that's because central banks and private banks working together ok and they and that's were all so let's just let's wrap everything up in a nice ribbon where did the inflation go where to go it's not that the money supply doesn't matter anymore that's by the way it causes inflation an increase in the money supply the money supply would ever growth there is has all gone into real estate bonds and in equities ok now this is reflected in the chart tracks money velocity correct because velocity is the what you're talking about normally that money that's created will be lent into the system and then that's a real inspiration as in the base money in the broad rag and then we see that collapse is collapsed right now you said also something i want to dig into a little bit here you said because there is not any real great demand for credit right now i want to explore that for a second because in other words there are millions of small businesses across america and it's the number one driver of economic growth in america and employment growth right and they all want credit so how is it that this i

has the same issue, other central banks around the world have issues. if you look at the back drop fo the ecb, you look at sweden where the economy is growing 70%, they are still doing qe >> is the riksbank able to say they don't have bubbles? >> i'm based in new york where we have lots of construction but nowhere near as much as here, so i would say there's evidence of low interest rates causing bubbles in the construction sector. >> dangerous bubbles bubbles in the market? in real estate >> i would say bubbles in markets. stock markets are at all-time highs all the time you cited another one -- 46r7b8 >> 43 on the dow, 40 on the s&p. >> the economy sets a new record high every quarter as well we have strong economic growth in many parts of the world >> why not ask for 6%, they might get 3% or 4%, what have you. that is real inflation and engrained inflation into the system, good news for workers but is that bad news for central banks? >> i wouldn't say bad news most central banks want to get out of this and normalize policy, but it lacks the inflation

their central banks are lowering rates. you have central-bank convergence between some in emerging markets and most of the developed world. our view is you want to be more cautious on developed market interest rate exposure and if you are going to take interest-rate exposure today, have it more in floating-rate form as well as select exposure. tom: i want to bring up the screen right now to give you an example of where mr. kissel talking about europe different. bring the camera in here to the upper right corner, if that is possible. you have negative yields in switzerland, two year, three-year, four-year, seven-year, nine year, 10 year. jim, that is how artificial the market is and doesn't suggest -- judges -- does it suggest a more normal fed? jim: we are entering a new phase here post the financial crisis. we had a cycle where everything correlated to one and the central bank and fiscal response came at the same time. we have gotten to a point where it economies are in different places and there are different levels of cy

tom: we heard this week, the idea of central banks in different locations in the cycle is key. chel, i look at the real yield, the nominal yield, where does goldman sachs think that dynamic is going? deutsche bank suggests a better real economy, even with subdued inflation. where is the real yield nominal yield dynamic going to work out over the next 12 months? all in 20 seconds, can you do it? rachel: we think they can press against each other. both nominal yields will continue to rise, but we will begin to see some inflation coming through. we are believers that there were temporary inflation factors pushing inflation down that will be coming back into the market early next year. while we believe there is going to be a lower terminal rate towards the end of this cycle, there is upward room. we are short u.s. while or we are relatively more positive in europe. tom: we will talk about that. i know everyone wants to jump in. a nice opening section on real yield. we will continue. that's out in the beautiful weather of newport beach. coming up, the auction block. mcdonald's heads

and making faces at the central bank governors facial expressions move. let's do business catalan leaders say if the banks can shift their headquarters out of the region they can simply withdraw their savings independence supporters have been storming. the correspondent. the response to the rallying cry has been left lost withdrawing money has become a form of protest in catalonia separatists are determined to show their discontent with banks like unsober dell which have moved their headquarters away from the region financial institutions are worried the current instability could take a toll on their business. maybe we appreciates a way of exerting pressure after peaceful protesters were arrested and put in prison but if there's another way to put pressure on the spanish state but it's a. list of us but. some protesters withdrew one hundred fifty five euros in reference to article one hundred fifty five off a spanish constitution which madrid employs to impose direct rule over the region others opted for different. music i withdrew one thousand seven hundr

