brexit trading relationship going to be?e is a hard brexit, then investors are going to be quite spooked. nejra: simon, sterling is played into the fairly benign economic data that we have had since brexit. do you think that will continue? simon: so far the indications we have seen, it is great news the economy is holding up. it does not tell us or anyone about the medium-term outlook and it is conceivable that the u.k. could have a shock of this size and not have a slowdown in investment and activity. you get this on top of a bad structural position, fiscal deficit, lack of productivity. it is unsurprising the currency market does not like this and what we might be seeing is a bounce of currency vigilante-ism. clipped the wings of the bond vigilantes so now we have fx vigilante-ism. nejra: if we continue to see sterling weakness as we very much might do, what negative impact could that have on the consumer or other parts of the economy further down the line? simon: the obviously one is inflation. we have a relatively high i

battle.e a brexit the big squeeze is on. ?oes brexit mean brexit this is bloomberg. ♪ >> 752 a.m.london 8:52 a.m. in berlin. bit of risk aversion after the chinese trade data numbers. the utility, there is reporting in the local press they're looking to spin off part of the power grid business. they try to stock up cash to pay off the waste disposal costs that would be announced with the german government and that being reported in the german press. >> unilever out with numbers, those numbers are pretty good. dominating, and it has led to a bitter battle between retailer and the supplier. like it will be suffering the same scenario as well. let's stay in the can talk about once happening. what will be interesting is whether or not it becomes a takeout target. decent european exposure. make sure you focus on that. one of the companies has been a perennial mna favorite. it is back on the radar screen. >> keep an eye out for unilever numbers and one retail story in france today. casino numbers looking better than expected. say it is brought in. where do you sit when it comes to the e

what kind of brexit will we see?ed about hard or soft, it is clear or we seem to understand speaking to theresa may's allies that she will not fight for the city of london. speech ofesterday's theresa may, it looks like that she is going for a hard brexit. will havets it she it, but a hard brexit means while good things for london are not in negotiation anymore. ofthere is a hard brexit course me understand there will be no possibility for moving people into the u.k. anymore because she said, we are deciding who is coming in. at the same time, this means for instance the banking passport is gone. if the banking passport is gone some of the banks have to leave the city of london weather theresa may likes it or not. it is her choice. francine: what is your reaction to the timetable? we finally have the timetable and it is pointing for the moment to a hard brexit. do you think a reversal to take place or a softening stance from the eu or u.k. side could come? michael: the timetable is now clear. she said it will be marc

hard brexit or soft brexit.brexit meaning we control immigration and lose access to the single market. soft brexit and essentially means you've still got access to the single market. you are stuck with what you've got or it is a hard brexit where you lose out. what is the middle ground? is cherry picking possible? they are grandstanding on both sides. is cherry picking remotely possible? john: it depends on how we situate the deal. when we are talking about the soft brexit, looking at switzerland and norway, switzerland had a referendum in 2014 where they wanted to restrict more migrants coming in and that was overruled quite recently. if you're going to be a part of that partnership in the soft brexit, you have to allow free movement. this is not possible under the political circumstances at the moment because of the polls showing the population wants to restrict free movement. understand, there is no way they will allow us access to the single market. hard brexit is where i think this is going. i think people

manus: coming up, brexit means brexit, or does it?plans to push it through without parliamentary consent. that begins today. this is bloomberg. ♪ anna: welcome back. this is daybreak: europe. a live shot of tokyo, dollar against the yen, a bit more risk appetite in the session. nervousness around the chinese export data it seems. a new edition of daybreak is no available on your bloomberg and mobile. let us take a look at some of top stories that made it into today's edition. manus, you like the story they have gone with. manus: it is a very interesting one. what is it? as she correctly pointed out are we there yet, the backseat of the car? r? anna: fed up with waiting. manus: the september minutes show the last months decision to hold rates was as they call it, a close call. several thing that a height is needed relatively soon. brexit's next story is high court challenge. a judge will hear arguments against theresa may's assertion that she does not need parliament's approval to trigger article 50. this is all about the timing of art

brexit means brexit. bloomberg. >> i'd also note the mexican peso stronger over the last having f days maybe with the to do trump/clinton antics. in new joins us on set york. david, i know you have a show. what do you have for us today? we have two great global chiefeconomists. eric neilson. jp also have dana kelly from morgan. we're going to talk to him ab risk. we've got fed moves. elections in europe. brexit.ot nd hal shot very prominent professor up in harvard law school. tom, you know him. orld wide authority on regulating financial institutions. we're going to talk to him about an are we really safer than we were before. thank you. >> mark chandler and luigi zingalis. this comes back to your books. moving average of economic growth is down to a gdp.ning 1.9% he bush eight years in a red circle. half a sepbry. a given u jump start economy, professor? >> what we want is more kpe teug in the system. concentration in america has tremendously. lower it has brought growth. an more inequality. competition

