Transcripts For BLOOMBERG Bloomberg Markets 20161004

Down for our markets. You can see now extending losses by 6 10 of 1 with the s p and nasdaq down by 4 10 of 1 . Lets take a look at the ride for the s p 500. The flatowns, crossing line. Then we have some definitive thatn and definitive sense the potential rate hike in toember may be happening up 61 , which is up 10 points in the last week. We are just off session lows. Look at the function, which is a sector of health and s p. Bylities are down the most 2. 3 , also accelerating losses on talk of that potential rate increase. Higher Interest Rates are helping. In the sector right now, up by one third of 1 . Not just down on the day, down on the last two days. And oneabout seven third percent as the possibility of a rate hike continues. Lets take a look at the biggest losers on the s p 500. It is about three years or so. Cutting to 12 because of more global competition from renewable resources. Also a hold to a buy, saying the possible rand sale, which is an antioxidant lowcalorie drink will be that is a wrap right now. In on the first word news. U. S. Officials and investigators estimate a commuter train was traveling 20 through 30 mile per hour when it slammed into a new jersey rail term last week. That is according to the associated press. Federal investigators are basing the speed estimate from the extent of the damage, which killed a woman on the platform and injured more than 100 others. Secretary clinton promised to provide paid family leave and six days and sick days for working moms. What i have been trying to do is really a continuation of what i try to do throughout my entire life. Everythingdo possible to put kids and families front and center. Sure we provide the opportunities that families deserve to have. Clinton has made pennsylvania one of her top targets on the 2016 battleground map. Another tirade. He told president obama come you can go to hell over u. S. Criticism over his antidrug campaign. Saying the 28 nation bloc the antidrug fight has left more than an estimated 3000 suspected drug dealers dad in just three months. The way has been cleared for a Global Climate deal to take affect. European parliament has proposed a sweeping to fight pollution. Last year more than 190 nations agree to work toward capping global temperature increases. Global news 24 hours per day powered by 2600 journalists and analysts in over 120 countries. Fast forward five years, will Interest Rates be extremely low and will bond deals be in stock today . Earlier they took earlier joined bloomberg. It is possible, because every time we have expected rates to move up they havent, and every time we thought rates could in gets lower, often they have gotten lower. Bet and that be my is the mainstream view. But it is entirely possible. I dont personally think rates are going to go lawyer go lower. Nobody would bet their life against it. I also think youre going to see some easing up from the Central Banks. It is a lot more possible today than it was six months ago or a year and a half ago. Slow hing pretty pretty so bring about longterm economic growth. You look at the latest data on world trade it is really discouraging. I saw forecast a couple of days ago. I think yearoveryear less than 3 growth. That is so far below what we have seen recent years that it ties together with a lower longer scenario. Where the Systemic Risk is, the imf says it points to Deutsche Bank. This is the european senior financial credit default swap index. It looks at 30 plus Financial Companies that were always equally rated. But we have seen a steepening here of the credit default swap for this index, which would imply there is some index for the bank. Do you see that . Not particularly. The Banking Sector is in such a profoundly different place than it was eight years ago. From the point of view of capital buffers, supervision and regulation, streamlined business models, it is just a much sounder, safer system. Certain european banks are weaker than their international counterparts, and we all see the pressures. About 18t equity is billion. One of the things going on here for ay are under pressure number of reasons. It is not the size of the market cap but the size of the balance sheet. They just dont understand what is there. Whether it is through europe, through the united states, etc. The Justice Department would have been greeted very differently. Difference than the market cap. Pay 14 billion. That would be the reaction against one of the big u. S. It thanks. There are also the european banks. Is this a specific situation . I think it is more specific than otherwise. These institutions they are pretty they are primarily a Wealth Management is missed. A considerably stronger direction. I think there are more differences than similarities and i dont expect them to work in a european banking contingent. Is it an equity raise, a death rays. I dont know the answer to that. Theres a lot of speculation. I think it depends on what the likely settlement amount is. Is it 4 billion, is at 5 billion . Determine whether or not they need to raise capital. Coming up from dealing with china to battling big fluctuation and commodity prices, how is the u. S. Industry still coping . Have john kerry a luck, head of the largest steelmaker as our guests next. This is bloomberg. Vonnie it is time for the latest business flash and a look at the biggest business stories in the news right now. Still hammering out the details of the transaction. That is going to people familiar with the situation. And the party still havent reached a final agreement. In owner of usa today is talks to buy it for 15 per share. If we if the acquisition is theessful, they could gain los angeles times, chicago tribune, and baltimore sun. Scanning customers incoming emails for specific information on u. S. Intelligence. Informationr what officials were looking for, but ceo Marissa Mayers decision to obey the request last year led to the departure of chief Information Security officer. The International Monetary funds morning that political turmoil is posing a risk to an already weak recovery. The imf maintains its growth forecast. 3. 