francine: just below neutral, equity markets rally on jay powell's shift to a more dovish tone. carnies warning. a dark scenario for the british economy with brexit. president arrives today for the g20 summit. he threatens it more tariffs on twitter. we are live from when azeris -- buenos aires. welcome to "bloomberg surveillance." i'm francine lacqua in london. we are seeing a nice boost from jay powell about his dovish

stance. when itfew less hikes comes to the next 18 months. stocks in europe gaining 2.4%. that is buoyant sentiment across the board ahead of the g20 summit later this week. this is pound. this is on the back of what governor carney was saying. he gave some pretty dire predictions on the impact of brexit on the economy if it were to crash out or we were to have no deal. you can see crude below $50 as opec prepares to meet next week. coming up, we speak exclusively to the chief executive of russia's vtv bank. that exclusive interview a 9:30 a.m. u.k. time. we will talk russia, ukraine, and a little bit about the bank. let's get straight to bloomberg first word news. commentsget to those

from the bank of england. governor mark carney says the boe is prepared for the worst possible brexit. and that the u.k. faces the steepest economic slump since world war ii if it crashes out of the european union without a deal. u.k. government and central-bank have warned that the economy could be 11% smaller under brexit compared with remaining in the eu. under the banks projections, the decline would be much more rapid, with gdp shrinking up to 8% in a year and property prices plunging a third under a worst case scenario. bank gettingr, the ready for brexit is not enough to guarantee a particular economic outcome. there is little monetary policy can do to potential heads to productivity and supply that brexit could entail. >> meanwhile, the bank of england says it is confident about the strength of the banks it regulates. the u.k.'s seven largest lenders all part of the latest stress

test showing their strong enough to continue lending even during a no deal brexit. of the banks to exit, barclays and lloyds would be more vulnerable in a scenario of extreme disruption. two european economies unexpectedly shrank in the third quarter. swiss gdp dropped by 0.2% blighted by a fall in exports and weak domestic demand. no economists had forecast the with ation of 0.2% median prediction for an expansion of 0.4%. swedish gdp also declined by 0.2% in the latest quarter. economists had been expanding scandinavia's largest economy to show growth. president xi jinping says the global economy is at a crossroads as he prepares to meet his american counterpart this weekend. speaking in madrid, he says that the world must decide whether to

comports -- support the global to continue to support the global system. washington is indicating higher tariffs on chinese goods in the new year. hasukrainian president called for nato's military assistance. according to the country's minister, 35 vessels have been prevented by russia from entering or leaving ukrainian ports in the area, disrupting exports. , he claimed that russia's president putin is planning to annex another part of ukraine. global news 24 hours per day powered by more than 2700 journalists and analysts. this is bloomberg. francine: thank you so much. the powell put stocks surge as the federal reserve chair opened

the door to a potential pullback for interest rate hikes in 2019. u.s. equities gained the most in march after a more dovish tone was struck with the address to the economic club of new york. >> interest rates are still low by historical standards and they remain just below the range of estimates of that level that would be neutral for the economy , that is neither speeding up nor slowing down growth. detected broad-based buildup of abnormal or excessive levels. from mace financial stability perspective, we do not see dangerous excesses in the stock market. we know that the economic effects of the gradual rate increases are uncertain and may take a year or more to be fully realized. we are paying very close attention to what income and economic financial data are telling us. as always, our decisions on monetary policy will be designed

to keep the economy on track in light of the changing outlook for jobs and inflation. francine: that was the secretary arepowell, but some traders concerning that the powell put could be exhausted. but some say the economy is still kicking along nicely. >> the normal signs of what causes a recession, these excesses, banks getting way levered up, having half the leverage they did before, residential construction out of hand, commercial construction out of hand, those telltale signs are not there. so i would be willing to bet no recession in 2019. francine: we are also getting some breaking news out of deutsche bank. this feels pretty big. we understand this could be related to a probe. police cars have been seen outside deutsche bank .eadquarters we are showing you a deutsche bank is doing.

the shares are actually falling after this headquarters raid is being mentioned. we are following this conversation very closely. back to the powell put. joining us now is michael o'sullivan, regional chief investment officer at credit suisse. thank you for joining us on such an important market day. the rally is a little bit lower. what are markets looking at? do they worry about the g20 or will they continue with the powell put? so, i think given where markets are and many equity market prices have been depressed, risk appetite has been very low. one is the fed and powell. the other for emerging markets and europe is the g20. for those markets to join the u.s. what we need to see is an absence of trade tension for --

at the g20. ideally, you would want some kind of cosmetic trade deal between the u.s. and china. china will offer more access to american companies if they promise to reform state owned enterprises and the u.s. will stop the of position of further tariffs on china. that would be ideal. globalu would get a more and a more full equity rally. noticeable this morning that the asian market fell rather than joined last night. you say: overall, would the uncertainty is palpable on the markets? michael: i think the uncertainty is actually priced in. we have had a correction in october. we have retested the lows. in terms of market positioning, i still think there is more fear than hope in the markets. but i would look at it as the market is now more priced for bad news then good.

we get an absence of bad news at the g20. francine: give me a sense of what you think about end life questions. this is an outstanding blog. on the bloomberg terminal. the big question of the day is how long will the powell put last? what is your answer? tohael: i think it will have last until december until we have the fed meeting. i think this statement is to clarify the fed thinking on neutral rates. this has been a big issue for them. they have not been clear to the market. i think what he has done is hence that the neutral level of rathers probably 2.75% i thinka higher level

bond markets had already figured this out. equity markets have managed to rally. francine: michael, thank you so much. we are just getting breaking news out of the deutsche bank story in frankfurt. the shares are down. police were seen outside headquarters. the deutsche bank raid is part of money laundering probe. i think the share price is down some 1.8%. it might be falling off more as we find out more about what exactly this raid entails. this was first mentioned by a german news agency. deutsche bank down some 2.3%. i also need to bring your attention to it theresa is doing right now in the commons. she is facing questions from the commons liaison committee about her deal. this is on the back of mark carney yesterday warning about a very difficult, difficult

consequences for the u.k. to crash out. theresa may, of course, trying to explain her deal. i imagine she is explaining and will explain some of the thoughts behind the negotiations and maybe she wants to explain in full how much the eu could still give. she says the december 11 vote is an important point for the u.k. and we will continue monitoring her comments. this thursdayn morning and we will be back in a couple of minutes. this is bloomberg. ♪ oomberg. ♪

francine: this is "bloomberg surveillance." first of all, a market reaction after those powell comments yesterday where the market interpreted him as being much more dovish than expected. the u.s. 10 year yield falling sincefor the first time september 2018. the market is also trying to reprice how many hikes we will get from the fed. the danger, the chatter i'm hearing on the trading floor, is that the market represses to quickly and jay powell is not as dovish as he seemed yesterday. the second piece of breaking news is deutsche bank. we found out in the last 5-6 minutes that 170 prosecutors and police staff are involved in the deutsche bank raid. police were seen earlier today at the deutsche bank headquarters. we understand and we are trying to piece it together with

various reporters on the ground and of course from our head office in london. is suspected of providing help with these offshore accounts and two deutsche bank employees may be named as suspects. this is a report from the prosecutor. what we know is that it is certainly hitting the deutsche bank shares. they were down 1.5%. that decline was 2%. it is now a 3.3%. --know that deutsche bank police cars have been seen outside headquarters in frankfurt. if we look at a longer-term share price of deutsche bank, it bank, ititely had a tough has definitely had a tough time. questions about some of the risk management. this seems or could be new. we are trying to figure out exactly what the prosecutors are looking at. after police cars have been seen outside of deutsche bank headquarters, we are now getting prosecutors saying that this is

a big operation. 170 prosecutors with police staff involved in this deutsche bank raid. deutsche bank now saying that some accounts may have been used for illicit money. let's get straight to our reporter in frankfurt who covers deutsche bank very closely. this is a breaking news story. we found out in the past 5-6 minutes that there is this a great going on. what can you tell us? >> we don't know too much at this point. we have a statement out there from the prosecutors in frankfurt saying that they are doing a raid at the offices of deutsche bank in frankfurt since the early morning. we don't know exactly what it is about. the prosecutors said it is related to potential money laundering. they are not saying anything about which specific case. they mentioned that they have a suspicion that deutsche bank helped clients to move money

