Clinton. She canceled a trip to california. Will hillarys health rattle the market . Caroline significant volumes, two and a half times than the usual. The vix shoots up 40 . All eyes on europe. Lights up onros friday on the stoxx 600. Guy let us talk about what is happening around the world. Having some fun with your gm function. This is the best place to start your day. The slider up. Giving you an idea of the scale of the moves. Look, some big market moves. S p down 2. 45. New zealand down 2. 5. Hong kong, two point 82. Showing you what is going on. The futures over there as well. On yours coming through gm and this morning. Let us catch up on everything we need to know. Hillary clinton has canceled a two day trip to california after her Campaign Says she is suffering from pneumonia. President ialc nominee up abruptly left a 9 11 commemoration yesterday and appeared to stumble and need help as she moved to her official vehicle. Her team is evaluating the rest of the schedule. Praxair have agreed to terminate talks. They are said to a failed to agree on the role of munich. The potential deal would have been valued at around 30 billion. North korea has completed preparations for another nuclear thatraising the prospect it will conclude its third that nation of the year. After the north carried out its fifth Nuclear Explosion on friday and claims it can outfit and atomic weapon on a rocket. Ceo frank witter that says the company is still far from overcoming the emissions crisis. It remains to be seen if the company has enough money to overcome the problem. We are making progress. We are trying to provide Technical Solutions to our customers and to regulators and we have to regain the trust. We disappointed customers, stakeholders, and employees and we need to work very hard and we do. Making progress but we are far from fully overcoming the crisis. And we have a long way to go. David samsung shares have slumped again. Seeing the biggest drop since 2008 because it u. S. Regulators and the company itself warned users that the smartphone that they should turn off the smartphones. Aviation authorities are calling on passengers to stop using the devices during flights. The phones had batteries that caught fire or exploded. Global news 24 hours a day powered by our 2600 journalists in more than 120 countries. This is bloomberg. Let us stay in asia and talk about how the asian markets are performing. In terms of what happened on friday on the streets. We are likely to see a soft european open. We are not done here either. The scale of the drop was significant. By 1. 73. Wn governor kuroda in basel today. Joining us now to kick all of this around is Michael Metcalf. ,s the market telling the fed no, dont think about september . It is an interesting mobile and financial conditions have been a big driver of fed policy. They are beginning to normalize. It is clearly a concern. Professional investors were short the vix. We have seen the vix picking up a little bit. Part of that field like short squeeze to me. Nevertheless, what should i make of that . Is referred to as the fear gauge. When ite are also times is reflecting complexity. The moves we are seeing are pulling us back. We look at the yearlong chart going back to the average is all we are doing. Right now, guy the averages 17. Ishael what we are seeing an unraveling of complacency. In. Put the earpiece back you can hear caroline. Caroline are we expecting this volatility to stay . Michael there is a lot of event risk coming up, the first is the fed. The thing that is new now is we have this question i think about what is next for Monetary Policy in the sense that the ecb and the boj are reviewing quantitative easing. We are not quite sure what that means. Does it mean that there is a new form of easing coming or that Central Banks are going to step back and let fiscal policy do the work . As well is the question about will the fed hike or not in the timing of the move and you also have the question about quantitative easing which is somewhat new. The reason for volatility being so low is the idea that Central Banks have been there to underpin any big fallout in the market. I think this is the beginnings of that question being asked right now. I wanted to gather what michaels answer is because you are saying it is being questions. Is less coming from the central bank . Michael i think you will get more from fiscal policy. But it will take a long time for that to come through. Right now, it will be about continued centralbank guidance but also a little bit about the question about whether you can have more qe and whether it has reached its limits. I cannot handle that question. The boj will go towards answering that this month. Do you want to engineer a c po curve . General corrode it is talking about looking at new places for what he will do with Monetary Policy. Is he thinking about reengineering a curve . And the unintended consequences of this program being a flat curve. Boj for obvious reasons is much further down the new monetary measures route. All the way through, we are equities all of a sudden, we cannot have longterm boj yield this low. The acknowledgment of that is a significant change. And