rule named after former federal reserve chairman paul volcker volcker the world bans investment banks from trading for their own buck essentially i know you helped write and voted for that role your big fan why did you think it was needed what are the prospects of getting rid of that now well first of all why is it needed is needed because some of these large investment banks this is because there is really a free market mentality and this is not just republican versus democrat bill clinton supported relaxation in the glass steagall that we've talked about to break the bottom line is that what tipped what had happened is that some of the investment banks were taking in. investment from customers right and then it's telling customers get into this account get into this thing and then once. that customers populated that product whatever it was then they would take the opposite position that the banks would take the opposite position of their own customers so that's been a problem in the past and that's why i thought it needed to get done whether or not it can be changed it's a really hi

rule named after former federal reserve chairman paul volcker volcker the world bans investment banks from trading for their own buck essentially i know you helped write and voted for that role your big fan why did you think it was needed what are the prospects of getting rid of that now well first of all why is it needed is needed because some of these large investment banks this is because there is really a free market mentality and this is not just republican versus democrat bill clinton supported relaxation the the glass steagall that we've talked about to break the bottom line is that what tipped what had happened is that some of the investment banks were taking in. investment from customers right and then it's telling customers get into this account get into this thing and then once the customers. populated that product whatever it was then they would take the opposite position that the banks would take the opposite position of their own customers so that's been a problem in the past and that's why i thought it needed to get done whether or not it can be changed it's a really hi

rule named after former federal reserve chairman paul volcker volcker the world bans investment banks from trading for their own buck essentially i know you helped write and voted for that role your big fan why did you think it was needed what are the prospects of getting rid of that now well first of all why is it needed is needed because some of these large investment banks this is because there is really a free market mentality and this is not just republican versus democrat bill clinton supported relaxation the the glass steagall that we've talked about to break the bottom line is that what tipped what had happened is that some of the investment banks were taking in. investment from customers right and then it's telling customers get into this account get into this thing and then once. that customers populated that product whatever it was then they would take the opposite position that the banks would take the opposite position of their own customers so that's been a problem in the past and that's why i thought it needed to get done whether or not it can be changed it's a really h

jonathan: people say we want a real market back, but volcker back? really? he had inflation to deal with. not inflation with a to handle. come on. bob: inflation is picking up. i am going to pull up a chart because i get this all the time. people say no, there is no inflation. you see it. you see year-over-year wage gains coming up. you see the inflation across europe, japan, china. it is all picking up. jonathan: is it picking up, marilyn? marilyn: it is picking up to a certain extent. still from very, very low levels. it is all relative. certainly still at very low levels. jonathan: michael collins, you will take the other side of that? mike: all day long. given the fund rate is 03% it will assure we go into a recession and the stock market crash. if you have a money market fund at 3% or 4%, everybody would take all their money out and put it into money markets. it is too good to be true. on the inflation side, i'm in the disinflationary camp. i'm looking at anecdotal evidence of companies in the world that have the ability to raise prices on their goods a

get out of the market, we want it back, but but volcker back? really? he had inflation to deal with. with a two handle, or a one handle. come on. bob: inflation is picking up. i am going to pull up a chart because i get this all the time. people say no, there is no inflation. and you see it. you see year-over-year wage gains coming up. you see the inflation across europe, japan, china. it is all picking up. jonathan: is it picking up, marilyn? marilyn: it is picking up to a certain extent. but still, i think, from very, very, very low levels. so it is all relative. certainly still at very low levels. jonathan: michael collins, you will take the other side of that, i assume? mike: all day long. i think if the fed gets the fund rate anywhere near 3%, it will in sure we going to recession and the stock market crashes. think about it. if you have a money market fund at 3% or 4%, everybody would take all their money out and put it into money markets. it is too good to be true. on the inflation side, i'm in the disinflationary camp. i'm looking at anecdotal e

get out of the market, we want it back, but volcker back? really? he had inflation to deal with. not inflation with a two handle, or a one handle. come on. bob: inflation is picking up. i am going to pull up a chart because i get this all the time. people say no, there is no inflation. and you see it. you see year-over-year wage gains coming up. you see the inflation across europe, japan, china. it is all picking up. jonathan: is it picking up, marilyn? marilyn: it is picking up to a certain extent. but still, i think, from very, very, very low levels. so it is all relative. certainly still at very low levels. jonathan: michael collins, you will take the other side of that trade, i assume? mike: all day long. i think if the fed gets the fund rate anywhere near 3%, it will assure we going to recession and the stock market crashes. think about it. if you have a money market fund at 3% or 4%, everybody would take all their money out and put it into money markets. it is too good to be true. on the inflation side, i'm in the disinflationary camp. i'm looking at anecdotal evidence of c