illegally and that is all we know so far from prosecutors. francine: in these kind of difficult times, we cannot really speculate, but do we know whether it is tied to any other bank right now or is it too early to tell? jan-patrick: no, we don't know that. it is always possible, but so far, the information we are getting from the prosecutors is what i just told you. i think we have to wait a couple more minutes to see what is going on and maybe get also a statement from deutsche bank. we have tried to contact deutsche bank some of that we did not get a response. prosecutors and police staff involved in this raid. by german standards, does this feel like a very big operation or is this something we have seen in the past? to me, fromors, london, feels very big. jan-patrick: well, i'm not an

expert and i cannot tell you how this compares to other raids, but i would say it is not unusual because usually when you rated bank, there was a lot of paperwork involved that you need to have a look at and confiscate , so you need lots of people. we have like 10-12 cars standing outside of the deutsche bank headquarters. i would say it is a reasonable amount of people that need to be involved just to handle the sheer amount of paper that needs to be handled. francine: yes, and i know i'm asking difficult questions because we are literally just finding out about the probe, so we are trying to figure out what is behind it. given that the chief executive is fairly new in the job, would he be implicated in this or do we just not know? jan-patrick: i think we don't know yet. we have to wait a little bit to see exactly what this is related to, if it is related to the panama papers which are going on for a while now -- then that

could be a different story than if it is related to something that occurred more recently. we have to wait and see what the matter is about exactly. francine: all right. thank you so much. our lead reporter on deutsche bank. let's focus on brexit. governor carney said the bank of england is prepared for the worst possible brexit and the u.k. faces the steepest economic slump since world war ii if it crashes out of the european union without a deal. the banks being ready for brexit is not sufficient to guarantee a particular economic outcome. there is little monetary policy can do to offset the potential significant hits to productivity and supply that brexit could entail. francine: now with us is the director of u.k. in a changing europe, michael sullivan from credit suisse is also still with us. we are getting breaking news out

of theresa may. she is currently testifying against -- in front of the liaison committee. she has also been asked whether she can confirm under all scenarios will u.k. citizens be under the current relationship. thank you so much for joining us. when you look at the deal, what exactly is the chance of this getting through? it seems on most impossible. >> there is very little if any chance of this deal passing at its first attempt. most people assume the will bring it, it will face a defeat. then depending on the scale, the government might think about bringing it back to parliament at a later date and trying again. maybe with some cosmetic changes , maybe having on back to the european union to change some of the text. the european union is not going to change anything substantial. francine: could they attach a second referendum to it? would that be more of a

disaster? anand: certainly, mp's are going to put an amendment on the bill that says we will approve it if it is approved by an amendment. the government needs to legislate on an amendment and parliament needs to decide lead tos and it will more uncertainty. the intriguing thing at the moment is there are a range of options and they all seem equally unlikely, but one of them is going to happen. it is impossible to tell what is going to happen at the moment. francine: michael o'sullivan, thank you for being patiently with us. where do you see the fault line when it comes to the markets? what is priced in? could we see the day after the vote if it gets shot down in parliament a significant fall or is it priced in? michael: i think it is priced in. assets, investors in the last year have really stood back. to find investors

outside the u.k. who have any kind of significant positioning to u.k. assets. also in terms of the market narrative, i think a failure at the first hurdle in parliament is priced in. i think theresa may is now pursuing a kind of compression strategy, where she is trying to narrow the options that the euro-skeptics and labour party have. there are signs that people are now beginning to think of a different but more pragmatic version. tom: michael, why does --francine: michael, why does governor carney go further than the government with this gloomy outlook? do we have the facts and figures to know how it will behave in the case of a no deal scenario? for the via an extension in the meantime? i think not only was he

prominent in terms of warning of the effects of brexit, but thankfully, the bank of england was one of the few institutions in for a brexit vote. i think some of the scenarios he painted are probably in terms of macro impact. there would be considerable economic damage to the u.k. if we get further uncertainty. this is part of a much bigger picture where public opinion has been formed head of the parliamentary votes. francine: what is the chance of a fresh election? anand: it is conceivable. it is harder because they have this piece of legislation that means the government does not have to resign if it loses this vote. under these circumstances, it is conceivable that we have an election because parliament is unable to agree on a move forward for brexit. francine: thank you so much for joining us both.

a lot of breaking news today. argentina is hosting heads of state from the g20 nations for a summit that begins tomorrow. we will be watching out for bilateral meetings between trump, xi, putin, as well as any news on the scandal and saudi arabia, brexit, or other stories. we spoke to argentina's economy minister ahead of the meeting. g20,r job as hosts of the it is of course not to strike the deal between the leaders, but to act as an honest broker of the different positions. michael mckee now joins us. there are all these bilaterals that could be explosive. which is the one that you are watching out for the most? is it trump-xi? mike: it is definitely trump-xi.

this is the argentine's chance to be on the world stage. the g20 meeting is the least important thing happening at the g20 meeting, unfortunately. it is the various players who have come to town with different agendas. the president of the united states and the president of china will be the main act, but that does not happen until saturday night, after we have seen the rest of the leaders leave. the markets are going to have to wait until monday morning to react to that. maybe a 50/50 chance that the two could reach a deal. other deals may come into place here. we don't know of the president of the united states is going to meet with the president of russia, but trump-putin is a possibility. will they talk about ukraine? the saudi prince, the first g20 leader to arrive here, who will he meet with? will anybody really talk to him after what has gone on in recent weeks? we know that vladimir putin is going to meet with mbs and that is another story line. the last time they met before at an opec meeting, they sent

signals they were going to cut back on production, and that they were going to let the oil price drive higher with west texas falling under $50 now. that is going to be a big meeting as well. a lot going on here, a lot for the markets to follow. it is just not the g20 that matters. francine: mike, thank you so much. mike mckee joining us from the g20. a lot of breaking news in the last 26 minutes. deutsche bank, those offices, the headquarters in frankfurt, being searched by prosecutors. you can see deutsche bank down 3%. i have the 10-year yield falling sincefor the first time september 2018. coming up, we talk russia. ♪ alk russia. ♪ ♪ there's no place like home ♪

argh! i'm trying... ♪ yippiekiyay. ♪

mom. ♪ i am a techie dad.n. i believe the best technology should feel effortless. like magic. at comcast, it's my job to develop, apps and tools that simplify your experience. my name is mike, i'm in product development at comcast. we're working to make things simple, easy and awesome. francine: a very busy news day. bank breaking about 25 minutes ago.there is a

probe in frank for it . the raid is not connected to denmark. there are 170 prosecutors looking at this. deutsche bank down some 3.2%. let's get straight to the bloomberg first word news. bank sharessche have fallen as frankfurt prosecutors say the company's headquarters. are being searched in a money-laundering probe according , about 130ent officials and police are involved in the raid in frankfurt. say the rates are not related to the doamske case. there is widely expected hike in december. the dollar dropped oil u.s. stocks surge the most since march following what was seen as

a shift in tone from remarks last month. paulo says the fed's series of rate increases that policy just below neutral. he also noted that the economy have yet to feel the full impact of the hikes. interest rates are still low by historical standards and remain just below the range of estimates that will be neutral for the economy that is neither speeding up or slowing down growth. pingus: president xi xin says the global economy is at a crossroads. he says the world must decide whether to continue supporting the global system because failure to do so will he two new barriers on trade. he will be meeting with president trump at the g20 with washington indicating higher tariffs on chinese goods in the new year.

governor mark carney says the bank of england is prepared for .he worst possible brexit the u.k. government and central bank have both warned the economy could be as much as 11% smaller under brexit compared with remaining inside the european union. under the bank's projections, the decline would be much more rapid with gdp shrinking up to 8% in the year. the bank being ready for brexit is not sufficient to guarantee a particular economic outcome. there is little monetary policy can do to offset the potential hits to productivity and supply that brexit could entail. markus: the bank of england says nce is showing

they are strong enough to continue lending even during a no deal brexit. the boa said barclays would be more vulnerable in a scenario of extreme disruption. global news, 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. -- i'm markusr karlsson, this is bloomberg. francine: it has been a pretty hectic week for russia's second-largest lender. the ukrainian business was declared insolvent and made a $12 billion payment to the central african republic which it says was a technical error. just days after russia fired on ukrainian vessels raised some eyebrows.