dot what are we hearing from central banks?nt,her pa parallel ,en bernanke presented a paper lau brainard ways income, raising issues around that. mario draghi also on this panel talking about quantitative easing. stopped and had a funny thing to say about a part of the paper that in bernanke you wrote. >> they laughed at the part on the sociology of criticism of qe, as you may imagine. i was thinking it should be translated in 19 language for the euro zone, especially for those who don't want to read english. >> you can see even mario draghi thatadmit that he hears criticism and push back on his policy of quantitative easing. governor kuroda meeting with reporters ask about what it means for the boj. always,it very clear as sticking with stimulus come heading for the 2% inflation target. haidi: far away from it as well. thank you. coming up, more analysis of the imf forecast. also, it's taxed squabble with the white house. researchhe ing head of right after this break. this is bloomberg. ♪ ♪ getting back to the imf. ought to m

central banks, we got the riksbank and ecb. some of the share prices and what is going on here. we are going to bring you the stocks to watch and talk about banks. central banks, banks, barclays and santander, all in focus. this is bloomberg. ♪ guy: 54 minutes into the equity market sessions. let's get the details with nejra cehic. nejra: the focus on bank earnings. banks are not the worst performers, those are actually tech stocks. we are seeing a number of these banks trading lower from a barclays, and deutsche bank. the big story is over trading. jes staley said he would not panic after one bad trading quarter. he has had three. in thes posting a drop third quarter, trailing most wall street rivals the reported an average 22% decline. he did perform better on this front than deutsche bank. for barclays, detects profit also came in -- pretax profit also came in underestimates. europe's biggest investment bank keeps losing ground to its rivals. income more than doubled as the bank lowered costs and headcount and we are seeing

similis is a trillion dollar question the umbrella body for the world's leading central bank said on sunday the bank of international settlement said and its quarterly report that cheap borrowing rates in the rare simultaneously expansion of advance and developing economies are driving financial markets higher with signs of exuberance starting to emerge but they can't figure out why despite all the new debt the inflation is not happening what is the primary mandate for central banks around the world is to have an opinion about inflation janet yellen echo these sentiments in her testimony when i asked jonah can you explain what's happening is inflation she said no i don't know because i. i have no idea what's going on with inflation i mean i could tell me i sit around. all day long thank god to play the cosmos but i've never actually had a real job i don't know what the price of stuff actually is because i get paid to shut them up so that these banks you rolled that they gave themselves huge bonuses at the expense of everyone and everyone else out of the building because i don't think

i can -- i will not go into detail, but if i had to say the big difference between the central banks d politicians in the crisis, i could talk to another central banker, confident that it would be a conversation in confidence, and it would be treated with discretion. i think that whatever discussions took place with politicians, they seemed to end up in the, in the media. francine: how did you cope with the financial crisis? what are the attributes that a central banker needs for working under pressure, extreme pressure? ♪ ♪ francine: long before mervyn king set foot on threadneedle street, he was an academic teaching and procedures institutions like the university of cambridge, harvard, and m.i.t., where his office happened to enjoin to then assistant professor ben bernanke. in 1991, he brought his quick thinking to the bank of england as its chief economist, moving up the ranks to deputy governor then to the top job. it was a long way from his humble beginnings in the english midlands. what did you want to be as a child? lord king: i wanted to play cricket for my county, worcestersh

jes: at the imf meetings in washington a week or so the general consensus from all the central banks, bank of england, the fed, the european central bank, economic growth is gotten to a point where central banks are beginning to return to a more normalized monetary policy. is going to mean his interest rates do need to rise. at aest rates are historically low level, they have been this way from austin decade. it is time to begin to normalize monetary policy and that will mean some rise in interest rates. we think it will be in a way to adoes not challenge significant way the u.k. consumer or borrower. manus: if you set down with mark carney and said i think you should do one and then hold back because of brexit, would that that be your far side recommendation? jes: we will leave the dietary policy to the governor of the bank of england. we will respond to any moves but normalizing monetary policy will be a good thing for the global economy and a good thing for the u.k. and a good thing for [inaudible] manus: setting new targets which assess, for mel as an interviewer, i want to know w