is not going to follow up on brexit.nd now people seem to be serious and you saw pricing trailing in the last few weeks. back andcould bounce you have to remember that it is helping the economy temporarily, so you were going to see that flow into the numbers. see a bounceould back, but i would still not expect sterling to go beyond that anytime soon given how much uncertainty we have. guy: what do you think the market is pricing in. currently? it is triggering article 50 by the end of march, signaling a two-year process, the hard brexit. all of those things are critical to the price. the question that i asked, surrounding immigration, you talk about the fact that the here,s not the priority what do you think that philip starts to say, you know what, there is economic damage being done, the rate of change is that -- -- the government is going to be pragmatic. there will be give and take. when we talk about one did not being important city, it is, but if you look at passporting, there something called regulatory balance. a

and hard brexit.ll the attempts that have been made to stay have certain sectors in the european market or the customs union, they do not stand up on reflection. it looks to me like we are heading for hard brexit. francine: do we not need a politically class in charge that has a plan and is very decided and inclusive for everyone, including the chancellor who is well respected by the international markets? phillip: what we have is essentially ideology facing reality and the reality is that all the costs of brexit look -- fairly enormous, 2% to 4% of u.k. gdp. if you compound that over the years, it comes to an enormous number which will have a massive impact domestically on the u.k. economy. the prime minister realizes, the prime minister wants something quite reasonable, control of migration and not being subject to the european courts of justice. before people say that that is fundamentally against the four pillars, germany and france have a seven-year moratorium for accepting workers from the new c

hard brexit or no brexit, take your pick. the stark warning from the e.u. president. in our brexit show, we will have the latest news on the u.k.'s european exit and will speak to the ceo of l'oreal. this is bloomberg. ♪ the best prospect of those in being able to do that is if we get fed normalization. anna: what about the euro and how it performs from here? i read ubs was saying that the euro would rally on the taper talk. we ran this story some weeks ago suggesting that when the time comes to end the bond buying program that will be some tapering. do you think that that's what he would like to do? brendan: i think that tapering is what draghi would like to do. i do not see that being a big story for euro. the only situation is where the dollar would be strong anyhow. it is not an independent story. we have toh more focus on the german political in europe,e risks particularly the italian elections that will be close to thoughts and december. that is a risk one has to look at very carefully. ed always says it has nothing to do with politics. independence. brendan: i

brexit means brexit and we are going to make a success of it. manus: you are very welcome to "countdown." i'm manus cranny in london. wards atd i'm anna ed the conservative party conference in birmingham. march 20th, 2017, that is the date we heard yesterday from prime minister theresa may. that is when she said she will trigger article 50. it seems britain is set on cour se to leave the eu. we heard a lot about timing yesterday and about process. more on that later in the program. but we heard very little detail, and we will not get very much it seems about the relationship between the eu and the u.k. we heard little about immigration and trade at the conference yesterday. in fact, theresa may rejected there is a dichotomy between those demands. we will reveal more about what we heard here. philip hammond will be here, distancing himself a little bit from the policies of his predecessor. we might hear about house building as well. but today, we need to hear about bank andt on deutsche what the speculation has done to the asian trading session.

we cannot just be looking at brexit as a defining moment. it is a number of geopolitical risks that will happen over 20 years. that was the henderson group ceo andrew formica earlier. later today, we will hear from capital ceo. both of those companies absolutely rallying on this news , stocks up in double digits. henderson up by the most in seven years, up by 20%. janus also getting the most since bill gross was hired in 2012. vonnie: a big day for those two companies. coming up, european banks are preparing a fresh round of job mean as much as 20,000 positions. we will take a look. this is bloomberg. ♪ ♪ vonnie: from bloomberg world headquarters in new york, i'm vonnie quinn. nejra: live from london, i'm nejra cehic. down to the european close, about 15 minutes away. european banks are preparing a fresh round of bloodletting with a total of 20,000 jobs set to go. deutsche bank is said to be moving closer to a plan to cut 1000 positions while ing announced it will shed 5800 jobs over the next five years. joining us now is our european financ

over soft brexit?ust bathing in brexit? >> i think the whole brexit thing has been done before. everyone is an expert on the legalities, so to speak, but i think brexit is brexit, whatever happens. and it will come down to how skillful the negotiations are in trade deals with europe. i can't say -- mutually it's a good idea, but politically europe has to fight hard. >> it's interesting comments coming from the belgian prime minister over the weekend. he said if the eu can't strike a trade deal with canada because millonia walked out of the trade deals, how would they negotiate a trade deal with the brexit and the eu once brexit happens? how do you feel about that? >> you have to go into it thinking no real -- they are good people now. because they are asking big questions how the european union works. so really, they are going from the zero tariff and trying to build things up if they can. but i think it just disappoints that free trade is a thing. politics is a problem. >> when you look beyond the pou

is brexit now binary? either no brexit or a nasty brexit? is that your view?xit, i don't see how there can be a solution where britain can keep access to the single market. for me, the number one issue is the freedom of mobility, of allowing workers to move freely through the european union. in my view, the single market cannot function with barriers on migration within the european union. that is a very clear position. the chancellor has been very clear on that, and i think for good economic reason. decide ultimately has to whether it wants to accept mobility of people within the european union, and if it doesn't, i don't see a way for britain to stay in the single market. that to me would be beside the issue. caroline: always great to have you here in the studio. please do come in more. d.i.w. and president of the wish you luck. up next, we will get another view of the ecb from its first-ever chief economist. tune in after the break. this is bloomberg. ♪ guy: half past the hour. 8:30 in london friday morning. has been a busy 24 hours. european equities on th