as always, thank you for joining us. if you look at m&a and the fact that you want to get bigger, maybe you're looking at organic growth, if you look at -- and that i would put sanctions and concerns over russia, what is your number one concern? concern isr geopolitics because the banking sector is developing quite successfully. this year, we expect record profits for the banking sector ,round; 1.8 billion rubles sorry, trillion rubles. we have a certain level of stability and the banking

sector. i think the major threat comes from outside. the possibility of new sanctions in the banking sector francine: with our investors. are you getting tired of these constant delays of possible new sanctions in the u.s.? : when anybody is told every day, you will have sanctions, you get used to this. you start not to care very much about this. we have our plans as business as usual. we are ready for any development. do you think president putin will try to smooth things over at the g20 to avoid more sanctions? andrey: i don't think that we can put it this way. i think mr. putin is interested in meeting with president trump

just as mr. trump should be interested in meeting with mr. becauseecause -- putin our relationship reached a low. frome who benefits improving this relationship. i think it should be resolved in the context of bilateral relations. we very much hope that any meeting between the two leaders could lead to better relationship. we always notice that after the meetings, after the meeting in helsinki, we had a very strong position from part of the congress. we had new sanctions. given that you can see the defeat of the central bank over the size of your capital requirements, can you afford dividends at 50% of profits? i don't think we can

afford 50%. we still should count how much we can spend on dividends has ae the central bank little bit softer approach. they extended the recommendation and that will be enough for us to be in line with the regulations, but i don't think we will be ready to pay the 50% dividends. there is no law for that. it still should count. francine: how much lower do think it will be> ? andrey: i don't know. that is still yet to be seen. we are interested in paying

dividends to our shareholders. as much as we can, we will pay. francine: we are just hearing from angela merkel as we are having this interview saying that the world cannot close their eyes to broad flaws of russian meddling. do you worry that russia is isolated, and what can russia due to be less isolated? andrey: i don't think that russia is isolated. investors.tings with there wereerence, 500 investors from all around the world representing 63 countries. i think that our political our ministerputin, of foreign affairs have regular meetings with their counterparts from all over the world. unfortunately, we don't have the relationship with america, and that should be improved.

america has its own problem. i can tell you that america was isolated from other countries when mr. pence was very powerful and talking about american policy with china and other countries. --rybody side as a threat saw it as a threat to free trade in the area. francine: do you think that the fact that wages laid out in terms of geopolitics, does it actually have a discount in your share price? andrey: of course. the totaltoday, obligation is approximately net profit for three years. it is ridiculous. pressure of

political situations. me about thek to btb ukrainian solvency. how much has been reserved and what is the worst case of how much more you could lose? : we will not lose very much because most of it was of -- reserved. all of the principles are little bit lower am or violated. -- and were violated. -- still a lot of money from his own bank. he managed to arrest our efforts in the ukraine by claiming something against the russian government. the btb could not be responsible for the russian government.

for usde it impossible to cooperate in the ukraine. we tried very hard to repay all the deposits to our clients and we managed to do 90% of the job. the remaining balance is only about 100 million, which the banks still have to pay. authoritiesnew would manage to properly dispose these efforts, i'm sure they will be able to repay all deposits both to the private clients and companies. it is not a big some to be repaid. we are eager to do it ourselves, but we are now allowed to do it because of the policy of the ukrainian government. francine: one final question on

qatar, you put out a strong denial about lending to finance the state. where they the indirect beneficiaries? ndrey: i am saying i never lied to the press. i'm not always saying everything. read my lips. i said we didn't give any loan. me whether it is true or not, and i say look, let's have a bet. if i'm not right, i will pay you. if you are not right, you will pay me. i'm happy to pay now one million rubles to any journalist who will find we gave this loan for $6 billion. that is a guess. francine: i don't know if i would take her bet, but i will invite you to come to the studio so we can talk some more.

thank you so much for the interview today. in the meantime, we are following the deutsche bank story very closely. police investigations are related to the panama papers. we understand that deutsche bank has just put out a statement, the share price is still lower and they are saying that it is true the police are currently investigating our bank in germany related to the panama papers. we will communicate as soon as we have more details and will cooperate fully with the authorities. that headline just crossing outside the bloomberg. deutsche bank will be cooperating with authorities. this is bloomberg ♪

it is busy this thursday morning theresa may. testifying in front of the comments. what she is doing is answering questions about her deal. the last question that we just is someone is, insisted on a hard border, who will build it, the u.k. or the eu? if you look at her testimony so far, it has been pretty muted. a lot of things she has been asked she says she cannot answer because it depends on the outcome of the vote. we will continue keeping an eye on theresa may. you can see pound at 127.77. the last 40 minutes, deutsche bank being probed by

authorities. they just put out a statement saying this is related to the panama papers. .et's cross over to frankfurt we spoke 30 minutes ago, not a situation seems a little bit more clear. what do we know? we know that there has happened already this morning i deutsche bank, frankfurt prosecutors or searching the office is here. it seems right now that the raid is over. the prosecutors said this is in relation to the panama papers. they had a look at these papers and raised the suspicion that deutsche bank helps clients to set up accounts and offshore companies. this might be related to money laundering issues the bank has not raise previously.

the prosecutors also said this is not related to anything in denmark or danske bank. francine: if i look at the share 3.5%, areis now down we less worried than when the probe started straight away? could this be contained or do we just not know yet? think the share price is significant because when you look at it from today's high, we dropped a little bit more than 6% in today's total. market reaction that you have to knee-jerk a thing at the beginning and that people make up their mind what to do with it. it shows money laundering is a central topic. deutsche bank has been fined $18 billion in the past few years. if there is more of the back pocket to come, investors get a little bit nervous. francine: thank you so much.

that is the latest on deutsche bank. now let's go to an exclusive conversation. startup and d.c. status.n the endocrine it uses artificial intelligence to customize customer service and call centers to get the best possible service. joining us now is the company's chief executive. thereviously founded company behind the teeth straightening brand invisible align. >> we are very unusual for technology stock. by the time he go public, we will be profitable, continuing to grow over 100% a year.

i don't put ourselves in the same class of stocks that have now peaked and plateaued. francine: so you're going to ipo? >> eventually. francine: is the potential for artificial intelligence uber hyped? zia: massively. i think if you live at the landscape today, there is a edwerpoint where they igraph it on somehow. a lot of that inflated bubble will go away overtime and broader markets will focus on what makes money. francine: where do you see afiniti technology heading? zia: the algorithms we use continue to improve. where we are now is less than 1% of our market. we have a long way to go. francine: to what extent does

chatbots pose a threat? lot.not a there less than 1% of the overall communications marketplace. i think the perception of chatbots and reality are two different things. backfrom an era where in the 1980's, chatbots were all the rage. quickly, people figured out they don't do what is on the label. there will be some applications that will be germane, but that is not fundamentally affect our business. francine: you have princess beatrice to serve as the vp of partnerships. what this she bring? zia: i'm not going to talk about that. we have a lot of great people on the team. i'm very proud of the organization we built. francine: is this a really big market to support the investor

interests we have been hearing about? zia: i think one of the things we have been privileged over the years is to build a great group of people. we have a lot of people that bring enormous talent and access to the business. it is an integral part of how we look at the world. francine: how big do you want your company to be in three or four years? today, we are taking over 100 million in revenue. in three or four years, we should be 10 times that. i think that is the plan. year,e been growing every taking it over 100% growth. francine: thank you so much. comeback relation to see us right here on "bloomberg soonillance." -- come back

to see us right here on "bloomberg surveillance." busy 30: you have had a minutes. money market pricing and now one rate hike earlier this month. rates are coming back to earth. struck aerome powell bit of a dovish tone yesterday. wti crude falls below $50 a barrel, really a key level. a big week and a half ahead for the oil market. we have mds input meeting at the g20 market. .eutsche bank to the downside

this is the headquarters is being searched in frank for by prosecutors -- frankfurt by prosecutors. deutsche bank putting on a statement saying it is related to panama papers and that they are fully cooperating with authorities. bank, thoseutsche headquarters in frankfurt searched in the panama papers probe. that two bank employees or targeted as suspects in the case according to a statement. say about 100 officials were actually involved in the raids. a probe into the so-called panama papers expose evidence that deutsche bank help clients set up offshore accounts. that is according to

prosecutors. news, i would of also mention a third which is a 30 year yield below 3% for the first time since 2014. we are also watching theresa may testifying in front of the liaison committee. may is trying to defend her deal, trying to explain her deal. one of the questions from the people asking the questions was, she is trying to say to some people, you want to be pretty close to norway, two other people, you will be close to canada. they just want clarification on what she intends to do with the future relationship of the u.k. with the eu. she says the political declaration says the u.k. will have an independent trade policy. it actually makes for quite good listening. we will bring you all of the headlines and questions and answers from the liaison committee just going on in the house of commons.