4 in 2017. Advanced economies are likely to stay on a low growth path. Imf managing director Christine Lagarde joins Christine Locklin live from washington for their annual conference. That conversation begins at 9 30 a. M. Eastern on Bloomberg Television, radio, and online. That is the latest business flash update. It has been busy on the deals front. It Just Announced it is reworking the natural gas on ament, 49 of interest gas basin. And acquiring joining us to talk about those deals, the state of the Steel Industry and the state of the u. S. Economy is chairman and ceo of nucor, also vicechairman of the world steel association. You have a birds eye view of what is going on in global trade. Lets talk about these natural gas agreements. I asked myself why so involved in natural gas . For us it is a natural hedge. It impacts our total cost of production presignificantly. How has the cost of production been going over the last year . I know you have had some pricing power. When you look at natural gas into our steel process, that is some good news. Generally prices have been going down. Them the imf came out and warned what it called a frankincense is on trade. Where do you stand on tariffs . Im pretty clear where i stand. Lawsieve we have trade that must be obeyed. We must enforce them. I believe the best way for the Global Economy to prosper is to have free of fair trade. You do where both of the candidates seem to be pulling back from that . We like the position of both of the candidates. Strong supporters of enforcing our trade laws. Feel either way feel good about the leading our laws to go forward. They are against tdp. Need these trade agreements to enforce free and fair trade . It is good to have free trade that is balanced with partners of the law. Clearly china does not always follow the law. The dumping they have been doing, subsidies. It all creates a very unlevel Playing Field. Is there one candidate you think would be better in enforcing those laws or agreements . Both parties are recognizing the need for food trade policies and our trade lot to be protected. What about the view of the products coming over from the u. S. To china . Would you want the amount to diminish . We wanted to be fairly traded. We wanted to limit the subsidies these companies are receiving. On low to zero interest loans, it gives them a competitive position. We are confident that it given a level Playing Field we will outcompete the chinese and any other country in the world. You just eliminated terrorists it wouldnt make you happy, because a mix he thinks the government think the governments are subsidizing there. When i say free trade, i mean trade that is free of government interference of any kind. That is the best way for the Global Economy to prosper. A 15 billion market cap company. You have a pretty good birds eye view of the economy. Where do you see the economy heading as the demand for steel increases . Im personally disappointed in the growth of the u. S. Economy. You look at gdp growth since 2009, youre looking at 1. 5 average per year. We need to see policy changes that stimulate the economy, and make us happy. Do you see a recession as a possibility . I think it is going to be determined by who the next leader of our country is. We really appreciate it. The ceo of newport. Sports teamsd, how are trying to unlock the 1 trillion purchasing power of their lgbt phone. Of their lte phone. Vonnie in a dramatic reversal from the not so distant past, professional sports teams are trying to embrace their lgbt fans. Jeff green reports about it in the Bloomberg Businessweek. As you point out just two years ago, you wouldnt have seen many pride days at professional sports games. Haseoples perception changed pretty dramatically. For five years ago the majority of americans thought gay marriage was wrong. That has flipped, it is now legal. You have people looking at the situation. Saying this is something society has shifted on and we need to get with it in order to attract fans. Millennials want to feel like they are in an inclusive environment. Story ite on your sports has been a bastion of homophobia. It is not necessarily that they arent a bastion to some degree anymore. Is just the companies and sports teams are making an effort to let the fans know this isnt ok. The players are having policies to suggest homophobia is not accepted. Just the perception is changing for the fans, not so much that the reality underneath it is shifted overnight. How much of this is topdown . Clubalk about a soccer that has its own pride. Something coming from the corner offices . It was a coach whose son was gay and talk about how difficult it made to play. They created an Organization Made by the nfl. Prime nights all focused in a particular time frame. But it started this grassroots effort. They kept the Foundation Going in his memory and it became a movement within the nhl. Wnba has been part of the east coast. All their teams do it. Nfl is still a work in progress. It tends to be team by team. Fans and advocacy groups are starting to demand it. Allinclusive certainly in my view. Sports leagues are realizing it makes Financial Sense to open up their crowd. Almost 1 trillion in spending power based on the way they measure spending is something to Pay Attention to. That is in line with the minority groups that other people will go to when youre talking about hispanic or black or other groups. And to ignore or alienate them is to or alienate them is a bigger concern. You can read his story in the latest Bloomberg Businessweek, and hear more from the reporters every saturday and sunday on Bloomberg Television. The pound falls to his lowest level against the u. S. Dollar since 1985. We will get insights on what is ahead for the u. S. Head of fx strategy. Later today we are going to be talking with jenna Capital Fund Manager bill gross and his newest outlook. Newest Financial Technologies like bitcoin may become increasingly attractive to investors. 3 p. M. Eastern, 8 p. M. London time. This is bloomberg markets, i am matt miller. Lets take a look at the prices starting with energy. Still trading near a threemonth high as investors look forward to next months opec meeting. Hurricane matthew threatens unharvested u. S. Crops. And rawparts of florida sugar. Could fall by nearly 3 . Nickel heading for the biggest twoday loss. Mines avoidne shutdowns from an up government audit from producers. Take a look at this chart. In our Bloomberg Television library. It shows the falling price of gold. Time since the brexit vote. Improving u. S. Economic data, both during the case bolstering the case against interest fairing assets is one of the reasons, and a lack of inflation is another reason. Now we are at a threemonth low. Thank you. Lets check to first word news. Mark president obama is eventing a political because of hurricane matthew. The president was scheduled matthew could menace florida toward the end of the week and push its way toward the east coast. The president will go to fema