rule named after a former federal reserve chairman pov or volcker and the world bans investment banks from trading for their own buck essentially i know you helped write and voted for that role your big fan why did you think it was needed what are the prospects of getting rid of that now well first of all why is it needed is needed because some of these large investment banks this is because there is really a free market mentality and this is not just republican versus democrat bill clinton supported relaxation in the glass steagall that we've talked about to break the bottom line is that what tipped what had happened is that some of the investment banks were taking in. investment from customers. right and then it's telling customers get into this account get into this thing and then once the customers populated that product whatever it was then they would take the opposite position that the banks would take the opposite position of their own customers so that's been a problem in the past and that's why i thought it needed to get done whether or not it can be changed it's a really hig

david: what about volcker--? unfortunately, because dodd-frank-- volcker was one of them. it was added kind of an after-the-fact thing. which is, in my opinion, completely unnecessary. it is what it is. i have to deal with it and that's the law of the land, and it's been interpreted. the other thing dodd-frank did is it really gives-- it's not a legislation that says x. it basically says make the system better, do what you have to do to do it. so the regulators have a huge amount of authority to interpret some of these rules and... so the system's better, dodd-frank is partially responsible, but dodd-frank, you know, was passed 100 percent democrats, zero percent republicans. and, you know, it-- none of us can possibly say: "you can't make things a little bit better." one day, rational people should sit down and say, "what parts work, what parts didn't work, which parts should be changed." i'm not in favor of throwing it out and starting from ground zero and-- a lot of good work was done, and there were a lot of flaws that need to be fixed. [crowd cheering] david: you were

jonathan: people say we want a real market back, but volcker back? really? he had inflation to deal with. not inflation with a to handle. come on. bob: inflation is picking up. i am going to pull up a chart because i get this all the time. people say no, there is no inflation. you see it. you see year-over-year wage gains coming up. you see the inflation across europe, japan, china. it is all picking up. jonathan: is it picking up, marilyn? marilyn: it is picking up to a certain extent. still from very, very low levels. it is all relative. certainly still at very low levels. jonathan: michael collins, you will take the other side of that? mike: all day long. given the fund rate is 03% it will assure we go into a recession and the stock market crash. if you have a money market fund at 3% or 4%, everybody would take all their money out and put it into money markets. it is too good to be true. on the inflation side, i'm in the disinflationary camp. i'm looking at anecdotal evidence of companies in the world that have the ability to raise prices on their goods a

manus: that could create the volcker back up. opinion.en to get your moment of truth has come for fun markets. just for bond markets. -- for bond markets. alberto: this has been a bubble recovery. audited of easing has helped --ple make returns quantitative easing has helped people make returns. we don't expect the treasury 4% or 5%, but even a today could cause a lot of losses. we estimate -- [no audio] make money, a little bit of money, 1% every month or two if everything stays quiet. they can lose 30% if there is a return of volatility. anna: alberto, very interesting. a bardo gallo -- alberto gallo stays with us. manus: we are live to the future investments form -- forum in saudi arabia. davos in the desert has been penciled in. ♪ anna: this is "daybreak: europe." 6:30 here in london. yuan.llar against the a lot of the action in the asian equity session has all of been around this has then all around china -- has been all around china. we are getting breaking news coming from corporate. manus: we have usual, let's get -- we

. >> dodd-frank or -- volcker, the way it was written, it was ill advised at best. i did not support that. i believe the banks should be allowed to trade. there is nothing wrong as long as they are regulated. there liquidity is critically important to the marketplace. i did not like to see them taken out of certain asset classes. you can prop traded u.s. treasuries on the cash side that you can't prop trade on the future side of u.s. treasuries. some say, that is no good. we went from 47% of the u.s. treasury trade in the united are at 87% of the trade on the u.s. treasury market. when you look at counterparts in europe, they are at 400% of the trade. we are starting to move forward in that direction. i'm not sure if that is because of the laws or the efficiencies of liquidity but my point is, we should not have the banks eliminated from those pools of liquidity because even though we are not moving a lot right now stuff you the mentioned, stress will come to the marketplace and you want those people in there. itra: let's talk bitcoin as spikes above $5,000 for the

i think he's quite favorably disposed between the volcker rule, the volcker rule is where the brackets start to use their own capital to trade in the markets. i think he does want regulation. he wants less regulation so certainly i think -- and i think he's dovish. certainly trump wants lower rates. overall i think powell would be a good choice for the market and for the economy overall. yes. >> he's been considered more dovish than kevin warsh. that's why we saw market reaction to the emergence of jerome powell, that's last week or the week before we'll see what happens we should know more in the next couple weeks let's talk about the start of the earnings season in the u.s., kicking off with jp morgan and citi. >>> the big banks kick off their report card season that's in two minutes. zar: one of our investors was in his late 50s right in the heart of the financial crisis, and saw his portfolio drop by double digits. it really scared him out of the markets. his advisor ran the numbers and showed that he wouldn't be able to retire until he was 68. the client realized, "i need to get b

look at somebody like john taylor coming in, why the markets are more frightened that the next paul volcker is coming in. 3.75 telling you it is %. distorted monetary policy is something of the past. they need to step up the pace the normalization. what comes out of washington is something different than that. if we get some stimulus, what is the stimulus going to do? it will accelerate the recovery we have already seen. i can see rates buffeting back-and-forth between this. i don't know if it has much to do with the fed chair or stimulus, it is still qe after-the-fact. jonathan: people say we want a real market back, but vulgar back? he had inflation to deal with. come on. bob: inflation is picking up. i will pull up a chart because i get this all the time. people say no, there is no inflation. you see it. you see year-over-year wage gains coming up. you see the inflation across europe, japan, china. it is all picking up. jonathan: is a picking up marilyn? marilyn: it is picking up to a certain extent. still from very, very low levels. it is all relative. michael collins, you will take the