a lot of news moving the markets today. deutsche bank share price under pressure after we found out about the probe. we are expecting opec to decide on whether or not to add production. 49.71, the price of oil at the moment. the pound on the back of that theresa may testimony is at 127. 76. coming up, we will have tom keene. this is bloomberg.

francine: deutsche bank's headquarters raided by prosecutors.

the group saying it is related to panama papers. president trump arrives today for the g20 summit. he threatens yet more tariffs on twitter. good morning, everyone. this is "bloomberg surveillance." really incredible news flow today. i would watch out for three big pieces of news. everything to do with deutsche bank, we followed in the last hour as a first found out about the prosecutors and the raids. share price now down 3%. i'm also looking at the testimony of theresa may on her deal. tom: a delayed move off the powell bombshell yesterday. i would also note oil. west texas intermediate under $50 a barrel. straight tot's get

the bloomberg first word news. prosecutors have rated deutsche bank headquarters and a money-laundering investigation. two bank employees have been named as suspects. the bank allegedly failed to report suspected money-laundering. is warning parliament that rejecting her brexit deal isn't risk-free. untry should co be prepared for a no deal. just two words from jerome powell sent stocks rising and the dollar falling. he said the benchmark interest rate was just below the neutral level. powell and those rate hikes have

been a target of repeated criticism by president trump. it is a rare moment of unity in the u.s. senate. senior senators rebuffed efforts to placate them over saudi arabia. they are demanding a briefing on the death of the saudi journalist. global news, 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm kailey leinz, this is bloomberg. tom: thanks so much. a nuanced data check off of the powell speech yesterday. futures at negative eight after the 600 point move in the down yesterday. curve has not done much. west texas intermediate, huge news there. well under $50 a barrel.

there is the dow with a big close. the 10 year yield should be read on the screen -- red on the screen. am always happy. treasury yields heading 3% after we heard a more dovish tone from jay powell. i'm also looking at deutsche bank. probably the main stock to watch here in europe. we did see paul of unilever step down. shares have fallen as frankfurt prosecutors say the company's headquarters are being searched in a money-laundering probe. the bank has confirmed that police are investigating at several german locations in relation to panama papers and say it is fully cooperating with

investigators. in the last hour, we saw the headlines and images of police cars. what do we know right now? elisa: we know it is not danske bank, it is that cannot papers, which we haven't heard much about. hasn't been much of an update in terms of what the regulators across the world were looking at. some hadt the time opened their own investigations. francine: how bad is this for the chief executive? do we know -- i imagine this was before his watch, but could implicate him? it joseph with legacy issues at a time in which he really needs to focus on growing the top line again.

at the very least, he is going to be picking up more of what they would like, but i guess we will hear more about what the prosecutors are finding and focusing on. we don't yet know who the two individuals are that are the subjects of the inquiries. that will help us understand a little bit more how manage it is. francine: is that it? do we know if there's any more coming? a we arethink that is going to be reporting in the next couple of hours. tom: i want to take a broader view. the credit default swap on an individual bank, this is the five-year cds on deutsche bank. i was sort of surprised at how untrustworthy this chart is with this elevation here.

all you have got to know is less trust, more trust before the financial crisis. what is the measurement of trust right now in this iconic bank? elisa: as you rightly point out, it is probably not a good measure right now, but it does affect its competitiveness in terms of how they comprise its services. trading we know is where the bank has struggled. at the moment, all of these indicators have continued concern and slack in terms of improving the controls and futures they have in place. it will not be good for morale inside the company at a time when many do bankers to be in good form and selling a good message. you have 40 banks memorize, when do we get a new measurement of the revenue challenges? is it eminent? is it out weeks, months?

elisa: it is months now. people are potentially reviewing the speed with which the top line could be picking up. francine: thank you so much. continuing the conversation on deutsche bank, joining us is dan morris. you probably don't want to talk deutsche bank at all, the let's talk a little bit about -- this is another concern for the bank. how much does this just .2 legacy issues for all banks in europe? you need better economic growth and a bit of a cyclical upswing. we have concerns with italy and brexit that indirectly hit the banks and the balance sheets. let alone these kind of particular issues. you do get a bit of a negative

alignment. we keep talking about m&a and the sector across border. cannot be done before all of these legacy issues are dealt with in individual banks? daniel: if the banks want to use their own equities and purchases -- tom: bringing up this chart was standing , and we were talking about the chronic nature of negative interest rates. here it is. i said, i'm going back and anding up on the terminal will dazzle dan at the fact that we have a germany to year yield negative since the middle of 2014. what is the price to all of these banks of chronic negative interest rates? l: it has made it

extremely challenging for the banks to generate any kind of net income revenue out of their operations. if you think about the outlook now, especially with people getting more cautious as to when the ecb will hike rates. that we was this idea are slowly getting down to this negative interest rate environment and there are brighter skies ahead, that seems to be less of the case. that drag seems like it is going to be there longer than we hoped. tom: once again, lower yields. do you just assume a lower grind down in yields? daniel: you need to think about what is going on in america. three hikesng for

next year from the fed. that should have an impact on tenure treasuries, which then should have a feedthrough to interest rates as well. we don't want to lose the fact that we are on a slowly rising environment. interest rates are going to be moving up, just perhaps a slightly slower pace. francine: thank you so much. coming up on bloomberg, we speak to the former ecb president. that interview is 6:00 a.m. in new york. we will talk to him about cross-border, m&a and ecb policy. this is bloomberg. ♪

kailey: nissan and mitsubishi have reaffirmed the what they call a deep -- much.hank you so yesterday at the powell luncheon at the economic club of new york, he stands up at the podium he is byduced as the economic clubs of new york, and the headlines, out literally

as the chairman begins speaking. the markets begin to move as he begins speaking. let us listen to the dove, chairman powell. >> interest rates are still low by historical standards and remain just below the estimates that will be neutral for the economy that is neither speeding up or slowing down growth. we do not detect a broad-based buildup. of excessive leverage dealers appear robust from a financial stability perspective. today, we do not see dangers excesses in the stock market. we also know rates are uncertain and may take a year to be fully realized. we will pay close attention to economic data is telling us. monetary policy will be designed to keep the economy on track. a signal that the former

president of the new york fed is sitting next to him at that market moving speech. we consider the market moves. they continue this morning. what will this do to the dollar? do you have to reset your dollar call off of what he said? >> known. -- no. in fact, we see it confirmed. we have been expecting a weakening dollar next year are typically as the fed hiking cycle will draw to an end. this is the common pattern we have seen in the past with past it rate hikers as the and draws near -- end draws near. the peak of interest rates and the dollar starts to weekend.

powell has confirmed our review in the. -- that. chairman powell wnats more room for discretion. it took a long time for information to go from the brontosaurus's head to its tail. in the same way, the bond market is the brontosaurus' head which it sees something and try to react while the stock market is the last to get the news. do you have to reset your bond framework off with the chairman said? dan: not at all. if anything, we are they concerned with how the market is interpreting his comments.

it still suggests three hikes is appropriate and our view for next year. we may have a path, be that in march or june on the margin of change from what we have thought previously. fundamentally, we think you are going to see higher interest rates. december isn't it. there is going to be more than one next year. for now, the market is ignoring all of that. the realization is going to set back in about interest rates. francine: where do you want to be invested right now to take advantage of that? we are neutral in equities overall, but we are still underweight fixed income. we will continue on this much more. let me look at the bloomberg to see the 10 year yield was a 3%. 3.00% right now.

we will continue with thu and da niel. dane thrilled to give you gimbal of montana. this is bloomberg. ♪

