky. .02 is a stunning statistic of curve flattening, even with -- we will talk with conrad this morning. that, the color is

wrong, it should be green on a 127 two year, the two-year elevated. the yield a little bit higher. francine: selloff in riskier assets are easing somewhat. european stocks gaining. equity markets in asia resuming their upward trajectory. the dollar steady and u.s. stocks set for a recovery yesterday. tumbling on reports that the south african president plans to fire his finance minister which was denied by some factions in the government. gold soaring yesterday, now flat. tom: this is the state of america. about the news flow from the white house and capitol hill. an. is lbj and here is the gloom of the 1973 and 1974 recession. the consumer confidence, the

conference board rather, expectations index. we have the basing of 1985. look where we are, we have come back at least to par on our expectations. a little bit of glory in the 1990's and a little bit in the 1980's. we have finally crawled back to a constructive expectation. francine: i imagine, that is a u.s. chart? tom: yes. francine: important for our global audience. iran,s the u.s. dollar the south african current -- and rand, the south african currency. the first move came when we were on air yesterday. the south african finance minister -- reports that he was being called back to south africa. rand moving on the back of that and 24 hours later, in the last

50 minutes, we had this talk about the president saying to communists within his party or allies within his party, he would fire the finance minister. that has kind of been reviewed. -- rebuked. the u.s. house intelligence committee top democrat has called the chairman to step aside from the panels russia said he metnunes with a person on the white house grounds to view secret intelligence documents he used to bolster donald trump's name of surveillance by president barack obama. joining us is stephanie baker. -- the bnp paribas global thank you very much. run me through when we find out more about this russian probe. >> the real question hanging over the house intelligence

, histtee's inquiry, nunes position has been cast into doubt because of how he received these intelligence reports. his lack of an explanation of who he met with at the white house. it came to light that he went to the white house a day before he went. and informed the donald trump about these intercepts. now you have leading democrats calling for house speaker ryan to replace nunez as head of the nes as head of the house intelligence committee and an independence commission to take over the inquiry of russian hacking. there are a lot of questions to be asked. the house intelligence inquiry into russian hacking, it appears to be in a mess. he canceled, nunes canceled a closed-door hearing with james comey, the fbi director and the national security advisor mike

rogers. he also canceled another hearing later this week with former obama administration officials. the house intelligence inquiry appears to be in disarray. tom: help me, with your years of judgment on this, we value it. how does this full over to other legislation? it is a big distraction. jared kushner, the son-in-law of the president is somehow involved. it is one big distraction. how big of a deal is this to the washington machine? >> i think it is a big deal and overshadowing his other efforts. it will overshadow his efforts .o push further tax reform the recent revelations that jared kushner that with not only the russian ambassador to the u.s., but also the chief executive of a bank. this is very curious because the bank is a state owned bank. the prime minister is on the

board. it has finance putin's that project like the olympics in 2014. why jared kushner, during his time in the transition, in december, what have met with them is very curious. sanctions,k is under was put under sanction after prudent annexed crimea. crimea. annexed tom: who is the adult in our intelligence debate, speaker ryan? the senate majority leader? who comes to the rescue of common sense? >> it appears to be james comey, who seems to be the grown-up in the room. he has urged moderation. he has been quite open. weekouse testimony last

where he finally confirmed there is a russian inquiry was a deal. .- big deal it probably went further than the white house wanted which is why we have seen fallout. francine: let's look at the chicago fed president, he told us that to rate hikes may be the right amount of tightening this year. >> to the extent i gain more confidence in the forecast i have, that would be a good indicator that i could perhaps support three. two may be the right never if there is more uncertainty. if there are any modest concerns about whether or not we will get that. if things take off, if we get continued strong growth and if underlined inflation picks up, we could get four this year. francine: that was charlie evans. when you look at what a lot of

the fed presidents are saying, they are going out of their way to communicate what they think is transparency in an orderly fashion. we need to look at the data or listen to the president? >> we need to do both. the fed is saying to look at the data and we will respond to the data. the overriding theme in markets at the moment is that this falling yield, falling dollar, very connected to that, does seem to be an overreaction. we would argue the market is going in the wrong direction, not pricing in enough risk, particularly when the fed has guidance onith its 2, 3, maybe for rate hikes. francine: how should the fed look at the health care bill? there was concern that a failed health care meant that donald trump would be side tracked and could not push through his economic reforms. >> i think this is the case and the market is putting one and

one together and getting five. have anl probably not overriding impact, particularly on tax reform coming through. the fact we did not see a vote on the health care, did not see it going through, does not mean we will see an abandonment of tax reform going through in the u.s. the market is overreacting. tom: we mentioned this earlier, here is a chart. c famous "surveillance" ursor. we had even more curve flattening this morning, even with market stability. now decisively below the november 9 morning after donald trump victory. is the trump reflation over? >> if you look at the markets, you may come to the conclusion, yes but from our perspective we would say the market has probably gone too far.

looking at to send tens, you could argue both are too low. what we are doing is sticking with our recommendation. that recommendation is to go short. we see higher two-year yields and higher 10 year yields. the key point is to focus on this linkage. does the stalling of the health care bill mean that donald trump will struggle with tax reform going forward? on the tax side, we think it does not necessarily mean it will happen. from our perspective, we expect tax reform to go through in the second half of the year and we think we will see more fed rate hikes. if that is the case, these bond yields are still low. francine: coming up throughout the week, interviews with the fed presidents on wednesday, we speak to the boston fed president and on friday, st. louis. this is bloomberg. ♪

