are insolvent the federal reserve bank the european central bank the bank of england the bank of japan they are fifty sixty seventy percent leveraged much more leverage than long term capital management ever was much more leverage than lehman brothers or bear stearns ever was that is the most leverage hedge funds that we've ever seen in the history of hedge fund skullduggery but it doesn't matter because they can print and buy back their own debt in an infinite cycle of profitless prosperity and then one day like while the coyote a over the cliff chasing the road runner there's a moment of recognition and then zero zero zero zero zero zero zero and there you go it's all over now who's going to come to the rescue this time obviously not the central banks because they're tapped out they say they're going to do negative interest rates so we'll see that negative interest rates where they just take money directly out of people's accounts belin as it's called but you mentioned the profitless profit profit profit loss prosperity profit prosperity of course we recently discussed the flow list

banks something called bed credit which is actually. just good is cherish its base money but by saying to the central to your commercial banks by the central bank saying to the commercial banks. our three trillion dollars worth of base money and permanently monetizing what they've said is we have no ability to take those ha high powered reserves that high powered money out of the system which is a fractional reserve system genndy multiply by ten times or more especially when you figure x. factor into the sweeps of the men deposits into long term deposits so what i'm saying is is that inflation could run intractable and the fed is basically a minute that we can do nothing about it we have no ability now to take those reserves out of the system and we have no ability to raise interest rates any longer because we we've given up that right to that's how they raise interest rates you know they sell assets grey money out of the money market and interest rates rise they don't have that ability they're really diminished by three trillion dollars they can't take at money at any longer and that also means that they have less ability or willingness o

the us central bank says it now expects no rate rises this year, as the world's largest economy slows down. denham is back on wall street, the iconic jeans brand levi strauss is set to make its return to the top market. good morning asia, hello world, how are you out there? glad you could join us for another exciting addition of asia business report, and rico hizon. now let's start off with the us in the country's central bank has said it now does not expect to raise the cost of borrowing at all this year as the economy slows. the federal reserve has changed its outlook to predicted increases in december, it warned that growth of economic activity has slowed from solid rate in the fourth quarter of 2018. earlier, iasked solid rate in the fourth quarter of 2018. earlier, i asked an analyst whether this takes pressure off the central bank, which had been wearing and cautious of tightening monetary policy. for the asia-pacific, we're looking at central banks which have had to tighten monetary policy off the back of the fed's monetary policy last year. if we look at the philippine central

also on the show mario draghi is set to leave the top job of the european central bank in october but who's going to be the next chief guardian of the euro. also way to use unemployment in greece to lead the record highs the greek railway operator decides to do something about it with a little bit of help from germany welcome to the business i'm down to office the e.u. wants a joint approach in combating risks to their five g. networks especially risks that could come from chinese tech suppliers like weiwei but instead of banning weiwei which washington would like to see the e.u. is hoping that cooperation within the bloc could offer better protection competition to run europe superfast five g. networks is fierce when it comes to deciding who can be trusted with the vast amount of information that will pass through them the european commission thinks there's safety in numbers is recommending the nation share data on five g. cyber security risks with one another we have to protect everybody's privacy we have to protect our business secrets we have to protect. all our life we will be co

central banks are lining up, and in the second half, we could see a few central banks lowering rates even before major countries do so themselves. manus: it is interesting when we look at how the curve has reacted in the united states. great to have you with me this morning, our mliv strategist mark in hong kong. joining us is the portfolio manager at tribeca investment partners. good to see you this morning. tracy and i were using is that the fed have dubbed the doubts -- doved the doves. would you agree? dovish,s certainly very compared to the market expectations. i would agree with that. look, the dovish tone was not a surprise given what other central banks have been saying. and the global data has been pretty weak over the last 12-18 months. we are expecting the dovish tone , but that was a downgrade of the dot plot and was more dovish than markets expected. that is why we see a negative response to the downgrades. with the fed rates study fed rate does support asset prices. so think about what has outperformed, the valuation will be supportive. on that front, it is good news fo

so i don't think investors were happy to hear this from the european central bank no bank stocks and you know the era of reagan you know the financialization of the economy has become the dominant theme in global economics so we're post manufacturing you know we entered into just a bank ponzi scheme economy globally that requires. continuous money printing as any ponzi scheme does so this idea of negative interest rates is the admission that simply printing money is not enough to keep the ponzi scheme going to have to confiscate money they have to confiscate money from people's accounts the negative interest rate is coming to your bank account soon as being done on the wholesale level right now between countries but now it's going to come to your local bank account so instead of getting thirty basis points on your money market fund or on your savings account the bank you'll get a negative three percent so that three percent will be taken out of your account and given to someone that the central bank says a systemic only important so if you said oh my god that sounds like medieval isl