>> i think it is absolutely

important. francine: the prime minister of the united kingdom facing questions from the commons liaison committee about her deal. she has been testifying for about 70 minutes. the latest question is whether she accepts there will be serious consequences for patients if there was no deal. this is about the nhs and health care. they also asked her whether she would allow this to happen. theresa may saying the department of health is ensuring people will be able to get medicines. overall, a lot of questioning is on whether the u.k. and u.k. citizens will be worse off under the deal than now. we will have to continue listening to what to says, maybe a possible backstop. in the meantime, mark carney has never shied away from brexit warnings, but the bank of england's latest announcements have gone further than ever before. the sun called his warnings,

carnage. the times also puts his warnings up top. one causes forecast that a hard brexit could call it the worst economic loss since world war ii. brexit, is itat doomsday scenario if we don't have a deal? does that now make it more likely that we do get the deal approved in parliament? dan: we have a range of options. we have a plethora of alternatives as to how it can playoff. i think the forecast we have seen is the worst case assumption which is we end up with no deal and no mitigating efforts between now and then. toward remain,e where nothing really changes. across the, there are several options with differing economic

effects. areprobability of those shifting and there is no one a standout is highly probable. francine: what is being pressed into your pound forecast right now when it comes to brexit? thu: we have seen the options market has become relatively nervous. pricing and has been pricing any higher probability of a no deal. the levels are nowhere near what we saw around the 2016 referendum. the market still seems relatively relaxed when it comes to a no deal scenario. i think that is due to the fact that there are so many scenarios. what could happen after the vote in the british parliament. there are also scenarios that could play out.

we are talking about a second referendum which could lead to the u.k. remaining in the eu, which of the positive for the pound. it is very difficult to make a pound forecast at this moment with all of these scenarios. tom: what are we going to do? where is the opportunity on pound sterling? a think from a risk return perspective, i still think investors with pound exposure should take the opportunity to hedge their risk and their long positions because volatility's have picked up, but they are still relatively cheap because in a no deal scenario, i would expect the pound to depreciate at least by 10% or even more. as the market is not yet prepared for that. are buyingent you

imply volatility, which is a good risk return investment. francine: thank you both for joining us. coming up, former bank of france governor. i'm sure they will talk about euroanks and your level -- level. coming up next hour, we will be talking to the former ecb president and we will ask him anything thing or two about productivity and wage inflation in the eu. this is bloomberg. ♪

tom -- surveillance."

in london. i am tom keene in a new york, francine lacqua joining us from london. update on we have an the deutsche bank, our first word news with kailey leinz. in germanysecutors's have rated deutsche bank offices in a money-laundering investigation. two employees have been named as such next. prosecutors say that a probe into the so-called panama papers show that the bank had offshore accounts and failed to support money-laundering allegedly. deutsche bank has said it is cooperating. trump has been in his practice a 5% tariffs on imported cars. impose his 25% tariffs on imported cars. meanwhile, president trump will not rule out a presidential pardon for former campaign chairman, paul manafort. he told the new york post -- why

would i take it off the table? manafort was convicted for bank fraud charges. robert mueller said paul manafort headline to authorities cooperate.agreed to the new chairman of the senate armed services committee wants to triple the number of f-35's bought from lockheed martin by 2024. best senator james in-house said senator -- senator jim's in half should also be billed -- built faster. global news, 24 hours a day, on air and at tic-toc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i am kailey leinz. this is bloomberg. ♪ francine: thank you so much. argentina is hosting the g20 summit tomorrow and we will be watching out for bilateral meetings between trump, president xi jinping and putin.

summons,the bloombergtv spoke exclusively to argentina's economy minister. g20,r job as hosts of the is not to strike a deal between the leaders, but to act as an honest broker of the different positions. francine: that was argentina's minister. we are joined by michael mckee, bloomberg's international economics and policy correspondent from buenos aires. in three days, you have all that microcosm of geopolitics, everything that could go wrong, distilled in buenos aires. michael: yes, unfortunately for there may not be a lot of opportunity to be honest brokers. they are the world stage, but the least important thing is the g20 meeting itself. so many other side lots led of course, by the meeting between

president trump and president xi jinping that will take place saturday night after most of the other leaders have gone home. markets will not be able to react until monday morning. the big question, can the strike a deal on trade, that would avoid much more damage from the war? many other meetings will take place on the sidelines, including the question of whether donald trump even meet with vladimir putin, given what is going on in ukraine. if they do, what kind of stance ? howthe united states take will other leaders react to him given what is going on in recent weeks? hasnow the on the one who confirmed a meeting with him is vladimir putin. but in the past, when they have met, it has signaled a change in oil prices. we have the nafta signing, finally getting signed -- then you left assigning best of the new -- the new nafta signing.

are good atou synthesizing the economics into the politics. the fact is, the g20 has $49 a oil, and you waste of the lunch yesterday, the food was not as memorable as the speech. you also have a 10 year yield of 2.9 and percent. is this a global slowdown. global20 -- is this a slowdown g20? >> the question is how far does it go and how much does it fall into the area were we start to worry about contraction? at the moment, it doesn't look like that that was jay powell is message yesterday. . he emphasized the fact that the u.s. economy is in a pretty good place, and as long as the u.s. economy is in a good place, it helps the rest of the world? so much.ike, thank you

bloomberg's international economics and policy correspondent joining us from buenos aires. we will see plenty more. of him the next couple of days we are back now with daniel bnp paribas asset management investments that are just. what are you looking for on that meeting between president xi jinping and president trump to give us clarity on trade? daniel: that is really probably the one thing that could come out of the meeting that would have an impact on markets. reason it matters so much is with all the trade tensions and discussions we have had over the course of the year, it was not just tweets, it was threats, proposals, but now we are getting too real tariffs, real money. the proposal of 25% or 10% on 500 -- it will make an impact on the economy. whether we are more likely to go

on the path will have an impact. francine: and carmakers must be very nervous as well,. daniel: i don't think it is priced in. even if you do get what seems to be a deal between president xi jinping and trump, we had one in europe, and now we are still talking about european auto tariffs as well. so i think will have this pendulum swinging back and forth that we have had for a while, even if things seem to look better. there are long-running issues which i think we'll have an impact on the u.s.-chinese relationship. you buy stocks today after this back-and-forth, after the ambiguities we see, and indeed, ambiguities in the next board?an you climb on daniel: we have to think about what drove the initial decline

we've had since october. trade has clearly been one of them. interest rates, the second and also, the outlook for the technology sector and earning expectations. the only one have a bit more clarity on perhaps, is interest rates. . the other two, not so much given that we have a have one of the three that looks better than what it did two months ago, it is probably premature to say it is a huge buying opportunity. europe, howds in attractive are they? it is extra dinner to see them even coming down in the united states. is that a reason to own european equities? daniel: it is probably one of the principal reasons. you have extradition for higher dividends over the course of the year. from an investor's point of view, given your not so optimistic about price appreciation -- but if you are looking at income and comparing potential for income and dividends from equities relative to say, a german bund, they look attractive. .om: very good, daniel morris

terrific news flow this morning. an important conversation at 10:00 today, the mayor of los angeles, eric garcetti. always timely and ever more timely after what we saw in the geographic and demographic mix of the midterm elections. this is bloomberg. ♪

♪ francine: francine: this is "bloomberg surveillance." kerley: i'm kailey leinz, this is your bloomberg business flash. a telecom ipo has hit its retail sales target. bloomberg learned underwriters received enough reservations for the bulk of the shares to be sold to individual investors. they may push up the price

range. the ousted chairman of qualcomm is still thinking about taking the chipmaker private. the company has had legal problems and has less cash after recent chair repurchases. thebs is the son of qualcomm founder and former ceo who left the company after a hostile takeover attempt by broadcom. war isnt trump's tariffs expected to lead to higher prices on products in the u.s. survey.g to a roughly nine out of 10 companies do not anticipate relocating production back to the u.s.. and, china's $176 billion experiment with your tapir lending is headed to an end -- peer-to-peer lending is headed to an end. the most i just. that china is not done clamping down on the shadow banking industry. that is your bloomberg business flash. tom, francine. francine: thank you.

deutsche bank shares have fallen as prosecutors say the company's headquarters are being searched in a money-laundering investigation. several german locations are included, and the case is related to the panama papers. joining us for more on this is my next guest. what does the lobby group want from deutsche bank today? >> we are representing institutional as well as private shareholders of deutsche bank, and what we are seeing in the last year, is that deutsche bank does not come to rest. if is scandal after scandal and terayed after rate --raid af ra youi could say thatdwe are getting used to it, but the share price is going southward. management has to make it tasks and make it work.