does suggest we are at the limits of their easing. Inoline give us a sense your head of strategy role whether we put money into this market . Or do we get into cash . Michael one of the key things we will be talking about if this really is a timeframe where Central Banks are changing tact is the correlation between equities and bonds. One of the things we are reassessing is you need to think about the yen exposure. If the boj cannot ease anymore, the yen may end up stronger than they want. Economics they have been able to have a week yen but now there are questions about that. Yen that now there are questions about that. Guy what would a massive fiscal approach due to that . Satan do to that . The storyhat change surrounding the currencies because they are correlated . Michael absolutely. Uncorrelated i should say. What we have been concerned about is ons eating on a bubble for some time but they keep going. And jgb is the poster bond for that. The poster bond. Question if you do get a massive fiscal push and Central Banks are saying we cannot do any more qe than yield should rise and fisk and fixed income markets should come. Caroline , will be fed hike up next, will be fed hike . Thenard tries to put question to rest. Volkswagens cfo told me that the Company Plans to return to the bond market. We watching shares of uniper which begins trading for the first time. This is bloomberg. Guy 2 43 a. M. In new york city. The European Market is extreme minutes away. David samsung shares have slumped again. Seeing the biggest fall since 2008. U. S. Regulators and the company itself is warning users to immediately turn them off and stop charging the phones. Should authorities are also calling on passengers to stop using the devices during flights. Three dozen of the phones released a few weeks ago have batteries that exploded. Dalia client money since it started its new Strategy Early last year according to a person familiar with the matter. A rare exception in an interstate that severed from poor performance. A spokeswoman declined to comment for bridgewater. Tesla is updating its Autopilot Technology to focus more on radar images then camera. It is the third attempt to convince critics at the semiautonomous features are safe. It is also designing the software to disengage. Tesla has been under fire since a fatal accident back in may. Planning a to be major restructuring of its executive board. The company will also combine the marketing and sales operations. The carmaker is also changing its a electric car strategy to rival tesla. New models are said to be improved at a meeting later this month. That is your Bloomberg Business flash. Now, we returned to the u. S. Governor brainard will be the last of the central bank members to speak ahead of the decision in september. Some watchers think brainard is suggesting changes are coming. Her comments follow those from the boston fed president friday when he said as failure to continue on the path of gradual good to shorten rather than lengthen the duration of this recovery. Froms get the viewpoint Michael Metcalf. Give us your sense. September, are we going . Not think the market is priced for them to go at the moment. The fed is playing a cat and mouse game with the market right now and they are trying to persuade the market that september is a possibility but i think the data has wrongfooted that attempt a little bit. The reality is that unless the fed is ready to change direction as of late, the fed has never tightened rate in the last 20 when when there have right right now, you have to assume that it is the same said and they will not tighten unless it is at least 50 priced. Guy that is history. They have not done that. I can give you the probability now, 30 . People are now thinking maybe the fed is saying we are not dependent on the world. There is also an argument that says that is what the brainard speech is about today, getting that number of different you percent. There is someone at the dovish and of the spectrum saying we should think about, that number will go to 50 pretty quickly. Michael i agree with a lot of what you said. Another difficulty they have is that if they do not go in september, what happens in december if it falls below 50 . It is possible. Andink this is a real cat mouse game. A difficulty in the feds communication right now. It appears at least that they have allowed themselves to be led by the market. There is a question at some point, they have to break that cycle and show they are leading and guiding the market. Actually, fed tightens means the fed is following the market. Does the data support a hike as soon as september . Michael i would say it depends because if you look at the level of Unemployment Rate and the level of things like core inflation. We get an update on inflation this week. You wonder why policy needs to be this accommodative when the u. S. Economy is quite close to full employment and inflation there are no risks of deflation. Why you need such an accommodative policy . Against that, you do see signs of growth is a lack momentum right now and that lack of growth momentum and the lack of followthrough on wages is what the doves are pointing to