headquarters to monitor the storm. U. S. Foreign disaster teams have been deployed to haiti, jamaica, and the bahamas. During whitewater probe of the 1990s being released. If they outweighed any Public Interest for disclosure. Additional watch argued that the president ial bid compelled disclosure. No one is expecting fireworks in this debate. The Vice President ial nominees, democratic tim kaine and mike pence meet tonight in virginia. Two ofe considered americas most mildmannered political figures. You can watch the Vice President ial debate here on Bloomberg Television. The United Nations says 80 of the population from yemen is in need of some form of humanitarian aid. Yemen is the worlds poorest country. Global news 24 hours per day powered by 26 hundred journalists and analysts in over 120 countries. This is bloomberg, back to you. Vonnie big news in the currency market with the pound dropping to its lowest level in three decades. Other moves to since then. U. S. Head of fx strategy. That deeply impacted the pound. There was no massive move yet. When does it happen . We said it over the course of the next year and a bit. You are an outlier at one point. This is going to be a grinding story. Cap tou get enough coming in . And every so often punctuated by these headlines. Theyre going to drift to what we are calling toward a hard brexit. Really for referring to a mechanical balance of payment story. You are not looking for any gap lower when they were triggered or when inflation comes in and involves 2 . Markets cant help themselves. That is not a vital story. It is not like were going to take a leg down for three months. A much more grinding story. Where will inflation be . May be up 5 at that order of magnitude. Currency,et a weaker inflation goes up. I think the bank has to be aware of that. They are looking for the adjustment. That Exchange Rate move carries on year after year after year. We are so used to seeing my entire life, sterling, trading at around 150. It has been down to 130. It looks like a stephen major call. Morning, it was prevailing. Thats how long we are going back. We all thought it was pretty normal. Gradually winding down bond purchases, ache super exclusive well done team. This is causing the dollar to trade the low. Is this a major deal . Is this a good thing. Pace at whiche they deliver bond purchases, to the extent it was a big qe program that engineer dollars lower from 140. The question is do they follow through . Until september of 2017, which will weaken the euro further. We are not looking for things to go very far. I would think the most important thing, we obviously care about cable and the eurodollar. What is the most important pairing . Pound an important pair . Our cable forecast and what thatcast means is for sterling, you have an Exchange Rate moving for parity. We talk about a peculiar number for british people coming to the state. Parity would require big change in spending patterns. The point where our Prime Ministers are stopping us from going on holidays. I dont want to draw too much of a comparison. That is not any that is the same mechanism. Is it a controlled dive . England would describe it as a glacial decline. Then they will step in. The mexican peso, trade here any sort of fragile currencies that we need to be watching . Become the monitor of things. It has been fashionable to look on the flip side. These have become the hypersensitive currencies. Slip actbeginning to behind teller clinton in the race. As you say it is a sensitive currency. What is your favorite trade at the moment . I do think it is a recently populated trade, but that doesnt mean it cant work. You mentioned new mexico and the russian ruble. I think people are looking for any satiric draw. Some of the other big plays are still hovering around 100, 102. Tricky to make currencies in the market at the moment. Head oftunately he is strategy at hsbc security. The Vice President ial debate takes place in just a few hours. Can a candidate on the lower half of the ticket draw attention to make enough of an impact . Matt it is the Vice President ial candidates turn tonight in the spotlight. Andcrat tim kaine republican mike pence faceoff in a debate at Longwood University in farmland virginia. Side,g us from the debate not very close to washington dc. Do they want to get to just get closer to whirl america in this debate . Tim kaine is going to be in his backyard. He is going to be on friendly turf. Where they are going to be talking about the issues that affect the normal americans. To the laws that other running mates are hoping to pass to past. From thepecting that moderators. A lot of policy questions, maybe less of a personality contest. They are going to take into some things that affect every american. I just drove through virginia, through Western North andlina, through tennessee, i started to notice only trump pence signs everywhere. Didnt seem like any of them were for clinton. Although clinton is ahead in all of the polls of the states that i just mentioned. Other just not advertising . Clinton team has seen what you are seeing when you drove through. And driving from here to farmville and richmond. Saw the streets aligned with clinton signs because they knew it would be coming in. The roads leading into this debate were full of Clinton Mccain signs that were very easy to see their presence and obviously a lot of organic trump signs as well. Is a rural part of the state where there are a lot of trump voters. They really ramped up here in the last couple of weeks. They are both pretty mildmannered. Every going to see a big audience of voters that may not be inclined to vote . We are not going to see a huge audience the way we saw last week with clinton and trump. These are mildmannered candidates. To be an opportunity to introduce themselves to the American Public and humanize their running mates. A lot of people are running a lot of people are worried about his temperament. Toce is going to be able modernize and humanize trump and use his ability to talk about what he has done to make a trump scary for a less lot of people who are worried about it. Possible for this debate to actually influence the outcome of the president ial election . What theyre going to do is try to avoid making any gaffes that will impact them on Cable Television as we have seen. Very difficultbe to have a major impact on the whole. It is probably something that will have a more negative impact. Be something that a few voters, probably some republicans will be worried about trump may bring into the trump camp if they feel strongly about