those investments that the central bank of the banks is that surely made what was on the economist heal as the central bank was already announcing they do not want. the in the cave with all those things at some point in the future they want to sell it on the market as them well i guess my question was more about. the general posture of government by is. what i like really much about your philosophy your i really i'm very much when you as an artist whether you'll be interviewing the central bank you should ask them questions and you know push them to be more open well minister we have to take a very short break now but we will be back in just a few minutes. the city of luxury and free but also an alarming number of people living in the streets. the simple fact in l.a. is there's just not enough shelter even if people on the streets right now decided to come in there's nowhere to come in it's been a struggle. this man from his own response to the problem and constructed dozens of tiny homes for people in need of shelter when you have nothing in order to go. you know having something like

it was fairly frank comments from the central bank governor.expected to step down this year. yes, interesting to hear from him. on the growth number, the standout number and comment, saying gdp could hit 7%. we will get the third quarter number expected out on thursday, october 19, so we will see how that lines up. he may can see that growth is coming up the cost of higher credit levels. another cage on the health of the economy later today around 9:30 beijing time with the ppi numbers and cpi numbers as well. if ppi techs up, that helps with corporate levels and helps with profitability. it is expected to edge of marginally from august. -- notn: a great story so much extravagance, right? in beijing. everything focused on party congress. security ramped up, hotels, bars, restaurants, it is hard to have a good time in beijing these days, but maybe there will more of a celebratory mood at the end of the week. kathleen: tom mackenzie joining us from beijing. the pboc chief has offered praise about china and a warning that there is corporate debt,

i will not go into detail, but i would say the big difference between the central banks and politiciansn the crisis i , could talk to another central banker confident it would be a , conversation in confidence, and it would be treated with discretion. i think that whatever discussions took place with politicians, they seemed to end up in the media. francine: how did you cope with the financial crisis? what are the attributes a central banker needs for working under extreme pressure? francine: well before mervyn king set foot on threadneedle street, it was an academic teaching in the university of leverage, harvard, and m.i.t., where his office attached to then assistant professor ben bernanke's. he brought his quick thinking to the bank of england as its chief economist, moving up the ranks to deputy governor and then to the top job. it was a long way from his humble beginnings in the english midlands. what did you want to be as a child? mr. king: i wanted to play cricket for my county, worcestershire. i would play for the full season apart from the last week of june and the first week

that there will be a bit of a reckoning in equity markets don't forget those are still out of central bank money sloshing around trying to look for returns that is a benefit that is of benefit to these equity markets as well globally but there's also warnings as i know i'm sure you know that sixty percent the bottom sixty percent of americans are struggling are we being misled somewhat by some of these headline numbers and this is the big dig in to me the big paradox of course on the one hand if you look at the s. a clock people classes. bubbles are falling it seems a lot these markets are doing well you can come up with structural reasons we're not there bubbling up of course in part because central banks have been supporting it but underlying in many. societies globally in the u.s. is no exception there there is a large underclass of people who are wondering how this recovery is working for them they don't see the real wage increases that's the big missing factor here and that's of course where such a statistic like sixty percent of the american struggling from paycheck to paycheck is co

banks -- the central banks are no longer going to be reinvesting or buying a level of securities they have over the last two or three years. that's going to put tremendous pressure for yields to rise. i think rise quickly one of the things i'm concerned about is when we get into first, second quarter of next year, when we're seeing the fed unwind its qe at 20 billion and 30 billion a month, what happens when we run into unsubscribed bond option? then there will be panic panic in the dealer -- in the dealing community because they don't have the balance sheet to warehouse securities the way they did the last time rates rose so aggressively. >> let me jump in there. you're absolutely right. because i remember when we used to worry there was a light one a few years ago. i can't remember the last time we looked at a bond auction. have any of you? you do, it's your business we used to look at bond auctions well that wasn't two times over subscribed now we don't look at bond auctions at all. >> trying to focus on the u.s. treasury market and how deep it goes the other way do you think the m