the truth is this isn't a soft brexit or even a hard brexit, it's simply a chaotic brexit. because with all this uncertainty and all these mixed messages, day by day confidence in this economy falls and the british people become more worried about their future. two weeks ago, the treasury said that leaving the single market would lead to a $66 billion loss to the economy. the trade deficit is widening, the value of the pound has already fallen by 18%. seeing industries, including the auto industry and others delaying vital investment decisions and the banking sector looking to relocate. this indecision and poor economic management is starting to hit our economy severely, weakening the hand as we walk into the most important negotiations for many generations. mr. speaker, we on this side of the house respect the referendum result and we except britain must leave the european union. we also understand that this will be a monumental exercise with the decisions made now affecting the lives of british people for years to come. the prime minister appears to be making some sort of

be a hard brexit?certainly suggestive this is a panel dominated by people who lead to the hard end of the spectrum. the scottish secretary, that question of whether that ends up being left off the table, no place for londoners. there has been some pressure on the london mayor for a committee but it is the competent -- composition that is diverse. vonnie: cable did not move all that much. it is weaker a little bit but we are still just under $1.22 to the market was not anticipating her group would be made up of hardliners. ison: i feel the market starting to tune into hard brexit. the pound is becoming a bit of a barometer of how much she can achieve on the hard side of the equation. the pound is down when hard brexit hits the headlines and in the when sand gets wheels as it did with the court case and parliamentary hearing. vonnie: even gilt yields are climbing. sort of the opposite reaction you would anticipate. investors must be ok with this. simon: i am not sure the gilt yield is necessary. the infl

brexit at she wanted to send a clear message that there was no turning back from brexit, but ae wanted.k. to remain strong and dependable partner. according to the e.u. president, that might not be that easy, even though he said, when he arrived at the console yesterday, that theresa may it den,ot entering the lions but a nest of doves. he said in a closed door meeting, theresa may, that the remaining members may have to meet in the future without the u.k. to discuss some issues if exit was not reversible -- if brexit was not reversible. >> after the decision in the u.k., we have to respect the result of the referendum. this is in the british hands. i would be happy if it is reversible, but we have to, now we have to start our form the vitiation. start our formal negotiations. anna: what is the latest? some floated in, the possibility of new sanctions inrussia over the situation syria. you sanctions on top of the sanctions over ukraine would require the approval of the 28 du members. .u. members. matteo renzi said it knew sanctions might be premature. sanctions might be premature. >> f

and in terms of brexit, i think that brexit is a real risk. -- tom: let me bring in guy johnson. guy: alessio, why talk about the fact that europe is in trouble, though the project is in trouble? if the user does not blame europe, who should they be blaming? alessio: europe -- in my opinion, while europe remains a aable project -- but it is project that, under the current situation, is clearly not working. brexit is just one sign of many that will come. you need to create growth, lower the unemployment rate, to prevent the populist momentum of repeated election cycles from taking over. idea.t is the what is the alternative to europe is a worse alternative. thing thanonly worse the current european project is a european project where there is more disaggregation. who is to be blamed for this momentum? in my opinion, it is for reforms and low growth. strong growth and a dynamic economy solves a lot of these problems. guy: we can blame the politicians, i guess, in some shape or form. we look at what is going to happen next. we have the italian re

we will talk to a global economist on the mounting concerns of the heart brexit. -- hard brexit. vonnie: as we await news on the department of justice, we will hear from a german lawmaker. and google's latest hardware event takes place today and could mark the arrival of two new flagship smartphones. apple andtaking on amazon. have a look where european equities are trading right now. just under 30 minutes to the close, the uk's ftse 100 up 1.7%. we have seen this hit a record high after it opened above 7000 for the first time in 16 months. 7104 and still rising on this u.k. benchmark in the netherlands. 1.2%uro stoxx 50 index of and the dax index as well as it reopens. a broad gain across european equities. we are seeing a weaker euro. sterling, of course it is one of the key things we are talking about. 12747, this has fallen below that post-brexit low. it keeps falling and might do even more as i will show you in just a second if we take a look at the bond market. we are seeing a little bit of yield kick higher on the front-end and you can see the ,ommodities at the end as wel

means brexit morgan a to make it a success. [applause]. of course we wouldn't that that. and have it not been for david cameron. i served in his shadow cabinet for nearly five years. i saw firsthand his commitment to public service to social justice back to the british economy.tish e a plate no income tax at all. he has a legacy in which heit and her whole parties can be proud.the wh for those who claimed he was mistaken in calling the referendum there is no finer accolade they put their trust in the british people. [applause]. i know there is a lot of speculation about what second amine about the nature of our relationship with the european future. i understand that. we will give clarity whenever possible and as quickly asas possible. but we will not be able to get a running commentary on account of the negotiation.ow we all know that isn't how they work. as we stray and every hyped up media report is get a make it harder for us to get the right deal for britain. so we have to see patient but when there are things to say we wi