yes, we know we need to normalize policy to a relative low. That is the other part, the terminal rate of fed funds will be much lower. Are the doves saying, what is the rush . Whereas the more hawkish members are saying we have rates near zero, they should not be there when we are at full employment. Why dont we begin to normalize policy . The one thing that is not a timese that has been many for the fed in the last few years, is financial conditions are fine. The International Outlook is also fine. And so that is why it is interesting that the price we have seen in the last few days, Financial Markets are beginning so financiale bit conditions may become less supportive. This is the big debate here right now at what point is the fed going to start to impose itself on the market rather than being led by the market . Thatine we will see how impacts the rest of the fx class. Thank you. We are minutes away from the open. We will look at the potential stock moves in trading. We hear it exclusively from volkswagens cfo regarding the scandal. We are also watching linde. That is coming up next. This is bloomberg. Are we making progress . We are trying to provide Technical Solutions to our customers and regulators and we have to regain the trust. We disappointed customers, stakeholders, and employees and we need to work very hard. And we do. Making progress but we are far from fully overcoming the crisis. And we have a long way to go. The volkswagen cfo spoke to us exclusively, very open about the work that still needs to be done and the costcutting they still need to do a cross the board. And they are looking at the bond market. They are having to update the market in terms of their finances. Going forward, they may be occupying that space. Guy staying in Industrial Gases downrmany, linde sharply. It could be plus 5 softer this morning. It could be because praxair and their deal with linde is off. Caroline we are german focused. Uniper is another one we are watching. The only day it will be on the dax. The conventional Generation Energy site of aons business. The evaluation will be much less than what aon had on its books. We will talk to the boss of that business later on. Four minutes until the market opens. Looking at the bond market. Germany, off but look what is happening in peripheral europe. The moves are even bigger. 45 basis points off in portugal. Decent moves. Michael metcalf is still with us. The periphery had recently been well bit. Does the market no longer see a qee are going to extension effectively delivered by rocky by mario draghi . Michael the ecb question is being reviewed. Clinical risk in italy and spain. Guy the market open is up next. A couple minutes away. This is bloomberg. Guy good morning and welcome to on the move. I am guy johnson. We are in london. Erland high Caroline Hyde is over in berlin. What is the morning brief . Caroline a rude awakening. Slumber,tbrexit several weeks of that the market falls out of bed. Volatility comes surging back. Betting on brainard. The market looks to the feds relative dove. Will she put september to rest . Clinton canceled a trip to california. Will her health rattled the market . We will be will her health rattle the market . The asset class is still crucial. It will stay an essential part of Deutsche Bank. And they are reaching the finish line. Is the Deutsche Bank fascinating. The banks are back info. Let us show you what is happening. We are expecting a softer open. This is what we are looking at. That is already falling. You can see it happening. We will wait to see what the story is. A selloff on the backend of friday. We are leading lower and lower. Starting to play a little bit of catchup. Are coming the cap into the and the cac are on. Ng let us show you what is happening with the stories which has athe dax lot of moving parts today. Let me get my fx sp back on screen. Let me show you what is happening. What you have for me . I had the u. K. 10 year yields up. We solve this yield rise 10 basis points on friday. The u. K. Led a global selloff in bond market. On concern that the Central Banks are coming to the end of the quantitative easing. We heard from the ecb and we heard from the hawkish leaders. We are at 88 basis points on that 10 year yields. Moving onto to what is happening on the stoxx 600. Red across the board. Looking at the imax function. Utilities are down 1. 8 . When we saw the selloff in entered riday, it was a luxury things going down. Financials following closely behind, down 1. 5 . They just switched with materials. Down lower on Commodity Prices. Looking at specific stocks. I wanted to start with a be foods. With ab foods. Fullyear retail operating profit margin are close to the first year level. 9 ahead of last year. It sees fullyear sugar revenue and adjusted operating profit to be a head. To be ahead it looks like we could be seeing that a little lower at the open. Ism not sure if that todays price and it is down 3 . And praxairt linde terminated talks. They were in talks to join the two biggest producers of gas. Those discussions have ended. They failed to agree on the role that me a net, lindes headquarters would play in a combined company. These companies had been in talks since midaugust about a merger. The deal could have been valued at 3 billion. This is an industry that has been getting increasing antitrust scrutiny. On the same day that aon spins energy, theer unit, Renewables Grid and Retail Business is being split out of the german utility confirming plans for an ipo in the Fourth Quarter. Guy this is the ftse. The mmr. What it shows you is that we are seeing some fairly substantial moves in the mining sector. 