♪ >> this is bloomberg "surveillance." i am taylor riggs. credit suisse is considering a number of optional to plug a capital hole that may be as big as $4 billion. their ceo tells us in hong kong that the bank is considering a number of options. >> we know the market wants an answer. we are working diligently. we will give a clear answer. worst: he signaled the may be over for job cuts at credit suisse, saying the bank will cut 1000 jobs this year and fewer than 1000 a year. that is your bloomberg business flash. u.k.-brexit secretary says britain will pay nothing

like the amount of money the officials say -- the eu officials say the country will need. they say the country's bill to leave will be about $62 billion. for more on the brexit process, let's turn to stephen. article 50 triggered tomorrow, and eight-page letter. will you look at the tone of the letter to see how negotiations will go are impossible to guess? >> and possible at this stage. -- impossible at this stage. the u.k. could be thrown something very different. it is difficult to second-guess this. if we come back to the impact on markets, i would continue to see that we will see the bad news priced into the market, particularly in sterling which has been very weak. it has taken the brunt of the selloff. equities have held up nicely in the u.k.

our view is that sterling is undervalued. the market is short. it isur positioning -- the largest short in the market. we think the most likely scenario, if there is a vulnerability, for a sterling rebound on positive news, rather than a continued selloff on negative news. francine: positive news from negotiations, or something like yesterday, we spoke to the qatar finance minister who said they will put an extra i billion dollars in this economy, does foreign investment or investment from funds matter in your world? point, is a key absolutely, the u.k. starts off with a current account deficit. the reason brexit is so dangerous for the u.k. is because it needs to attract those funds. if you're getting those comments from qatar, a fantastic vote of confidence. we have had it from nissan and toyota. i would highlight there is a disconnect between actually what

is happening as far as flows are concerned and the weakness of sterling. absolutely, this photo for low continued -- vote of confidence, there continues to be global confidence in the u.k. economy but uncertainty. tom: within that uncertainty is a call on the economy. in the united states, the idea of a more weaker economy after the health care debacle and maybe the link of the tax reform debate. what is the state of the underlying economic growth in the united kingdom? >> clearly, since the brexit vote, growth has held up much better than anyone would have anticipated. mark carney has been criticized for being too quick to cut interest rates and to go with quantitative easing. up until now, things have been good. we see some slowing next year. before the brexit vote was triggered, the u.k. and the u.s. where in similar situations.

both had seen sharp falls in unemployment. -- to a levele where inflation was likely to start to pick up. the point i would make is, the u.k. is in very good health unless there is a very big drop off in growth as a result of brexit. so far we do not see that. francine: -- tom: an interesting morning. , we willequity markets migrate to that in the next hour. we need a recalibration in the 6:00 hour after what we saw yesterday. the bigs moving in the last week from 10 to 14. this is bloomberg. ♪

♪ francine: francine and tom from london and new york. the south african rand plummeted almost are present, president hea will tell senior leaders plans to fire the finance minister one day after the president ordered gordhan to cancel meetings with investors in the u k and u.s. to return home. let's get to our south african government reporter asa in johannesburg. great to have you. point? we know at this >> the finance minister has landed in johannesburg and we asked him about being fired by the president. he said the president is my

ball's and when summoned back home, i have to come and he said let's wait and see. he has been seen outside the headquarters of the ruling african national congress, possibly to meet with some of the top leaders of the ruling party. francine: there was an investigation into gordhan that went away. the market like the stability of this finance minister. why would the president replace him? >> there has been some sort of tension between the president and finance minister. some speculated that the president wants a harder hand on the treasury, more access to the treasury. we have seen the finance minister gordhan coming out strongly that these treasury wants to stick to the fiscal consolidation that it is promised to stick with in order to stave off a possible credit downgrade. francine: thank you. when you look at rand, how

volatile will it be? i have heard the central bank some sayt money, and it is a stable central bank that would not do anything of the kind. steven: as we highlighted in the earlier slot, we think the dollar will do well. we think the market has sold off too much as far as the u.s. is concerned. as the dollar rebounds, we think current account if is a countries will be vulnerable. south africa is one of those. a vulnerable currency. our urine forecast is 14 in dollar rand. -- year end forecast is 14 and dollar rand. driven by domestic politics. in summary, we would agree with this move. it -- the politics may settle down but we would suit -- still be sellers of the south african rand. tom: we will look at japan.

kevin will join us from goldman sachs asset management in tokyo. looking forward to her equity strategy and we will migrate to the buy side on bloomberg today,llance." radio david will join us about his affection for value in japan. may we also speak to the republican about the state of his gop and particularly from his wisconsin, the speaker of the house, paul ryan. francine lacqua in london and i am tom keene in new york. stay with us worldwide. this is bloomberg. ♪

♪ francine: this is bloomberg "surveillance." pen.pictures of marine le talking to business leaders.

they did the venue in the middle of paris. there onemacron was hour or two hours ago. marine le pen trying to position herself more centrist, says she doesn't want chaos and says any exit from the euro will be done carefully. before the election on april 24, we will see marine le pen trying to get support from her base, from the hardliners and at the same time reaching out to get more support from people who would not necessarily naturally vote for her. our reporter is on the ground. let's get to the bloomberg first word news. taylor: attorney general jeff sessions is threatening to cut off at all police money for so-called sanctuary cities. local governments will have to certify they are not refusing to

get information to federal authorities trying to out green and undocumented immigrants. if they cannot, sessions says he will cut off justice department grant. the on capitol hill could lead to a government shutdown with conservative republican saying the party has yet to post it first legislative adrian. they may try to be fun fun -- planned -- defund planned parenthood. democrats strongly support planned parenthood. the battle almost led to a government shutdown in 2016 and they put congress on path to another one. in europe, the british prime minister theresa may look only to the brexit process with the smallest army of civil servants since the 90 40's. you are than 400,000 government employees. they are needed to new dashboard new trading deals and create new regulatory agencies. the u.k. has not negotiated a trade deal on its own in four decades. the china labor force participation rate is falling,