pulling the brexit trigger. the uk prime minister says they should invoke article 50 in the first quarter of 2017. she is leaning toward a hard brexit. the pound weakens. money manager merger. janus capital is to join forces with henderson group creating a firm with 320 lien dollars in assets. -- 320 billion dollars in assets. ♪ francine: welcome to "the pulse." live from bloomberg's european headquarters. i am francine lacqua. we have a great panel on banking coming up. this is a picture for the markets. the pound dropping by the most in weeks after the prime starter announced it will rolling the u.k. out of the eu. we are getting manufacturing pi -- pmi coming in in-line. brexitld've had if any impact, 52.6 is the figure for eurozone manufacturing. overall european stocks unchanged. the pound on -- the pound weakening. about deutsche bank will be played out in the states. we do seem closer to a resolution on the doj number. , 2.4% higher. let's get to the bloomberg first word news with nejra cehic. nejra: the

is it brexit-proof?d a summer economic statement which looks at the impact on our growth. came out minister recently to say that this budget will be brexit-proof but we have to make sure we are in tend to what might be happening in the u.k. next year and the coming years and have our fiscal policy planned appropriately. vonnie: oh murphy, thanks for joining us. ising up, the british pound at its weakest level since 1985. : stocks in europe are rallying and we are looking at a broad-based gain of european stocks for their longest stretch without losses in almost a year. and thex 600 is up 1% ftse is up 1.8% and we have seen above 7000 for the first time in six months and hitting a record high. the dax is higher as well. we will bring you the close in just a few minutes. time this is bloomberg. ♪ >> it is 11:00 a.m. in new york. 4:00 p.m. in london and 11:00 p.m. in hong kong. i am nejra cehic. i am vonnie quinn. you are watching the bloomberg clothes -- close on the bloomberg markets. we are going to take

the brexit hit, let's talk about that.have been cautious on giving guidance on what it will mean. >> yes, and there's of course is just the pound related hit we are seeing, 35 million pounds more than the currency impact pre-june 23. what we don't know yet is the impact of brexit on-demand, both in terms of how much the weaker pound is going to dissuade britons from traveling abroad over the winter and into next summer, and also of course the awesome impact on the economy and whether or not that stores up more trouble for next year. caroline: chris, i want to turn our attention to an amazing chart we have been rustling up, showing how in lockstep the market capitalization of easyjet is with the pound. it really has been rattled by brexit. give us a sense of the turnaround, the growth trajectory. how do they turn the market cap back up? >> well, she says she is planning to press on with her growth plans. 8% capacity increase plans for the year that has just begun. the view at easyjet, and certainly at ryanair, is that it's

pulling the brexit trigger. the pouncing's as theresa may says she will invoke article 50 by the end of march next year. caroline: the pound trades lower on that news. u.k. futures are in the green. caution affecting european traders. germany is closed. everyone else is enjoying their holiday. overall, the dax will be shot. -- shut. still some nervousness, some risk aversion out there, as we build up whether a deal will be struck by deutsche bank this week. guy: lots of pmi data out of europe this morning. -- 820 ofayed 20 attention. the british pound firmly in focus, dropping on the back of news we will get a trigger on article 50 before next month. we will hear from philip hammond -- hammond later on, chancellor of the exchequer. the bond market will probably respond to what happens with the data throughout the morning. here is the bloomberg first word news with rosalind chin. rosalind: the pound fell after the british prime ministers said she will pull the trigger on brexit by the end of march. theresa may wi

as she famously said, brexit means brexit. idea of how clearer theresa may plans to disentangle britain from the eu? >> the main thing she would like, and this dates back to her time as home secretary, she would really like to feel that britain has firmer control over immigration. whether she would want us to remain within the single market, no real indication that what she is trying to do is show to her toty that she is committed brexit very much in principle. there are certain bits of it that she is very much in favor of and believes in it principle. that is a way of making sure there are no voices in the party that she is not really committed to brexit. she is making most of her own feelings to convince her own party that she is on their side. christ there was a lot of talk >>well about fairness, -- there was a lot of talk about fairness. conservatives stolen the labor mantle as the party of the working people? the think that is really key to understanding this quite remarkable speech. she has tried to's seize the opportuni

theresa may might be known for butng brexit means brexit, the london court will decide if it is up to her to decide when the u.k. leaves the eu they will try to convince a judge she can trigger article 50 of the lisbon treaty, which activates the brexit without approval. the failure would force the issue into the parliament house of commons and lords, both of which were largely pro-eu. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. i am erik johnson. this is bloomberg. mark: let's get back to a busy day for the markets. sterling rolling for fourth day. the ftse hit a record before backing up. joining us is the head of multi-asset funds at legal and general. theing at the ftse versus 2-10 year spread, there is a lot to think about right now? the presidential elections, the fed, the oil price, brexit, how does it play out across the asset space? trump looking at the event in the risk of u.s. rate hikes. the bigger story is on the inflationary side dictating with the u.s. can get away with and how far europe can go. with the end