essential being digital currency which i think is actually a good idea from the point of view of the central bank currently issues five percent of the money supply which is paper money and that's it and then they have their own digital currency but it only banks are allowed to bank with this with the federal well certainly with a block chain sort of system like i'm sure you saw because this is a sort of story you follow that the bank of international settlements central bank for central bankers recently just announced in the past few weeks like oh by the way there might be fourteen or thirteen trillion dollars more debt than we thought there was and that's because we forgot to add all these four extra if it isn't like you know like other block chain everything's yes so it would be marvelous to you could track that's a nice if it talks about this forty trillion dollars that have gone missing or twenty one thousand nine hundred. ninety i mean if you can't track it back at least you could track a forward it can't happen again you could make things transactions very fast so you don't have all this co

where is the downside risks they are trying to respond to in the central banks?y are behind the curve. it is starting to get away from them. you can look at the recent wage data in the jobs report. you can look at the atlanta wage tracker. it is all headed one way. jonathan: youtube joined me on ou two joined me on this program since its inception. mike collins said i will take the other side of the trade. bob michele is in trouble. you can be right about inflation but wrong about a market? bob: it is true. before you claim i have been wrong about everything jonathan: i certainly have not done that. bob: yields could be higher and should be approaching 3% now. the other thing we have seen is the weight of quantitative easing that has come in and suffocated the market. it is that weight of the cash that has kept yields in a very narrow range. 2.15 to 2.50, for most of this year. there has been a bear market. it has been on the front end of the curve. they will raise rates in december. it will be the third time. it does not make any sense to me that they are still

here is the power of artificial price setting by central banks.is what they are capable of doing, keeping a lid on interest rate levels. jonathan: if you look at spreads so far over the last 12 months, italy has blown out a lot wider than spain has. the basis point move over the years in terms of spread. italy has flown up 40 basis points. change over the last 12 months compared to spain. luke, whether italy is the real story and spain is just kind of the appetizer to what might be coming out of europe in the next 12 months. luke: i'm afraid it's a bigger story than that. credit markets. do you really want to take a lot more risk in a market that is getting more and more asymmetrical? the downside is getting bigger and bigger. when you think about spain and italy and the peripheral markets, you are loading up risk. that is not somewhere i want to be. i want to be in companies i can understand where they are going. that means you are cautious about spanish companies all of a sudden, cautious about italian companies. george, if you're over in frankf

and making faces going to central bank governors facial expressions move markets. and on your winter and this is your business news update separatists thought they had the trump card that glittering economy but now it seems businesses can more about stability than political identity many firms have already packed up their bags and that's called the region's students worried and some say they'll be out of the first sign of separation from spain. it's break time at the technical university of catalonia. and time to let off steam. the independence debate is a hot topic here. it concerns the students futures. if. it will result in international and medium sized companies leaving the region it will be very difficult to find work that i don't want to leave catalonia my whole family is living here but there's a possibility that i will have to leave us what about. the political conflict is already taking its toll say on a volkswagen affiliate is one of the region's biggest employers there are rumors the central government in madrid is putting the carmaker under pressure to

traders love that they also like the central banks gradual winding back of its huge quantity of program. the cuban design company looks to the u.s. to boost sales by launching the island's first online fashion. base is your business update on how at home free in berlin thanks for joining me spain is counting the cost of its dramatic political events on thursday catalonia as president said he will not be calling a regional snap election forgoing a move that could have ease tensions with madrid many companies have already moved their headquarters out of spades richest region but not every business wants to leave. a banner on the town hall of sub adele reads freedom for political prisoners this catalan city isn't just the stronghold of the region's independence movement but also its industrial heartland due to the city's wealth spain's fourth largest bank was founded here. even though the bank has now turned its back on the region most mid-sized companies are staying in catalonia. take this supermarket chain for instance right in the middle of the political crisis its management announced

francine: what was it about central banks, academics, studying? mr. no doubt my academic background was fundamentally important in being concerned all-time about what is the fundamental reason this is happening? have we seen this in the past? i was much less concerned about the movement in financial markets moment to moment because it was not clear that met a great deal. it was a symptom of a deeper problem. that was fundamentally important. the other thing was a number of people i have known well in academic life like ben bernanke, janet yellen, stan fischer, larry summers, a were all in policy positions. it was a natural ease of having a conversation about these questions. tim geithner, who do not have an academic background, but he had been in the treasury a long time. that was important in him being able to interact with people around the world because he knew them all. i think if he arrived in office only six months previously, it would have been very difficult. to have expense in the federal reserve bank of new york and then the u.s. treasury, t