pressuring wages and driving down growth. the participation rate has gone from 77% in 2010 to a little more than 72% in 2015. some say it is not all bad news, young adults entering the job market later with more education which could lead to more productivity gains. 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 riggs. we need to talk a lot about yen. a huge -- a huge move there yesterday at a huge move in gold. i safe haven. that's a safe haven. haven.fe if you look at yen, is it a simple trump trade? steven: i think it is this time

around. from our perspective, we often look at dollar-yen as the purest form of the dollar trade. i say that because there is very little change happening in japanese monetary policy. it responds strongly to what is going on on the u.s. side. the link to gold is consistent. old consents to be -- 10 to be negatively correlated to the u.s. interest rate outlook. when we have lower u.s. rate, gold does well and the dollar-yen comes up. that side, rather than anything japanese driving this move. francine: i have a lot of people looking at asset classes and saying i like japanese equities but everything seems to be correlating back to you. if it is strong, it will be difficult for all the nominee's to work -- abenomics to work/ . steven: much lower for dollar-yen.

the reason we are at once in, 115, because of the very easy monetary politics. abenomics even at once and is having a very big impact on dollar-yen. if you get more growth and higher yields in the u.s., the dollar-yen will move to the upside. it is the low interest rates in japan that creates a policy gap that drives dollar-yen higher. tom: i was blown away by the resiliency of the u.s. dollar. looking at it at a trade weighted basis. another way to look at the dollar, this is asia's dynamics to the dollar. takeout japan and it is simple. the fall off of 1997. here is the asian recovery. here is the great rollover. the dollar has many faces. the dollar has many measurements. how will the dollar a just and a

that --nd i just added i just and adapt -- adjust and adapt through asia? steven: i believe japan is only number eight in the u.s. inyou caps off the big four the u.s., on a trade weighted basis, they are the currencies we have to look at. while we are focused on dollar-yen, it does not have that much of an impact on the twi, particularly if dollar men --dy or dollar-mexico dollar-renminbi or dollar-mexico is stable. tom: here is another chart. you can pick up this chart on tv . this is different than asia dxy.

down we go, weaker dollar. i think a lot of people are not aware of this resiliency of a trade weighted dollar. steven: i think it is interesting. it gets back to both currencies we have been talking about. renminbi, mexico, canada, these currencies have a big weighting as far as the trade weighted dollar is concerned. it can be doing different things . for example, talk about dollar-rant and dollar-yen -- dollar-rand and dollar-yen. francine: what is the one thing people misunderstand about yen? .e talk about demographics something that could help in terms of structural reform that could mean japan is on a different path for the next two

years? steven: there is a lot of skepticism about structural reform. i was recently in japan two weeks ago on a roadshow. the message i gave was that the dollar-yen in particular, we think it is the dollar side driving things at the moment, rather than the japanese side. over the past few days, this concern about congress in the u.s. passing the health bill. that has a big impact on dollar-yen. whereas a cpi release out of the event or a small rate increase, monetary policy tightening in october, we do not think that will have a huge impact on dollar-yen. the big driver will be the u.s. side. tom: you will get this conversation no place else. two fed interviews this week. an important week to speak to fed governors. from boston.

and i will call in the middle, james bullard of st. louis, look for that on friday. worldwide, this is bloomberg. ♪

♪ francine: bloomberg "surveillance." we need to talk a lot about europe and france. this is green lebanon, -- marine le pen, france presidential hopefuls talking to business leaders. others --also many presidential hopefuls talking to ceos and i think marine le pen is trying to strike a balance, keeping her core and trying to

reach eight broader appeal. -- a broader appeal. what are the real concerns of french business? pen is the biggest concern of french executives who are present here they favor the macron and fillon. one was attacked on his proposal to keep the 35 hour week but tried to reassure the audience of executives, saying he will add flexibility sector by sector. the policy submarine le pen, she is discussing -- marine le pen, which is a concern of investors, as well as her plan to leave the euro. francine: it seems, and i've been reading and listening a lot to french coverage, it is a

standoff between marine le pen and a manual micron that -- emmanuelron macron. does it feel like that? >> yes, it feels like they are in the runoff, they attack each other. attacked her over immigration, saying her plan to ban illegal immigration was a lie. she fired back, saying macron was too stuck on immigration. just one example who think they are already in the second round. has the wall street journal a massive treatment on this moment and the shift of the national front from her father to her vision of france in europe. are there any ceos on board? she is getting elites from the conservatives and socialists,

they are coming on board in the margins. is any chief executive officer behind marine le pen? -- we had a full quite interesting, 16% of small and medium businesses in france think marine le pen has the best economic program. that means the vast majority of executives support other candidates. it is interesting to see that the bigger your company is, the fillon. will vote for approvedg businesses fillon. a quarter of the medium companies prefer macron. tom: what is her goal to get the marginal french motor, the marginal french voter in paris? >> today, her concern is do not

scare too many voters. on her plan to leave the european union and the euro. she knows this is one of the reasons there is this so-called glass ceiling which could prevent her from winning in the runoff, no matter who she faces. populationfrench want france to stay in the eu. she has been trying to soften her stance about this idea of a brexit referendum, saying her priority will be to favor brental print jobs -- jobs and restore -- french jobs and restore borders, leaving the euro would be the final thing and she would wait for that before the final election. thank you so much. our bloomberg reporter in paris. let's get back to steven saywell of b.n.p. paribas.