what he does tonight. Matt thank you for joining us. From bloomberg politics, join us for all of those stories. Senator tim kaine and indiana governor mike pence will face off in farmville virginia. I remember raising my eyebrow. It is farmville. Virginia in the first and last Vice President ial debate of this Election Special coverage. That on bloomberg tv or listen to it as i did on Bloomberg Radio. Farmville is a game. It is time for our Bloomberg Business flash. A look at some of the biggest business stories in the news right now. Britains Banking Center will not get any special treatment. Say they want to reset the relationship between the government and the city of london. Amazon. Comrelationship between e government and the city of london. Is in talks with regulators to settle an antitrust probe. The investigation deals with how the contract with publishers may be squeezing out rival distributors. Any deals would have to be tested with publishers before it becomes final. Amazon is the target of an investigation with luxembourg. That is the bluebird business flash update. Lets head to Ramy Inocencio for todays spider report. Remy we know gold has been falling today as it has been for the past several days. Spider goal down. Point 3 . This is the lowest ever since the brexit boat that happened in late june. Lets take a that, look at the past seven days. This is on a seven day losing streak. The fall here is really pronounced. Down for about 4. 3 there. Futures have been rising by 12 Percentage Points. We are seeing this interesting correlation between gold and dollar rising. On the day it is also falling. It is only up by 7 10 of 1 . Today it did fall below the 1300 mark. Lets take a look at what is happening there. Since june. Gold, its lowest since march. Lets go to the bloomberg terminal and talk about what is happening in terms of that futures. 61. 8 . This is also up 10 points in just the past five days or so. A possibility of falling gold. Reebokng up google is does is embarking on a revamp of its mobile phone strategy, attempting to put itself squarely up against apple in the marketplace. This is bloomberg. Matt this is bloomberg markets, i am matt miller. And she is vonnie quinn. [laughter] vonnie google is revamping its mobile phone strategy [laughter] to bere the first phones designed and engineered and tested inhouse. It puts google headtohead with apples iphone. Why is google getting more into hardware . Didnt they already try this with motorola and nexus . It is all about control. These web all services and apps and Machine Learning. It really going to trust apple to distribute all those services and put all those features on the galaxy phone . They really have to make their own phone to control that. That what they said the last couple of times . Is it fair to say they have failed miserably . The big one. S over 10 billion they spent on that company, it was pretty much a strategic disaster. He said something interesting, when motorola was a division of they never were in close contact when it came to Google Services being given to motorola ahead of the smartphone makers. This time around, these pixel phones are going to crack at things like Machine Learning and vr. It is hard to see any difference between this phone and what the iphone offers. Is there anything the iphone has that this doesnt . One point they kept going on about was the cameras. That is really in the iphone wheelhouse. Hey spent a lot of time they are really pricing these are must the same as the iphone. The android chief did tell me they are really going after an iphone share. They made a half effort. When you talk to an iphone user and debate with an android user, it is not always about the hardware, is it . It is about the software. The android is for people who would rather control their own environment. None of that is going to change. Tothese phones are going become our digital assistant we carry around. The software and hardware have to work really together. This one they can start from scratch and say what is the enduser experience. Now we have 12 months to line up the components and make it work. Thank you, and we will have more. 6 p. M. Eastern, 3 p. M. Pacific. We are going to be talk and with Capital Fund Manager bill gross. He just released his october with new Financial Technologies that may become increasingly attractive to investors. What he thinks of the selloff in treasuries. This is bloomberg. Hiim here to tell homeowners that are sixtytwo and older about a great way to live a better retirement. Its called a reverse mortgage. Call right now to receive your free dvd and booklet with no obligation. It answers questions like. How a reverse mortgage works, how much you qualify for, the ways to receive your money. And more. Plus, when you call now, youll get this magnifier with led light absolutely free when you call the experts at one reverse mortgage today, youll learn the benefits of a governmentinsured reverse mortgage. It will eliminate your monthly mortgage payments and give you taxfree cash from the equity in your home and heres the best part. You still own your home. Take control of your retirement today vonnie it is 3 00 p. M. In new york. I am vonnie quinn. Matt i am matt miller. Welcome to bloomberg markets. Matt we are from bloombergs world headquarters. Covering stories from san francisco, washington, and london as well. Starting to map their retreat from external a stimulus measures. We learned the ecb may gradually reduced bond treasuries falling on the news. Two big interviews are lined up in the hour. , why central bankers have turned market into casino. Will join us from the dream force conference in california. We will hear from the twitter investor about who should buy the social media giant. One hour from the close and rim is an seo is thin a buy with the latest of what is going on in the equity markets. It has been for the past few. Ays if not longer lets look in terms of the s p 500. We had some choppiness early in the morning with a lack of clarity as to where we were going to go. The markets decided to take that turn lower and we saw markets head to near lows and now we are at new session lows down on the s p. Asilar in terms of the dow well. Lets look in terms of the imap function. Utilities, real estate telecoms, because of the potential rise in Interest Rates set for december. As that happens, one sector gets a bump, financials up one quarter of 1 . Lets talk about other gainers. Size, stocks. Lender, biggest starting to use apple pay as of today. Citigroup. Rica and financials taking a bump. On the way down is the s p utilities sector. Also down for the past eight days in a row, losing its appeal, 2. 