behind the creation of this money the twenty two trillion dollars of asset purchases that the central banks have done around the world to funnel money into the system through the banks all of that even though it was said to be helping the economy in real people never did in fact there's greater wealth inequality there's been before the participants yes the monarchs in the upside of that financial wealth have grown substantially further and what the regular people have had to deal with is a crumbling economy is lack of money for for social constructive process what has not gone is infrastructure spending when it's not gone is sort of more real jobs are more real stability like none of that has happened they were looking around the world clinton was president he said he wants to die and come back as the bond market because the bond market has all the real power so that politicians have abdicated the rule of politicians to the financier's that's been going on for twenty thirty years again this is a situation. contract being broken and we're going to explain it in economic terms of financial te

druggy is set to leave the top job of the central europe the european central bank and who's going to be the next chief guardian of the euro. this is a business first welcome after two crashes of seven three seven max eight planes and other near misses putting plane make a boeing under additional pressure southwest airlines boeing seven hundred seven made safe emergency landing tuesday in orlando florida after experiencing an engine problem with no passengers on board meanwhile hundreds of boeing seven three seven . remain grounded around the world in washington politicians are looking into how the forty planes got certified to fly and how boeing is planning to fix the issue. under normal circumstances an emergency landing like this one would not get much attention an engine overheated shortly after takeoff the pilot returned to orlando florida and landed safely but the plane was a boeing seven three seven max eight one of hundreds that are grounded a southwest plane was headed for the carry a storage facility in california it did not carry any passengers the incident is likely to rui

central bank signaled it may not raise rates at all this year.bal news, 24 hours a day on air and @tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. nejra: debra mao in hong kong. coming up, china's industrial profits see the biggest drop in a decade. concern over the global slowdown. we discuss that next. when you are traveling to work, tune into bloomberg radio live on your mobile device or on dab digital radio. ♪ nejra: this is "bloomberg daybreak: europe." we are asking the question. are yields low enough now to spur a rally in stoxx? mliv out to us and the team on your bloomberg. now let's get the bloomberg business flash. bank -- swedbank may have misled investors. that allegation comes from a swedish broadcaster. confidential documents it has obtained say more than 100 companies have done business with swedbank. a law firm tied to the panama papers allegations. the securities and agreed to pay whistleblowers $50 million. they provided information that helps the agency win an

way into a college is something like five hundred thousand dollars now put that into context the central bank says that they receive they print money is to stimulate inflation that there's not enough aggregate demand and the prices aren't moving and yet the price of bribing your way into college at five hundred thousand dollars a clip surely shows that there isn't a place and the cost of health care skyrocketing costs of education even without driving away and is skyrocketing there's purchasing power collapse which is the same thing as inflation and the central bank that that's sort of intellectual cover that they say that they're doing they're printing the money to stimulate aggregate demand that's what they will write about the wall street journal what they're doing however is they are using the central banks as a transfer mechanism to take billions of dollars from savers and workers and put it into the pockets of charlatans crocks speculators spirit of hollywood celebrities except trying to bribe their way in diving league i mean that's that's what the central banks function is at this mom

theme ofigger dovishness in central banks.s it because the data in new zealand deteriorated in the central bank makes this move, or announces it could be more dovish in the future, or is it the central bank trying to play catch-up with the global trend? mark: you're right, the new zealand story is the main story of the morning in asia. they made a dovish shift only six weeks after toning down expectations for rate cuts, they were clear the next move would be a rate cut. it's all the rates in new zealand collapse and the new zealand dollar collapse as well. the data in his england hasn't been -- in new zealand hasn't been too bad. it seems like they are feeling pressure to do this. all of the global central banks are shifting to more dovish positions. we are seeing a currency war theme, the idea that everyone else will be dovish and so i need to be dovish or my currency will get too strong and will hinder my trade. trade already impacted by the trade tensions. that has been the big story here. i think it is probably a misguided

at this it goes exactly with that can tell the facts and the central banks printing money only allowed to go to a certain segment of the population is we have a flow lists economy their money is not circulating we have you know the. circulation the velocity of money is that all time lows like money is not leaving their hands that can griffin so the world are just buying two hundred fifty million dollars properties and will pay five hundred million for the same property next year as long as it keeps going up and has a safe haven for it it's not going to flow into the economy right the money philosophy is dead right so the money velocity would measure of how money is being alone doubt from bank to bank to bank to bank to bank which is a measure of economic health is dead and it the money printing continues to increase so instead of asking the question why is the money not getting into the economy they're printing more of it doubling down on that mistake because they don't want to and they don't want to look at why the money is like getting to the economy because the banks are handing bil