especially the thetion today, whether woman who is in charge of all things concerning ms= money-laundering and etc., whether she is the right woman in place. francine: if she were to be replaced, would it make you more comfortable about the direction deutsche bank will take? klaus: it would not solve the problem from one day to the other, but for me, it is a question of whether she has done her work correctly. we have seen that she commented on the money laundering questions on the dennis bank that deutsche bank has nothing to do with the customers of the danish bank, that was wrong. know your customers, that is a

rule applicable to deutsche bank. we doubt that she is still the right person in the right place. tom: thank you for joining us with this breaking news today. you were quoted by business insider deutschland as saying -- this cannot go on forever. we keep seeing the forevers, panama papers, maybe it is old news, maybe we will see something in a danske bank, who knows. as you gauge retail, eightutional, is it euros, seven euros, five euros, what is the breaking point for this psychotic institution for this share price? klaus: every cent in the losses is too much in these scandals, , the ceo had a lot of

what he took over as ceo, and he now has to deliver. i think he knows that he has to deliver. -- investors are totally red totally tired of all these scandals and raids. theoryat is the retail in germany? the people who own deutsche bank shares, how angry are they, or do not care? klaus: they are totally upset about the developments at deutsche bank. 20 years ago, everybody was very proud of being a shareholder at which a bank or of being an employee of deutsche bank. but now, if you ask deutsche bankers on the street whether

they are proud of working for deutsche bank, they are not even saying that they work for deutsche bank. so this must have an and. this is also one of the reasons for the bad share price that we are seeing, in the last two years. francine: we spoke to you on a june 1 of this year and we asked you at the time of what you thought of the deutsche bank chief executive. and you said, he just needs more time and shareholders need to get behind him. do you still feel that way? it is getting difficult from week to week, month to month. we are still waiting for improvements at deutsche bank. we see small steps in the right .irection broughtd today has

deutsche bank dramatically backwards in their efforts of getting these scandals off to the past. tom: thank you so much for joining us for this breaking news on deutsche bank. nieding. daniel, we would call this a button-down belt and suspenders bank. is that what we need in the equity market now, with innovators and technology companies, or do belt and suspenders companies look good right now? daniel: welcome i think we all kind of sense that globally we are in a late cycle in america, and that is the point where you will be moving towards distance in this sector. it makes sense to go to a high-growth sector from an economic point of view.

with interest rates rising and the income he would be getting from them. tom: it is a great time to capture income. with that income, will we see dividend growth, or do you assume dividend growth comes down, as nominal gdp is dampened? daniel: at this point, we are just looking for continued growth in gdp, but of course, not quite at the same rate. dividends could continue to rise, they should. it brings you back to the question, if companies are returning cash to shareholders via dividends or share buybacks, does that suggest they do have any more profitable investment opportunities in that business. coin.s two sides of the as i said, we are neutral on our portfolio, still average historical returns for the market, and now certainly where we are going underweight. tom: how do you expect credit to be? daniel: we have seen how things

have been recently, a significant increase in high-yield spreads in emerging markets in europe come and the u.s.. it is challenging and you are always asking yourself, are the mark is signaling into two aeration coming -- are the markets signaling a deterioration? but we are always watching for signals of increasing default rates or upgrade-downgrade ratios deteriorating. especially where spreads are today, you want to be nimble when the point comes. tom: thank you so much, daniel morris. coming up, the exxon mobil chairman and chief executive. it will ask him about the price of oil. we will see of mr. woods dares to give us a price. at 1:30 p.m. in new york, 6:30 p.m. in london. this is bloomberg. ♪

♪ tom: good morning everyone, "bloomberg surveillance." francine lacqua in london, tom keene in new york.

as you look to india and pakistan, you always go back to conflict.r we are joined by the executive producer for bloomberg news in mumbai. the change is imran khan, he said pakistan is on the same page to finally get the relationship within the -- is india on many pages, or the same page. >> they have been asking for a better relationship with india and these. he even said that he and his army are on the same page. but india does not want to engage in pakistan because our differences stemming from the fact that india buildings that imran can does not have control of his army and does not walk the talk of putting an end of itrorism and eliminating from his soil.

india believes that for any meaningful dialogue to happen, terrorism needs to stop. and on that front, india has been pretty consistent. tom: many of our western audiences no imran khan as a aant of cricket and celebrity. in a different politician. does this matter in this debate? harsha: we love him as a cricket player. india has all memories of him as the captain of august 10 cricket team. but as a politician and prime minister, he has not delivered -- as the captain of pakistan's cricket team. any form ofted in meaningful relationship with india? not quite how? daniel: that do they need this imf bailout? harsha: economically pakistan he wicked. they have been asking

-- there have been asking for the bailout, and it is necessary from an economic stamford. but from india's perspective, we did not do much trade with pakistan. from a foreign policy standpoint and from a security standpoint, india's relationship with pakistan is significant. thank you so much. joining us on a most interesting and important debate. in the next hour, for the entire hour, jean-claude trichet. this is bloomberg. ♪

tom: this morning, expect the unexpected. deutsche bank raided by police.

prosecutors say the bank is " suspected of providing help with offshore accounts." think panama. capitulation, the 10 year yield at 2.99%. jean-claude trichet on jerome powell, the dove, and mario draghi. don't cry for me, michael mckee. ashael mckee in buenos aires the g-20 oh wakes trump and xi. good morning, everyone. this is "bloomberg surveillance." i am tom keene. bonjour.de trichet, francine: bonjour. rate tookhe bank people by surprise. there are german police still at

the headquarters of deutsche bank. , denmark, butke it is about money laundering. it brings us back to the panama papers. our,in the last representing shareholders, i thought that was extraordinary. when does this end for a troubled institution? let's get first word news. >> in germany, prosecutors have rated offices of deutsche bank. a probe of the so-called panama papers indicated the bank set up offshore accounts and failed to report suspected money-laundering. two employees have been named as suspects. is warning parliament that rejecting her risk-free. is not she said the country should be prepared for a no-deal brexit.

the pound fell. sterling could plunge to parity with the dollar if the u.k. crashes out of the eu. jerome powell said the benchmark interest rate was just below the neutral level, raising hopes the fed may be close to ending its campaign of driving up rates. it has been the target of repeated criticism i president trump. senior senators from both parties rebuffed efforts to placate them over saudi arabia. they are demanding a briefing from the cia director, and threatening to punish the kingdom. global news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. thanks so much. the markets moving after the

speech by chairman powell, futures -10 after a huge celebration. the curve shows those yields coming in. $50, extraordinary. the 24,200 low. red on the be screen. we had a 2.99 print on the 10 year yield. and brent at the $60 level. francine. francine: it is all about the treasury yields. 3% after whathit we heard from jerome powell, but the sentiment on the trading floor is shifting to the g20. i'm looking at the pound,

theresa may still testifying on her deal and the vote on december 11. barrelbling below $50 a as a russia signaled little urgency to commit to supply cuts. tom: this is the 10 year yield. i have not shown this chart in ages. the president's election year with a very, very low yield, then the move up, stasis, up we go, then the first mark of a 3% yield in the early summer, and toe is the print 2.99%, just give a guidepost of where we are and where chairman powell is right now. francine: i want to go back to deutsche bank. it is a big story. helprted thanks to the be,ifferent than it used to

the focus of the angst when it came to deutsche bank. it is cocoa bonds, convertible bonds, and today they are sliding further on the back of this news that the german authorities descended on german bank related to a money-laundering investigation. tom: good morning to all of you in europe as we begin a busy week. ,ichael mckean, buenos aires g20, deutsche bank, and the challenges of central banking. i made clear this single headline of the monetary policy gamed out to the late summer or fall of next year for the ecb was absolutely original. it is good to speak to the engineer from france. jean-claude trichet, former ecb president, the chairman of the trilateral commission. much more to speak of.

we could speak for hours today. i want to talk about a child in on with memories of 441. >> i was young, but scarcity was all over europe. tom: in world war ii? wherene: it was a period we knew we had to rebuild everything, and everything was possible, and finally we engaged your for the better -- europe for the better for a long time. that is a marvelous success, even if everything is this colluded, rightly so, in democracies. tom: i want to get where chairman powell spoke of yesterday.

