doing too much higher by just 0.3%. other markets looking a bit weaker into the start. germany down by 0.1%. bond yields negative. the first negative sale on germanyyield notes from since 2016. that impact might be seen in the markets this morning. whether or not they open lower, that is the question. in the u.k., they take a cue from the pound. because the pound is not moving too much, we are not seeing too much movement in u.k. assets. the dovish central banks around the world, the ecb supporting banks, might help assets from here. germany, that is one to watch. we have the conflicting reports of lower yields very correlated to banks as well as the ecb helping them out. let's look and see what some of the sectors are doing. we are looking at health care. moving lower today. that was one of the best-performing sectors last year. utilities moving lower as well.

a little bit surprising because you would think we would see these bond proxies doing better. bond proxies cannot pick it up. consumer staples moving higher as well as materials. we are seeing oil go in little lower. let's look at some of the individual movers. weterms of to the upside, are seeing british american tobacco, we are seeing some banks do better, as well as some rio tinto, various energy companies. imperial brands, stellar earnings yesterday. heading higher again. let's look at the downside. we do have a lot of companies going ex-dividend today. that is going to impact some of the stocks. on the as some miners other side down here. credential, that is another ex-dividend. performing some of the worst today. anna? anne: dani, thank you very much.

european equity markets opening fairly mixed with stocks in the u k outperforming a little. another night of voting in the british parliament. the next step for brexit remains pretty unclear. prime minister even offered her resignation to try to get her deal over the line this week. that did little to bring resolution closer. we wait to see whether the prime minister decides to bring meaningful vote number three tomorrow. joining us now on set in london is benjamin jones. very good to have you with it -- us. a guest earlier ron who said the market is complacent, in particular the fx market, around brexit work at risk. he pointed out that euro-sterling is actually at its usual trading range from 2019 -- 2009 through 2013 considering the uncertainties and the risks that could lie ahead. >> absolutely. good morning. i've got to say i agree wholeheartedly with that

sentiment. sterling has appreciated over the course of this year. all we have really seen is the uncertainty increasing and increasing as we first approached tomorrow's deadline. that has now been pushed back a couple of weeks. last night, all that really told us once again is what parliament does not want to do. there is still no consensus about what parliament actually does want to do. with only a couple of weeks to run, i think the risk of running into an accidental no deal brexit, which we have to remember the default is for a no deal brexit, is really, really getting quite high. certainly sterling is not pricing in that probability whatsoever at the moment. anna: i thought it was interesting that amongst conservative party, one of the little factoids from last night's voting, among the

conservative members, no deal is actually quite a popular choice. even if it does not have great support across the house as a whole. that gives the market a lot to think about, doesn't it? i suppose if we enter a leadership challenge in the conservative party, we need to be mindful of that particular background story, those sentiments around no deal. we going to see contenders for leadership trying to flex their muscles as brexiteers in chief, are they? benjamin: exactly. that is what a lot of the last six months has been about, it has been about political posturing. it seems to be trying to oust and not really thinking about the consequences of what that actually means and what the resulting process for brexit is after that. -- i think it definitely repeat that no deal probability is much, much higher than the market is pricing in.

1.32 is a very small distance away from where we have fair value at 1.25 and more or less where we were prior to the referendum in 2016. anna: the negative correlation between what is going on with the pound and stocks has been much talked about. if we did see a sizable move downward in the pound if some of this complacency turns into actually some realization and we saw the pound fall, with that necessarily push stocks higher? with no deal brexit be very good for stocks? can we put it that boldly or is that too simple? benjamin: i think it is potentially positive for u.k. stocks in a relative sense. whether it is positive for u.k. stocks in an absolute sense i think is a slightly different question. i think certainly the large caps, the ftse 100, for example,

as we have spoken about previously on the show, you've got two thirds or three quarters of their earnings stream coming from overseas. a material in sterling is definitely positive for those earnings going forward. but ultimately, what it means for the u.k. economy and where the u.k. companies -- or where companies want to invest does then start to back the question as to whether that is going to be a longer-term positive for u.k. assets. you would probably get some out performers in the immediate aftermath of that scenario, just as you did in 2016, again in the days after the referendum. you did see u.k. equities, the large caps at least, outperforming even though they were not appreciating in absolute terms. anna: yes, certainly that exposure to nonsterling revenues boosted stocks in the immediate

aftermath of the 2016 vote. ben, thank you very much. benjamin jones at state street stays with us on set in london. bloomberg has learned that two huge investment banks are cutting jobs. jpmorgan is planning to dismiss hundreds of workers and a japanese bank will shed more than 100 traders in its european and american businesses. let's talk about the sector and what is driving our move. we will bring in our reporter from hong kong covering this. how does this news fit into the broader context across the banking industry? the latestt is iteration of a story running for some time, cost-cutting among the big banks. >> exactly. is a broader story that we are seeing across the sector. all banks are reviewing staff as they tried to ramp up cost are also trying

to increase profitability. jpmorgan, we are seeing how are they -- how they are trying to trim their staff across well and asset management division globally. it is part of their normal review that takes place every year, but it is a great sign of what the industry is going through, and we have seen other banks doing some similar approaches in previous rounds, as well. nomura of japan is also struggling to turn around the business, especially overseas, where they are also exploring cutting jobs in their investment banking division as well. it is something we are seeing across the sector. anna: ok, so we are seeing across the sector. as long as we see low interest rates across the banking sector, you have to ask yourself whether other banks are going to be following suit here. manuel: yes, exactly. i mean, we have seen that in the past as well.

both american and european banks are struggling trying to turn around their business, increased profitability. look at germany for instance. --have these big potential this big potential megamerger between deutsche bank and commerzbank and look at the job cuts that may derive from that situation as well. we have seen it in other countries, spain, italy, france. and that is really across the whole industry. it is also normal. we need to take a step back and look into the hirings at these banks, that they normally do, when they see growth opportunities. i guess when we look at the industry, we need to take into account those both sides. like when they dismiss workers, but also when they see growth opportunities and they also higher big-time. i think it is normal we are seeing this and it is also very telling of the whole industry. anna: thank you. joining us from hong kong with the latest.

the cost-cutting efforts from the banking sector. up next, stocks on the move so far this morning. 10 minutes into the trading day. including a company that loses a second trial over claims that roundup weedkiller causes cancer. we will talk more about that next. this is bloomberg. ♪ ♪

welcome back to the european market open.

13 minutes into your trading day. big picture story from asia is mixed. negative session. japanese markets under pressure. europe looks a little different. making some gains in some european equity markets. especially the ftse 100. there is the pound effect to be mindful of. let's get you to individual stock movers with dani burger. dani: a story we have been continuing to watch. losing another roundup court case. shares moving lower by 2.5%. the company said they are going to appeal the case. this is going to move them to settle. the total might be $5 million. tief is also lower today. one of their shareholders selling 4.3 million euros of shares. imperial brands, solid earnings yesterday, and the sector is getting an upgrade from citi,

who says that the cigarette, tobacco space is going to be saying the focus on e-cigarettes is going to give the company some breathing room. -- dani,o, thank you thank you. let's talk about the eurozone economy. there needs to be a solid monetary policy case before officials act and mitigate the decisions. concerns because basically our policy has not changed. guidance,is forward which says that the rates are going to stay at the present level through the end of the year. the recent increase of bond toces, where the rates fell , it is an indication.

>> are you particularly concerned about germany? >> i'm not particularly concerned about germany. i think balance sheets and are in -- in germany good shape. i think this is a company that can absorb a number of shocks. is driven byonomy manufacturing. manufacturing has been hit. alsolowdown in china and the u.k.. the u.k. has been a visible slowdown of investments. germany is a big exporter of investment goods and germany has related by the brexit

concerns. is exposed to manufacturing. delicate phase in the business side for them. >> talk to me about risks. there is china. there is trade. you mentioned brexit. >> yes. >> what is your biggest concern? >> the concerns in general are of a political nature. persistence of these uncertainties, and you listed a number of the uncertainties, are weighing on economic sentiment, business sentiment in general. that the positions of these uncertainties have real effects at some point. businesses continue their investment plans, but at some point it hits confidence and has a real effect. it is about trying to reduce a little bit of the uncertainty, the political uncertainty. >> what can the ecb due to do

that? >> there is only so much a central bank can do. we have a mandate. we use the instruments we think are the best suited to reach our objectives, but it is only limited. related for example to the trade regime and brexit related problems. the central bank cannot do much about this. it also needs to be supported by all the policies in general. anna: that was the ecb chief economist speaking exclusively with bloomberg. still with us, benjamin jones at state street. interesting to hear him talking about the need for a monetary policy case. that is something that has been talked about, about whether that could make things easier for the banking sector. that should not be seen as a fix-all for the eurozone economy. that might help the banks lend more, but it does not change demand for exports from china, for example. it is not the answer to