. >> dodd-frank or -- >> it would go to two the the volcker act. the way it was written, it was ill advised at best. i did not support that. i believe the banks should be allowed to prop trade. there is nothing wrong as long as they are regulated. there liquidity is critically important to the marketplace. i did not like to see them taken out of certain asset classes. so they can prop trade in u.s. treasuries on the cash side and future side, but you cannot prop trade on the future side of u.s. treasuries. some say, that is no good. we went from 47% of the u.s. treasury trade in the united states, now we are at 87% of the trade on the u.s. treasury market. when you look at counterparts in europe, they are at 400% of the trade. so we are really starting to move forward in that direction. i'm not sure if that is because of the laws or the efficiencies in the pools of liquidity, but my my point is, we should not have the banks eliminated from those pools of liquidity because even though we are not moving a lot right now because of the stuff you mentio

. >> dodd-frank or -- >> it would go to the volcker act. the way it was written, it was ill advised at best. i did not support that. i believe the banks should be allowed to prop trade. there is nothing wrong as long as they are regulated. there liquidity is critically important to the marketplace. i did not like to see them taken out of certain asset classes. so they can prop trade in u.s. treasuries on the cash side and future side, but you cannot prop trade on the future side of u.s. treasuries. some say, that is no good. we went from 47% of the u.s. treasury trade in the united states, now we are at 87% of the trade on the u.s. treasury market. when you look at counterparts in europe, they are at 400% of the trade. so we are really starting to move forward in that direction. i'm not sure if that is because of the laws or the efficiencies in the pools of liquidity, but my my point is, we should not have the banks eliminated from those pools of liquidity because even though we are not moving a lot right now because of the stuff you mentio

i think the volcker act was not appropriately written. i think that could be modified. i think there are other things in the dodd frank act that could be changed. what is going to happen is the regulators will look to make numeral changes -- new rule changes. the president talked about what his agenda is coming forward. taxes is a big part of it. agenda is crowded for washington right now. i do not see that happening other than rule writing. scarlet: i want to switch gears to m&a. it is not often we get you on. i want to touch on all the topics. have set youou prefer large-scale deals, that often means cross-border which can be difficult. for the last couple of quarters, whenever i have asked you about m&a, you have said you are keeping your options open. do you see any need to add etf trading to your mix to capture the growth in that product? terry: no. i don't. i don't see that as something we products tointo our have growth. people ask me all the time, where is our business today? if you were to related to baseball, i think we are in the early innings. if you look at

. >> it would go to the volcker act. the way it was written, it was ill advised at best. i did not support that. i believe that the banks should be allowed to prop trade. i think there was nothing wrong with it as long as they are regulated like everybody else. there liquidity is critically important to the marketplace. also for the security of the marketplace. i did not like to see them taken out of certain asset classes. so, they can prop trade. here is a great example you can , prop trade in u.s. treasuries on the cash side, but you cannot prop trade on the futures side of u.s. treasuries. someone would say, that is no good. terry: we went from 47% of the u.s. treasury trade in the unites states at cme and now we are 87% of the trade on the u.s. treasury market. so, when you look at counterparts in europe, they are at 400% of the trade. so, we are really starting to move forward in that direction. and i'm not sure if that is because of the laws or the efficiencies in the pools of liquidity, but my point is, we should not have the banks eliminated from those pools of li

this is from eisenhower up to volcker. down we go, the crucible is led by bill gross and others, we are at a tipping point and rates at something about 2.40%. it is all clear on the financial crisis, do you agree? dr. kaufman: i felt that last october-november, we had reached the so-called secular low interest rates. , based it off of the 30 year which i'm acclimated to which at that time was 2.08 or two point 00 -- 2.08%. we are approaching nearly 3%. i think the secular movement downward is over. i think we will gradually move up somewhat. , great tory kaufman have you and we share a birthday month. happy birthday to you. tom: he is looking more well preserved than you. nejra: absolutely [laughter] . you say that you are expecting rates to move higher, when and how far could ago? dr. kaufman: i do not expect a dramatic move. i expect a modest move higher. now, the 2.4% yield on the 10 year should be up to 2.75% or 2.8% or 2.9%. that will not be the end of the world. i have seen those rates before. tom: this is critical,