4. 47. P glencore, up 4. 14. Rio is factoring down. We are seeing some big moves. Has the market taken the deutsche comment . Caroline still down 1. 5 . It does seem to be the key take away. The asset business is not for sale. They are keeping the overall Asset Management part. It is crucial to the future of Deutsche Bank. Let us talk about what is happening in the banking sector. Michael, the michael the market has been rotating out of morey into some of the cyclical elements, banks in particular have been a big day in her. Gainer. What you make of that move . What do you make of that move . Out of the rotation utilities generally was all part of the complacency we had over the summer. Because we had these centralbank questions, as the year draws to a close, people will question the complacency. It will be interesting to see if the rotation continues. Some of the cyclical stuff will be down more but in general, this is a blanket weakness we are currently seeing. Guy let us talk about what has been driving the story. For the is picking up fifth consecutive year. Corporate bonds highlighting the growing strain on Company Balance sheet. Morgan stanley estimates that ompany debt what do i make of this . There are a number of interpretations. This has been a world where borrowing is easy and cheap. And at a time when you are still remunerated as an executive for keeping your share price elevated and you can do that i buybacks. By what happens next . This is why the Central Banks are taking a step back and reviewing the impact they have had on the market. A slight yield curve will hurt the banks. And corporate are incentivized to borrow heavily. Henkel can borrow at negative yields. Michael you are creating these massive distortions. There was an assumption that corporate would borrow and invest and the investment numbers at the moment are not backing that up. What we have seen is that corporate have borrowed is that corporates have borrowed and bought back. In terms of how it ends, at some point they will shift the balance back to fiscal policy and yields will rise. Willuestion then will be corporate failed to maintain the debt . And there will be a stronger focus on credit. This is still many months, even years away. Caroline what about m a. We have just seen that deal ween teixeira and lend between praxair and linde unwinding. Michael the financing is still there. While will take a long for this theme to play out. Now, you would say yes, the finances are still there so why with the trend change . About think. About where we go. Everything is correlated with Central Banks. Forget intermarket correlations. It is all correlated with central banking. If you start to think about the relationships that exist, how to the relationships change not just with bonds but through the entire market space . How does everything fit together in a world where we are changing the other side of it . Michael initially, the correlations stay similar mainly because there will have to be some kind of rewinding and unbalancing. Money will ultimately leave the Corporate Bond market and go back into equities at some point. That correlation will normalize. The sectors in the areas that have benefited guy the equity market goes higher in a world where the Corporate Bond market tells off which has been driving the buyback . Michael mainly because positions have to adjust. Cash. L not all go into it is a question of relative valuation. Thereok at equities are some sectors that are expensive however, they are better valued than the bonds and the sovereign bonds. Guy michael, stay with us. Japant, the bank of indicates a shift away. Of talking to the cfo volkswagen to talk about how they plan to overcome the scandal. Uniper. E ceo of all of that is coming up. This is bloomberg. Guy welcome back. You are watching on the move. We are 12 minutes into the market session. This is the picture. Stocks continue to soften. We saw it friday. We are seeing it again today. Thanks down by 2. 4 . The utility sector. Stoxx 600, down by 1. 