grossr from retiring bill on the role of the central bank today. >> if this battle between central banks and the continues,y forces the question becomes can central banks inflate? nejra: double-edged sword. elon musk delivers on the promise of a new model three, but tesla shares dip as he warns of a loss in the fourth quarter. welcome to "bloomberg daybreak: europe." six a clock a.m. in london, two hours from the start of cash trading in europe. in equities yesterday. some concerns around geopolitical risks and trade. they seem to have gone away today in the asian session and u.s. session, up 4% on s&p. the 10 year yield has risen seven basis points in the past two days. the u.s. gdp print for the fourth quarter yesterday. a slowdown from the previous quarter, but not as much as expected. 2.6%, the 10 year yield holds handle --on a 272 2.72 handle. dollar-yen, 111.72. the dollar is heading for its first monthly gain since october. emerging-market equities having the best start since 20 fault -- 2012. the dollar come a little firmer and wti with a fourth day of gains and a weekly gain. ju

power collapse which is the same thing as inflation and the central bank but that's sort of intellectual cover that they say that they're doing they're printing the money to stimulate aggregate demand that's what they will write about the wall street journal what they're doing however is they are using the central banks as a transfer mechanism to take billions of dollars from savers and workers and put it into the pockets of charlatans crocks speculators spin hollywood celebrities except trying to bribe their way in diving league i mean that's that's what the central banks function is at this moment as a transfer mechanism and then the intellectual mean that they put out there to try to cover this crime is to say that they're trying to stimulate aggregate demand it's yes and it's also we have this notion of a meritocracy not only in this educational spacy rise to the top only because you weren't it but a lot of people think that they are somehow uniquely endowed with great business intelligence if you see that in the comments sections on anything having to do with housing bubbles that th

going into 2018, the central bank convergence story was that the fed would leave central banks to moveigher. i think it goes back to something that just said earlier. the banks pivot has caused or given the market the view that there is a support for risk assets out there. whether it be equities or high-yield credit. that is happening not just in the u.s., but globally. jonathan: is that the u.s.? jeff, what are your thoughts? >> it is the central bank pivot, the reach for yield. we are talking about fixed income. you were talking about equities in terms of the performance. it is unique. german bund yields are making new lows. pretty much a bearish signal if we take it straight up textbook. and the equities are doing fine. it is really about everybody back in the pool because the fed cleared the path away from the fears of normalization and the disruption that it had in 2018, the tightening of the conditions, the movement of cash, the return to cash. i call it the competition for capital theme. that story is completely changed at 180 degrees where you are lowering rates, other central

become a global liability and it's all dependent on getting extraordinarily cheap borrowings from central banks like the bank of japan richard if interest rates are to go up even ten or twenty or thirty basis points the policy scheme that is deutsche bank collapses and i correct yes and if they can't raise interest rates go. to reasons across the world. class to. the fact is we're going to. always do when you're trying to figure out how to get the g.p. more into cities to stock as we do so they're going to. laugh . with that. too system with that. right this is i say that her that sounds like a very tall order a given the overlapping books of these banks you know they all have counterparty risk with each other and we saw in two thousand and eight that when one of them becomes insolvent like a layman or a p.r. stearns the global banking system ceases to exist because of a credit freeze the short term overnight rates between banks go up five six seven percent and you have essentially a nickel or winter in the banking sector requiring multi-trillion dollar a bail out facility from the taxpayer in

several central banks in asia making decisions.ow we are shaping up in asia? sophie: regional central-bank decisions from the philippines, taiwan, indonesia and thailand this week. see aof that, we positive start to the week, asx 200 advancing after faltering on friday. technology among the leaders so far at the start of cash trade in sydney. 50 continuing to climb, at fresh all-time highs even as we see several economists from the new zealand institute of economic research lower their gdp growth prediction for 2019 for new zealand. we are seeing japanese stock futures gaining. they open in less than two hours, which comes after the boj kept things unchanged on friday. haidi: let's get you the first word news with ramy inocencio in new york. ramy: a new bloomberg survey expects the federal reserve to bring rate hikes to an end after one more increase in september, marking the peak of the cycle with the upper end of the target range at 2.75%. in december, the same survey expected two hikes this year with the cycle peaking at three p