everything. benjamin: no, exactly. there are a multitude of concerns and headwinds facing banks. the very low rates, the very flat and inverted yield curves. but the biggest concern for me really is the demand is really just not there for those loans at the moment. regardless of really what the rates are in europe at the moment and how this tiering takes effect, if there is not the mound -- demand from corporate and consumers, it does not matter what you do for the banks. they are not going to lend. and that is going to keep banks under pressure. and that is ultimately going to keep european equities under pressure, in our opinion as well. ben and, apologies, everybody, if you are getting background noise. a lot of protesting going on, or

some protesting going on this early in the morning in the background. let's get to how weak we get in the eurozone economy. we heard from mario draghi that a soft patch does not necessarily foreshadow a slump, a serious slump. i guess that is some important context to bear in mind. how weak do we get in the eurozone? benjamin: my outlook for the global economy is still reasonably positive. i think if you look around the world from china to the u.s., and indeed europe, what you are seeing is a slowing down from a reasonable level, but that does not mean that we are heading into a contractionary phase. so, yes, the manufacture impactingn china is the exporters in europe, particularly germany, so that is having a detrimental effect. there are significant political concerns. obviously, brexit is just one of

those that is having a slowdown effect, as well. it does not necessarily mean you are heading into contraction at the moment. my issue with europe really is that i'm just not sure whether some of that less good news, that more negative news in europe businesses are really priced in to european equities at the moment. that is where i see the problem. but i don't necessarily see a material slowdown or contraction in europe, particularly if we do start to see a rebound in china. obviously, we are seeing an awful lot of stimulus being thrown at the chinese economy, very different stimulus then we have seen in the past. ultimately, if that does benefit the consumer, that should benefit some of the exporters in europe as well. anna: ben, thank you. benjamin jones at state street stays with us on the program. coming up, getting negative. u.s. benchmark yields dropped to a low of december 2017. our markets overpricing the

fed's dovishness? this is bloomberg. ♪

anna: welcome back to the european open. we are 24 minutes into the european equity trading day. movingkish lira substantially weaker against the u.s. dollar. at one point this morning, down by 5% against the greenback.

now just paring those losses. in general, we are looking ahead to municipal elections that take place on sunday. in the run-up to that, the measures that were put in place to stop shortselling of the currency seemed to have spooked the market, perhaps not the design defect. we will track what is going on. as we heard from our colleagues earlier, this is having an impact on other emerging-market assets and on to develop markets. -- have theet markets gone too far in pricing in the fed's moves? the that will take to make the profit is for the central bank to remain on hold this year. doves called for a 50 basis point cut. let's discuss with benjamin jones at state street. ben, how much of a cut do you

think the market should be pricing in from the fed this year? , thisin: i have to say year i have probably not had the best track record of calling with the fed is going to do. you probably did ask me at the end of last year and the very beginning of this year, i would have said the fed was still hiking rates in 2019. i think if we look at a lot of the underlying data, things like the isn, the labor market, which is still in a pretty healthy ,tate, look at core inflation online inflation -- still telling you that the u.s. economy is in reasonable shape at the moment. if you do get a resolution of the trade deal between the u.s. and china, that is somewhat of a risk. i could see very easily the fed staying on hold into the end of this year. it is harder for me really to see a rate hike going forward. as i say, i had maybe three

hikes in at the beginning of this year. take that with a little bit of a pinch of salt. that youhat bet highlighted earlier is probably quite a safe, quite irrational at in my opinion -- quite rational bet in my opinion. that said, it has been really surprising just how quickly the fed has pivoted to this more dovish stance and people like stephen moore now being put up as a potential nominee, just one voice, but it really does increase that dovishness. i think what we have come to learn, what i have come to appreciate is that the power really is still there, which has been a bit of a shock. anna: ok. ben, thank you very much. benjamin jones at state street stays with us on the program. the u.s. treasury secretary steven mnuchin is in beijing. trade talks continuing. he said he looks forward to a

productive meeting. we will talk more about china and the trade tensions between the u.s. and china next. and we will have more on brexit. this is bloomberg. ♪

anna: parliament says no. british m.p.'s reject proposals. theresa may needs support for her brexit deal. bloomberg learns jp morgan has thousands of job counts and said to be shedding workers in the united states. there needs to be a solid case before policymakers take action on negative rates. it u cannot just conclude is deterring because the markets are slowing down and rates are lower. it's fair to say we need to go in the issue and need a monetary plan in place to do

that. anna: good morning and welcome to bloomberg markets. i'm anna edwards live in westminister. we continue to watch the twists and turns in parliament. we learn a little bit more of what the m.p.'s and house of commons can get behind. a softer brexit would be a way to sum that up. none of the options on paper got any kind of a majority support. the option that came closest was the customs, the option that got the biggest number of votes was a referendum and support for no deal, no deal is not something that has the cross party support of the house but is quite popular within the conservative party. where does this take us? we need to be mindful of the fact there are two twin processes taking us towards brexit land potentially. one is this indicative vote process we talked about, the other is theresa may and her deal, whether she can bring that back for what is called a meaningful vote, another vote on her deal.

we get meaningful vote number three taking place tomorrow. we understand the government is continuing the meetings with the d.u.p. to try to convince the northern irish party on which the government relies to support them in this. they've held out with objections, of course, that we know a lot about with regard to the backstop. in the meantime theresa may says she'll step down so another layer of uncertainty as we head to a new leadership vote for a conservative party in the summer. a nice line i want to bring you from capital markets this morning calling what's happening in the british parliament behind me the theater of the absurd. we'll continue to keep an eye on that absurd theater for you. let's get a bloomberg first news update with anna bell in hong kong. annabell: china's economy faces a weak demand. the domestic economy shows signs of stability. the government this month evealed a $2 trillion tax cut.

negotiations continue in beijing this week. boeing is starting software changes it plans to submit to the federal aviation administration for approval. this as the company tries to quell the crisis around its best-selling jets. investigators are still trying to piece together what caused the two crashes in the last five months. senators in washington are zeroing in on a controversial safety feature, new anti-store software. trump's pick for the federal reserve reportedly owes more than $75,000 to the i.r.s. documents filed in court said the government won a judgment against steven moore for unpaid taxes. moore's wife says they can settle the dispute as quickly as possible. it isn't their attempt to defraud the government but was a mistake in the reduction of al moany and childcare payments. powering more than 2700

journalists. this is bloomberg. anna? anna: thank you, annabelle. let's get more on the china story she was bringing us. our correspondent is tracking the latest for us. what exactly is said about the economy today at the forum? drawing a distinction, we've seen the international economy nd domestic chinese economy. >> that's very clear, they came out and said there were clear challenges in regards to the global outlook and markets are concerned, he pointed to that. as you rightly say, domestically the economy was showing signs of stabilization with a result he said of the targeted stimulus measures the policymakers have put in place, underlying those tax cuts and social security cuts. he also said the debt or deficit target, i should say,

would be around 3% but they would help fund that by putting to work idle funds in the government. his comments dovetail with some of the early indicators we've been getting in terms, for example, a gauge of the confidence of smaller, medium size and ticks up to a 10 month high and saw a credit gauge picking up to the highest level since 2017. the china beige book came out and said compared to the fourth quarter of last year, the first quarter of 2019 is looking substantially better across the sectors in the regions that they look at. but they warn it comes at a price, credit, credit, cred sit what the china beige book said and a pickup in shadow banking. anna: big focus on credit. what's the latest in trade negotiations because the chinese are giving us these indications what they will or won't do to support the chinese economy. the trade story seems to have gone little on the back burner though we know steve make

michen is with his team in china for the latest round of talks is steve mnuchin. tom: that's absolutely right. the u.s. team led by robert and treasury secretary steve mnuchin in beijing to continue the talks and then the prime minister is expected to fly to washington. keanly and focused are the demands from the u.s. and paris. the two are tied together in their links because the u.s. wants to use tariffs as a form of leaf ribbling to ensure any deal is implemented by the chinese or to use as a punitive measure if the chinese come off track in terms of implementing this deal. from the chinese side they want a weaker oversight and more access, investment access into the u.s. market but a priority for the chinese is getting those tariffs removed and therefore you get this contentious issue coming to the floor, really, the u.s. chamber of commerce the vice president articulating that for us saying

we're in the last stretches these negotiations, but in terms of the contentiousness of these talks, they are firmly focused, the premiere is trying to make a play to them saying we're taking these issues around intellectual property and tech transfer very seriously and will implement this new foreign investment law that will make it easier to do business here and, by the way, we'll have a new negative list we'll publish in june that will show a smaller number of sectors to close off the number of investors and leveling the playing field as the negotiations continue around trade in beijing. anna: we'll see how far that goes towards countering u.s. demands in trade talks. tom, thanks very much. our correspondent tom mackenzie joining us there. we're getting a redhead line around saudi aramco who wants to issue a $10 billion bond as early as next week, coming to

us from "the wall street journal" in connection with the big deal we brought you from bloomberg the last 24 hours. saudi aramco buying a majority take in sabok from the kingdom welfare firm. $660 billion, transfering cash from one arm to another in saudi arabia. let's get to ben jones on the subject of china, senior multistrategist from state street. hearing from tom mackenzie our correspondent in hainan. the chinese are drawing a distinction between the global growth story and still seem to be a little slower and the domestic story where they're trying to focus their efforts. do you think they're doing the right things to stimulate the chinese economy, tax cuts, more lending for smaller, medium sized businesses, is that where the future lies? >> i think it is and is the area i have the greatest degree of optimism at the moment.