72 this morning. Caroline it is a big selloff. Digging into the individual movers. Function on the bloomberg screen. Analysts liking the evaluation now of that company but only four stocks in the green. Look at your key lagarde laggard e. On. The energy part of the business, the former plants, spinning off into uniper. We speak to the chief executive of that business as they are spun off. There are questions whether e. On will have to take another right down to the value of the business. Looking quickly at linde that is an dominate on and a with praxair. Ng let us talk about Hillary Clinton for first Hillary Clinton first. She has canceled her twoday trip to california. She has disclosed that she is suffering from pneumonia. She abruptly left a 9 11 commemoration yesterday and appeared to stumble as she moved towards her official vehicle. Her team is evaluating the rest of the schedule. North korea has completed preparations for another nuclear that if itg concerns conducts one it would be the third detonation of the year. Comes after the north carried out its fifth Nuclear Explosion on friday and claims it can output an atomic weapon on a rocket. Samson shares slumped again. Rates point, they fall to of 2008. The company itself is warning turn off the battery. Aviation officials are also calling on passengers to discontinue the use of the device. Global news 24 hours a day powered by our 2600 journalists in more than 120 countries. This is bloomberg. Guy let us talk about the boj and what is happening. The bank of japan has signaled a shift away from policies that surprised the market according to analysts. We had been sifting to get sifting through recent speeches. Just to talk about transparency. There is a behind closed doors meeting happening today. Are they talking about regulations . Everyone wants to know what the boj is doing next. Michael metcalf is with us. Is waiting for general kuroda governor kuroda. We will wait and see what the boj is going to do in the review coming up. If they start changing the way that they do things, maybe we will follow suit. Michael it was interesting that mario draghi of adopted the same will dos the boj we a review and come back to you. And the bank of japan does the same thing though they are one step ahead in the process. You also have to remember that in contrast with the fed, the ecb and the boj have made it part of their policy to get the right Market Impact as a price the market. Both Central Banks have done that and perhaps that will change. With the ecbsaw that mario draghi does not think that his policy will have much impact on the banks. Guy caroline . Technical issues. We will fix that and come back. It has been one of those days where technical factors upset us. Michael, let us turn our attention to china. This is the interbank lending rates. It is starting to get more elevated. Do you think that this green line, 6. 7 is sick never prevent is significant to the chinese . Michael does china still need a weaker renminbi . Yes. Another 5 10 weaker however one thing we would know is that markets, as they did appear over much of the summer, look to be much more chineset to balance currency weakness. If you look at a threemonth change in the renminbi versus any risk ask versus any risk asset that you may choose, it was the catalyst for a lot of market turmoil. Weakness in the chinese currency guy up until today. Michael the market has been pretty resilient. Weakchina still has a currency but the rest of the worlds getting used to that idea. Guy stay with us. Caroline keeping mexicos currency declining. As Donald Trumps election outlook improves. Is another dip in the cards . We discussed. We discuss. This is bloomberg. Caroline welcome back to on the move. 22 minutes into trading. Were talking about fx. Donald trump is expected to stay quiet over Hillary Clintons health but there could be a louder reaction from one asset in particular. You have the chart of the hour. The mexican peso is down. It is down by more than 9 on the year, the second worst performing currency after sterling. It was the worst last week. Donald has a lot to do with that. Take a look at this charge. Over the last four months, it shows you the mexican peso versus the u. S. Dollar. The lower the yellow line, the stronger the peso, the higher the yellow line, the weaker the peso. Naturally, you see a lot more weakness and strength. The correlation. This is the day back in early may when donald trump became the to. You see the peso beginning a timeframe of weakness. It gains a little bit but donald trump starts to paul even with clinton during and after the gop convention. Just to show it can work both ways, here is a decline coming after the convention in cleveland when we started to see Hillary Clinton fight that. Finally, donald trump support reaching the bottom, beginning to decline beginning and then this chart only takes you to the end of last week. The peso today is weakening partly because people are concerned about Hillary Clintons health. Willshe lose support, donald trump gain support based on concerns about her health that we saw yesterday when she was at the 9 11 ceremony and had to leave. An interesting chart showing that as long as donald trump is strong, the mexican peso is weak. Five 18. 