7 on the day right now. Lets look at currencies as well as commodities. As rates are rising, that is anding of the dollar index also lifting the 10 year yield up six basis points. Higher than the five i was a couple of hours ago. The First Time Since breaks it. Down below 1300. Back to you. Vonnie thank you. Lets get a check of the headlines. It is mark crumpton. Hurricane matthew, the powerful atlantic storm, slammed into western haiti today and could be taking aim at the u. S. East coast in the coming days. The storm left two people dead in haiti and four others were killed into medicare and republic. That brings you the death toll to at least eight. Tok scott warned residents take precautions, saying we can rebuild your home, your business, but we cannot rebuild your life. The European Union is meeting meet several outstanding conditions by next week. The eu says if that happens in time, 4. 1 billion can be released to help strengthened the countrys economy. The primus to his on monday to debate congress on this socalled milestone. The federal judge presiding over the South Carolina Church Shooting trial says he wants to avoid undue stress on the victims families. The board plans to recess during the thanksgiving, christmas, and new years holidays. An attorney representing families of the victims say some plan to be out of town during that time. Accused of killing nine black churchgoers in june of last year. Left untilour months he to park the white house, president obama is taking republicans to task for their failure to hold hearings on his Supreme Court nominee, merrick garland. The president writes in an oped for Huffington Post that part of what makes judge garland a remarkable jurist is his understanding that justice is not an abstract theory. It touches peoples lives every day. As long as republicans continue, america pays the price. Global news powered by more than 2600 journalists and analysts in over 120 countries. This is bloomberg. Vonnie thank you. Treasuries selling off in trading now after an exclusive bloombergs scope that the central bank will probably gradually wind down before the conclusion of quantitative easing. Erik schatzker is standing by with more on the action reaction. The reaction of bill gross, manager of the global unconstrained bond fund. Always a pleasure to have you here. Butave a lot to talk about we certainly need to start with a selloff underway in government bonds globally. You tweeted about it earlier. It appears to be in response to a bloomberg scoop that policymakers are beginning to about the end of quantitative easing. Do we have another taper tantrum on our hands . To now we do today. On the screen in front of me, i saw your posting and those at about 12 00 eastern. The minute it was posted, the bond dropped almost one point. Bloombergs article suggested the ecb make take purchases of per in march of 2017 2017. Iny characterize the drop treasuries in may of 2013, a big drop. We have had a drop for the day. Is that totally significant . Is a niceot but it scoop and caused me to basically reverse positions in terms of being long to being short. I am watching my bloomberg. The story you reference makes an important to be sure point. The ecb has not decided to extend quantitative easing the on spring 2017. If it does, whether it will continue to be at 80 billion less,a month, or perhaps if they do begin to taper, based on what you say, the point you make in your most recent investment outlook, that the ecb, the bank of england, the bank of japan, and the fed, have continued to double down in your words on the monetary stimulus. It makes me wonder whether this is not potentially a buying activity. If you believe they are addicted to monetary stimulus, wouldnt this be a buying opportunity . Bill i think perhaps you are right. That is why i said it is a taper tension for the day. We did suggest the markets in the economies are addicted to the creation by Central Banks and the maintenance of low and negative policy rates in many cases, by them as well. We have seen changes in many recent weeks by the bank of japan. They basically suggested they themselves might reduce the quantity of their purchases and in its place, they would maintain is 0 , 10 year target yield. Ecb, thate of the would not be difficult to do because there is a different spread than germany and france and portugal. So maintaining a specific yield would be a difficult proposition and i agree with you there has in no announcement on the part of the governing council but even in march of 2017, that they would stop. The addiction is real. The question becomes, what harmful negative the addiction is creating. It is certainly creating a lot of negative and some central bankers and Central Banks are beginning to wise up. Erik schatzker if in fact they are contemplating if not planning for the end of quantitative easing, what does about mario draghi and the way that others are thinking at the moment . Do they recognize the point you are trying to make, that there are limits to conventional monetary policy, or Something Else . Bill i do not think with the ecb. Draghi is still, whatever it takes. He has spoken in the past about of nearterm concert is is negative Interest Rates and the effect on Insurance Companies and the like. He has also said those problems have to wait. Want to make a 180 degree shift but i find the article in the room or perhaps of aesting in terms potential shift. The article said they would reduce their purchases. They might reduce their of 2017 byo march 10 billion a month. At the moment, they are buying 60 billion. No, but itig deal . Has a connotation to it. If i can drag this on, central bankers in the united states, we had three negative opinions in terms of the last fed statement. Themston, he was one of and i find it interesting he is the president of a district which includes Insurance Companies in massachusetts. So perhaps he is sticking up for tostituents, as opposed savoring borrowers. Erik i spoke to a money manager justin switzerland and having , they say it is truly grim and people are beginning to get angry. How long do you think it will take before the financial repression effectively, the punishingly low Interest Rates, constantly the impact they are having on Insurance Companies and banks and Pension Funds and endowments, generate some real anger here . Bill it has not happened yet and Interest Rates have been low for a long time. There are changes in the wind. We know about bitcoin and that is