the mistake some people have made over the last sort of year or so now is expecting china to stimulate in the way it has done in the past, in the 15, 16 period, for example, through significant investment spending which very, very quickly materializes in the credit impulse function and materializes in improvement in g.d.p. this time around, i think china is taking a much more longer term approach and they're obviously trying to stimulate the consumer via the tax cuts mentioned there. and that's something that is going to take longer to feed into greater consumer spending. the credit that we're seeing as well going more to the small or medium sized private businesses rather than those state owned enterprises also i think is a very significant positive as well at the moment. china's also making significant inroad to liberalizing and opening up their economy to external sources of funding.

we've obviously seen that. we're opening up to equity capital and mmci have followed by increasing their weighting scheme, the weighting of china in the global indices and you have the opening up of the bond next week as well and means there will be significant amounts of foreign capital starting to move into china. i think tom's point on the previous segment there about the idea that the chinese will start to tackle some of these intellectual property rights and protecting some of those overseas businesses coming in from intellectual property theft, really starting to materialize as well. we saw it with one of the small companies that last week was imstating the range romber, for example, and chinese authorities are ramping down on that kind of activity as well. i think this is definitely part of the longer term trend in china to open, to liberalize its economy and i think they're

going about it in the right way. for me, though, the big thing to watch is whether investors have confidence in that and that is where we look at the capital flows that are moving into china and certainly over the end of last year that northbound flow that was going through the stock connect was really quite rapid and strong and shows investors do have confidence in china going forward. anna: interesting whether investors have confidence and the u.s. has confidence in the chinese government's willingness to implement and ensure those new rules are stuck to and is some of the comments of the guests i speak to. benjamin jones, senior multistrategist at state street joining us on set in london. protests continue in westminister as we keep an eye on the politics. we bring you the movers including sweat bank as they face shareholders amid allegations the bank was used in money laundering operations.

the a.t.m. takes its place today, uncomfortable perhaps for the c.e.o. this is bloomberg. ♪

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anna: welcome back to the european open. european equity markets with more policy of the asian sessions that proceeded it. the markets on the upside with the tootsie up .8%. let's get to sweden and the subject of money laundering. sweat bank is holding the a.t.m. following a money laundering scandal that engulfed the european institution. what are the allegations? earlier this year the sweetish broadcaster x.e.t. alleged sweat bank handled $10 billion in suspicious transactions. this figure has grown to potentially more than $100 billion between 2010-2016. in a separate claim, u.s. investor bill browder accuses of bank of handling several swendenski.ebt of they're looking to a breach of insider rules. and now the u.s. is

investigating the lender and they say the sweat bank misled u.s. authorities about suspicious activity. allegations made paul manafort received payments from sweat bank. in addition to the recent allegations, it was commented the lender is limited in what they can say about what communication has taken place with u.s. authorities and the content thereof. for more on the latest developments, let's get to our bloomberg managing editor from stockholm. bring us up to swede and what is the latest? >> a long list. shares closed down 12% and since then we learned the investigation alleged initially into insider information breaches have been expanded to .ook to potential fraud

three investors signaled they ost confidence in the c.e.o. the mood could not be tenser. anna: we head towards the a.g.m. and what should we expect from there today? tasneem: the situation until today had been the major shareholders had more or less signaled they were continuing to offer their support. the smaller shareholders have been more critical and we knew there would be critical voices but as we learn the shareholders representing a total of 16% of the share capital this morning signals they no longer have confidence in the c.e.o. it might be a different sort of event than we initially expected and the pressure really is mounting on the c.e.o. we know from last night a statement was put out following the update in terms of the investigation, the potential fraud statement indicated she feels that she should stay and

she feels she has the ability to fix the situation but the mood seems to be turning against her based on what we've heard this morning. anna: thank you very much, our bloomberg nordic managing editor in stockholm giving us what we need to know ahead of swedbank. g.m. on jp morgan is reducing the number of employees in support roles. this comes as the mirror is said to be planning job cutting across the trading and investment businesses in the u.s. and europe. we spoke to another bank making culingts. -- cuts. we spoke to the c.e.o. and asked about the business outlook. >> what i see is that there is actually more client activity than the end of last year, last

quarter so it's higher this year. it's no that the levels we saw the beginning of 2018 but certainly declines to a little bit more and obviously what is positive for us is in the stock market did well so assets on the management have gone up and part of our fees are asset based fees and others are transaction based fees. >> due to the recent rout we saw you announced some cuts. where are these cuts being done for julius baer? bernhard: we had a tremendous first half and much more difficult the second half and started tactical tax measures and now we do it more on a strategic basis. for example we analyze the locations we have and smaller locations where we think is very difficult to make money or to grow we have closed three of hem already, holland we closed and amsterdam and panama, peru. we try to do it a bit more

strategic and we also had some head com cuts. >> when it comes to challenges it comes to retaining talent and relationship managers, recently we saw a exodus of senior relationship managers from julius baer to the likes of p.k. are you concerned you're losing talent? bernhard: last year we hired 105 relationship managers, growth is a big number and we lost six. that's not a big problem. >> going forward there are concerns perhaps the pharmacy may be approaching your senior r.m.'s. it can't be a good feeling seeing your talent leave. bernhard: we have very few people leaving so they like our platform. i respect the other firm who has a different platform. in asia our platform is much more comprehensive so we don't

fear. >> tell us about your restructuring because julius baer has been of scrutiny as of late by the regulator. what else can we expect? bernhard: what i did since i took control as the c.e.o., two things, we worked a bit on the legacy issues and proved the point that we're able to finish he d.p.a., defer prosecution agreement in the u.s. and think it's fantastic so want to tick them off one by one. and the other thing is we have started to increase the quality of our client data, we call it upgrade and will continue to do that. >> in terms of plans for yourself, it's been 16 months .ince you took over and when it comes to your board what succession plans might there be? bernhard: we'll have a new chairman april 10 he will be elected. i have known him many years and

worked together at credit swiss. i know he's a knowledgeable guy and i presented the three year strategy implementation plan and i really like my job and i like what i'm doing. anna: that was the julius baer .e.o. speaking to has linda. and to the swedbank, shares have been halted and the share was down another 2 1/2% ahead of the a.g.m. and they'll confront the c.e.o. the two coming up against each other. this goes back to the money laundering scandal we were talking about with tasneem. tweel practice the developments and stock was down more than 10% in yesterday's trading. we can interact with all the charts we use during bloomberg, up next, more charts. it will be battle of the

charts. this is bloomberg. this is bloomberg.

anna: welcome back to the european open. battle of the charts. ustinea, to you first. justina: feels like plunging stocks. and pay attention to the dividend players again. what i have in the upper panel is a 12 month yield of the s&p

500 diffident aristocrats dividend and risen above the 10-year u.s. bond yield because bonds have risen sharply. means these dividend pairs have started outperforming versus the s&p 500 after years of underperformance and make sense because they consistently increase dividend payouts so you can count on them for income. anna: ok. now what's your chart? >> we've had the prolonged rally and j.t.b. 10-year yield reached the lowest level of august of 2016 and banks don't like this. deutsche bank puts the cost of european lenders at $8 billion euros a year and i've targeted the 10-year yield in japan. you can see the correlation and how much of a dip they've taken as bonds have increased. anna: thank you very much.

these charts, incredibly linked, of course, the low yield environment throwing up the stock environment behind dividend pays. i'm going with tustina. . he ♪

♪ >> brexit roadblock. theresa may's offer to resign.