95. We will come back i think i ryan called donald trump trumpy. [laughter] Michael Metcalf is still with us. When you look at the u. S. Election being priced in how is that being priced in . A lot of all agility is being priced in. We have seen a lot of concern. You are not seeing the same sort of trade yet. Did we get to it . Or know when believes donald trump will deliver . Michael what we have learned from brexit is that the fx market priced in the volatility. Here was a big skew the curious thing for the remaining Political Risk is fall of skew volatility skew. I think it is a puzzle and it relates a little bit to the complacency in the market that we have talked about and maybe after event this week, maybe we will see that priced in. Right now, nothing is priced. Caroline is it time to get out of the emerging markets if we see further hence of the fed hike . Guy is it time for the emerging markets and time to get out of it . Fed does not go, you stay with it. Guy is december ok . Michael you have to assume that they will use september to get the markets ready for december if they dont go in september. Guy say you believe they are oing in December Michael if they go in september when the market is not fully priced, that is them signaling something very different. There are trying to take back control of the policy. Basis points a year, you stick with emerging markets. We believe that there. Thank you very much indeed. Michael metcalf. Next,ne coming up driving through the crisis. We speak exclusively about that to the cfo of volkswagen and how they try to get past the cheating scandal. This is bloomberg. Hey hows it going, hotcakes . Hotcakes. This place has hotcakes. So why arent they selling like hotcakes . With comcast Business Internet and wifi pro, they could be. Just add a customized message to your wifi pro splash page and youll reach your customers where their eyes are already on their devices. Order up. Its more than just wifi, it can help grow your business. You dont see that every day. Introducing wifi pro, wifi that helps grow your business. Comcast business. Built for business. Guy welcome back. You are watching on the move. We are 30 minutes into the trading session. So, how are things shaping up . Thup might be the wrong war. 600, down bytoxx 1. 55 . Which stocks are moving the market . Lets find out. Nejra the biggest mover on the downside is down almost 13 . Shares have dropped the most since 1999. This, of course, largely because eon is facing another round of multibillion euros. It is forecast to fall massively short. So, according to an average estimate of 12 investors and 3nalysts, it will be worth 1 of the value that eon applied to be business as of june 30. Volatile a started writing. Linde, the secondworst performer, down 8 . This companys shares have followed the most since 2013. Now, the companies were int alk talks about a merger. The merger could have been valued at 30 million, but this is an industry that has come under quite a bit of antitrust scrutiny. What were hearing with people with knowledge fro of the matter is the companyies failed to agree to the role munich would play. There have been a number of other tieups in the industry. Finally, i wanted to bring up bhp billiton because miners are taking quite a big hit today. Lower Commodity Prices and lower on expectations, or rather, on reaction from the hawkish tone we got some from fed officials late last week. Caroline thank you very much, nejra. Now, we are getting the start of trade. We heard nejra talking about the ramifications on eon. Currently, we are seeing a price of 10. 015. We could see this rise to as high as 16 euros. Ist seems to be what uniper being rateed. We will be speaking to the chief executive in a few minutes time. But now, we are sticking with the german theme, far from perfect. That is how the volkswagen cfo frank ritter described the companys position. He told me there were profitability issues. , but wey can guarantee know much more about the risks that we were exposed to. Carefullyessing very all the risks and have set up related provisions. We have a pretty good handle on it. Ongoing conversations, not only in the u. S. And canada. We are quite confident that we have a pretty good handle on it. Caroline he also spoke about volkswagens plans to tap into the bonund market once again. Market, we have not been tapping for extended period of time. Us, market was closed to but we still have to tend to the market during the calendar year. Luckily, wehave have strong cash flow and a strong underlying business. We have a lot of customers trusting us with their deposits. Fundamentals,rong but we will certainly come back to the Capital Markets soon. We need to have flexibility in our strategy for funding. That is paying off. Caroline now for more, lets bring in our own reporter. Chris, it was a fascinating conversation. He really was very candid about some of the business failings. Chris indeed. You got the impression that volkswagen is on a nice edge. They have got to get their grasp around the scope of the problem. He says they are not there yet, but they have a good idea. He also said they wanted to move ahead and they are investing in a fitness in my in u. S. Business, as well as in the future of the auto sector. Caroline they have got money funneling out of the business, in terms of the fines, but they also have brazil slowing down, exposure to china. There is a lot they have to fix. Meanwhile, trying to stay ahead of the curve when it comes to electric vehicles. Chris they have a lot of things on their plate. Witter has a lot of balls in the air. He talked about costcutting. He talked about moving the mountain, trying to get the massive spending machine volkswagen has been in the pa st to get grips on it. They have to put pressure on unions