the central bank will give details of his plan to taper qe . president draghi is predicted to reduce asset purchases to 30 billion euros a month. we also see draghi hiking for the first time. s francesco.ow i what do you make of that survey? 30 billion euros for nine months , ending in september. is that close to your forecasts? fromat is the consensus the conversations we have had with clients. my impression is the ecb will try to avoid that cliff affect in the first quarter. the first quarter of next year will have a lot of uncertainty on global growth. holding ane italy election and that seems to be quite a steep drop in the pace of monthly purchases. consider the ecb estimate, the flow effects from these purchases are pretty high. so, the presence from the central bank in the secondary market, in their opinion, is one of the important factors keeping financial conditions easy. so, what to do. we have the view that the likely income will be of a near tapering, so we go to 60 all the way to zero throughout the course of the year, or a more la

i'll send you an apology so why is it not pop yet because central banks haven't stopped dominating and usurping the entire free market away from all asset price here's why pharaoh's they're buying everything that's not nailed down and they're buying every bond printed in bank of japan's buying everything why is it not called that monetization it is is that what happened why my republic is why is the dollar not crashing because if everybody does it concurrently there's nothing that the dollar can be represented dollars say why is the dollar crashing the dollar crashes against other currencies so if you measure it against things like bitcoin it is rationing if you are to stay. michael you got it now you lenders will eventually what's going to happen is the next recession comes upon us and it's going to happen shortly all of the central banks are going to have to admit that hey you know we can't really raise the fed funds rate much above the fed can't raise the fed funds above one quarter percent and the e.c.b. can't really end its taper and the bank of japan can't even think about taperi

i mean the central bank in japan has kept rates near zero point zero zero zero one percent ten years not the old and here the ten year note the bet that the nation of japan is lending out money ten years borrowing money for ten years and getting giving people zero percent and here's the problem you mention japan it could be here's one of the things i'm we're lancy i measure money for a living ok so it's not my son my idea to buy a bunch of gold and short the stock market and there are you beating them aren't going into. the model portfolio was up both years not signal huge dollars the market but it listen i have a hedge portfolio so if north korea bombs the united states tomorrow we're not going to down in the portfolio probably either maybe making a little money i don't know but. everybody else to get wiped out so here's the point the bank of japan is going to be the possibly the only central bank on the planet a major one that's going to be in the money printing business in two thousand and eighteen and in that case you know i'll be just reported the snap election for the three yea

traders love that they also like the central bank's gradual winding back of its mammoth want to take easing program. i did fizzle and let's do business the picture isn't any clearer out in catalonia tonight the president has stopped short of calling regional elections but is left the door open to declaring independence from spain so expect more on certainty and more political turmoil the type of stuff that it's business. a banner on the town hall of sub adele reads freedom for political prisoners this catalan city isn't just the stronghold of the region's independence movement but also its industrial heartland due to the city's wealth spain's fourth largest bank was founded here. even though the bank has now turned its back on the region most mid-sized companies are staying in catalonia. take this supermarket chain for instance right in the middle of the political crisis its management announced it would be making two hundred million euros in investment opening nearly thirty new stores creating one thousand new jobs. they want to know us and we're also building a company head office

coming up over the next week, a trio of central bank decisions from the bank of japan, england and thes. jobs report and president trump's trip to asia. it is expected his fed chair decision will be known by then. kathleen gaffney, joern wasmund and jack flaherty. jack, you mentioned the u.k. the bank of england did focus the first rate hike it over a decade. i looked at some u.k. retail sales figures that came out and they dropped off a cliff. likeked at gdp, it was 0.4% better than expected but not compatible with what i would call a time for a rate hike. jack: inflation has scared them a little bit. the weaker pound inflation has come through. it is a very open economy and i think that is what they want to address. i think it is important they address things now rather than later. they will potentially need some ammunition later on. jonathan: if you google "unreliable boyfriend" and go to images, i found out this week that governor carney's picture comes up everywhere. it happens because he guided us towards a rate hike several years ago. did it again and then did it again. a famous