votes for alternative options. doubling down on debt. developed markets bonds surged and fierce about the global outlook. 10-year treasury yields low and the e.c.b. chief economist tells bloomberg there needs to be a solid case before the policymakers can choose the pain of negative rates. good afternoon if you're watching from asia, francine from london and tom in new york. the biggest story of course is what is happening with bonds and the positive signals it is anding with positive outlook and we have brexit, left, right and center. tom: i read three newspapers and couldn't get through it and i gave up about two hours ago. a extraordinary moment now in the bond market. we'll have much more on it. francine, bring us up to date with what we see with swedbank right now? phillip:

rancine: changes at the top. we understand andrew will be appointed c.e.o. and understand bruce paulson is leashing and we've been talking about swedbank every day. yesterday was under significant pressure and under 10%. i don't snow we have a share price now for swedbank but this of course is on the back of the money laundering allegations. they rehalted shares. we'll get back to the money laundering allegations and swedbank but first to the bloomberg first word news in new york city. viff anna viviana: theresa may will back down if she doesn't get the votes. parliament signaling they're more willing to back a softer approach from the european union. no single option managed to command a majority. may will have to decide if she'll bring her divorce deal

back for a third vote. u.s. negotiators are working through a trade deal but they of increasingly challenge beijing. the u.s. sailing a warship through the taiwan straits and released a report criticizing travel restrictions in tibet and these moves define china's warnings against meddling and what it views as its ex-personal affairs. this as the company tries to quell the crisis around the best-selling jet for nasa. they're trying to piece together what caused the two deadly crashes in the past five months. .s. senators in washington are focusing on a new safety feature. bayer, increased pressure on the company to settle thousands of similar lawsuits. a san francisco jury awarding

over $5 million compensatory damages and $75 million in impugntive damages and the case involves a 70-year-old man who sprayed the herbicide on his property for decade. global news 25 years on air and kicked off by twitter. powers in more than 120 countries. tom: let's go back to february. i want to make sure on swedbank we understand what we're dealing with. it's a conglomeration of banks and dates back to the early 19th century and is a rollup erger story of 25 years ago. rajik has been the c.e.o. three a tip years old and off in sweden that's when it pell apart. francine: the fed bank money

laundering scandal became bigger and right when we were on the air so exactly 24 hours ago after sweden's main broadcaster published the support alleging the bank misled u.s. authorities and these past allegations put pressure on the oldest bank which i imagine it led to the resignation or pushing out of the chief techivetive. tom: in reporting of our team there is a new york state financial services as well so the american regulatory bodies are involved with this. expected is somewhat out the door. carlson taking over. let's move to the data check. what do you have, you have three screens? francine: of course it's tied to the u.s. authorities but the allegations is that federal bank was used more than 10

trillion tied to the estonia money laundering case. we've been covering that story as well. tom: let's go to the markets. i have three data boards and i want to get through them quickly. euro churning and oil churning. let's move on from there. it looks calm. it's not. keys are the yield and should be green with a yield lift over the last number of hours but that germany number is stunning and when i walked in the door this morning it was negative .01 on the two decade swiss. i'll show you a chart on that in a moment. third screen shows the effects gyration. the main story here is the euro a weaker than sterling. the u.s. sterling pair is a great interest and e.u., a big

deal for ee brazilian real back to 4.00. francine: it is a big deal. fresh riss are headed higher. the yields dropping to november of 2017. i'm looking at european shares but they're up a tad. i'm looking at yen 11 0-2 7. tom: glad you put the yen in there as well. some interesting gyrations. has to be the two decade swiss frank. we've been waiting for this. here is the financial crisis, down we throw about all that flight to equality, it's a split to switzerland and the historic negative yields of 2016 and we just retouched that this morning here as well. the shector and flatness and we roll over again. the attention we hear from

mario dragh imbing. francine: we have breaking news. i feel like i need to live up to recommendations. a health care official was apointed on a three-year contract. we're going to talk football. tom: this is a huge, huge deal. francine: we know smog about football. tom: i know just enough where i think i know too much. this guy has earned it. he'll have springtime coverage in a bit. rancine? francine: i'm too intense on guilt. the guilt curve is waning. there needs to be a solid monetary swace before the

bles act to great debate the effects correctly. we spoke with an expert. have a listen. >> you can't just conclude the economy is slowing down and the rates are here for longer. i think it's fair to say we have to go in this issue but need monitoring points in place to do that. the first allotment would be in september of this year. so you have to do it before and that would be decided but i will be gone for the developing council because we left the projections at that time and would be one opportunity before september. francine: to talk more about the markets, very have the chief investment officer and our other analyst. the story was breaking and we thank you both for joining us.

you look at the markets very closely. do you worry there's these flashing points when it comes to bonds that tells us something is wrong in the world's economy. >> you have to take the yield curve seriously but don't believe the u.s. yield curve is transmitting a risk of recession. i think what the curve is saying is that the u.s. economy is clearly not going to accelerate any time soon. i tonight see any evidence we're due a recession for at least 12 months. the quality instead growth in equity space makes more sense than buying overpriced stocks. >> where economists are so bad at predicting recessions? >> generally speaking concessions come along and morph and regulates policymakers deal with the stimuli that triggered the last

recession and find out fundamentally the economy has changed and the reasons for it. i agree with james there's not a near term risk after global recession. you have to ask yourself with a bond -- a short u.s. treasury yield 4-.5%. is that liberal according to households? the real rates at the short end of the curve has been 3% if you average the last five inverpgses. you have to ask whether the real factors will deter credit appetite or bite in the same way they have been in the previous aversions. tom: this came up at dinner last night. what portion of all this apings right now seen in the bond market is due to trade within the general economic equation of every nature, how much of this is annexed angst and how much of it is domestic angst?

>> a large portion this is the expectation, the global cooperation that has largely taken place the last 30-35 years is going to start to break down from here. it's not the case of steve mnuchin, robert coming back from beijing with a piece of paper to mitt gate these risks. it's a repeated game and will momb overtime and will seek a safe haven. tom: very request simon french and james bevin as well. we'll touch on the markets and what to do with the equity investments as well. it's always timely to speak to the dallas fed president, he'll be in new york. the quinnipiac conference, look or a conversation openly 10:00 a.m.-ish. this is bloomberg. stay with us.

♪

♪ stephen a.: significant breaking news this morning. francine lacroix in london looking at francine laqua looking at markets. go to the screen. this is important. a little difficult to read, francine. what were we worried about in america? how do you pronounce the new uy taking over at man-u. this is soccer in america. there's an article on how you pronounce the man's name. tom farrell will have more on the team coverage later. francine: and simon french also with a great announcer of the new man-u manager. and we probably have bigger they are announcing there

will be a a.g.m. taking place in stockholm for swedbank and .hey have initiated a process they've appointed a chief executive on allegations of money laundering and the scandal widened yesterday. plenty more on fed bank later but first to viviana. viviana. : the world's biggest oil producer is paying the kingdom welfare $70 billion for the holdings and transfer as big sum of cash from one arm of the saudi state to another to help finance the crown prince economic agenda. raising the price range for the public offering and adds to the biggest listing of the year so far. the company is aiming to sell

$31 million at $72 and hopes to raise as much as $2.2 billion where previously the shares were marketed at $68 apiece and the listing set for today, thursday. that's the bloomberg business flash. tom and francine? tom: very good. an extraordinary moment for the united kingdom. i don't know where to begin. i know you watching don't know where to begin. we have an expert, anna edwards on the green at westminister and of course she joins us this morning. anna, an open question. ow what? anna: i don't know where this ends, tom, like the rest of us. we don't have answers yet but know a little more on what the house of commons behind me could support in terms of brexit. remember, we have the two parts to brexit land still presenting themselves. one is the indicative vet process that took place last

night signaling maybe a softer brexit that continues on monday unless the other part to brexit doesn't get in the way, and theresa may trying to bring her deal back to the house for another vote, meaningful vote number three. we learned more about what the softer brexit would look like if m.p.'s were in charge of crafting it last night and could look like a customs union perhaps and there could be a referendum required and those two options got the most support though neither demanded a majority. one of our colleagues in bloomberg news digging into the details of who voted for what, interestingly, the question is no deal, not popular across the house as we know as a whole but within the conservative party there is quite a lot of support for no deal. make of that what you will. >> the fact the prime minister announced she'll quit as prime minister if a deal gets through and that didn't do much to move it forward.