as well. They are having discussions with unions they are looking to wrap up by november. That will be a significant issue to get profitability back on track to have the money to invest Going Forward. Caroline it is also interesting, how they are trying to educate the market as do perhaps why if you bought the car in europe, youre not getting the cash back that a u. S. Purchaser of the car would be. Thes that is one of things volkswagen has gone to pains to explain. They cannot paint all consumers with the same brush. He tried to explain that in europe, that the impact on consumers was not as significant thehe u. S. , in terms of residual cash on their cars. Caroline they are hoping that eating billion euros is it they are hoping that 18 billion euros is enough to have set aside. It really was notable how candid he was trying to be, guy. Guy yes, i guess the transparency story is more real than we thought it was. Up next, we are going to speak eons cfo. That conversation is next. This is bloomberg. Caroline this is on the move 40 minutes into your trading day. A lot of german stocks are taking the attention of the Investor Base. Why . Uniper goes live today. We want to dig into this story praxar havea and agreed to terminate talks. Shares have plunged at the moment, down 8. 4 . The biggest mover on mrr. Lets get out to frankfurt, where we can get a little bit more detail on the move. Tell us why this deal wihth the u. S. Seems to have fallen apart. Reporter yes, good morning. Yes, it is a deal that has been criticized, or at least, analysts have been critical that the deal could go through at all. That is because there are only a few players at the top of the Industrial Gas market. They probably would have had to divest a lot of assets. The surprise was it came as soon as this, that they decided to call it off as quickly. Guy lets think about what would have been the big Sticking Point here. How much of this is about munich, and how much is about personalities . Does the industrial logic stick out more than those factors . It would have been very attractive for those companies because they are going through tough times at the moment. The Steel Industry is in the doldrums. They are getting less contracts for these big plans. So, combining during tough Economic Times is always an attractive prospect for the companies themselves. But when it comes down to it, they do have to agree on details like, where is the headquarters going to be, and who is going to be the ceo and chairman. There always seems to be a little bit of power play examples here. I must have played a role here. Guy thank you. Caroline we are going to be sticking with the german focus. Spinning off the conventional Energy Trading business. Uniper is listed today on the Frankfurt Stock Exchange and we are joined by that ceo. Here is klaus schaefer. And congratulations on the listing. Currently, the valuation is at 3. 8 billion euros. How do you succeed that Going Forward . Today, first of all, is a great day for uniper. After 18 long of after 18 months of very hard work, we have made it to the stock exchange. Realtime to judge the performance of the company will be in 12 months time. Us roline give caroline give us a sense of the Investor Base. Are you expecting the same Investor Base that have been given your shares will have to sell out . We spent obviously, the last week on many intense meetings. There were three investor teams across europe and in the u. S. Very broad interest, in terms of investors looking at uniper, broad. Ep value, very it will be the index investors that need to readjust their portfolios, but we have seen enough demand in the last week that we know we will have our Investor Base on a stable base Going Forward. Guy klaus schaefer, it is guy johnson in london. Give us a sense of what you think costcutting is going to look like. People are looking for clarity on what you are going to do. You must have some idea of what the advances going to look like in terms of the employment base. Marketainly, the energy is challenging these days. Activere, every company in the market needs to put themselves in a competitive forum, making sure we are costefficient in terms of what we are offering. Over the next month therefore, we will work on that, but we will at the same time, work on other parts, such as really running the company for cash, making sure our Balance Sheet is into thed then going next year to see where our future sources of growth can be. Guy wholesale prices are pretty low right now. Do you see them improving . We certainly saw the price environment and the price environment is presenting some challenges, but we have also seen improving prices. Therefore, some talents therefore, some tailwinds for us. Caroline when you are looking at potential tailwinds, you talked about the future of the business, will you be selling assets if we see a recovery in prices . It is foreseen indeed, that inwill sell some assets terms of taking the balance in terms of taking the leverage of our Balance Sheet down. 2 billion euros, though, is quite a hefty price tag. How do you imagine achieving that . I think, Going Forward, the importance is uniper stands for a security of