how you would political tensions within the eurozone. the point -- the question i am often asked by clients is -- is there a discount in the euro currently because of concerns about the european elections? my answer is no. we can compare that back to 2012 when there was a huge discount in the euro relative to fundamentals because of the stress. argue the we but opposite, the euro is slightly overvalued. there is stress in the euro swiss exchange rate. remains the safe haven and a strong relationship between rural bond spreads and euro swiss. therefore, if we see, as expected, not a le pen victory in europe, we would argue the way to play that from an fx perspective is long euro versus the swiss franc because we would

see the swiss franc we can -- weaken. everyone isll -- waiting for another january where they massively adjust swiss franc, are we close to that? steven: probably not. the reason is because the relaxed nature about the french election. a point i would highlight, the outcome of the dutch election. the market is generally skeptical of polls because of what we saw last year with the u.s. and the u.k. therefore, the dutch election was a litmus test to see if polls were accurate, specifically underestimating support for the far right. it showed they were not. therefore, there is more confident in the polls in france which highlight that marine le pen is unlikely to win. if that is the case, the swiss national bank may get a boost

and the since they will not have to step up to the plate and intervene. you could see the swiss franc falling naturally. euro swiss actually moves higher. tom: bring up the chart. here is the view from 60,000 feet on strong, strong, strong swiss franc. they get the stability they want, dealing with the your responsibilities i editorialized from europe. we do it again in january of 2015 and get the same leveling off. you think we may get stability and actually weaker swiss franc? steven: that is correct, tom. we can see it, we can look at the data released monthly by the swiss national bank who are intervening in the market. we would suggest that is to prevent swiss appreciation. the safe haven trade is what is going on here. if that safe haven trade goes out of the market, if there is,

as expected outcome in french elections, you will see a natural rise in euro swiss. they will not have to step up to the plate and intervene as they have been doing in recent months. francine: thank you to steven saywell of b.n.p. paribas. you can ask them questions directly. don't want tv if you are a bloomberg user and see cool charts and headlines. i know a lot of you putting focus on the french elections. go on the bottom of the video screen and ask the guests a question. we will put the questions to teven next.- s this is bloomberg. ♪

♪ tom: bloomberg "surveillance." tom keene in new york and francine lacqua in london. we go to tokyo. david will join us later. goldman sachs, chief japan strategist. i want to bring up the charts. this is the value that is japan.

this is a normalized chart back 20 years of the extraordinary performance, particularly out of the lehman low. japan normalized in dollar, has migrated along. state for us the level of value in japan blue chip equities. view, there is still value, despite the significant outperformance that you are showing already. i think it comes from the fact that japanese companies are the most cash-rich companies. --all of the developed world compared to all of the developed world. low.w, quite there are a lot of reasons for this, many people think the market can only go up as the yen depreciate further. from last year to the first part of this year, japan in dollar terms, as you are showing, keeping pace with the s&p 500 and beating a lot of other

developed markets. it is still a hidden gem. abouteople are still wary to fail for historic reasons but weaving medium-term, still upside the head. -- ahead. tom: can there be a use of cash in japan like there is a use of cash pressure in america? can we see the religion of dividend increase and share buyback out of tokyo? >> you are beginning to see some of that religion getting traction. in 2014-2015, the japanese government set up edicts to force japanese corporate -- public corporations to do something with their cash, corporate governance reforms. inhave not seen a revolution share buybacks and dividend increases as we have seen in the last three years or four years. share buybacks reached record levels last year and we expect a

20% increase in 2017. not that they are done with the campaign on buybacks but we think they are moving in the right direction. francine: you are quite bullish on japan and believe japan is in a transition. as abenomics been disappointing so far? becausepeople say it is , if you look at the bank of japan inflation target, 2%, we are nowhere near that. people say there is not a lot of immigration reform which means abenomics is a total failure. that glosses over some of the issue there has been progress in, more women working in japan than in the united states thanks to, partly, the government's campaign to get more women to participate in the workforce. corporate governance reform leading to record reforms. agricultural reforms, farmers a big constituents, yet the government has said you must

reform and we must deregulate the sector, otherwise he will not survive. despite the rhetoric or public perfection, there is a lot more progress than meets the eye. francine: if there is one thing the government can do in the next six months to make it better, what should they do? >> the big missing puzzle piece is -- they have made the environment for corporate japan very friendly, corporate profits are record high and margins are record high, not the trickled out from corporate japan to the worker or to the employee. unusual in japan in a global context in that there are 43% for -- more jobs available that japanese people seeking work, how tight the labor market is. reply thing the very first demographic reality. we think there will come a point in the next six months you will start to see companies for two rate -- raise wages. tom: thank you so much for joining us in tokyo.

look forward to speaking you on your next visit to new york or when we migrate to tokyo. we would like to do that for a week, probably in the spring. >> you better come fast because the charter blossoms are blooming. tom: thank you so much. steven saywell, thank you so much, from b.n.p. paribas. in our next hour, on the american economy, conrad, rumor has it, kevin cirilli has been on the white house lawn at night. this is bloomberg. stay with us. ♪

tom: this morning, markets stabilize after a little end of trumpcare adjustment.

washington and investors recalibrate to the coming battle on tax reform. this morning's theme is trump and russia. himself new meds recuse after secret meetings within the white house? and there is no global warming. president trump plans to destroy all legislation. good morning everyone, this is "bloomberg surveillance." prime minister may do in scotland? francine: she didn't do too badly. she tried to ram the message home that it would not be great if they were to break off. but tomorrow is the big test. and we're having a lot of reports from bloomberg and i urge everybody to follow simon kennedy on twitter -- saying, this is a life-changing moment

and they have less civil servants than at any time since the 1940's. tom: we will have a new barometer we will look at with simon kennedy. right now, your first word news with taylor riggs. here in the u.s., trump will begin aggressively undoing policies designed to keep the carbon cutting promises the u.s. made with 200 other countries in paris. today he signs at executive order that starts unraveling the fighting climate change. the president says he wants to get rid of job killing destruction. lawmakers in scotland are call on themake the second referendum. they want permission to seek the legal means from british authorities to hold a vote by 20 spring -- load by spring of 2019. in africa, south africa's finance minister appears to be

on his way out. allies heent has told plans to fire gordon. he was ordered to cancel meetings with investors in the u.k. and the u.s. and return home from london. rand was down almost 3% today. in asia, china has asked the banks to increase lending to manufacturers. the government wants banks to boost medium-term credit to improve factory technology. this is part of the campaign to steer speculative lending away from china's real estate market. global news, 24 hours a day. powered by our more than 2600 journalists and analysts, in more than 120 countries. i am taylor riggs. this is bloomberg. thank you. how about a speed data check. market stability is fragile. oil at the $47 handle. the curve is flattening this morning.