your banking system is different. we see that played out today and such.che bank what does europe need to do to stabilize the banking system to move forward to the prosperity that you and others new from another time? >> we are in a totally different universe in the u.s. and europe. the banks are not the dominant channel to finance the economy in the u.s., it is the market. in europe, the banks are the dominant channel to finance the economy. rapprochement,n but at the moment of the crisis, 75-'s 25 in the u.s., and 25-75 in europe. higher inroblem was

europe than in the u.s. because it was a major channel to finance the economy. intolso have to take account the efforts to recapitalize the banks was at least three times bigger in your than the u.s.. when we compare what has been done on both sides of the atlantic, we have to take that into account. we have banks that are solid and strong in europe. they are up to the re requirements of the financial stability board, but you still have hard work to do. that is very clear. francine: what to do you worry about the most. ,hen you look at geopolitics central-bank normalization, do you worried the market is not solid when you take away the extraordinary policies in place for the last 10 years? me we are still

in a world of danger. said in the ecb when they produced their last is stability review. weould stress the fact that continue at the global level, not only the u.s. or europe, but the global level. ,e are still over leveraging with the debt outstanding public and private versus the global gdp. world anda global have to take into account the risks at eight global level, then augment overall leverage in the world more or less at the same pace after the crisis as before the crisis. is fory difference

advanced economies it mattered less than before, and the emerging economies mattered much more than before. is my own observation. inflation -- hascine: inflation, which been so difficult to take form in western countries come all of a sudden in 2019 takes hold? >> when i look at inflation expectations, i don't think we have to feel that. the solid anchoring of inflation expectations is of essence on both sides of the atlantic. on this side of the atlantic in the u.s., solid anchoring is more or less in line with the definition of price stability. same definition in the u.s., europe, japan, and the u.k.. that is something that is important. i take it proof as convergence

of the central banks. been expert over your decades on technology and the diffusion of technology. we had no idea what it would be like in 2018 or 2019. can europe jumpstart the technological innovation to prosper and get out of the rut? at capital on both sides of the atlantic, i have the same approximate over 20 years. that is one. second, the u.s. has a formidable advance in terms of ,latform, digital creativity and the major firms in the world are either u.s. or chinese, and the europeans are not at that level for a number of reasons, and a have to work hard to ,rganize their own catching up which is overdue.

i think there is recognition by all in europe that this is absolutely of the essence. with usn-claude trichet for the next six hours here on "bloomberg surveillance" today. who else should we talk to? ,n the equity markets, value how do you manage the news flow out there on equities? , bloomberg radio, this morning. stay with us, worldwide, and in france. this is bloomberg. ♪ ♪

>> this is "bloomberg surveillance."

let's get the bloomberg business flash. ilever.eo at uni he is the head of the personal care division and used to run the china operation. largest automaker alliance will continue despite the arrest of carlos ghosn. they have reaffirmed a commitment to the alliance. hasos ghosn's arrest exposed divisions between nissan and renault. china's experiment with peer-to-peer lending is heading for an end. authorities plan to close platforms the coast of an increase in default, fraud, and investor anger. that is the bloomberg is this flash. francine: thank you so much.

deutsche bank shares have fallen as frankfurt prosecutors raided the offices in an investigation into him money laundering. the so-called panama papers indicated the bank helped clients set up offshore accounts and failed to report suspected money-laundering and two employees have been named. deutsche bank says it is cooperating. joining us now is our market reporter. we have been following the investigation for about two hours and 15 minutes from when we first heard police were outside the frankfurt headquarters. how worried are shareholders? is this another legacy issue on? could draw: -- drag >> that is how shareholders react, the between disappointment and resignation. we heard some voices earlier that it is scandal after scandal

and rate after rate. the management has to make sure it can focus on business and not dragged away by headlines like today. francine: apart from the two people who could be involved directly, is anyone's job at risk? >> that could always be the consequence. then some names going around, but it is too early and it would not be fair. it seems like the bank has a problem to do what is necessary to comply with the law and prevent money laundering. that is always an issue that management should take care of. if they don't, there have to be consequences. tom: you and chad, and others are in the trenches, day after day after day deutsche bank opera. what which you say is the next step?

will come out and shed some light on what is going on and say it is not a big deal and they keep focusing on the business and will handle the stuff. the main problem is just sentiment. the bank is not getting the best headlines. that is bothering many investors. never get a chance to focus on the stuff they are doing right. tom: thank you so much. looking at deutsche bank and the news flow there this morning with our banking team in london. jean-claude trichet with us. we will continue with him. later on, one of the many candidates vetted for 2020, the mayor of los angeles. it is his fault that the dodgers lost. eric garcetti at the 10:00 hour. this is bloomberg. ♪ ur. this is bloomberg. ♪

francine: this is "bloomberg surveillance." talking about it, mark carney not shying away from dune days warnings -- doomsday warnings come as saying the u.k. faces the steepest economic slump since world war ii if it crashes out of the eu without a deal. let's get back to jean-claude trichet.

as always, thank you for joining us. how messy could brexit be for the eu? u.k. will be messy for the and the eu, but with the the size of the gdp, so more messy for the u.k., but bad for all of us without exception. asking the u.k. to stay. the u.k. has decided to leave, but it is alone. all the others wanted the u.k. to stay for many reasons, and it is a totally different comparison than the time during general de gaulle. youas saying we don't want to join us. it is a pity. the analysis by the boe, i am not surprised. no deal would be a total catastrophe, that goes without

saying. a deal as it is is also costly for the u.k., much less, but of gdp2.5% to 3% compared with 9% or 10%. remain, thene there is no cost. i am not too optimistic on the capacity of the u.k. to stay, but it is a possibility. it is a possibility. even theresa may mention that. she said no deal, the deal i negotiated or remain. francine: if there is no deal, how far and wide with the repercussions be? a lot of people think it would hurt the u.k. and eu. could it be felt further afield? that happens in any part of the world and certainly at the level of the

very large integrated economies, , so the no deal is certainly something which is very bad for all, including the global economy as a whole, the u.s., everybody. that is absolutely clear. again, even the deal is not good for europe. u.k.,nly very bad for the and by way of interaction and interconnectedness and for the rest of the world. francine: would it be a systemic risk, or would it affect the transmission mechanism if there was no deal, or just on the gdp level? >> we are in a world which is dangerous, fragile, because of the over indebtedness of the global economy. that would be a trigger for possible major difficulty.

i don't suggest it is in the cards, but it is one trigger. german powell mentioned a number of triggers that could cause a big problem. this is one of those triggers. tom: let's come back. jean-claude trichet with us. we want to discuss the dynamics of the chairman's speech yesterday. we will not ask jean-claude trichet about the former banker friends governor. it would be indiscreet. himead am a we will grill at the 2:00 hour. the former banker friends governor. a beautiful new york city. stay with us. ♪

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"all sites are green." all of which helps you do more than your customers thought possible. comcast business. beyond fast. francine: this is "bloomberg surveillance." from london and new york. for those of you listening on the radio, good morning to you.

we are looking at live pictures of the plane of the italian prime minister arriving in buenos aires. tom: look at the flag. president trump will see that flag. air force one will show up with a flag like when the flies over yankee stadium in the summer. francine: three flags. i'm not sure if they fly with it all the time. they are mired in the discussion with brussels on the budget, but the jet the prime minister is using is one of the political weapons used in the last election, because they were saying the former premier had spent too much on it, so all of these things got politicized. b's" iney have too many "

the word republic. francine: let's get the first word news. prosecutors in germany have rated deutsche bank in a money-laundering investigation. the headquarters is among the places searched and two employees have been named as suspects. papers showd panama deutsche bank helped clients set up offshore accounts and failed to report suspected money-laundering. deutsche bank says it is cooperating. president has renewed his threat of a 25% tariff on imported cars and ordered a review of china's retaliatory tariffs. argued it did not event the decision of gm to close factories in the u.s. president trump won't rule out a pardon for paul manafort. he told the near post "why would i take it off the table?" manafort was convicted of bank

and fraud charges stemming from robert mueller's investigation. toafort has lied authorities, despite agreeing to cooperate. the new chairman of the senate armed services committee was to triple the number of f-35's by 2024, requiring more spending than the white house wants. he also wants to speed up a 350s to reach five-should navy and that aircraft carriers should be built faster. global news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. thank you so much. some breaking news out of the ecb. they are at with their financial stability report, talking about brexit, the cliff-edge brexit poses additional risks to the theility of the region and ecb is saying to financial stability environment is more challenging.

that is interesting. yesterday in london, we were hearing from governor carney about the impact of a no-deal brexit. it was pretty scary reading. whats a dire warning of could happen to the economy. tom: right now we go to washington with kevin cirilli, but first in buenos aires, michael mckee looks at the g20. meetings. be g20 is there a theme this year? >> there are themes. one is sustainable food development for the world, but they will be taking a big backseat, the least important thing is the meeting itself. this is all about the meetings on the sideline. president trump meeting with xi jinping. can they dial down the temperature on the trade wars?