supply. The strategic of th focus of the company will be seen in enough markets across europe. It is gaining in value. The u. K. Is a good example. We also believe uniper will perform well on that basis. Guy i was going to ask you that very question, talking about the u. K. The u. K. Seems to be taking a long, hard look as to whether nuclear is the way Going Forward. Do you think the energy mix is about to change in terms of political imperatives . U. K. ,is changing in the and in many other markets. Renewablesncrease in across all markets. That requires, at the same time, backup power for those on the gas lights, the right amount of support. We need to strengthen the security of supply. That means access to commodity markets. That what uniper stands for. Caroline klaus schaefer, we congratulate you on the listing today. Uniper goes live on the Frankfurt Stock Exchange. We look forward to hearing from you as the business progresses. Keyext, the bond markets middlemen. Me take we take a look. This is bloomberg. Guy it is 8 50 in london and it is 3 50 in the morning in new york. As you can see, Energy Markets are softer. Linde, down by 8. 26 . Look at what is happening in the bond markets. Unsurprisingly, we can see something of a move. You can see it is skewed towards the periphery. Portugal for instance, is on the move. Caroline, what is coming up for the rest of the week . Caroline there is such a lot on our plate. We have the fed governor, so much focus on the chicago speech. It will be the last scheduled appearance before the quiet period. 71st regular uns session begins in new york. And on wednesday, Jean Claude Ju ncker gives his state of the Union Address to european parliament. All eyes are on the pound and we round the week off with a gathering of eu leaders. Plus, the jpmorgan ceo speaks at 5 25 u. K. Time. Can follow that at top live. Thati urge you to check out. Joined thecole thatts middlemen, but looks like it could be about to change. About . E we talking primary dealership is that we are talking about, right . Absolutely. Credit agricole has been trying for a number of years to join the club as a primary dealer with the federal reserve. It finally got all of its ducks in a line. Then, the people familiar with the situation tell us they did a review and decided not to go through with it. Caroline so, in terms of the application, it is not going to become a primary dealer in the u. S. But what does that tell us about the appeal of becoming a primary dealer . Is it Still Limited to the United States giant players . Yes, uh, this is hitting the world in general. In the last year, we have seen primary dealers pullout of the Government Bond markets, across europe, and also, in the u. K. The point is, it is harder for bond dealers to make money, basically. So, that is reducing their appetite to take on the risk and ultimately, curbing their interest in becoming a primary dealer. The is this the same across markets . Many businesses are walking away from the bond market. What is actually happening in the bond market and are we heading for a liquidity story that could cause huge problems . Certainly, the bond market is changing, guy. You know, electronic dealers, High Frequency traders are changing the way liquidity i ha ndles. Many traditional dealers are not willing to hang onto the same number of bonds on their Balance Sheet. That means the trading has become more difficult. The market is feeling a little more vulnerable. Guy what are we seeing this morning . Is the market just sitting on its hands and waiting and watching . Absolutely. The fed is the primary concern at the moment. Could we hear something that will make us feel that september is more of a light meeting . We could see a selloff in bonds. At the same time, we have other Central Banks feeding into this. Japanese Government Bonds and european bonds are also showing signs that they might want to see a steeper yield curve. So, it feels like we are at a point where we are going to be setting the tone for the Fourth Quarter over these next few days. Guy paul, great stuff. We will be discussing this a little bit later on the radio as well. The conversation will carry on. Caroline you take to the thanys with none other jonathan ferro. Lets have a look at the knock on effect happening at the moment. We can see a selloff across the board. Five stocks are in the green on the stoxx 600. In the red, eon is down more than five percentage points. We can also see a selloff in linde, the german gas company. It will not be pairing up with praxair over in the United States. Mma is off the agenda. The numbers are not living up to expectations. Guy it is an amazing business, quite an eclectic group of assets. Caroline, lets quickly wrap things up with the bond market. Yes, we can see a little bit of a move with the yields moving higher. It is more pronounced on the periphery, and we will discuss what that means next. Stay tuned. The pulse is up next. Mark the return of rate risk to european the return of rate risk. All eyes turned to fed dove brainard as investors seek clarity on the tightening timeline. Hillary clinton stumbles will her health scare rattle the market. Welcome to the polls. I