are we assuming a long extension is possibly the only way forward? i know it's speculation but seems like we're in a deadlock. anna: amazing state of affairs when the prime minister offers to quit authored to gain more support for the deal she wants to push through particlele. that's the big question for today is can she gather together enough support to get meaningful vote three through and convince the speaker to put it in front of the house because he's had his own thoughts on a that matter and blocked her in the past. she's been successful in getting a bit more support and we understand some like ian duncan smith and boris johnson even turning a little more positive on theresa may's deal but if we enter into a leadership battle that raises questions about what the future relationship looks like because remember, what they are voting on here is whether the withdrawal agreement is enacted and the future relationship is not legally binding and who leads the party could have a

big bearing on that. francine: thank you for your great reporting, anna edwards. one of the interviews of the day without a doubt. anna edwards with the mayor of london coming up at 6:30 a.m. in new york, 10:30 a.m. in london, pretty much an hour and 10 minutes from now. this is bloomberg. ♪

♪ francine: this is "bloomberg surveillance." tom and francine from lond ann

and new york. back to brexit with our investment management. if you were a betting man, what would you bet the outcome of brexit is? gordon: if i have one outcome i think ms. may will salvage some sort of agreement on her current proposal. francine: by april 12? gordon: yes, because i do believe she is offering what most people would regard as a halfway house -- from the english, the least worst option. francine: simon? simon: tom said at the top of the show he has read three newspapers and hasn't gotten an answer what's going on. what took place yesterday was an exercise in framing the alternatives to theresa may's deal. number 10 shows they are quite

pleased this process is going on because it shows what can happen that those to the right don't back the government's deal and may get a much more watered down version of brexit but there's a key element, the democratic unionist party and worried about the island of great britain and whether phillip hammond with the chancellor's checkbook and some assurances made in london rather brussels will get them around from a no to a yes. james: there is an interesting issue in terms of what the constituency voted in northern ireland itself and you look at the surveys and the young people say it's a smart deal, go forward. businesses like it because they have the boast available of both worlds if they prevail the politicians to give a little to find a solution. and we reveal the real risk is mr. corbin gets in and pursues

a reunification of the island's agenda. tom: where is the opportunity, you were the king of long term investment and opportunity. you and i could sit in some historic church in england and go back to war of the roses. great. where is the investment opportunity in this comedy? james: for me it is global rather than local and would still see the u.k.'s current challenges as soningsly small bear compares to what will happen in the united states in the euro zone because i would regard what's going on in the euro zone is essentially a product of u.s. and china policy and where does it leave me in terms of the u.k.? there's a reasonable chance the u.k. turns out to be the fastest growing g-7 economy in 2020 and interest rates could rise quite markedly and i think the guilt market is really

dangerous but think there is an escape for the pound's rally. this is about really good quality domestic companies with global underlying businesses like ashta group, for example. francine: ok. thank you both, james and simon. coming up we speak with the leader of the u.k. liberal democratic party, 6:00 a.m. in new york and 10:00 a.m. in london. we'll have another full roundup of europe and brexit news. we had a bit of patrol tillity the last couple days and look at the guilt with the guilt curve narrowing. this is bloomberg. ♪

♪ bloomberg "surveillance," extraordinary news flow today. our first word news. viviana: the monetary policy case must be made before officials moved to mitigate the impact of negative interest rates, according to the european central bank's chief economist. they are examining the option of options aree some at a lower rate. longer,ates are low for so i think it is fair to say that we have to go into this issue, but we need to have a convincing monetary policy case. baer is looking at making further cost cuts despite client activity picking

up after the equity route last year. last month, julius baer cutting financial targets and pledging cost reduction. >> all indications that the way we think, it is difficult to make money and grow. we have closed three already. holland and amsterdam we closed, and carew. -- peru. viviana: mike pompeo refusing to -- desh to commit to a commit to a two state solution for israel and palestine, defending the trump aid totration's to slash gaza. global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am viviana hurtado. this is bloomberg.

francine: back to breaking news the sweat bank has been dismissed and will be replaced by the chief executive officer. this is one day after a raid by prosecutors. they are in the grips of a money laundering scandal and misleading u.s. regulators. swedis the very latest on bank and we will have more. thank you both for sticking around. i feel like every time we try to book you on mergers and acquisitions there is another we have to get through first. how much is it a surprise they dismissed the ceo? elisa: it is almost a surprise that it has come so late in the day. yesterday,we heard

the multiple investigations the bank is facing from the u.s. to investigation at home, that is pertaining to management's handling of the scandal as it broke, which is perhaps more alarming than the scandal itself, which dates to earlier years. lostems the managers have investors' confidence. francine: we are talking about swedbank and others facing allegations of dirty money. elisa: what starts as a small bignt has turned to be a desh a bit deeper. -- a bit deeper. announced on the order of $200 billion. if that were the scale to affect

swedbank, that would create different circumstances. tom: it is so important to see this single sentence that was in the bloomberg reporting on the new york state financial services regulatory body. bythis effort being pushed u.s. regulators? are they cooperating? are they tangential? what are they to e.u. regulators? elisa: the u.s. has had some jurisdiction and has come down harder on money laundering cases. there is a push from that angle. , yourope on the other hand have a fragmented oversight of money laundering which is precisely what enabled this to happen because regulators are not talking to each other and enforcers are working independently of each other, creating cracks that criminals

can exploit. tom: what is the next step? we go bank to bank. does a pro like you assume there is four are more banks behind this? four more banks behind this? dangeroushink it is to tar everybody with the same brush, but there is an awful lot that needs to be done on the oversight side so these cases do not proliferate and continue over the coming years. francine: i do not know if that has repercussions for the industry as a whole or how you view this from a portfolio point of view. swedenone would argue has been stoking up debt since per capita debt has expanded since the global financial crisis.

this is bad news for all of the swedish banks. looking at the european banking system at large, a problem that is thebanks have had bundesbank is providing money to the target system so they get a bill for negative interest rates. anyone the only bank should be playing in europe are the spanish banks. francine: bringing up the german banks, according to people familiar with the matter deutsche bank is wary of commerce banks books. --h commerzbank commerzbank's books. that is one angle, but it is one of many reasons why it seems like it is difficult to

find an accord. politically, there is the will to put these banks together. more on me ask one deutsche bank and commerzbank. to me, it still comes out of the egos of management. what are you watching among the behavior of the senior managers? what is the emotion within yelling and screaming in board rooms on telephones? obviously, they are keeping their cards close to the chest. the chairman of deutsche bank said he expects a development for first-quarter earnings. we have had the annual reports that talks about some growth in 2019. i think they are trying very -- ito come out of this either happens now or does not happen for a long time. thank you so much, greatly

appreciate it. cannot say enough about her efforts on e.u. banking and the challenges we see, looking forward to mr. draghi's next meeting. we continue with james bevan and simon french. coming up with more perspective on business and brexit, and and 2025,look to 2020 nigel wilson. this is bloomberg. ♪

tom: bloomberg "surveillance tom: francine lacqua in london,

tom keene in new york. china with his affiliation over many decades of the communist party, let us listen. >> world economic growth has remained in positive territory but is being weighed down by factors like sluggish international trade and investment and rising protectionism. global economy is losing momentum,'s uncertainties desh uncertainties are on the rise. and james bevan with us simon french. i remember when he first dropped on the international scene, made a big appearance and splash. what is the message he and president xi are trying to send about stage three or four of a silk road experiment? james: they are sending two sets

of message. the first message is polity -- policy stimulus is effectively a repeat of what they pulled off in 2015, is starting to work again, and they are trying to frame market expectations to expect to pick up throughout the year. in terms of the broader strategic goals, i think they continue -- as you mentioned, his first appearance at davos -- but i go back to president xi's appearance at davos where he took on the role of global statesman that is protecting free trade, which we are not familiar with the chinese administration, and it is in this vein he is alluding to the protection his forces being a threat to the global growth. tom: the favorite phrase is comprehensive reform. and making writing

clear it is a shift in china to a more sophisticated consumer and middle-class economy. do you believe with dr. roach? james: certainly not. there is a direction of travel that is consistent with his thesis, but there is still insufficient scale and cross -- progress on the important domestic economy. i still worry that china is more interested in exporting deflation, still subsidizing, still dealing with this troubling of free trade and fair trade to coin mr. trump's language. i think we will have china continuing to run down inventories and subsidize and drive prices lower. that is the story being picked up i the bond market. francine: well the chinese bond market escape deflation?