111.20 on the two-year tenure spread. we did just have a great interview. francine: yes, i enjoyed that. star or study. we need to put this in context. it is about the selloff. the selloff yesterday was stirred by u.s. policy but then the story of the day was tumbling on the prospect of south african president firing of the finance minister. tom: over to the bloomberg. this is in the united states. -- the the u.s. expectations, the gloom of 1973-1974, the blowup of werican manufacturing, down go. the lehman low and financial crisis. and we just nudged above the 100

level. trumply indication of the bump but we wonder where that is after legislative disappointment. what do you have? francine: i have a simple rand chart. it is the today movement on the rand. rectanglee they are to be 100% with my geometry figures. plans to fire the finance minister and we have seen in the past when there were allegations surrounding mr. isdon, they went away but it clear that the markets actually like the stability of the finance minister. so if he does get fired, will we have rand movement? tom: kevin cirilli with the intrigue of washington. -- tax reform or health care let me just go to russia-trump. if his career done? toin: he has to prove

democrats and large portions of the american people that he is going to remove himself from the politics of this. democrats have continued to criticize him and say that this is someone who is not going to be able to be impartial to the investigation. and seemingly, the onslaught will continue. some brilliance has been written over the last 100 days even before the trump administration. and i did is this together. an f to keep kevin cirilli awake. it gets weirder. nunes wenty -- devin back to the white house to inform the president -- trump has claimed that what he found out vindicates his tweets. devin nunes has repeatedly said that this claim is literally false. the good news is that we will soon get a second and third opinion. what is the second and third opinion of the republicans? kevin: several republicans are

growing skeptical of this. and earlier this week on the senate side of things, you have people like paul manafort agreeing to meet with the senate intelligence committee and jerod kushner is now agreeing to meet with the senate intelligence committee. the cries are going to grow louder for those folks to testify publicly. , what did they talk about? nunes, what did he talk about? at some point, they have to release some kind of perspective. this is nowhere close to being over. francine: and jerod kushner has a new role in the white house. when do we get back to talking about the economic policy that we are waiting from donald trump? put this question

yesterday to several lawmakers on capitol hill and several lawmakers have said they want the tax reform by august recess but that is a a coal in the august. between now and as of now, there is no set timetable for the tax reform. kevin, get set for the 9:30 five tweets from the president. i'm sure we will get them. kevin cirilli. he and john writing have done timeless work on the federal reserve system. conrad dequadros, i want to go to what we heard from heaven. this has to affect gdp. but how much? how much will this dampen or improve gdp? among we seepends with the next policies. our feeling or hope all along

was that the white house would go with tax reform first but that didn't happen. there is the idea that we potentially could get budget room as health care is passed first. and now, i think what happens going forth depends on what we see on tax policy. i think i am more optimistic than most that we will see something done on tax policy. is theat optimism zeitgeist right now that in the first quarter of the year, we keep the gdp and with the warming of the weather, we get growth. we have had several consecutive years in which the first quarter has had poor gdp growth and i think we will get it again this year. our call is that it is tracking around 1%. we don't track or judge the economy based on gdp and i'm happy to see janet yellen back away from that. stanley fischer has been on it for a while that we should be looking at the economy through jobs and not gdp.

tom: this was the question at the press conference -- chair yellen talked about "noisy gdp." francine: a great question. noisy gdp and inflation, is the trend for the health of the u.s. economy up or down? conrad: there has been a narrative that most of the soft data has been strong and the hard data has been week. an amateur i agree with that. .he jobs numbers have improved we have seen stronger factory order growth which has backed up the survey information we have banks and theonal isn. so i think the hard data has picked up a bit. it is a small improvement in numbers but we have to put it into context with where we are in the economy. we have an unemployment rate which is close to what the fed believes is full employment and we are late cycle here.

so to see job creation numbers above 200,000, i think that is encouraging. dequadroswas conrad and we have fed speakers here on friday. we look at the equity markets, particularly after the adjustment of the last two days. from citigroup, the chief u.s. equity strategist will join us. this is bloomberg. ♪

francine: it is the day before brexit is triggered -- or at least article 50 is triggered. theresa may will write a letter to the eu tomorrow. look at that, the day before

brexit happens, it is sunny in the u.k. is said that "nothing like the amount of money say the officials need to exit." after theents come bill to lead would be said to be $62 billion. joining us now is simon kennedy and also with us is conrad dequadros. simon, congratulations on the great coverage. if you look up the terminal and the website, great stuff there and we have a brexit barometer. talk us through what this shows us? then: this is done through bloomberg intelligence, a great group of economists. and we have a series of indicators on growth and uncertainty and employment -- we have pulled this together to create a daily number that reflects the state of the