the white line is keywords on the bloomberg terminal sits brexit. the keyword is hard brexit. the orange line on top is sterling against the dollar. as you can see, as the use of hard brexit in articles on the bloomberg terminal has increased, particularly in the last month, we have the pound falling. the correlations, the inverse correlation between the two is -0.9%. if we had -0.1%, it would be a perfect inverse correlation. what a wonderful function. news trends chart. let's get vonnie quinn. you better take it away. vonnie: yes, i love that. let's check in with the first word news. .> thank you u.s. defense secretary ash carter calls that a decisive moment in the fight against islamic state. iraqi soldiers have launched an offensive to recapture the city of mosul. the iraqis are being backed by shiite militias and the u.s.-led coalition. mosul is iraq's second-largest city. syrian opposition monitoring groups say an airstrike on a rebel-health village has killed 23 people. the attack was in a northern province of aleppo. 30 people were killed when russian warplanes attacke

soft brexit.at works for britain and for the european union, as well. it has to be about mutual advantage, about mutually beneficial solutions. david: ok, just a short taste of the interview you will be hearing in its entirety at 10:00 eastern time on bloomberg markets. he says to miss a very carefully, making sure both are benefiting. u.k. and europe. he is a diplomat. saying itmr. hammond is not clear the ecb can require clearing to move. the ecb tried this a fee years ago, and response from the courts was you cannot move clearing exclusively to europe -- the ecb tried this a a few years ago. so i wonder if this becomes a legal issue, as opposed to a legal one. david: he is channeling you. jonathan: i doubt it. i imagine he has had this conversation. course,lly speaking, of they want to use the same kind of trump card in europe here it but legally speaking, if it is going to happen is i the european union anyway, why can't it happen in london? alix: he is also trying to spin some positive rhetor

still debating brexit. giving parliament leeway and debate over brexit.look at the currencies. rebounding for the first day in five. a horrible five days for the pound against the dollar. euro falling against the pound. looking forward to the minutes in a couple of hours. this is bloomberg. ♪ vonnie: noon in new york and 5:00 in hong kong. david: welcome to bloomberg "markets." >> covering stories from tokyo. u.s. stocks are seeking direction ahead of the federal reserve minute. real estate and utility among the gainers while energy is lagging. the meeting minutes are due in two hours time. bank earnings kickoff and earnings on friday with j.p. morgan chase and wells fargo. we are joined with the numbers you need to watch out for. halfway into the trading day, abigail doolittle joins us with what we have been seeing so far. >> halfway through the trading day, we have stocks doing very little, fluctuating between al

she thinks she has the mandate to deliver brexit. most members of parliament did not want brexit.n those in her own party, the majority of mp's were against brexit. that is the mandate that theresa may feels she has to deliver. vonnie: the british high court against hearing the case today, the constitutional case. how long might it be before we get an actual decision? >> it could be towards the end of the year. one of the judges involved has raised an important issue. there needs to be some kind of speed here. they will deliberate and torts of the end of the year we will see some kind of decision. could be ane appeal. if something materializes, it materializes. that is the minority sort of outcome, right? >> obviously there are appeals going into the house of lords. this wouldn't be the last point. it is something investors will be watching as an indication of whether the process can be delayed. not many analysts think this could be enough to derail brexit completely. mark: there's no hint as to when a vote might take place. >> it's not been that long since thescots last went to r

a solid beat despite the brexit referendum. >> makes you wonder, did brexit happen? at the same time we know article 50 has not been triggered yet. yes, we have a deadline in place, end of march. the real pain will come in the next two years, but the immediate aftermath of brexit has seen a resilient uk economy. >> some saying we will first feed that through in a year's time once companies get to grips with what it means what a triggering of article 50 means, getting that underway. >> the decline in the pound/sterling. we've seen this drop, at some point even now, already it is feeding through into higher consumer prices, higher inflation. that will dent the consumer in the christmas season. >> definitely. the bank of england looking with a half high at the weakness of sterling. >>> let's talk more about what's taking place in the u.s. susan cramer joins us. baroness, thanks for joining us. >> thank you. >> looking at uk gdp growing by a stronger than anticipated half percent quarter on quarter for the third quarter. is there a risk we maybe are overplaying the fears

-wide for brexit.said failure to deliver a brexit deal that works for scotland will leave them to take another stab for independence. nissan has signaled that early discussions with the u.k. about its prospects of future in the country have been politic. there was a meeting last week with theresa may. >> with the prime minister, we shared the fact that no matter what is going to happen, the competitiveness of nissan in the u.k. needs to be at least preserved, if not reinforced. as long as we agree on this and everybody takes responsibility for his part of the game, we agree on the essentials. so we do not have to worry too much about what is going to happen for brexit as long as you have the assurance that the government will make sure that nissan will continue to be competitive. news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries -- this is bloomberg. francine: we are all in pink because of cancer awareness. it was completely done on purpose. not a coinci