previously, when we had chairs like volcker and mayor or greenspan, the chair really had a much more a leadership role the sense of how their opinions lead the rest of the committee. receiver nikki, yelling. the other members of the committee seemed to be more vocal. they really seem to collaborate much more on what's going on with their policies. we may have a knee-jerk reaction if we have one of these from especially if we have the taylor rule, they assume we will be a very rules-based fed if he comes in. really come if you look at what the formula says now, it would be about a 375 and that really makes investors nervous, which you have to go in and look and see him say change the inflation expectation, change the unemployment noninflationary rate in the number comes down closer to 2.5, which is closer to the neutral rate it to that we are seeing. regardless of who comes in, we may have a knee-jerk reaction because they'll be more hawkish, but the path of the fed will stay pretty much on the same path but it still rates moving higher. cheryl: it's interesting you say that. john tay

. >> it would go through the volcker rule, a way was written, i do notdvised, support that and i believe the banks should be allowed to prop trade. there is nothing wrong with it, as long as they are regulated like everybody else. their liquidity is critically important to the marketplace. and for the security of the marketplace. i did not -- i did not like to see them taken out of certain asset classes. you can prop trade in u.s. treasuries on the cash side, but not prop trade in the future side. on u.s. treasury's you some say that is not good, we are now -- we went from 47% of the u.s. treasury trade in the united states at cme, and now 87% of the trade on u.s. treasury market. when you look at counterparts in europe, 400% of the trade. we are starting to move forward in that direction. not sure if it is because of the loss or because of the efficiencies of liquidity. we should not have the banks eliminated from the pools of liquidity because, even the we are not moving a lot right now, because that stress will come into the marketplace and he want those people in their vonnie: that w

the volcker, the way it was written, it was ill advised at best. i did not support that. i believe the banks should be allowed to trade. there is nothing wrong as long as they are regulated. their liquidity is critically important to the marketplace. i did not like to see them taken out of certain asset classes. you can prop trade in u.s. treasuries on the cash side that you can't prop trade on the future side of u.s. treasuries. some say, that is no good. we went from 47% of the u.s. treasury trade in the united states, now we are at 87% of the trade on the u.s. treasury market. when you look at counterparts in europe, they are at 400% of the trade. we are starting to move forward in that direction. i'm not sure if that is because of the laws or the efficiencies of liquidity but my point is, we should not have the banks eliminated from those pools of liquidity because even though we are not moving a lot right now because of the stuff you mentioned, stress will come to the marketplace and you want those people in there. nejra: let's talk bitcoin as it spikes above $5,000

he says the volcker act is not one of them. he says he didn't support over at the time and says limits on the market doesn't help. >> i think it was ill advised that best. i think the bank should be allowed to -- i think there's nothing wrong with it as long as they are regulated like everyone else. that liquidity is going to be key to the security of of the marketplace. prime minister justin trudeau adopted a positive mood at talks about nafta. more contentious issues are the agreementer is effectively dead, the president said it is possible we won't make a deal. we will see. a fourth round of negotiations is underway in washington. taiwan's exports surged to a record last month. shipments rose 28% to $28.9 billion, the most since july 2010, more than twice the estimate of every economists surveyed by bloomberg. experts say china and japan also climb to record levels. reports from australia say hackers have stolen data on naval vessels and air force planes. authorities were only alerted last november here at the government say

also paul volcker just stepped down back in mid-august, that was the beginning of the alan greenspan era, and the steady decline in interest rates has continued. now we're back down to the 8%, 9% range on the ten-year now 2.30 it's a different world the risk is higher for next year evaluations are getting more extended i think we'll have geopolitical risks within the gop and across the aisle in washington, d.c. and around the world we were two months past the top, and we have not seen decline yet. we have to wait until things break before we risk some sort of '87 or '29 or some other type of massacre of '97 you want to go back and pick out >> it's like the whole stock trader's almanac is in your head i know you will be talking about this all day >> i will. jeff said '97, this looks like the year that will break the curse of seven years every year out of seven has had something bad happen, except this one >> seasonality -- >> seasonality hasn't worked, so we're all set. >> a lot more about this and some earnings news on "squawk box" next. or your digestion... so why wouldn't you take

i think chairman yellen's comments on the volcker rule have also been interesting. david: how has this process played out in the past? i recall how president obama was on vacation when he brought them bernanke up to renominate him. of a tenuredvance does this usually happen? get something to done in the first couple months of next year. the president would ideally like to pick someone before he gets on air force one for his asia trip. the presidentwho selects, if you look at those five names, we have seen, at least from the market reaction and here in washington that they would be favorably met. even the folks who are critical of some of the choices, really wouldn't launch a campaign against them. kevin cirilli joins us from our bureau and washington, d.c.. you can catch all of our interviews on the bloomberg with the function tv . do check it out. tv on the bloomberg. this is bloomberg. ♪ is this a phone? or a little internet machine? it makes you wonder: shouldn't we get our phones and internet from the same company? that's why xfinity mobile comes with