which is in crisis measure still given what you just told me >> i think the central bank is the central bank of europe, not only for spain so there are different situations across the board. i think in any case, the policy of the ecb has been the right one in the last few years. it has helped very much the economy in terms of being able to reduce everything in regard to quality or make it improved reduce mpls and mpa's for the banks. it's true we're in a turning point in the cycle, having negative interest rates. it's a bit not the best movement >> i love the fact we have a senior spanish banker telling me the central bank of europe rather than for spain as well. my question on that basis, do you think they are inappropriate rates for spain now which is in recovery mode, the central bank is not reflecting the reality of what's going on in your country? >> i think they're reflecting the reality of what's going on across europe. spain has been growing further and faster than europe the last few years. we will grow over 3% this year it will be probably about 2.5% next year it will be above

we are looking ahead to the meetings of the central bank.y going to be able to bring down inflation, raise rates, and what does that mean for somebody investing in egyptian asset classes? our guests.s, we put this on the bloomberg for contacts for our clients. btv 1920. inflation coming down a little bit, still above 31.6% of the last data point. we added the and smart deposit rate and the egyptian u.s. .ollar index/rate the question i have for you is are they going to be successful in bringing down inflation below 30% before the end of the year. see subsidy cuts, inflation will stay around the 30% level. next year, we expect inflation to go down significantly, but towards the end of this year, if we see more subsidy cost us, which i think we will, inflation will be around the same. yousef: you have quite a bit of a struggle because commodity prices are rallying across the board, and egypt, as a net importer, that is going to feed into these numbers. ahmed: that is the flip side. that is why i'm not very bullish. i don't think that is going

it is the central banks that bought the government bonds and compressed real yield. of that stuff. right now, everyone is looking for credit. marilyn is right. corporate balance sheets, earnings, the quality of earnings all the pretty good. jonathan: wait a second. distorted markets exist across the whole fixed-income environment. bob: true. jonathan: if you want to sell distorted credit, that is it, isn't it? bob: no. there are a lot of things you can do. you can go into the loan markets. you can take out the fixed rate component. the other is you can buy spread credits. all of us can sell the treasury market against it to hedge interest rate sensitivity and just capture the credit spread. you are right. if the fed continues to normalize and the other central banks jump in, you will see a return of real yield to the market. that will ripple through every asset class and every discount rate people are using in those asset classes. jonathan: michael collins, bob michele, marilyn watson sticking with me. i want to get you an update on where the bond market is this week

dollars catalonian money institutes are both protected by the safety mechanisms of the european central bank the spanish guarantee fund and the federal government and that's why we don't think there will be any limits on the money that the customers can withdraw. the firms pulling out site turnover as their main reason for departure with spain their most important market they fear a catalan declaration of independence could lead to the country boycotting kettleman products independence for catalonia could have a detrimental effect on the ailing spanish economy to catalonia is the industrial heartland of spain the region generates a fifth of the country's economic output. chinese economic growth slowed marginally in the third quarter six point eight percent isn't all that bad slightly down the previous quarters but on target for the year as a whole despite that indicating stability the national statistics agency wants a volatility it says the economy is at a crucial stage of restructuring and china's central bank is warning about a sudden collapse in asset prices up to so much growth maybe th

experts believe in you debt crisis could hit had any time that's why the head of the european central bank mario draghi says the eurozone still needs its financial support it's purchases pump newly printed money into the banking system in hopes of raising inflation from the current annual one and a half percent for the banks goal of just under two percent which is considered best for the economy let's talk about that with daniel cope at the frankfurt stock exchange of financial correspondent there daniel what's the euro doing it's a real balancing act for mario drug to ensure it doesn't shoot up and to export has what's the reaction after the announcement. yeah you have and you just mentioned the euro we saw the euro yesterday actually rising and now after this news that mario draghi was just giving about forty five minutes ago we see the euro again falling that's also helping the export business and i guess you can see a very good here and background when the news off the e.c.b. came out we saw again jumping shares here at the blue chip index docs we are now over the thirteen thousand poi