economy. as you can see, today is 30.7, a slight pickup from yesterday. midway, showing the resilience of the economy that we have talked about. we do have the big dive down after the referendum and then a spike back into september. and now they are treading water on the health front of the u.k. economy. tom: think what is surprising everyone, and your reporting is capturing it, is the resiliency of the united kingdom. we saw that with the tone that with the telnet theresa may had yesterday in scotland. -- thisthe comedy chart is the kennedy chart back a million years. here is the average brexit barometer before precrisis. down we go. is lehman low, the world going to end. we come back here and we rollover. is there a zeitgeist of belief in the united kingdom that they can stay on the green line? that the average statistic is about 30 on the brexit

barometer? simon: you are asking how brexit-proof is the u.k. economy -- they haveience done a lot better than people expected. the u.k. has really strengthened theresa may's hand. if the economy was in trouble, she wouldn't be quite so confident. people remind you that the talks haven't even begun. we don't really know yet the parameters of brexit. it could derail the talks. and the wto tariff if the deal negotiations do fall down, we talked about that last night again, there is a risk of that. and certainly, through the it it referendum group, is to be determined is the talks go on.

quickly, i know that you don't want to talk about the markets but i'm trying to figure out through your stories that i don't have a lot of civil servants. 100 years.at we know it will be difficult for theresa may because she doesn't have a relationship with the eu leaders -- is there anything that could be bad news? simon: what we're looking at now is the declaration by friday. some sense of renewed tension. just how hard it is going to be. at the moment it has been a , a war in speeches. but we will be adding to the debate at bloomberg and there is certainly a risk that it will be down to a few people in a room in brussels in the middle of the night over the next two years. edward evans talked today that it will be knocked the

triggering of article 50 that worries markets, it will be what happens next. francine: that was simon kennedy. we will be back with conrad dequadros and we will be talking to the ceo of hurdles. on wednesday, we speak to eric robert gran. this is bloomberg. ♪

francine: this is "bloomberg

surveillance." let's go straight to germany. his 65 million dollars is the former u.s. price tag on barack obama and michelle obama's memoirs. the publishers are the penguin random house. matt miller is in berlin with this ceo. over to you. thank you very much. first off, on the obama book, that is a lot of money. what does this mean for your company? >> this is very important. to be the publishers of the obama's before they became president and we will be there after and it is an honor. we think it will be a worldwide event when the books come to the market. matt: when i first started covering you in the early

2000's, books looks to be on the way out. people wanted to read online and they wanted to hear it or see it but you are making that business big again. thomas: yes, the business is growing. last year was down a little bit too to market changes but overall, performances are stable and increasing. kids are actually reading more and more printed books. we believe this is the future. reading intensity in a number of countries is increasing and everyone has the opportunity to benefit for this. pearson wants to get out of their 47% stake. how much are you prepared to buy? thomas: we don't know what it is worth yet. it will take a bit of time. but we have said all along that book publishing is part of our if the terms are

right, we are prepared to increase our shares to 70%-70 5%. in terms on valuation, i don't want to speculate. matt: you made $2.6 billion in the last year. pretty decent margins. is that easier to do because you have taken the company private? is it easier to run as a private company that a public company? thomas: absolutely. we can take a long-term view on our business as we make long-term investments. we can structure the business in a different way without public scrutiny. .here are many advantages 1.5 billion in revenue coming out of the u.k., on the day before article 50 is triggered, how do you see the business going forward? thomas: the u.k. is one of our

main market and we have continued to invest in the market since the brexit decision. the u.k. is a powerhouse. we produce content, media content, book content -- we produce in the u.k. and sell worldwide. so for us, the u.k. has become a property rights help that we would like to maintain and grow. requiress -- but it that the markets remain open. matt: over when i do thousand employees globally. in five in the u.k. years time? what do you think? 6000 just short of employees in the u.k.. most of the people we employ are british. frankly, we like to keep it this way and who would like to grow our workforce. we like to continue to invest in the u.k. but as i said, it is

interesting following the brexit. best case scenario for negotiations? thomas: best case would be a close relationship between the u.k. and the european union, as close as possible, economically and politically. and in our case, what is important is that the u.k. has access to the global workforce, especially in management, being able to travel and work and live in the u.k. is essential for us to mail to maintain our business in the u.k. at the current level. secondly, the tax environment. which is attractive. meaning no withholding taxes. for example, royalty payments which we collect on a worldwide basis. matt: thank you so much for your time. that was thomas thomas who just got the obama book deal and you is looking to invest more. the greatg up, one of

images of the depths of the financial crisis. our dq economics, out on the golf course. he couldn't figure out where the fed putting green was. we will review that with conrad dequadros, where is the feds putting green? informationalso get from the boston fed president. look for that on friday. later, on bloomberg radio, david herold will stop by and maybe people talk to him about speaker ryan. this is bloomberg. ♪

francine: "bloomberg surveillance," and we are ,ooking at francois fillon

wanting to become the next president of france. maybe we get his approval rating , he is around 46% in january but every week, there has been a scandal. that he has paid his wife or kids for work. work that they allegedly did not do. his popularity is now at a record 19%. the vote is for weeks ago -- four weeks away. at thee talking there main french lobby for business. tom: is the bombshell here that he drops out perfectly timed for mr. macron? francine: there have been a lot of questions about dropping up but i don't think he has any intention to drop out. if you look at how the polls are showing, it is impossible to replace him. to have someone from his party. and he feels cheated. this was for him to win. so i really don't see him

standing down. let's get to the bloomberg first word news. taylor: in the u.s., jeff writing off police money for sanctuary cities. the government has to certify that they are working to give information to authorities with undocumented immigrants. sessions says if they can't, they will cut off grants. and the next light on capitol hill could lead to a government shutdown. conservative republicans say they have yet to get their first big victory. next chance comes april 28 when government funding runs out. are for planned parenthood. this am is led to a government shutdown in 2015 and may put the government on path for another one. and two rate hikes may be the right amount on tightening this