relations with people in qatar, then trump said we don't like qatar >> i was having a chat with kurt volcker, the u.s. representative to ukraine and works for the state department, and i wanted to address these things with him head on. here's what he to say. >> i don't think there'ses did grimt betwe there's disagreement the trump administration extended sanctions on russia because of its involvement in ukraine. president trump when he met with president putin in hamburg told him that u.s./russia relations will not be able to improve as long as the crisis in ukraine is not resolved the congress passed legislation to put in place more sanctions and retain some authority over them president trump signed that legislation. what i think all of this should convey to russia, there's a depth and breadth of concern about what they're doing in ukraine and they need to resolve that in order to see sanctions lifted n order to establish the basis of a u.s. better russia relationship >> this is not first time that president trump contradicts rex tillerson. we saw a similar situation in north korea eventua

yes, volcker comes along, does something different. okay. yes, there is sort of this aura of operational independence and a degree of operational independence. but, over the long haul, they're not independent. >> no. >> you remember what former fed chairman arthur burns said, which was we can't exercise our independence or else we might lose it. >> that's right. >> other -- before i give burt a second chance. other questions? >> okay. wait for the microphone. >> thank you. this comes back to the fed and new appointments to the board. ran randy quarrels has been confirmed to be vice chairman for supervision as a result, of course, of dodd/frank. what are your thoughts as to -- is there going to be an increased emphasis on supervision and how is that going to interact with monetary policy now that supervision has to some extent been elevated by virtue of having this new vice chairman for supervision? >> you want to take that? >> i suspect supervision will be de-emphasized compared to the t turillo years. one of the big problems with the dodd/f

act was ae volcker's little vis at best -- advised at best. the banks should not be allowed to prop trade. there is nothing wrong with it if they are regulated like everybody else. michael: that was ceo -- cme group chairman and ceo terry duffy expanding market participation. we had another exclusive conversation with ubs chief executive sergio ermotti. julia chatterley and joel webber asked him where investors are focusing their interest and whether he is worried about complacency. all assetross classes. , would say across the board andalso in corporate costs in the investment grade. i see a lot of complacency in the level of risk premium that investors are getting for the effective risks they are taking. julia: enough to cause alarm? sergio: not alarm, because trends seem to last longer than we expect and therefore, it is too early to say that this is alarming or not. but we have to pay attention to that. >> what are you hearing from clients right now? what are they coming to you and asking for? sergio: i guess, we see a little bit more of a

yes, volcker comes along and does something different, okay, and yes, there's this aura of operational independence, but over the long haul they're not independent. >> you remember what former fed chairman arthur burns said which was we can't exercise our independence or else we might lose it. >> that's right. >> before i give bert a second chance, other questions? okay. wait for the microphone. >> thank you. this comes back to the fed and new appointments to the board. randy coral has just been confirmed to be vice president of supervision. this is as a result of dodd-frank. what are your thoughts as to what -- is there going to be an increased emphasis on supervision and how is that going to interact with monetary policy now that supervision to some extent been elevated by virtue of having this new vice chairman for supervision? >> you want to take that? >> i suspect supervision will be de-emphasized compared to the tra littlo years. one of the big problems with the dodd-frank act in my opinion, is that so many of the powers in regulations are not very tightly conscribed. you can do

it would go to the volcker act. i think the way it was written was ill-advised at best. i think the banks should be allowed to prop trade. there is nothing wrong with it if they are regulated like everybody else. ♪ michael: that was cme group chairman and ceo terry duffy discussing market participation in financial regulation with our editor-in-chief. we had another exclusive conversation on markets this week with ubs chief executive sergio ermotti. julia chatterley and joel webber asked him where investors are focusing their interest and whether he is worried about complacency. ♪ sergio: across all asset classes, to be honest. is i would say across the board, but also in credits and junk or investment grade. i see a lot of complacency in the level of risk premium debt investors are getting for the effective risks they are taking. julia: enough to cause alarm? sergio: not alarm, because to be honest, trends seem to last longer than we expect and therefore, it is too early to say that this is alarming or not. of course we have to pay attention to that. >> what are you

-- percentage of volcker to currencies -- percentage of all cryptocurrencies, say hi. nejra: bmw is working on a deal that will bring manufacturing of the brand to china for the first time. all --e discussing outsourcing the manufacturer to china's biggest automaker. chinahing is for bmw's unit in the merely respond to any melting comment. morgan stanley is said to be ready to charge two and a half thousand dollars an hour for private analysis when new eu financial sticking next year. people with knowledge of the plan say that would be on top of the annual rate. the charge is almost twice the rate of top commercial lawyers. kobe steel fake data scandal has iconicd as japan's bullet trains were found was substandard parts supply the company. aluminum parts were found to have failed city centers although they don't pose any risks. that's the bloomberg business flash. the fifth round of brexit negotiations are to close today and sides are the goodwill generated by theresa may speech last month did not translate into progress in the talks so far. the chancellor warns the g