there has always been a cost for brexit.s never a zero-sum game, even though the brexit press sold it as zero-sum to britons. but the government is making it much worse by having no plan. caroline: give us a sense of where you put your money, then. it is interesting that we have seen a rally in banks, predicated on the fact that the ecb may be changing its quantitive easing, the way they buy bonds. give us a sense of a hard and soft brexit scenario. how do you invest? >> well, over the last eight years, the best-performing e long s&p and long treasury. now things are more difficult. the community is unwinding and you have to be short, especially on government bonds and gilt. you have to look at a reversal of these trades where investors were looking for duration, for yield, and gilt is most vulnerable. we still like some areas with yield, and particularly emerging markets, which are a safe refuge from the political risk we see in the u k and eurozone or in the u.s. and we also like banks, because banks have been hammered by

they are talking about a clean brexit or a dirty brexit.ither a protectionist brexit or a liberal brexit. treatment of the turkey and foxes talking about should reinforce the sterling ian foxe is talking about should reinforce the sterling as a reserve currency. anna: there is still very much banging the drum for globalization and global trade. they want to trade, some of them in the conservative party don't prioritize trade with europe. simon: you have got and veryonments where you have anti-free trade right now. that is the environment where those third country trade deals need to be brokered. anna: thank you so much. manus: up next, staying alive. the cleveland fed president loretta -- ♪ manus: right for a rate hike. loretta mester says everyone aliveecembers meeting is for a policy decision despite being close to a pollock -- close to a u.s. election. a rebound in commodity prices boosts the australian economy. tells amazing government bloomberg she will not prioritize protecting financial services companies and her brexit negotiations.

what did he have to say about brexit?im about the reports that vpb might be moving part of its business from the uk to europe in the event of grexit -- of brexit, and here is what he had to say. andrey: we are not pulling business from london. we will have to see what brexit means. we are planning to consolidate the functions in london. the anti-money-laundering functions, or the client functions. custody brexit, i do not think we will be able to do it. we will have to keep it separately in london and europe. that is a problem. otherwise, at the moment, no plans to leave london. but they plan to continue definitely to cut down there for business reasons, not for any political reason. nejra: i did also get mr. kostin's reaction to the latest central bank move. that thet is positive central bank is working so actively to cut inflation, even if he said the key rate might fall to 7% or 8% next year from 10% now. mark: great job. thanks a lot. mawby,houghts, jon gilles moec. this is a wonderful chart we were showing a lot yest

are very demotivated today by the brexit. 1000 doing the opening for two days before the brexit.lled them two days later morale was down. you very much. interesting comments on 3-d printing. in the perceived threat to the developed market. thank you very much. -- oil is trading near $50. a magic number. talks aimed at resolving a deal. the: we have the charge of hour. will the rack get some sort of exemption from the production cap they are talking about at the moment? youssef: before i get into the opec conversation there is another side of the story as we look ahead to the figures coming out from the iaea in the u.s. last week is what jolted prices of the wti after the unexpected drawdown of more than 5 million barrels. way to see they ofact that we are having on uti as the u.s. crude stockpiles fell below 500 million barrels. two 468 million barrels. more of these shale companies are going to be drilling again as a result of the higher oil price. as a result, you will see a rise in u.s. output. it will only be a matter of time. the expectation is for a build of 1.25 alien barr

theresa may finally announces a timetable for brexit. we will look at what that means for the you k's biggest and perhaps most controversial -- for the two k's biggest and most controversial -- kim kardashian robbed at gunpoint in paris. thieves steal $10 million worth of jewelry, leaving her unharmed but tied up in the bathroom. more on that on the way. first, our top story, live from paris. after all the pomp and circumstance over the peace deal between the colombian government and leftist farc rebels, the people have voted against it. turnout was low in a referendum on the deal, just under 40%, and the no votes won by just under half a percent. the peace agreement was the result of four years of painstaking negotiations that was meant to put an end to one of the longest-running conflicts in the world. it would have let rebel fighters had in their weapons to the u.n. and form a marxist political party. but the no campaign led by the former colombian president and opposition leader, alvarado or rebate -- a nationalto create pack. we thi

a touch of brexit? >> britain starting to feel the squeeze from the brexit. consumer confidence failing and a weakening of household spending power. >> that is likely a reaction to inflation, which could reach 3% next year. joining us now, the president of the peterson institute for international economics. thank you so much for joining us. when i read those numbers, the reality of brexit is beginning -- the head of the bank of england being less patient with inflation. faces inhat the u.k. 2017? >> the answer is simply yes. it will not be as bad or painful as the stagflation of the 1970's. inflation goes up and growth goes down. in the consumer in the u.k., fueled by some nonsense in the political sphere , kept them having faith in the u.k. economy that was not merited in the last few months. they are now waking up to reality. >> we are seeing bets are increasing on a rate hike from the bank of england. will that hurt the bank's credibility? banks are always reluctant to make an about-face but they should never let that interfere with doing the right thing.