a potential substitute at the moment. Know about the potential arrangements of banks and jamie dimon talked about it yesterday with this particular bank and some of these arrangements where they can salvage the value in terms of investments, as opposed to the current financial system. At the edges, there are deteriorations, i suppose. Ultimately, mom and pop on main street. When they get the point where they take the money out of the bank and put it in the mattress, which sounds like bonnie and clyde, to the extent that they with 0 at thed bank and even the charges the bank lays on them while that money rests with zero percent it might happen. Erik i feel the need to pin you down. Are you endorsing bitcoin as an alternative to the Financial Markets . It for theing unconstrained fund . Bill not much about block chain trying to keep up with other periodicals. So no. Bitcoin itself moves up and down in value much like gold. It is not necessarily the stable currency. Eventually lead to alternative stability compared to the Current System now. We should look ahead as opposed to behind. Can you think of anything else investors should contemplate if they are losing faith in the currency . Betty sure bill sure. It stretches the imagination to some extent. Diamonds, cannot buy expensive paintings and those types of things. Even those are not sure things in terms of maintaining value. But if things really got stretched in terms of negative onerest rates and the tax owning the deposits in the particular bank, mom and pop and that ismething only reasonable. Erik go ahead. Bill go ahead. I am done. Erik i was about to say we are all watching one of the slowest slowmotion train wrecks the world has ever seen. Based on what we witnessed in 2008, what do you think we should expect out of the Bank Troubles . Bill what germany and the cpr drying to do and the ecb are trying to do, with large domestic banks, they are trying to drag it out. They are trying to basically lower Interest Rates in terms of borrowing. Basically to build equity. By their constituent centralbank. It is not a bad thing. We should all realize the price we pay our low to negative and as anates investor, you have to begin to find another route to prosperity. If it is being protected by the ecb as you suggest and given all of the other changes 2008, shouldsince we conclude that Deutsche Bank is safe . If not, you have to be thinking about it. Look at what is happening. Turmoil in central markets and a strong bid for safety and treasuries. Inferior, that could happen again. It could lead to Systemic Risk. Investor, as a fixed income investor, there should be no concerns. Ample liquidity and significant lines with the ecb to provide that. The question is other investors have been alerted to by bloomberg in the last few days, the stock price. Will there be a mandate for such thatank to issue it dilutes the shareholder interest and reduces the price. I think it is merely a function of the equity price, a function of the potential default. Manager,l, portfolio always a pleasure to talk to you. I look forward to the website. Vonnie wonderful and thank you. Matt time for a look at some of the biggest business stories in the news right now. Google has done into the 400 billion smartphone market. Will give the iphone a run for its money, the pixel and the larger pixel xl the first inhouse by google. Takee is willing to alienating partners like samsung and lg, which sell it android phones using an android software. Johnson johnson is warning users of the one touch insulin pump and potential hacking risk. The Cyber Security flaw could be exploited to secretly at extra the diabetes drug. The probability of unauthorized access is low but it has confirmed the devices on her ability to outside manipulation can be lifethreatening. Sector willnking not get special treatment as the country negotiates an eu exit deal according to three senior figures and Prime Minister theresa mays administration. Not keen on making the protection a priority after brexit takes hold. That is your business flash update. Ahead, we are looking at gold in today passes options insight. This is bloomberg but first, a quick look at the markets to see where we are standing now. We are at the lows of the day. The Dow Jones Industrial average is down two thirds of 1 . Down. 7 . 0 is is not quite as high as it was, bolo 14. 5, nevertheless elevated today. The dollar is not as strong. Interesting toe a lack of expectations 126989. You can buy two moments ago, minus five basis points, a big move there. The two year yield 81 basis points. Matt this is bloomberg. Vonnie this is bloomberg markets. It is time for options insight today. Joining me for today is david, the momentum stock strategist. He joins me from the cboe in chicago. Good to see you now. Stocks are scraping session lows this afternoon. It seems the potential rate hikes this september, some 10 Percentage Points over last week. Is this speculation or conviction in the markets we are seeing now . Terms of Dollar Strength, it is conviction. The funds are flowing into u. S. Dollars and the british pound hit a postbrexit low today in the Dollar Strength was reflected in the gold strength. You saw miners getting crushed earlier today and the financials had a decent rally. Down in the market was not buying the selloff, now into the afternoon, we are scraping the session lowers session lows. It little bit of volatility entering the market here. Dollar headwind might be oreping into the q3 forecast at least the q4 forecast we have going forward. Classless of the trade. We have been talking about how it is down 3 today, lowest since exit. Psychologically, it is huge. Click yes, bigtime psychological level at 1300. 1270 getting even lower. Im looking at the etf gld. Below are many highs. I will get aggressive here because i think as we get closer to december the, the realize may kick a the realization might kick in that the dollar will keep on flexing that muscle. I am aggressive on the short goinguying 12315 spread out to center in the hope this continues to unwind down to 115 over the near term. Taking a look by the end of ,he year in terms of gold weakness, Dollar Strength, what is your forecast . Do you share the idea that fend funds fed funds futures will be in december . I do. All along, they would do one and it would be in december and i do. Ot think i am this close to being right. That will put pressure on gold especially because part of this is fading the gold rally that happened earlier this year. A little bit of capitulation to the downside i think. 