but it think the key thing we have to accept is that the last 30 to 40 years, going back to german volcker, -- chairman of lowerhe use interest rates. to goose economic growth has had a cost read and you ca. and you can see the cost, paid by banks. even though the system is getting bigger, they are making less money on every dollar. that is why larger banks tend to have relatively low spreads. they depend on non-banking securities, derivatives, etc.. -- thismost lured into is partly demographics, partly monetary policy, but it does have an impact on bank behavior. this is derivatives. you can see jpmorgan in the top, redline. is blue line, citigroup, once again the largest derivatives house on wall street. they have sold their mortgage business, they have sold their asset management, and there is not a lot left to the bank. environment where it is difficult to get returns and large assets to feed these balance sheets, they tend to go back into synthetics. citibank just announced they are going back into collateralized debt obligations which are purely a synthetic asset. notice the line on

. >> i think the volcker rule was ill advised, and at best. i did not support that. there is nothing wrong with that, as long as they are regulating like everybody else. their liquidity is important to the marketplace for the security of the marketplace. questa builds scale is reaping rewards. its business pulled and $52 billion in the third quarter, helping beat estimates for the quarters. in four they saw total assets under management surged almost $6 trillion. the stock is up almost 20%, compared to the s&p 500. taiwan's exports surged to a record last month on strong demand on electronics and a rise in domestic optimism. billion, the8.9 most since july 2010. japans to china and leveled. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am just the summers -- jessica summers. this is bloomberg. ♪ yvonne: let's get the latest from sophie kamaruddin. these minutes came out dovish, weaker dollar. is highsis set for the we see in both markets. sophie: it trickles through into the asian session. raging at the

. >> if there's a change in the volcker rule, not confidence in it, they will say let's put more assets into the business, and with velocity there they can get higher returns you know, last month goldman had a conference said $900 billion of assets. i think this is really something to watch very low key compared to the high profile part of tax reform. bank earnings were good today. morgan stanley, their strategy is working goldman had the blessing of september. >> of all of these stocks, the ones we've already heard from last week, including jp morgan, citigroup, wells fargo, which of these bank -- bank of america, which of these stocks do you like the best? >> he have with a strong buy on bank of many earning we have a buy on morgan stanley. also jp morgan bank of america has that tragedy engtry of improvement. both on the top line, but also on the cause side. the efficiency ratios are looking really good for bank of america. a goldman doesn't have that kind of capacity. they don't have bricks and mortar i really think bang of america looks really good here >> you pointed to the idea o

in particular, do you remember the controversial thing, volcker rule. it separated investment bankers who could not bets for their own book, because that became a problem several years ago. folks at the investment banks were populating various funds from their investors and taking an opposite position. we fix that with dodd-frank. differentth five regulatory agencies, including mine. it would be nice to get it rolled back. think itpoint, i do has helped the u.s. be stronger. people have more confidence in our markets because we have these regulations. ridiculously with the previous over-the-counter market with things like credit default swaps. we are doing better, investment banks in the u.s. are doing better than in europe. contrary to what a lot of people think, that is because we have strong, solid and efficient regulation. betty: do you think now is the time to roll some of those back? -- bart: i do not like rolling them back, i like tweaking them. they need to be living, breathing documents. the regulators need to be looking around the corner, be n

diplomatic efforts to implement minsk -- i appoint kurt volcker, this prospects for success remain dim. and moscow is intent on keeping the situation at a low boil and trying to topple the government and bring to power leaders who will abandon the ukraine people's dream for a future. the challenge is how to change president putin's calculus and convince him to negotiate in good faith on implementing minimum nsk. congress has provided needed leverage withthe sanctions bull the sanctions alone don't seem to be enough. we need additional pressure on putin to convince him that prolonging the -- that time is not on his side. the best way to do that is to significantly expand u.s. security assistance and in particular to lust the obama administration's -- lift the obama administration's embargo on lethal defensive weapons. the aim is not to encourage ukraine to seek a military voc and they know it's impossible. the purpose of providing defensive weapons is to help ukraine deter the russians from carrying out further attacks by raising the cost of further aggression, and ultimately to increas

massive and zero bound through the fed funds target rate back 40 years, 50 years, of poker inflation -- volcker inflation. we still have some negative yields, don't we? thef you look at things of nominal terms, if you look at where inflation is heading, the challenge is let's get through this cycle first. let's see how high the cycle gets too. at the end, we will have a downturn and maybe have negative rates in the future. but we are in this turning point. you have to respect that. howdy respond to critics who say if rates, we will destabilize -- how do you respond to critics who say if we raise rates, we will destabilize? george: there is a lot of fear around us. we cannot handle higher rates. the way this has been executed and a plan tried to be put in place with a rate decisions and the balance sheet policy is meant to put you on a gentle glide path. that is fine and good with the fed in isolation, but we are also witnessing a pullback on mobile easing, which could be seen as tightening. and other central banks have turned the hawkish corner and are starting to raise rates, too. inflection p