the fear of a heart brexit -- hard brexit might help get a softer brexit.s well , and i think her strategy is clearly intended. i am not sure it will be successful but it is intended. francine: if you look at the pound falling, the brexit minister saying this is good news because it will help with our exports. if it weakens too much or if the move is too violent and clearly points to a weak economy. virginie: you have positive and negative, 5.9% account deficit, and the weaker pound. it will help in terms of making imports more expensive and inflation could be a slight positive. there is no time to adapt to do this. the u.k. and the pound has been the safe haven of europe for many years. the question is, is this about to change? is that safe haven status about to be lost, given the lack of visibility? i think on one hand those negotiations must the tough and if they lost too long you will have some fear and people will move away. tom: let's bring up euro-sterling right now, coming off of brexit. it is the blue circle down at the bottom. the basic idea comin

the brexit slowdown. at 9:30 a.m. drop we will speak to the bt ceo, gavin patterson, following that with christine lagarde. we are watching how the dax might open after deutsche bank's surprise profit. futures signaling the lower across the board. this swept up with the fact we are seeing oil trading near that three-week low. we are seeing more views at the fed will hike sooner rather than later. it will be such an neo-syncretic day. -- idiosyncratic day. guy: a big day for earnings. we will carry on that conversation as well, caroline. the dollar story. it was much stronger over night. it began to fade a little bit into the european session as we start to see some of its liquidity coming back. the dollar index still up, but only just. the british pound is down by 0.2%. 121 handle.ve the gdp number of little bit later on. the big question, is it just recession deferred? does the dates i get worse from data get worsee from here? are we going to see these numbers deteriorate going in? fairly negative session. probably m

nejra: i want to ask you about brexit.t redlines does portugal have in terms of coming to an agreement with the u.k.? what impact do you have -- what impact do you expect?on the portuguese economy portugal has been ricardo: and long traditional operating partner at u.k.. in this respect exit -- brexit needs to be taken into account. we think we should have a discussion with u.k. such that --preserve relations between u.k. is an important trading partner. a very important partner in terms of financial relations and we should preserve. vonnie: the government indicated on wages to indirect taxes. how do you plan on achieving this and is it fair? ricardo: over the last year the budget has started by having you foster andt promote labor income and create incentives for people to provide -- to supply labor. reduction in personal income taxes and by an increase in direct taxes. smaller dimension in terms of magnitude. -- inhould not involve particular it should involve tax in some specific groups. vonnie: we have to leave it ther

>> this differential between soft brexit and hard brexit will disappear. we're in for an extended period of negotiations for two years plus. what we're hearing so far is not too much of a surprise. both sides taking a firm stance. we get to see the outcome. we won't know that for a few ye years. what we're seeing is that currency effect and sterling looks cheap. there's no near-term reason to see that starting to recover. >> european bond funds hit by the largest outflows in more than a year with the largest redemption since 2015. blackrock data at the same time showing us bond etf volumes at record high, 24% rise this year. these things that are taking place in the background, like brexit, like the uncertainties with regards to the election and uncertainties with central banks, will we continue to see money flowing into bond markets? >> we're at an interesting point. the last couple of years we've seen institutional money flowing out of europe into the u.s. and that same flow from japan as well. now when we look at that opportunity, it's fading away a bit

i am very anti-brexit. of negotiations or bad and the fact that the government does not have a plan makes things much worse. guy: when the pain comes, is a greater than it would've been it became more slowly because we predicted armageddon, but that is not happening. danny: i don't think anyone expected output to shift hugely. the data came out today, going into a process of years of revision. i remember back to 2009. the big thing we saw was a fallen confidence in the bank of england. this is just very early days. we don't really know what the effects of this shock are, especially as article 50 has not been triggered. we do not know what the deal is, thate have little idea these trade deals are going to be impossible, so the good news is not terribly good. tom: thank you so much, this morning. dow chemical off the lehman lows, it is a whole new company through the merger. taylor: earnings-per-share coming in higher, about $.91 or share, beating expectations. topline revenue growth coming in higher as well

there is no turning back from brexit.leaving the eu, we will continue to play a full role until we leave, and we will be a strong and dependable partner after we have left. it is in the interest of the u.k. and the eu that we continue to work closely together, including at the summit. >> to the leaders will be able to hear more from theresa may over dinner tonight. she will have 10 or 15 minutes of the dinner to present her views on how she sees the process is going to go. mark: let's like we have lost caroline. apologies. ,e will try to get back to her but a big night for theresa may during the official dinner where she will essentially get 15 minutes to tell the latest on the brexit process. vonnie: they will be speaking about russia as well. coming up, we will hear from cap staley -- jeff staley. how his bank is handling the comeback plan. this is bloomberg. ♪ mark: live from london and new york, this is the european close on bloomberg markets. time now for the bloomberg business flash, a look at some of the biggest bu

brexit follows on. profitlion of are to -- they understand million pounds below where they thought they would be nine months ago. -- they are 250 million pounds below where they thought they would be nine months ago. there is a lot of brexit pain still stored up for them, in terms of the pound and the impact on the -- anna: fabiola, do you have any good+++ what are your expectations for the pound and its weakening trajectory? .." -- fabio: think the pound could fall further. where looking for the 120 by the end of the year. some of the news we got from the local front looked like we are heading toward a harder version of an exit. it makes it more risky. we see more sensitive and all of this process. we see some reformation. where likely to see more weakening of the pound going further. anna: that a call it harder, the car cleaner. euphemism for perhaps the same thing. what about the growth plan? i pulled at this chart. basket ofjpmorgan what the call brexit sensitive stocks. they haven't done all that b