the central banks are fighting it.quantitative easing and low interest rates, they are saying we cannot deflate because the burden of debt is too large. if we deflate, then companies will go under in the great like a funill look the world'ssed to largest roller coaster. it is this battle between central banks, low interest rates, and the deflationary forces the continue to exist. the question is can central banks inflate? it is a toss up, point click. >> let's toss fiscal policy in the mix and let me ask you about modern monetary theory. think in terms of monetary and fiscal policy that they are co-joined, are becoming more and more the same, one in the same. the fed and central banks are their own separate thing, and yes they accommodated the it atry by buying to keep a certain load, but in japan, the doj buys everything that the government issues. they are the same. , in thease of europe last five years, it has been 30% of 40%. in the united states, 20% or so for a while, no longer. so they are almost one in the same

a number of reasons, the european central bank is a u-turn so interest banks will be lower for longerseems not to be over for banks and there is not much visibility on growing revenues, so cost-cutting is one of the only ways forward and obviously most european markets are much more heavily overbank than switzerland, so expect more consolidation. manus: what does that mean for the business, the landscape of europe, if this merger goes through? do you think the ecb will agree to it easily? i can't speak for the internal decision-making processes of the ecb, but i would expect, given the strong backing from political sources in germany, that the deal would go through if the two lenders agree. nejra: you were talking a little bit about cuts in relation to other banks in europe. i want to ask you about the fact that, across europe, banks are beginning to make hiring cuts, especially in investment banking. what is your long-term view on hiring plan? tried to run ays very steady ship through the different market cycles, so we have not always been very close to markets. we tried to be less p

central banks need to step to the sidelines.owth to stabilize and it looks to me that the market will respond and push them higher wednesday let that happen. now let's get the bloomberg first word news. >> theresa may is threatening to give up trying to get brexit done. this is reportedly unless euro skeptics in her party back down and promised to vote for her deal this week. the divorce agreement will not put to parliament unless there is a guarantee it will be approved. investigating the approval of boeing 737 max planes. concerns were raised as early as but them -- that the manufacturer held too much sway over safety approval. the company has been able to choose personnel. saudi arabia says the job of balancing the market was nowhere near complete. the oil ministers as opec and its allies need to stay the course, but alexander novak says it is to certain -- too soon to discuss. it makes much more sense to start discussing in may or june when you actually have a lot more clarity on the state of how these and on things are play

has also been the case for asia central banks.hat will become more the first one is where do we stand in terms of positioning and especially on the fixed income part and number two, where is the growth, and are we seeing emerging-market outperforming in terms of growth and do we have any acceleration? this is a developed market. there are some pockets we like within emerging and china is definitely one of them, but overall, taking the longer term view, we are not seeing any pressure. >> is interesting that you don't really like korea, you are thinking the bank of korea is the most hawkish central bank globally. >> yes. we have a hawkish central bank in korea and some earnings which have been quite add in the , very intense over the last few months, and we are not seeing any reason why it should improve, given the monetary landscapes that we have now in korea. korea is one of our underweight positions within emerging equity. one of your other traders has been long india. there have been quite a few hurdles because of the uncertaint

at least eight tons of gold are missing from the central bank's vaults in qatar has allegedly removed on president nicolas maduro his orders that's what opposition leader and head of arado says. it was taken without the internal bank procedures without the presence of fiscal organizations without the presence of internal security organizations of the bank and without the corresponding controls. and even by vehicle said a word from the central bank but private or identified vehicles that aren't armor and the destination is also irregular it is unknown. that transports apparently happened at a time when central bank head calista ortega was abroad on a trip and no security guards were present much of the venezuelan gold comes from primitive gold mining camps in the south of the country it's not the first time large amounts have left venezuela under suspicious circumstances last year twenty three tons of mind gold were transported to istanbul by plane according to turkish government data nicolas maduro is said to have a close relationship to that ship type. it is unclear whether the gold

central bank has tried to step in the way. that is not working but the brazilian real is trading lower. 100 is now trading down by 2.2%. european equities in general -- the cac 40 down 2%. and global bond markets, particularly the g10 bond market in focus. -- vonnie: the equity selloff picking up steam. we know what this is all about. our next guest is going to tell us all about the market psychology following the central bank moves this week. the 10 year yield is staying hot at 2.42%. nevertheless, we know the yield curve is inverted at the three-month tenure range. the two point tens were still not inverted but we are below 12 basis points. let's get some more insight on today's big bond news and what is happening in other asset classes. we have this inversion vonnie was mentioning in the u.s. curve and then we have the german ten-year turning negative. this is the first time that is happened since 2016. joining us to discuss is the vice chairman and head of central bank strategy at evercore isi. timing is everything in life