year. >> to the extent that i gained more confidence in the forecast that i have, that would be a good indicator that i could support three. 2 might be the right number. if there is more uncertainty. if there are any modest concerns about whether we will get that. and if things take off if we get continued strong growth in underlying inflation really picking up, we could get four this year. taylor: that was charles evans speaking to bloomberg. global news, 24 hours a day. powered by our more than 2600 journalists and analysts, in more than 120 countries. i am taylor riggs. this is bloomberg. tom: let's continue the fed coverage. we are honored to do that with conrad dequadros. he and his concrete -- he and his colleague minted the phrase of being on the golf course and not knowing where the putting green was. fed -- do any of them

know where the putting green is? with this came up analogy when burnett he was talking about taking out the putter. and the fed was at 1% at the time and hadn't taken the first step. you are standing on par 5 and you are pulling out the putter. and little did we know we would be here, where the economy is not even out on the course and there on the practice green. it looks like that is shifting now. way to go.ve a long farewell behind the curve. and this normalization process is made more difficult by how slow they they have gone. tom: this capri -- this could be a three-hour conversation. golf player -- they pay me to stay off the course. sand trap, sand trap, sand trap.

here is the 1% number that everyone is talking about. how do we get up to? how do we get appear to the better and better? conrad: i don't think this should be what is driving policy. we need to put it into context of where we are in the cycle. where we are with the unemployment rate down below 5%. the growth rate doesn't need to be 3% in order for the fed to move. right? so i think we are looking at -- and the fed has shifted the focus and the most important thing over the next few months inflation -- we are at 1.10% and we are moving up. and that is the global phenomenon. reasoning you are brilliant is because -- noisy gdp. where is that? does it show you a two point 5%-3% economy? economy in an

environment where we are at full employment. so where is the trend growth? it is not to percent, it is low that so we are growing above goal with the fed at its with the unemployed rate and insulation. the question is -- why shouldn't the fed go three or four times this year? and the reasoning as shown in your interview with charles evans, even more dovish, they would probably be ok with three. and i think there should be more. francine: talking about outside factors -- i understand it is important to talk about which county is doing what -- but we still have china and brexit and russia to deal with. so as far as they are concerned, there are risks out there, external risks, that the fed has to deal with. what are the top three risks for the fed outside the u.s.? there are always risks. we're have gone through this since the financial crisis.

we have had significant more material risks before then we have had now and yet, we still see the economy make progress on the goals of the fed is supposed we focused on. so there are risks out there. and there are some of the political risks which may not be as sharp as they were a few and china seems to always be a risk. but i just don't think these are material enough to slow the progress that the u.s. economy is making. it has been the case before and it should be something that drives that policy, the fed should pay attention to what is happening in the u.s. labor market and inflation. and certainly, there can be moves in the dollars that could affect the progress towards inflation -- we saw that last year -- but my feeling is that we are close enough now to where the fed wants to be on its goals , the congressionally mandated goals, that they should move the policy towards more neutral standing.

francine: all right. tom keene talks every day about the tailorable and maybe one day yes or maybe one day no. here is john taylor on the fed rate hikes. john: if they have indicated they will do three during the year. too muchisn't different than what they have been talking about that some of them are saying they will do for during the year. i think as long as they continue with this -- remember last year they said they would do three or four and they did one. i think the idea is to continue with the strategy, unsurprised. i think, don't talk too much about it. it is clear what they need to do. there doesn't need to be that much discussion. have a point? he are we paying too much attention when it comes to fed hikes, exactly when and how many? do we need to look more at the dollar dynamics? good point.akes a the problem is been in the

communication policy of the fed. it has been one that hasn't been particularly good. especially if you look what happened at the early part of this year, or we could go back to last year when the fed to strongly signaled they were considering a rate hike in june and they backed away -- one of the rate hikes that professor taylor was talking about. i think the fed to be focused on its objectives and should be guiding towards the objectives and that is what we should be watching, more so than what they are saying. thei think particularly at inflation data. tom: bring up this chart. chart has a number of ways of looking -- i'm sorry, this rollover is the x boeing investment, it is not there. can you assume that investment will pick up? conrad: if we look at the numbers in the report, the shipping numbers are meant to pick up. and they have confidence indicators that are more close. earlier in the segment, you

talked about some of the consumer measures. but other measures have moved higher and to me, that is more important as to how it will translate into economic activity. tom: should the fed look at hard data or soft data? will bei think they looking at hard data but the soft data does matter. investing is at the more, i think we are likely to see that in the data that has now been moving higher. the last three months, we have seen for capital goods shift at 10%. tom: the mix of durable goods numbers are there. we will come back with conrad dequadros. coming up, what a day. a snapshot yesterday, the distance in corrections in the bear market. this is bloomberg. ♪

tom: this is a "bloomberg surveillance." we have a smart conversation with tobias levkovich and conrad dequadros. the gloom of yesterday as the world was coming to an end, and here is the lehman low bull market, up we go. tobias picked this up right here at the bottom. let's zoom in to where we are now. two standard deviations down from where we are. the blue circle. above that is the yellow 10% correction. from gloom and caution. tobias: we are also miles from euphoria.