is seeking something closer to a hard brexit than soft brexit, the markets had to face up to the reality. that has to be bad news for sterling. >> has to do with liquidity as well. midnight uk time, asian hours, but it is about market structure. things have become too political. people are always saying how they will carry out the brexit plan they mentioned. peoples opinions differ on that. >> jeremy stretch is with us from cibc. take a breath. i know getting here can be real difficult when you're popular because of what's happening in sterling. >> it's been a busy morning. >> let me read you out a viewer e-mail from raj. writing in from london. he says in physics there's a method called protobation theory. he says you blast with a disturb balance and watch the results, it's like shaking a tree and seeing watches. the test on sterling is exactly that as i'm sure trader the and hedge funds want to know the market strengths, they may call it a fat finger, but test and see. it is a long equation of that i'll take a picture of and tweet. do you think he has a point? we're seeing how much can

everybody saying this is the set up for brexit.y question is straightforward, is sterling fully price for what we would assume to be a hard or dirty brexit? 85%, 90%rexit is like priced in. indeed, the immediate economic impact on the back of but a lot if not all negative and the price by now. all of our measures and models it is theng show cheapest g 10 currency out there. when you talk to clients in europe, asia, north america, they agree that a lot of the negatives are in the price by implication and any sustained downside need not be as accentuated as we have seen in recent days. any problem is the fact that there is no trigger for a sustained rebound. cheap, but likely to linger close to the lows. is cheap, butit relative to what? should not look back at the recent history to find the value for sterling anymore. where should sterling traded in a new world? >> longer-term-short-term measures, you compared the correction in the fx markets to other markets like equity markets, a correction to things like terms of trade. given tha

, either there will be a hard brexit or no brexit at all.iven that you were just in brussels, did she pick up this hardening political mood music that makes it clear that access to the single market that we so desperately need is rapidly becoming a pipe dream? prime minister may: we have not started the negotiations. what i found when i talked to other leaders and colleagues in the european council at the end of last week was a recognition that first of all this is a complex matter we have to negotiate, and secondly an increasing recognition that we have to ensure the deal we get is a positive deal for the european union and the united kingdom. i got the impression. what is being said to me shows that we will be able to sit down around the table and get the best possible deal for both sides. recent visit to berlin, it was said that there was genuine goodwill towards the united kingdom as well as an understanding that there would be detailed negotiations ahead. there are clear shared economic interests with member states. can my friend also c

and hard brexit. hard brexit is a conscious reject trade is a false dichotomy. whether people like it or not, the country voted to leave the and that means we are going to leave the e.u. let's more analysis, bring in our bloomberg team. the take art with you away, analysis from teresa may's speech over the weekend. what was it? >> that she is doing clarification to the date so know when she starts that two year process, article 50 will be to vote by the end of march. so we know that which we didn't know before. we know she'll put e.u. laws into british laws and we didn't know that before though we would be the case. >> i want to talk about the financial markets. weaker pound. we do have politics on one side. the manufacturing data and the economic data on the other side. walk me through that. >> it's nice that you have manufacturing data on the day have their s chancellor. yes the data are reasonably buoyant at this stage. you've seen what the market has said this morning. seen what's happened to the

that would be a soft brexit.ast week, that would be a dream relative to what is most convenient to us. matt: a dream that seems unlikely, doesn't it? from the rhetoric we hear on either side, does a hard brexit or harder brexit seem more likely? >> yes, we would need to have a thege in attitude from british government on its priorities and its whole political tactic, which is what the lawmakers in the house of parliament are clamoring for the government to give one, but it looks to me they have been offered a fireside chat to air their grievances. all those eastern european countries, for whom freedom of movement of labor around europe is one of the big things that made them join this party -- this body in the first place. matt: if they allow a soft leave is next.ta spain may go. wouldn't everyone want a soft exit? switzerland currently has a soft exit but would like to control the flow of foreign workers coming into its country. internallyreferendum the said they wanted to tighten up their rules. problemsa lot o

and a hard brexit the u.k. would take a tough line on free migration, which might lead the eu to deny companies access to the single market -- british companies access to the single or soft. and a hard brexit the u.k. would take a tough line on free market. >> we don't recognize this distinction between hard and soft brexit. we want to get the right brexit for britain. this has to be about mutual advantage, mutually beneficial and solution. >> hammond also said the u.k. doesn't dilute itself that the eu owes it any favors. people in china are pleased with their countries global rising power but there also concerned about foreign entanglements. those are the conclusions from the pew research center survey. still, they are worried by u.s. power and influence. global news 24 hours a day, powered by more than 2600 journalists and analysts in over 120 countries. i'm courtney donohoe. this is bloomberg. >> let's get back to deutsche bank. according to an audit commissioned by german regulators, the bank mismarked doz