you are saying they are over provisioned. >> coming from the financial crisis, central banks have been on banks. there is what you call detrimental provisions taking place. in the case of mbk, you talking about coverage of 250% in terms of provisioning. i think it's going to put a cap much kuwaiti banks will have to provision going forward. that means you will sing the cost of risk declining. they have been over provisioning, and they are not using capital efficiently. that is the end of the cycle. if i am looking for -- yousef: if i'm looking for opportunities in a cycle like petrochemicals, some of the compression we are seeing is to stay away. >> i agree with that. i don't think the petrochemical space is interesting today, especially where valuations are. i would not venture there. if you want to get exposure to , businesss services has been tough the past four years. oil prices have never recovered. the one name i would look at his -- the reason for that is they manage to buy assets at a fraction of the replacement cost and they have, i think their earnings can double on the back

obviously the president is heavy-handed with the central bank these days. >> the central bank faces tworoblems. one is the heavy handedness of the president. the other is how much impact the policy can have in this economy which is rapidly dollarizing. policy of growth in any costs has pushed people to hold dollars. that means the federal policy is more important than the central bank of turkey policy. pretty much the central bank governors hands are tied, even if they raise rates. that is not going to -- it is a core issue of dollarizing. -- credibility of the market that is what the problem is. i do not think there is a lot of potential to step in and fix this problem. guy: we will leave it there. thank you very much indeed. vonnie: let's get back to brexit and how it could affect europe's financial industry. bloomberg is taking a look at some of the key areas of concern. take a look. let's look at three potential hiccups the financial system could face from a disorderly brexit. first, money managers based in the eu could be blocked from using exchanges in london. the plan was unveile

it is as simple as the fed and global central banks are no longer on attack.hey are here to support you. spread markets are reacting. jonathan: bob michael's point at j.p. morgan. something i would like to discuss, this idea that the yield curve inversion doesn't matter because there are global distortions moving the treasury curve domestically, i will take that. can you also say, the credit market in the united states is equally distorted? if i cannot take signal from treasury, why should i take comfort from credit? both of those are distorted markets. distorted the credit must be too. walk me through the argument. george: the markets are too large and sophisticated to be distorted by one single flow. the markets are too large and sophisticated to be distorted by one single flow. what is happening is investors globally need yield. they will get it anyway they can. that does not mean it is a distortion across board. spreads are tighter, yields are lower but that does not change the entire fundamental story. jonathan: do you think credit will leave equity in th

women are massively underrepresented at the world central banks. 173 thanks, just 14 are headed by women. 13 have no women and senior positions. on report says gender balance at the banks is below where it was two years ago. danae helped write this report. they do so much for sticking around for this. this is basically 20 pages where it goes through what can be done, why this is the case, how people can lead by example. was the most surprising find? alwaysthe people are surprised to find out how much women do. banks, people tend to think they would do better. as he said, one in five central banks have no women in top positions. are index looks at over 200 individuals. with look at the top 10-15 positions. a loss,: if you look at it is mainly academics that went into these positions of central banks. academics tend to be gender diverse. importantt happen role models. janet yellen was one of them. -- you tend to have gender balance in the entry-level positions. is about the policies and also traditions of stopping themselves and believing these type

convergencebank story was that the fed would leave the central banks to move rates higher in that didappen. now i think the convergence story is back on, but the other way. the fed is going to lead other banks to is your policy. it goes back to something that jeff said earlier, the central caused the has interest, or given the market the view that there are support for risk assets out there, whether it is equities are high-yield credit. not just in the u.s. jonathan: your thoughts? >> exactly the right point. it is the central bank pivot, the reach for yield. we are talking about fixed income. you were talking about equities and job performance. it is unique, right? are making yields new lows, pretty much a bearish signal if we take it textbook, and they are doing fine. it's about everybody back in the pool, because the fed cleared of path away from the fears normalization and the disruption that had in 2018, the tightening of conditions, the movement cash, return to cash, i call it the competition for capital. now that story has changed 180 degrees, where you are lowering rates. othe

indonesian central bank mentioned turkey and said it would intervene for its currency if it needed toindex, some of its component parts are all lower. guy: let's turn back to the banking story in europe. ceoen's bank has fired its as the money scandal engulfing swedbank spirals out of control. joining us is bloomberg managing editor for finance. do inoes dropping the ceo terms of this narrative? >> it clears the slate considerably in terms of future negotiations, even with regulators or with shareholders. the company has lost the confidence of some of its major shareholders. it is an opportunity for recent moment for any company going through a crisis to show they are taking some sort of a scandal seriously and they are engaged fully in getting to the bottom of the issue. in a sense it gives the company an opportunity to have a fresh start. vonnie: you have to smile when you see they put the coo as active ceo. if anybody should have known what was going on, it is the coo, no? >> one has to remember that the current ceo came in 2016 and led the baltics region for a good part of the pre