when you look at what the united states is focused on, hence this administration, they are looking at volcker with adjustments, how they run stress testing with efficiencies, potentially the size threshhold for what is a community bank, which bank becomes systemic, all sensible things that quite frankly are u.s. focused as opposed to internationally focused. so it is not for us to say how the u.s. is organized domestically and it is also consistent with the international effort to look at some of the rules we're looking at them in the derivative market and other factors, and to make the adjustment that can deliver the same amount of resilience, but this a more efficient way. >> let me talk about the global macro situation here have you been surprised, except for yourself, you may walk into the central bank meetings that you're the only one with inflation. generally, they seem incapable of hitting inflation targets, is that a concern >> look, i think the big picture right here is the global economy is firing on most cylinders. we have 75% of the world economy growing above potential. the quali

treasury officials said that there was consensus among all five regulators that the volcker rule needed to be tailored, but any official changes to that would be a long way off. the next report out of treasury is expected to concern the insurance and asset management industry and treasury officials say it could be out as soon as next week. but certainly the banking and financial services industry is going to be diving into this one today. back to you. >> absolutely. and banks are the biggest winners now on the s&p 500 off the higher yields. thank you. >>> when we come back, what may be the world's largest ipo ever. saudi aramco announcing the public debut is still on track for 2018 a former top executive of that company is here to talk about the ipo. oil prices, opec and more. plus, an exclusive interview with imf managing director christine lagarde, what she d ha to say about the global economy, how to get to 3% economic growth in this country and tax reform >> and it should be project neutral. it should not increase the deficit. it should not drive to yet more debt into the future bec

. >> when paul volcker was chairman, and he was perhaps the best chairman of our time, he liked to keep them guessing. in his testimony and his speeches and to steve's point what warsh will precisely exactly do, i would like to keep him guessing warsh lays out an analytic strategic framework of reform that's just about as far as we can go they're like supreme court justices, melissa, i appeal to you on this. >> so much respect for you. >> we've got to go. >> transparency -- >> thanks, guys. >> had to get that in. >> federal reserve policy 101. had to get that in. >> four calls you need to hear about including one stock that could fall more than 30% following the deadly shooting in las vegas. "street talk" is next. hey, you every talk to anybody about your money? yeah, i got some financial guidance a while ago. how'd that go? he kept spelling my name with an 'i' but it's bryan with a 'y.' yeah, since birth. that drives me crazy. yes. it's on all your email. yes. they should know this? yeah. the guy was my brother-in-law. that's ridiculous. well, i happen to know some people. do they list

far with me when it came to talking about deregulation he talked about scrapping or rethinking the volcker rule. he talked about the needs for changes that weren't consensus on the board one other thing i want to point out which alan was alluding to, part of what's going on here is a desire to change the fed through personality. there are republicans who have concerns about things the fed has done, which have been within the mandate given by congress. and they're angry about that mandate and the way the fed has acted. what troubles me about this prosa little bit is trying to change the law through the personality rather than changingish the law itself if you don't like what the fed is doing and you're in congress, you should change the law, not necessarily try to affect that change through a personality >> change the mandate away from being focused on both the unemployment levels and the strength of the economy? can i ask you a little more process. should we assume, i assume janet yellen is not in the running for vice chair not going to take a demotion can we assume taylor and warsh are no

but the key thing i think we have to accept is over the past 30 to 40 years, going back to chairman volcker, the use of lower and lower interest rates to goose economic growth has had a cost, and the cost you can see in the return on earning assets for banks, which used to be well over 1% and has since declined down to around 72 basis points. even though the system's getting bigger, they are making less money on every dollar of assets, and that's why especially for the larger banks that tend to have relatively low spreads, dependence on nonbanking activities, security derivatives, et cetera, they are almost pressured to get into exotic activities because they don't make money on core businesses, especially the retail side of the bank. and this is, again, this is partly demographics, partly monetary policy, but it does have an impact on bank behavior. this is derivatives. you can see jpmorgan, the top red line, but now the blue line, citigroup, is once again the largest derivatives house on wall street, and when you look at their business mix, when you look at the fact they've sold their mor

i am encouraged by the fact that some of those, including elements of the volcker rule and the like, are being re-examined. i think the issue is not more or less regulations but appropriateness. , anddavid lipton coming up we are waiting for bank of america earnings as well. we look at the idea of branches in america, and i do not know what branches are like in the united kingdom and europe. do you work every day on the idea there will be a shrinkage of the retail platform in banking because of digital? howard: yes, the number of transactions going through banks is falling sharply as many retail transactions taking place on digital platforms as rising. we are now cutting branches quite significantly, have been for the last two years, but replacing them with branches with more tech experts. the adverts of sharply and exponentially and talking to other major bankers come a there is still that human contact, that branding of image and trust, the idea of granite from anotherlars time. how we you keep the trust of the brand in the digital era? howard: we are in danger of showing our age,