president trump and president putin will meet in a bilateral on saturday. the kremlin announcing that this morning. trump saying he might not meet with putin over what has happened with ukraine, but apparently the meeting will go ahead. no idea what the outcome could be from that. tom: let me rip up the script. i am uninformed. is ukraine represented at the g20 meetings? >> no, ukraine is not a member of the g20. and the saudi, prince implicated in the killing of jamal khashoggi is here already. he was the first g20 member to arrive. there are questions whether anyone else will meet with him, other than vladimir putin, who mbs tomeeting with hi

talk about oil prices. that will be a focus of the markets as well. francine: i was going to ask you about the markets. trump-xi meeting, what else moves the markets? >> the biggest thing is what happens with china, but oil prices will be a specific thing people are watching. this opec meeting ahead of the opec meeting. , the tone about global growth going forward in 2019? will we see the leaders pessimistic? that could have an impact on the markets. theresa may is due here tonight. she will be with a number of her european colleagues, trying to explain brexit and where they are. after the pessimistic reports from the treasury and boe, she will have to explain why this won't drag world growth down if

they perceive with brexit as planned. tom: thank you so much. michael mckee in buenos aires. , ourshington, bundestag chief washington correspondent. flow.is so much news what is at the top for the president today? >> i think he is prepping for the g20. this weekend with these meetings, there is a lot at stake. you have the backdrop of jamal khashoggi, the vladimir putin angle, and escalating trade tensions with china. that is where the expectations have been mixed in terms of what people are seeing, but the bottom line is that there will be an escalation in this in january. the president has said consistently that he is threatening to increase the tariffs. put two ships

through the taiwan strait. i believe china as well. where does general mattis fit into all of this? >> he has the presidency here. i also think mike pompeo has the presidents ear. i think the ongoing escalations are ones to carefully watch. we are in the middle of a trade dispute. every development is something that will be closely monitored. hearing, we are just looking at pictures for those of you on the radar, the tie-in prime minister getting off the national plane and catching up with some officials that have come to greet him. we are expecting him at a later stage to address reporters who have shown up in buenos aires.

does your what role have to play in tempering this china-u.s. trade relationship? is there anyone in europe that president trump actually listens to? to?istens i'm not sure there is anyone in europe who can twist the president's arm on this. first and foremost, the threats of automobile tariffs the president has said earlier this week. the second point just quickly, the ongoing issue in terms of isope as you alluded to directly impacted by china and the u.s. trade dispute. they could suffer their, or gain , but theret regards is a lot on the european front. tom: thank you so much. listening to all this american news and european news, jean-claude trichet has been generous to join us through the

hour. i want to get to central banking. kevin cirilli talks about the european opportunity in asia. there is so much of a heritage in europe and asia, france in asia, how do you see the opportunities for mr. emmanuel macron? >> i would say the responsibility of the president of the french republic would be to agree on new advances in europe that would be presented to the other heads. is.ill see if it i think we will advance a little bit in some dimension, and i am happy with that, because we all call for europe to deepen its unity. there are a lot of things to do. resilienceproved a that is often under assessed by observers, but we have to go

further. europe worrying about this battle between china and the u.s., which has to stop at a certain moment. ofope myself a kind appeasement would be found out. both sides have very good arguments, and the u.s. has some arguments which are very good, but we have to appease the situation, otherwise the entire world would suffer, and europe with all the other countries in the world. francine: jean-claude trichet, the former ecb president stays with us. the exxon mobil chairman and chief executive with us. we will ask him about the future investments in oil and talk geopolitics. this is bloomberg. ♪

>> let's get the bloomberg business flash. amazon as the target of antitrust regulators in germany looking into the largest retailer in the biggest online host for smaller stores. eu scrutiny on whether amazon gathers information on rival sellers to launch its own product. germany is amazon's biggest market outside the u.s.. ipo from softbank

has hit its retail sales target. they have received enough reservations for shares. demand may push up the price range. fiat chrysler will spend $5.7 billion to revamp factories in italy. the company is stepping up the pace on making more in demand suvs and electric cars. fiat chrysler has struggled for years to run at full capacity. that is the bloomberg is this flash. tom: thank you so much. with jean-claude trichet, central banking in a bit. but now, i imagine two chinese ships showing the flight between key west in cuba? how about the taiwan strait, only 81 miles, and for the third time this year, two ships have gone through. joining us now is our guest, and of course jean-claude trichet continues with us. what is the tension you just

observed in your trip to singapore and hong kong, that trump tension that you see? >> we are seeing more concern about the leadership of china than the leadership of the united states. tom: discuss it. it is important. francine: it is important. >> it is important. the perspective in the u.s. and asia is entirely different. the majority, not all, of course , but the majority of people i talked to, corporate feeders, government people, investment of them over half support with the president of the u.s. has been doing, unlike the chatter we hear here in the u.s. the popularity of the chinese leader i have seen really slide a lot in the last 12 months, to the point where he is imposing dictatorial will,

power in china. tom: can he and pose his death expansion -- impose his debt expansion? can he use debt as a weapon in the reach out to southeast asia? >> that is a great question. tom: i thought i had a good one today. usually my questions are subpar. continue, please. >> so self-deprecating. there is a huge demand in china for fixed income, for keeping the machine running, so is that a strength or weakness? i don't know. tom: this is important. with all your experience in the area, the south china sea, and all those adjacent nations, can europe advance there, can france show

the flight there as they did 60 years ago, can other nations? >> they are looking more inward than outward right now. the tension with the u.s. is not a benefit for europe from where i am coming from. tom: thank you so much. a short visit today. we go north up the pacific rim to japan, and important briefing. with our guests as well. this is bloomberg. ♪

francine: this is "bloomberg surveillance." we are just getting breaking news out of deutsche bank again. we have been following this blow-by-blow for the last two hours and 50 minutes as we first had news authorities were raiding the headquarters of deutsche bank in frankfurt. since then, deutsche bank saying they are cooperating.

us, the spokesperson telling that deutsche bank had thought they had given all of the information to park on secures -- to prosecutors. we know it is not linked to danske bank, but it is linked to money laundering and the panama papers. tom: the story continuing in europe. for this hour, jean-claude trichet has been with us. delicacies of a conversation on monetary policy and central banking. it has been his policy not to comment directly on ecb matters since he left the organization. i must speak to you about this modern disease, the crystal ball. did you have forward guidance at the ecb? or were you like arthur burns looking at the small print? >> we were saying we would do

anything recommended by the data. like what chairman powell just said. ahead oft committed time, but it was a situation that was different, different environment, different data, and a very hectic situation. i fully agree with the ford guidance that the ecb has given and mario draghi has given. it's a good weight to permit the market to price in all quite is likely to be done. everybody understand central banks have to react to major changes. tom: our single best chart. this is the real fed funds target rate. where wen the u.s., have a much better economy. what this talks about is guys like you, newtonian mechanics,

engineering, a history major from princeton, versus fancy phd's. are we removing central banking from phd's to a more traditional model? >> i would not say that. having deep education in economics, i certainly would not bash the phd. all my friends have in handling the drama we have to cope with in 2007 through 2012 and so forth. veryly, we are in a difficult situation. the risks are continuing to augment at the global level. at the same time, the central banks have to deliver what the democracies they are accounting

to have said, namely price stability in the case of the u.s. are very closeey to both targets. the problem is to avoid further difficulties. to avoid further difficulties come you have to avoid inflation, which is something that is important, and to refill the weaponry. session, youevery need weaponry. francine come in here with her weaponry. francine: if we do see a significant downturn in the next 18 months, do you think central world will have the world will have the tools to deal with it? >> that depends on the central banks obviously. in the major economies, we would be an exceptionally difficult

situation, particularly japan, then europe, then the u.s. we will see exactly what happens, but i have confidence that there are other means which could be utilized. first of all by the governments themselves in the parliaments, butalso by central banks, this is not a time for complacency in any respect anywhere. tom: we have to leave it there. jean-claude trichet, thank you so much. all this conversation on a digital products worldwide. leon cooperman on radio later on the stock markets. worldwide, this is bloomberg. ♪

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in hi money-laundering probe. mbs, and trump descend on buenos aires. a possible cause to rate hikes with just two words. david: welcome to "bloomberg daybreak." i am david westin alongside alix steel. 170 prosecutors going to the offices in frankfurt. alix: a spokesperson saying i thought we gave it all. oh my god. david: there are two individuals they are focused on. alix: how do you own that stock? one, there is a body someplace, and two, it is deutsche bank. alix