115 for gold prices here. Back to you. Matt thanks. South african Prime Minister says his countryss decline is bottoming out. This is bloomberg. Scarlet you are watching bloomberg markets. I am scarlet fu. Lets get you started with a check of the headlines on bloomberg first word news. Toss it over to them. Mark hillary and daughter chelsea held a town hall meeting near philadelphia today. Secretary clinton promised to help provide paid family leave and sick days for working moms. Clinton too ms. Many young people online are being bullied for have a look at being shamed and mistreated. That sometimes leads to tragic outcomes. The pressure of being talked about that way leads some young women to try to hurt themselves. We have got to be as clear as possible. You are more than the way you look. Mark clinton has made pennsylvania one of her top targets on the battleground map and is focused on attracting female voters. Secretary clinton turned a tie with donald trump weeks ago to a six point lead in the battle state of north carolina. Trump 45 to 39 . Tary clinton d nearly 39 of likely voters say she won the president ial debate and nearly half say they now have less cost and trump asked after his debate performance. Official who says investigators estimate a commuter train was traveling 20 Miles Per Hour to 30 Miles Per Hour when it slammed into a rail terminal next week in hoboken, new jersey. The estimate is raised on the caused by the crash, which killed a woman on a platform and injured 100 others. The biggest names in golf gathered today near pennsylvania to celebrate the life of arnold palmer, who died last night at the age of 87. His family wanted a Public Service after the cup, which the americans won on sunday. The service was held not far from the golf course where palmer won the game. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 mark crumpton. This is bloomberg. Back to you. Matt you see the real weight of defensive stocks. You see utilities and telecom and materials. All down. It is dragging on the dow, the s p, and the nasdaq. Threesdaq losing at least of the major averages. Lets go to where Abigail Doolittle has more on the action. Abigail an odd day for the nasdaq after fluctuated between small gains and losses earlier. Earlier this afternoon, a bit of a distinct leg down. Not a huge decline but down about half of 1 . A little bit directionless. Not surprisingly, we are not seeing a lot of leaderships the , a huge standout that you just mentioned materials, causing the mining stocks to weighed on. Gold and silver on pace for the worst section in more than a year. One consistent theme are the megacaps, including amazon, facebook, microsoft. Lows,now off of the something you often see on a return to volatility, they start to move. On the brighter side, stocks trading higher. Buy at charter equity. Also 1 , saying texas increments , in court in competition to qualcomm. Ceo rick came from this so there could be a nice fit there. Thateam was told last week rick could be holding out. Perhaps those talks are underway. Matt we talk about materials but how does that play out on the nasdaq . It is interesting. It is being caused by a rise in the dollar and later in the afternoon, a huge move up in the 10 year yield having its biggest move in more than two weeks. Stock asd pressure investors, the dynamic they do not want to see. We look at 3830 and in blue we the nasdaq and over much of last year, the two have been largely correlated. Then we see the nasdaq shooting higher and the 10 year yield trying higher. We do not have time to go into this, it seems likely we could this back up early next year. If it happens, it could be the to pressure the nasdaq and cause the diversions to reconversion. We converge. Reconverge. Bloomberg today on surveillance, he described the state of the nation poses economy. New areas bring gdp growth and inflation expectations. No doubt one growth begins to decline, agencies become concerned and they begin to ask a question, are you able . Nd willing to pay were going through a difficult pack patch economically speaking. Economies, we look forward to better times in the next few years. Tom bring up a chart again if you would. Song,k of the elton john wouldnt the Mining Industry that is unfortunately my stereotype of south africa, link the Mining Industry in the near future success . It used to be very important. A very substantial part, notwithstanding the fact that we had a demand decline, particularly from china. A very small part of the gdp. Economy cans of the. O into the future the industry, for example, American Companies for investors. The latest investment is the Chinese Company building small cars. Venture into space technology, innovation, and science as well, benefiting from the large number of tourists in south africa. Those would be new growth areas. They have a nine point plan which reflects some of those opportunities which stabilize the solution two years ago as well. As the chart was showing, it is tough times. Your forecaster from what you are giving out in february. How much do you expect south africa to grow this year and next . We will make our announcement in october with our policy statement. Not as close to zero as some people have predicted. Already, Central Banks predicting 0. 3. For this calendar year, the fiscal year is now from april to march, a little bit better than that as well for 2016 and 2017 and a year ahead, there will be even more. Yourat does that mean for fiscal spending overall and im focused of course on education. We are seeing a lot of social upheaval about. Sure. That is an area of concern. Since the session in 2010, you have someone to blame, you see, unlike some of the other emerging markets as well. The fiscal space has been narrowing. Working with the finances it they will continue to do so until the growth factor kicks in most successful way. Do you expect inflation to improve . It used to be on the decline. Is it difficult to see what inflation will do in nine months or 12 from now . It has been doing reasonably well. In terms of its mandate, suit to keep expectations and control. The fiscal side, they have done extremely well. To come back to an earlier majority i think the of students and parents in this willnitys understand it again do its best for the coming year. The money will be found in the. Ext two years matt that was the South African finance minister on bloomberg surveillance. Some breaking news on the reinsurance company. T had jumped quite a bit up at 215e that shot 2 15 eastern time. This is the early report, about 6. 