from a regulatory perspective, some of the volcker things will get eased. it's not just the changing of the rules. it's the fact you have new regulators in office now and some of the rules will be clarified. i do think we need the investment banks to provide liquidity to the markets we haven't seen the markets need liquidity in a while, but they'll need to be there to provide it i expect the rules to be lightened up, and some of the liquidity will be lightened up as well. >> i understand you think of goldman, you said it's the rodney dangerfield of financial services right now isn't there a case to be made they are in the midst of having to change mare business model to a certain extent but they are in this period where perhaps relying on hedge funds for a good deal of margin, for example, and fixed income currency and commodities is no longer going to cut it and isn't that or shouldn't that be something of a concern? >> you know, i'm not sure it's a concern, but clearly, the regulatory relief could lead them maybe somewhat going back to some of their old m

they largely went out of fashion at her the volcker rule one out of -- of effect. after it display number, particularly overseas on it has to do with debt traded -- debt trading. france posits biggest bank reported third-quarter net income on it has to do with debt traded -- debt trading. rose 8.3 percent, slightly beating estimates. the bank was hurt by the trading spots the hurt, it impacted -- joining us from paris, what is happened this quarter? >> the past quarters where it was always outperforming peers, even investment banking on the environment. the is not the case on quarter. 26%.rming by rising equities. overall, the trading business called the global market division, so revenues declined by 17%. who had declines of around 30%, but still sees approaching as the worst performing stock in the stoxx 600 banking index today. as you can see. about theth -- difficult quarter for trading and here is what he had to say. >> i think in the past quarter, there was uncertainty related to uncertainty in the market. waited to seeets what is unfolding and now we have to

one thing that could change it, my expectation, the fed will start to reinterpret the volcker the and you'll see loosening of that. you'll get some more fixed income trading out of that. francine: if you look at normalizing central-bank policy, does that help the banks? significantly? ? you can make money easier? thee: it is important for banks in terms of earnings other than deregulation a spoke about, is higher rates. anything normalizes rates helps. it helps trading, the interest margins. it is good for everybody. francine: but where do the banks grow from? if you look at the revenue stream, how do they grow from here? steve: it is more of a leveraged story. testsars ago, the stress allow the banks to buy back 85% of the earned income. this year's test allow them to buy 100% of her and income. my expectation is that sure that will go to 115% to 125%. it is not a revenue story come although, higher rates will close higher revenue. it is a combination of that and more leverage from stock buybacks. tom: steve eisman, thank you. briefing through the morning. let me look at the foreign

if you think back to the volcker , they had to take a second vote because he was going to be outvoted its would have been embarrassing for him, maybe a potential resignation. it will bring the rest of the fed and fomc with him. potentially a significant shift. alix: the difference between the short end and the long end, we have steven major of hsbc as one of the lowest calls on the street. here's what he had to say. >> i am struggling with the idea as to why yields go up and 99 out of 100 people we meet seem to be convinced that is going to happen. to me, the burden of proof goes with that camp who have been saying it all year and in fact the yields have been sliding down. they have been right at the front end, but the reality is the 10 year has fallen. alix: he sees like 2.3% next year. what do you see? david r.: we are looking for rates to be a bit higher. we do think over the longer-term, inflation is what will drive the longer end, and it is certainly worth discussing and thinking about the in full in its that the fed's path online will have to the longer end of the yield curve. t

proposals under consideration like relaxing regulations on community banks and potential look at the volcker rule again and doing a repeal of that. you start to get into some of the more international sort of agreements that are probably going to be thornier and take longer to figure out. the most interesting thing for a lot of fed watchers is what he will bring to the table in terms of monetary policy and interest rates. what we know about randy quarles is that he's outspoken in favor of rules in the past. we will see if you can make any headway that with the committee. this committee seems predisposed toward one discretion as opposed to more systematic rule-based policy. david: i want to talk about jon taylor for a moment. there's a piece on the bloomberg today attributed to rick rieder from blackrock that says jon taylor would be the most disruptive chair. he seems to be an outside candidate come about the most disruptive because he is rules-based. according to his rules, the rates should be higher than they are right now. thehew: if you pull up taylor rule function, it has been interest

paul volcker would not have -- you never heard that in the 1980s if the u.s. government is borrowing at ten years from you at 2.3%, and their own instrument, the fed is saying we would really like money to become more 2% a year or less, they're not promising you very much in terms of real terms for saving >> so janet yellen, you said she's got a big job. the question is does she keep that job, or does president trump appoint someone else that seems like two of the leading figures right now are either kevin warsh or jerome po powell as an investor do you have to think about who is running the fed to think about what stock prices are going to do if interest rates are the most important factor >> i don't spend time thinking about. it wouldn't do any good to think about it i wouldn't know the answer most of the time the fed is not that important occasionally it's the only game in town. it can be the only game in town. there is only one person that in september of 2008 could walk out like the sheriff into the street and say, you know, that this isn't going any furt