simon: we have a view that the growth story will very much back and it. a couple of more quarters of data. there is quite a lot of chinese and more global expected factors, a bit of an un-dutch upswing -- upswing. result, the short-term deflationary pressures will be temporary. if investors are patient they will see an upswing. james: can i press you on corporate earnings? global corporate earnings are negative, clearly you do not subscribe to that view? simon: i don't. i do not see a negative move in that direction. francine: what is your take on the trade war? way they viewthe

it as a strong economy at home but they worry about risks to the rest of the world. are they less likely to want a trade deal with the u.s.? james: i think the president wants to announce a deal of some sort. the rhetoric is straightforward and mr. mnuchin is a very slick operator and a bright guy. it is about the long jevity of what is achieved and china has made it desh long jevity -- lo ngevity -- stunningus segue to a james bevan-like chart. this is a chart of america and the united kingdom, the dow jones industrial average normalized to the average of 2007 and the ftse, both set in

pound sterling. this is why i love to have you on. arbitragedea this between u.s. investment in sterling and ftse investment in sterling. along, united kingdom. why can't you? james: the united kingdom has a compositional challenge in terms of the nature of industries in the index and whether they achieve the profitability that u.s. companies have managed to deliver. i want to buy the world's best 20 companies. the u.s. has a massive opera representation -- mass overrepresentation compared to the u.k.. i would probably have unilever and i do not worry about who else would be on my list. tom: you are expert at this. this is really important. is it lousy use of cash?

what is the why behind this? has a i believe the u.s. much more entrepreneurial culture. you form better businesses and shepherd those businesses through from small to large more successfully than we do. the companies are big and the u.k. and represent poor long-term investment opportunities. i look at negative incremental return on deployed capital projects. ohis all comes back t de-unionize asian of the u.k. ionization of the u.k. economy. with: i take slight issue the fact that we do not have world-class issues in the u.k.,

but it is scaling. the problem is, as it listed in the u.k. or is this mapped up? we have not had an industrial thetegy since probably mid-1980's. active industrial strategy which is present in china and the u.s. and large parts of the euro zone is why the u.k. market lacks growth. james: the composition means we have low productivity growth. until we get a shift back to making things, we will continue to have low productivity growth. francine: bring on brexit. tom: this is just an extraordinary chart. we would continue with french and bevan in a moment. more on politics and how republicans move forth on health care and maybe a mueller check.

11:00 a.m.in the hour, stay with us. ♪

viviana: this is bloomberg "surveillance."

investneca is looking to in chinese biotech according to the chairman of the cambridge-based pharmaceutical company. they want to expand their international position, last year astrazeneca growing 20%. >> i would be interested in seeing if we can expand their position and thereby going into the international markets, or make equity investments. it is too early to tell. is reportedlyrgan dismissing hundreds of workers in its asset and wealth reducingt businesses, the number of employees in support roles. -- in sports, manchester united confirms the new full-time manager. he has a three year contract and the year he replaced

manager on interim basis. tom: very interesting here. i am turning in our new york studios to see who the expert is on man-u. can we do this with simon french or james bevan? francine: i was going to say, simon, save me. this is big news in the football world and for markets that follow the world. i know how to pronounce it. itl the change -- will change the composition of the team? simon: he has done a great job since he has taken over. had their eye on a couple of other managers. alternative, they

wanted a good appointment. tom: what does it say about american ownership? liverpool is owned by the boston -u isox and i believe man owned by the united states as well. what does it say about the financial franchises? in terms not overthink of how it is perceived. what happens in the boardroom is secondary and if you are not winning on the pitch, that comes into focus. the u.s. and middle east are backstopping the four or five big u.k. football teams. that comes into focus when results go the other way. francine: this is investment. simon: if you have deep pockets, you will keep your fans happy but if not, questions are to be

asked, are the owners running in the best interest of the fans? francine: we are like football experts. tom: every day i am a football expert with jon ferro. i could talk to you about ac milan. i have a passing knowledge on that. jenna will beat. renaldo.beat lift up the show, please. francine: we actually initially before we got sidetracked were going to talk about lyft. are you interested in buying it? james: absolutely not. i want free cash flow and want to know i will put money to work and have a realistic chance of making a sensible return. lyft continues to burn money. there are a lot of competitors

and few barriers to entry. i am not willing to back that. tom: james bevan, thank you so much. this is been the most interesting our on brexit and where we are in the markets. thank you again for important comments on china. we will drive forward the conversation. this west 20 year bond went to a negative yield -- the swiss 20 year bond went to negative yield today. next hourmary in the to get your morning started in joinca, david kelly will us from jp morgan asset management. this is bloomberg. ♪ so with xfinity mobile

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customize each line by paying for data by the gig or get unlimited. and now get $250 back when you buy a new samsung galaxy. click, call, or visit a store today. ♪ tom: this morning, what do they do, not what they say.

the swiss bond moves to a negative yield. how well the ecb respond? brexit roadblock. theresa may's offer to resign fails to garner support for a deal. watch what they do. we have much more coming up, gridlock, gop, and trumpcare. this is tom keene in new york, francine lacqua in london. ,e are all brexit exhausted anna edwards on the green in westminster as well. what is your take on the next 24 hours? francine: i find it absolutely remarkable that the political stand up -- standoff deepens and deepens. it goes to show there is no majority for anything in parliament and the fact that theresa may saying she would resign if her deal got approved,

but it is nowhere near getting approved. ,ou kind of look at the u.k. try to find what you want and we go back to the table and talk. whiche have euro data speaks to this west 20 year bond. it moves back -- the swiss 20 year bond. it moves back to 2017. u.s. negotiators are in beijing to work toward a trade deal, but the trump administration is creasing lay -- increasingly challenging beijing on its redlines. the u.s. released a report criticizing travel restrictions in tibet. from defy the warning china of meddling in their internal affairs. theresa may promises her lawmakers she will step down if they back her deal, but she is

still short of the support she will need. parliament signaling it is more a link to back a softer departure from the european union. no single option commended a majority. may will decide if she will bring her divorce deal back. owed to thertedly u.s. irs, the government one ended -- a judgment -- won a pickent against trump's for the federal reserve. they said it was a mistake in deduction of alimony and child support. round,oses another increasing pressure on the company to settle thousands of lawsuits, a san francisco jury awarding more than $5 million in damages and $75 million in punitive damages.

you are taking a live look at a fire that has broken out in an office building in bangladesh. there are fears that some people are trapped inside. no immediate confirmation of the number of casualties, but there were reports some people fell from the building trying to escape. global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. hurtado.ana this is bloomberg. tom: i want to get through this quickly, three data screens and then francine's e.u. view. 1.50. the bond market and foreign-exchange really kicks in. the u.s. to year 2.22%. the german two-year drives on and the swiss 20 year bond was

negative two hours ago. on foreign exchange euro-sterling, sterling stronger than euro. that is remarkable. much-sterling not doing off the festivities of westminster. turkish lira giving out some more weakness. francine: turkish lira resuming declines despite what we call an organized effort to stem the currency losses days before elections. the pound is kind of moving sideways as the parliament rejected eight new options for a brexit strategy. the bond rally is easing in stocks -- and stocks are mixed. tom: this is the perfect guest for your angst of taking all the fancy talk over to the basics -- what do i do with my money? morgan aly, joining jp

number of years ago, he is their chief global strategist. you are at somebody's kitchen table and they are scared. what do they do? david: you have to ask what they are scared about. there is so much going on politically and we are so politically focused, how we think about politics should be how we are thinking about investing. the economy spat up last year but there down again, is no indication it is going to slip into recession. theshould be basing investment and long-term assets, may be overweight fixed income. go, but theays to bond market is a signal and precursor to what the equity market is doing. you can debate six years -- six months, one year out. should investors extrapolate

fear from the bond market angst? david: i do not think so. the bond market has been behaving strangely for some time because federal banks have been training -- treating it strangely. tom: the swiss franc negative yield, that is more than strangely. david: if quantitive -- quantitative easing and negative interest rates do not work, so they have to give stronger doses in the patient does not get better. that is why we are stuck in low negative rates. dimon can just see jamie and jeff frankel at home saying, central-bank action does not work. overall, does it mean we should ignore these market moves? david: let me be clear.

i think the central banks have good intentions, but what we have seen in the united states was an appropriate raising of interest rates to a low level in a manageable positive level, and the u.s. economy doing ok. in europe, we are maintaining negative short-term interest rates and we are not doing good at all. super easing monetary policy does not generate inflation and aggregate demand. it is better to normalize rates unless the economy operated in a more normal fashion. us inavid kelly with really historic times. we will come back, so much to talk about. with the kathleen hays head of the dallas fed, robert kaplan. a wonderful conference today in new york and kathleen will be

there tomorrow with dr. kaplan in the 10:00 a.m. our. -- hour. this is bloomberg. ♪

viviana: this is bloomberg "surveillance." saudi aramco is buying a majority stake in a local chemical giant. they are paying the sovereign wealth fund nearly $70 billion for the holding which transfers a big sum of cash from one arm of the saudi state to another. it will finance the price's financial activities.

picking up after the equity route last year, it caused clients to hoard cash. julius baer pledging cost reduction. >> that is where we think it is -- small locations where we think it is difficult to make money, we have closed. holland and amsterdam we closed, and peru. we tried to do it more strategic and had some headcount cuts. cost of lyft raises the its public offering. they are aiming to sell 31 million shares at $72 and hopes to raise as much as $2.2 billion. the listing is set for thursday. that is the bloomberg business flash. francine: thank you so much. let's kick off with the latest on the brexit stalemate.

the house of commons signaled it is more willing to back a softer break from the e.u. but failed to show a majority for any proposals. toresa may confirmed lawmakers she would stand down if they pastor deal, but it does not seem to have -- if they passed her deal, but it does not seem to have done any good. what is the way forward? >> i think yesterday helped. , none of the it eight options getting a majority, which is true. what it did identify was a couple of options that we still come out with large elements of support, one of which is a referendum and another is remaining in the customs union. i can see the way through to

what you can call a grand compromise in which we go with to governments deal, subject a referendum and subject to it being modified to include a customs union. not everyone would like that. the strong advocates of brexit will not necessarily like it, but there are elements we can rally around. francine: are you telling me the chances for a second referendum has been strengthened? mr. cable: very much so, yes. it was significantly the largest vote of the eight options available. it did not get a majority but is clearly a strong option. ofm hearing now quite a lot people who are hard brexiteers who share our view that we need to get this issue out of the way and get back to the people to resolve the issues.

it was written a few weeks ago, but after the big march last saturday and demonstrations that supported parliament yesterday, this is a runner. francine: the big march was a million people. the petition online was 7 million people. almost 17 million people voted for brexit. mr. cable: may voted for brexit threey voted for brexit years ago under different circumstances. we have had a general election, a hung parliament that does not command a strong majority. unfortunately, they went off on a two-year diversion trying to get an agreement that was satisfactory only to the conservative party and ignored the rest of parliament. that was a terrible mistake and that is why we are stuck in this mess. that is why we are looking to a

potential way out of it where the opposition parties work with the government to get this legislation through, provided we take it back to the people in a referendum and provided the modifiedt's package is to allow for a customs union with the european union. tom: you have decades of experience in parliament and with public service to the nation. how removed is your parliament from the people, whether labour, tory, lib dem? fromemoved do you see them the various people in the united kingdom? mr. cable: we do not have a very good system. we have this voting system that produces very distorted outcomes. we have a very old-fashioned party system that no longer reflects the different trends within the country. that is breaking up.

nonetheless, it is a parliamentary democracy and this is the institution and people we have, and we have to make the best of it. tom: what do you want to see from labour? can they assist conservatives in some way during this time of trouble? mr. cable: actually, the labour party have moved. until recently, they were quietly supporting brexit. they were very divided. not being very helpful. with the move they made yesterday, which was to come behind a public vote, a referendum to basically argue for a customs union, these are elements i think they share with people in other parties. i think they are getting to a point where they could be part of the solution rather than the problem. francine: with the brexit process such a mess, why have

they failed to make any progress at the polls? mr. cable: i think we will do. we are recovering, particularly at a local level in local elections. if there were an election held now, we would do extremely well for those reasons given. -- if we have european elections which would have to happen if we had an extended negotiation, we would do extremely well. british politics has been shaken up. we are developing a relationship with an independent group. there are potentially big fractures in the conservative and labour parties. the only way of looking at politics in the finian polls i am not sure is relevant. francine: how much is this threatened by the independence

group? mr. cable: not at all. it was inevitable that the groups who broke away from the tories and labour party would initially become independent. them,ooking to work with we are having certainly amicable discussions with them. i think they are just the beginning of something much bigger. there will be bigger groups who break away from the tory party and labour party, and we are headed towards a new kind of politics. vince cable, thank you so much, leader of the uk's liberal democrats. we will have more on brexit and more on fed bank. speak to later, we sadiq khan, the mayor of london and will ask him about brexit and financial services. this is bloomberg. ♪

♪ you cannot just conclude because the economy is slowing down and the rates are lower for longer. it is fair to say we have to go into this issue but we need to have a convincing monetary policy case to do that. the first allotment will be in september of this year, so you have to do it before, so that

will be decided maybe when i will be gone. we also will have the productions at the time -- projections at that time. that will be an opportunity before's timbre just before september. francine: his view comes in the week -- wake of draghi's comments about subzero interest rates. how can banks adapt? david: it is tough. they do adapt. there are ways of making money through various fees and other aspects of banking where you can stay afloat and make some money. what is very frustrating to me as particularly the european economy is built on bank loans. that is how they finance their business. if you want healthy lending and a growing banking system, i do not understand the preoccupation

with keeping rates negative and putting banks in trouble. why not move to positive rates? i was reading a book on cancer medicines and every medicine turns into a poison in the wrong dose. qe, i thinkso much it is poisonous and is slowing europe down. i wish the ecb had the courage to move to positive interest rates and i think europe would respond. francine: let me bring you to my morning must read about ecb policy. andh the outlook so hazy three executive board members including draghi stepping down this year, it can no longer supply all of the answers. a new era of unpredictability and volatility may be upon us." as the ecb the wildcard among central banks? could a policy mistake result?

david: i do not think they are helping, i think they are hurting, but i do not think they can hurt anymore because they will got -- they will not go more negative interest rates. i think they are well intended. other issues they have got to try to resolve, brexit and some issues with italy in terms of their debt and budget. we have got to resolve trade between europe and the united states, try to reduce those fractions. i do not think the ecb will be the cause of big problems because how much can they move policy except to make it tighter at this point? francine: david kelly of j.p. morgan asset management stays with us. we had breaking news about swedbank and the chief executive being pushed out. swedbankations against on money laundering

significantly widened yesterday. wilson, legalel and general group chief executive has an interesting take on the u.k. and brexit. that is coming up at 7:00 a.m. in new york, 11:00 a.m. in london. i am looking at pounds on the back of the votes in parliament. there is no clear way of how parliament resolves the stalemate. the pound is moving sideways and there is uneasiness that seems to be deepening. we look at brexit next. this is bloomberg. ♪

♪ kaplan always timely , that will be most interesting tomorrow. francine lacqua in london, she is brexit-ed out. tom keene in new york, we are both brexit-ed out. team coverage on bloomberg radio with jon ferro. a manager change. with jono to man-u ferro in a bit. viviana: china's economy faces new threats from week level thend but the premier says domestic economy shows signs of stability. government unveiled a record 2 trillion yuan tax cut but the trade war remains a major source of uncertainty as negotiations continue in beijing.

boeing is touting software changes it plans to submit for approval to the faa as they try to quell the crisis around their best-selling jet. investigators are trying to find the cause of two deadly crashes in the last five months. senators in washington, d.c. are focusing on a controversial new feature. pompeory of state mike failing to commit to a two state solution for palestine and israel, defending their move to gaza and the west bank. recognized israeli sovereignty over golan heights. last year, he replaced -- on an interim basis.

global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am viviana hurtado. this is bloomberg. tom: this just in, the new manager of manchester united committed for three years has per do over tennessee in the e oversixteen -- purdu tennessee and the sweet sixteen. let's go to the tweet. there is a single sentence in the morning tweeting of our president of the united states, may close the southern border. president trump is on a set of victories. could they have a success here? marty: it is true there is another caravan. tom: there is a whole new tension that is tangible. marty: maybe he is trying to deflect the criticism for his

stance on health care and obamacare. tom: let us go to them a new minutia of ard -- third rail emotion, the special olympics. these little things distract any and all banks. marty: this is fresh off a trump and thenald mueller report. pundits are baffled why the president is trying to scuttle obamacare. francine: talk to me, there is a --e clash between trump and where is this going? we thought this would be behind us but it keeps coming back. marty: and donald trump is contributing to that narrative. there is speculation that a lot of his criticism of the people , that the mueller report

donald trump is going after them in preparation for possible pardons down the road, which would again create a constitutional crisis in my view. francine: on the health care demands, what is the plan for the gop? is there a concerted plan that everyone seems to be behind, or is it just president trump? marty: it is just president trump. there is no alternative health care plan. they were in control of both houses of congress and were not able to come up with an alternative. there is none on the horizon. tom: with your decades of work in washington, i used to speak to the giant of princeton years ago on health care and on and on , arguing about the socialization of medicine, we do not want to be like the united kingdom where you have to wait

47 years to get your hip replaced. if youyou say "we" and do the polling, obamacare and its coverage of millions of americans is popular. tom: with all these distractions of special olympics and the rest of it, what is trumpcare? marty: it does not exist, it is just rhetoric. tom: he is not out supporting the ama or nurses. what is the lobby group of republicans if they want to have obamacare go down in flames? marty: it is dick bove knee, his chief -- mall vania, -- mulvaney who has always argued obamacare should be repealed. this is the stance the trump administration should take, it has been argued. francine: does america still

support the two state solution to the palestine-israel conflict? marty: apparently not. the beginnings of the administration, jared kushner was put in charge of this big mideast plan. does not seem to be going anywhere, but the two state solution if it is off the table, may present more strategic problems for israel down the road, even though it is viewed as being supportive of israel. there are many analysts who think that could eventually create a huge problem for israel. francine: i want to ask about the mueller investigation from a market perspective. if you look at what was priced in the markets and what strategists were saying, does it completely take out the risk of impeachment and is that beneficial? david: the risk of impeachment was no risk at all in terms of a change in administration or the

power structure. everybody realized it was possible that the democrats in the house would vote to impeach the president. results were highly unlikely that they would remove the president from office so it was an empty threat all along. i do not think the mueller report chased anything with regard to policy and the structure of power. tom: this has been a great conversation because we have gone here, here, here. this is a president focused on one mandate at any given moment. what is his mandate for it? umbrellaazine" as the and all that out there. what is his mandate to get to fourth of july? marty: it is 2020 and he is setting up for his reelection campaign. unlike 2016, he does have a very intricate and well staffed reelection plan and committee to

get him there. -- david: one thing the one thing -- what does that mean for the stance on trade? does he use that as a rallying point for his campaign? is that one thing he will run on and keep the fight going? or does he want to settle with china and europe and say, we came to an agreement that nobody bit could, and put a little off the global economy? trade tension is affecting the global economy. tom: is the president even overcome by events? the swiss franc went to a negative yield this morning. a point where president trump has to look at the markets, you told us earlier the markets do not bother you. david: i am not worried about long-term interest rates because they are being distorted by central banks.

the economics of the economy are slowing down but not stalling out. 2%m 3% growth last year to growth this year, that is what is going on in the bond market is sending us. . full signals. tom: people are saying the e.u. economy is actually good away from the export dynamics. francine: there is still a lack of inflation and we saw weakness in germany. part of it is the old thing that governor kuroda tried to do, if you do not talk the economy down too much, people continue spending and you have a chance of recovery. the forecasts at this point are hazy. tom: hazy may describe it. it is a sporting morning on the bloomberg terminal in the interest rate space. marty schenker, thank you so much, and david kelly as well. esther shanker will be listening

enker will be. sch listening to this interview, mr. spicer in the 11:00 hour. this is bloomberg. ♪

♪ viviana: this is bloomberg "surveillance." astrazeneca is looking to invest in chinese biotech according to the chairman of the cambridge-based pharmaceutical company -- pharmaceutical company. last year in china, astrazeneca growing 28%. >> i would certainly be interested to take a look and see whether we can expand their

position and thereby going to the international markets, or potentially make equity investments. it is too early. is reportedlyrgan dismissing hundreds of workers and its asset and wealth management divisions. they are reducing the number of employees in support roles. jobsa is planning to cut and that will hurt its investment and banking businesses. tom: im on a single best chart with david kelly. c word,oned earlier the courage, the courage to act. single best chart defines how lonely europe is. this is swiss 20 year with a normal year to in august 2007, the great deflation, we flatten and roll over again. i would suggest this is a

linkage of courage into theory, not only for the ecb but for all of us come the theory of how to extricate ourselves from this crisis. david: one of the things that is happened, things have pushed inflation along including information technology. qe causes asset prices to go up more than real output and pushes income for upper income individuals. the snag as they do not spend the money. you produce $100 worth of output and income, but the income does not come around. capitalcess of wealth growing income gap is something out of the global economy so you have to do something gala terry and to generate more. more.litarian to generate tom: look at the x axis.

we have been doing this for a decade. it is not one or three years in. a 12 year experiment. how do we extricate ourselves off the x-axis? david: we need to look at the distribution issue and aggregate demand in the economy. if we think about taxation spending in a way to give more money to lower and middle income people, they will spend it. you will get $100 of spending for $100 worth of output. believe saying i redistribution of income is a good thing in general, but it probably would work. you cannot fix it through monetary policy. low interest rates will not fix this. francine: if there is a recession, does -- do the central banks have enough tools? argue no, but i would

that what they can do as they can be a buyer of last resort and affect the financial system and allow the economy to recover. attemptthe economy will to recover by itself anyway. i do not think 25 or 50 basis points would stimulate economic growth. i do not think it did it in the united states. it was more natural cyclical forces that pulled it up rather than monetary stimulus. i think they are ineffective. we need to think honestly about how is it that monetary policy is not pushing up aggregate demand, and how do you get aggregate demand going? how do you get demand going in an economy? by giving more money to lower or middle income individuals give businesses certainty, try

to have policy certainty, and that will produce more investment spending. you have to think about how to get demand going in an economy and that is outside the purview of central banks. francine: that is a concern that japan has had to grapple with. is europe becoming like japan? david: there are some similarities. the demographics are not as bad as japan, but you have some positives. the unemployment rate is coming down in europe. isis 8% and in japan it 2.5%. they did not have a huge asset bubble that propelled japan to the problems it had. despite the problems in italy and greece, the aggregate debt of euro zone countries is far smaller relative to euro zone gdp as is the case in japan. japan has gone a lot further

down that path then europe. tom: david kelly knows this chart. we lived it. i am just throwing it out. this is allied irish bank from another time and place. the the irish did, they had courage to clear the market, essentially000 two five euros per share. theyeurope have a fear cannot clear their troubled financial system? it needs to be more irish? david: what the irish did was very controversial. tom: they had the courage to get out front of everybody else and clear the banking system. david: they suffered a huge recession because of it and they took on a lot of responsibility of the irish people that was the responsibility of international investors. history is unclear whether they

did the right thing. they took the tough fiscal medicine and made the tough choices, and the population put up with it so ireland has bounced back. the irish political system works relatively well to what you see in the u.s. and britain. there are logical choices being made by parties on both sides to keep us on relatively even keel. politics does matter. tom: i can just see all of us in dublin going over the success of ,he clearance of irish markets a real debate about how ireland did it, but that was really something. much,kelly, thank you so with jp morgan asset management. coming up tomorrow, kaplan of dallas with our kathleen hays in the critical game nine forum. this is bloomberg. ♪

♪ francine: this is bloomberg "surveillance," tom and francine from london and new york. at of swedbank, the chief

executive has been dismissed and .ill be replaced they are in the grips of a money laundering scandal, including allegations of misleading u.s. investigators. trading has been halted. editorrg nordic managing joins us from stockholm. does the north of europe have a banking money laundering problem? allhis is sweden, so we are a bit in shock at the fact that this is just coming fast and furiously. the ceo was dismissed this morning and the agm is going on as we speak. there is a lot of social media dissatisfaction that the ceo walks away with $2.4 million, and it is not over yet.

shareholders are suggesting the chairman should also be held responsible. where does this francine: francine: -- where does this go next? this goes back to some of the allegations from estonia. it is taking giant proportions. where does it end? tasneem: that is part of the problem. if we compare swedbank with danske bank, there were revelations and then danske bank put its own -- did its own investigation and put it all on the table. swedbank being much less forthcoming so there is concerned there are still skeletons in their closet. in, where does swedbank fit in the cultural pecking order of finance? tasneem: this is sweden's oldest bank and biggest mortgage lender

with a reputation of being a family bank for the little man, retail bank. their argument has been, we are not like danske bank. we do not do high finance and we .o not chase wealth management tom: does this engage the swedish public? tasneem: very much so. part of the reason it is such a big story is because a lot of leaks have come by the main broadcasts. thise have been digesting through documentaries with mood music and the full effect. it has changed the dynamic in sweden, which is similar to the story of danske bank. untenableuntamed -- for the ceo to continue. tom: thank you so much. coming up, there is too much to talk about.

we have the whole brexit uproar. who knows where we will be on 20 -- in 24 hours. on global wall street come up on the move with compressed yields and high bond prices. we will see bubbling in the foreign exchange market as well. angst. signpost of em the turkish lira moving as well. david kelly will join us and will continue the dialogue with jon ferro. we have thousands of emails and tweets. jon ferro on manchester united. this is bloomberg. ♪

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market. brexit breakdown. no clearlay forward -- way forward for brexit. trade.na talks of global a forum promoting multilateralism and opening up the economy to foreign investors. welcome to "bloomberg daybreak" on this thursday, march 28. it is not friday yet. i'm here with lisa abramowicz. david westin is off this week. we are taking a tiny break with the bond market, but yields were --ound the: delete economist for