5 billion according to nikkei. Matt bmw reported that, number of others confirmed after this report. Renaissance, third point, all gaining on the back of that report. Vonnie coming up, on friday, the latest read on the u. S. Jobs market. What can you expect . A couple of clues on what to look for. This is bloomberg. Scarlet a look at some of the biggest business stories in the news right now. Friction but they are still handling heading out the details. This is according to people familiar with the situation. They have not reached a final agreement. For 19 per share. Yahoo developed a Software Program going to reuters, which cited on a diet unidentified people with knowledge of the matter. It is unclear what officials were seeking. Fundnternational monetary worried political turmoil poses a risk to its global recovery. 3. 1 this year and 3. 4 in 2017. Likely to say stay on a low growth path. Lagardeday, christine joining tom keene live from these headquarters for their annual conference. Begins at 9 30 on Bloomberg Television and Bloomberg Radio and bloomberg online. That is your business flash update. We will get data from september and it will be closely scrutinized. Is here and he has three charts to look at. A huge week for the economy overall culminating with fridays jobs report. One thing you are looking at, what is happening here . That is right. The first week of the month. Next is the trade report tomorrow at 8 30. We talk about how exports will be a drag on the u. S. Economy. One thing is important growth has been slowing. We are not bringing in as much as we used to. It surged after the recession. Yes, it did. We are importing less capital goods and that sort of thing. Global manufacturing has slowed a lot. We want to see some stabilization. When they go slowdown, it only seems to be associated. Slowing is not what you want to see either. Less demands for investment, traditionally a big driver for the cycle. About the you think belowl jobless claims, 300,000 for months and years. We have a chart that shows weekly hours. More that than other things. Rate that weoyment heard a lot of complaints about and then real gdp. You can see in the chart growth has been slowing and the rate has been flattening out. They both coincide with a slowdown in gdp growth. Tech quirk of the labor market data. We got three just reports before the big fed meeting starting with the one on friday. Market improvement continue to slow . Have they said anything about the slowing . Most likely to convey optimism. Then you have global critics like Larry Summers playing out these numbers. Not want to play directly into those hands but you can see there is a big what the slowdown in the labor market means and where it is going. You will find high wage earners, going down much more than our lowwage industries. You can see it taper off. Still at least moving in the same direction. The thing that has been strong about job creation is the lowwage jobs. We have been adding a lot of jobs in the lower paying sectors. We want to look at, are we continuing with jobs in higherpaying Industries Like manufacturing and some of the higherpaying Service Industries . The optimist would say it is are addingg that we a lot because the money goes into spending and stuff. First, i think you want to and even with a higher marginal capacity, if they are making a smaller amount, it does not help with with consumption that much. The picture looks pretty good nonetheless. I am looking at a five year average of hiring here. For the white line is a fiveyear average. We talked about slowing but it is not so bad over the last five years. Up the cycle. I do not think the fed wants to raise rates if the just reports are continuing slowing. Moreact that we have three between now and december, i think this will make the picture crystalclear, and these questions will finally be answered. All right. Looking forward to friday jobs report. Scarlet coming up, compounded the fearsrn that are exaggerated . This is bloomberg. This is bloomberg markets. What could be an exaggerated market reaction. Look at Deutsche Banks chairs haunts. Selling first and asking questions later. Deutsche banks share prices, currently at a record low or near it. Ofn about 92 from the high 2007. A Short Interest as a percent equity flow. Junk recently as bearish. Back in 2009 at the height of the financial crisis, 3. 7 . The yellow line tracks a oneyear default probability. It also climbed above the level seen in mid2000 12. Nowhere near the levels of 2009. The the takeaway . Short interest and probability arising but not quite near the financial crisis has. This seems to be an extreme reaction. Investors say this may be a buying opportunity. He says he does not own shares. Matt he would only have to pay toy five cents on the dollar if you look at price to book because it has come down so low, far less than half of what other european banks are looking at now. I have a chart i was reminded of when i saw bloomberg on the ecb. This is about the u. S. Central together. Put this it was interesting to see the trend. The blue right blue line, you can see the fed funds rate. Skirting around zero. You can see the 10 year yield and 1. 68 after the selloff sparked by this story. Here is assete owned. Now 4. 5 chilean dollars but even that one is coming down a little bit. The ecb said they would slowdown bond purchases. Their line continues to rise. This is what it could look like for them in the future, rolling over and then coming back down. Collects a reminder to look at the currency translations. Index to alltime highs. Fact theeld by the pound has been collapsing. The white line is the ftse 100 translated into dollars. It is below where it was the brexit with a pound at a 31 year low versus the u. S. Dollar, still going lower about a hard brexit. A huge cap is opening up. This is where it is against the u. S. Dollar. You can see the chart somewhere. Bloomberg. Com. That does it for bloomberg markets. The closes up next. The close is up next. We are moments away from the closing bell. Stock market currency bubbles lowered this afternoon after retreats from extraordinary stimulus measures. [closing bell] im scarlet fu. Joe im joe weisenthal. Matt and im matt miller. Scarlet gold tumbling on speculation of a federal rate increase. Joe the question is, whatd you miss . Scarlet we break down what this means for markets with binky chadha. Joe the takeover of monsanto. We have the charts that you cant miss ahead of the earnings tomorrow. Matt before brexit, there was grexit. Discussing the Greek Economy today and whether it has turned the corner. Scarlet