investors have wretchedly being accepted of this rally. in our mind, this has been driven more by economics and earnings and less by the trump phenomenon. in years before, we talked about investors cents. the duke university leads capital spending by 12 months and it continues to do better. these are cfo's. they are not marketing executives who are getting excited. tom: help me here was what i see successful companies. taking low single digit revenue growth and manufacturing that into high single-digit cash flow . do you expect that to continue? markets have been fairly good outside of one sector -- energy. turning around. so i think part of this is how you look at the profits and the numbers. energy, capital spending has been strong in the last four years. if you look at energy, it has

been week and it is coming back. there is a fear that as labor costs go up, and markets a cheery rate but that is not the history. tom: had he respond to the 210? the market that is it is not over, it is in danger? there was took much excitement, initially and then we saw charts breakdown. everything will get pushed one way or the other too far. but the average in the last 35 years, in terms of the two 10 spread, you are close to the average. francine: give me a sense of what we are worried about right now. we talk about animal spirits but will they actually put their money into the investment in the united states? they always have. if we look at history over time, we don't say that this time is different. those are the four scariest words on wall street. if i look at a whole bunch of

notr series, you guys may remember this but i spent 50 years as an industrials analyst before i moved in and i have walked this forever. forever is a long time but certainly for 35 years. noti have never seen it play out. so every indicator that we are looking at economic growth in the next 3-6 months. say they how can you always have? a lot of companies did get back to shareholders and they give back dividends and share buybacks and they are sitting on a lot of cash. a lot of these companies didn't feel well enough or strong enough and they didn't feel like the environment was good enough to invest back. that is the narrative but the data isn't on your side. peak buybacks were 2007. capital spending for the s&p 500 records in 2011, 2012, 2013 at

2014 at the only reason they are down is because of energy. i love the narrative. francine: let me bring you over to what donald trump just tweak it. injor investment to be made three car companies. the u.s. -- jobs, jobs, jobs." are these enough real jobs to keep his base happy? tobias: i can't speak for the president or his base. i am canadian so i can say he is not my president. thate sense of the notion we will all this and fix all of the issues on jobs through a number of investments in a few companies, that is overstated. on the other hand, looking at i think thereng,

will be job growth continuing here. their manufacturing jobs in michigan? probably not. me with the top line of nominal gdp. this is the animal spirit of america. 6% gdp average through the beginning of the crisis. down we go. as you know, it has not come back. 3%-3.5% and the president wants to get back to here. do you have an indication that we have a combination of real growth and greater inflation on top of that? to get to the animal spirit that everyone desires? conrad: i think we stay closer to the growth rates that we have seen. a little bit closer to the nominal gdp growth for this year. ,t is tough to get to 6% because as i said before, we are no matterployment and how much further stimulus to push through, how are you going to get up?

andtrade deficit will widen it will be a subtract are on the growth side. tom: can your optimism work with a sub 5% gdp? tobias: i agree that we will have a tough time getting to 6% but we could get 25%. we weren't that far away from it to begin with. it isn't a gangbusters environment. francine: can you set the record straight? we are talking about how much companies are holding in terms of cash. and you said that the ideal is right but figures are wrong. so i'm looking at something that capital economics put out last september saying american companies are holding $2.5 u.s.ion abroad, 40% of gdp, is that figure wrong? tobias: it might be a tad high

but it isn't widespread. we do have work on those to look at the companies that have cash. repatriation is not an incredible gift to mankind. or 70% of the cash abroad has something like 50 companies. 2000 or 3000 companies have that cash. terminal,u have a this is extraordinary. you get tobias levkovich talking about whether canada can beat the washington capitals or you could come over here to bring up conrad dequadros, talking about a great chart. the onus round, you can take the chart from us and bring it to your terminal. it is of seemly popular. also, you can send constructive correspondence i quill or by tv

to francine lacqua. this is bloomberg. ♪

francine: this is "bloomberg surveillance." is "bloombergtly daybreak." david westin joins us. what are you most excited about? question isthe big this week -- is the trump trade off in light of the problem with the health care reform? that is the big question. and something more profound -- we have the best person to address that -- muhammad ali area in. he has two columns out. and you'll be interested in seeing him say what donald trump should do is taking a page from the book of nelson mandela in south africa because he needs to move from the insurgency to governing the country. the unknown unknown -- why michigan lost in basketball.

david: oh, tom, tom. , is thisquestion here the unraveling of the trump administration? act together or not? he says it is way too soon. says they need to get focused and there is the possibility of benefit.g a tom: single best chart. perfect for conrad dequadros and tobias levkovich. we have shown this a million times but it matters here. conrad, there is a real movement down here. days,upt movement in two 110.25 basis points. what does the curve flattening signal? of this is the decline in real rates that is related to skepticism that we

will have the trump related boost that people are hoping for and the other is that we have oil prices with a strong correlation which makes no sense but there is a strong correlation between tenure inflation and will prices. is part of the story here. so we are still at a relatively steep level on the curve. and it isn't something i am worried about. francine: tobias, do you agree with that? i think investors have overstated that. making this an indicator of economic strength when oil tends to be more about supply and demand. so, you know, i tend to agree. tom: tobias, thank you so much. and conrad -- they will continue with their perspective on bloomberg radio. single-handedly flattening the yield curve. let me look at foreign-exchange right now.

still not to a 1.09 level. sterling at 1.58, stability may comes up to the important moment tomorrow. on the federal reserve, we have two important speakers. one from boston and on the regime change that is underway, george full or in st. louis. look for that on friday. it will be an interesting day in washington. kevin's a really is in washington and he will be a little bit busy. this is bloomberg. ♪

quickly: calm is

restored and markets stabilized. u.s. policy uncertainty over. political risk is something be fed rate hike could take into prospect. the finance minister takes a bite out of the south african rand and we are 24 hours away from triggering article 50. going back at this is just in that the u.k. will pay a fee. welcome to "bloomberg daybreak." david westin. alix steel is on assignment. something little bit like this. more stable and calm from where we were this time yesterday. the futures are up five points on the dow. we go nowhere. switch up the board. a big bid on treasuries. this time yesterday. this morning, markets are lower. the euro is weaker. the dollar gaining a little bit of strength this morning, up .1% . david: