September 11 is always most difficult, theres no way to put it. This is a beautiful shot from our world crisis next to bloomingdales in midtown. That is the Freedom Tower in the distance. It doesnt get easier. Guy the story will continue for a generation after generation are it generation. We saw yesterday as well how important this date is. It could have a meaningful impact on the election. What you make of what happened yesterday with secretary clinton . Tom i think it was the moment where all of a sudden everyone considers the health of both candidates. It has been sort of a subset of gossip. Theove on with that secretary has pneumonia. Hillary clinton is suffering from pneumonia and has canceled a Campaign Trip to california. She stumbled as she was helped into a van after the 9 11 anniversary ceremony. Donald trump will keep quiet about her health for now. South korea says that north korea will conduct more Nuclear Tests at any time. Its exposed its exploded fifth nuclear device. They may detonate another device at a test site. Impose unilateral sanctions against north korea. A Syrian Rebel Group warns it will not respect the ceasefire that starts today. The troops would benefit the dictator. They worked out the seat fire. Ceasefire. Work permits may be a way to control migration into the u. K. After brexit. The ideaneed to accept of visas traveling to european countries. Net want to reduce migration by 300,000 people. Thousands of protesters protested to show their displeasure. They are calling the brazilian government illegitimate. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries, this is bloomberg. Thank you so much. Lets get to the data. There are challenges from friday. There is further deterioration in the last hour. Futures are 12. The yield is churning. The euro is churning. That is a misquote on oil. That is the wrong number on oil. West texas intermediate right now, weve got that. On to the vicks, its back to normal. So much for complacency. We will get to that of a moment. Futures are below 18,000. Deal, to see that emerging market proxy and the adjacency of the united spades. Carl weinberg is joining us in the next hour. Guy we are talking about the election and whats happening. We will discuss that a little bit later. Lets look at the euro dollar. Its rarely budging. The bond market is waiting to see whats going to happen later on. We saw a big move friday. Moving,e talking about but not moving aggressively. Euroe down 1. 8 on the stoxx 600 at the moment. Tom i like that positive yield. Over to the bloomberg, a correction. Do you remember what a bear market was . Guy is too young to remember that. From the peak where we are right now, this is back over the last four years. Off to the left of the chart is a little more volatility. The red is a bear market, 18 . It drives me nuts how people generalize those across assets. Youve got to do it based on the standard deviation. In this case, there are the two corrections recently in the last 18 months. There is no bear market insight. Guy the pullback in positioning, when i think of this chart, it speaks to that you we that. We have been talking about the nationals in the market short the vick. They dont think anything is going to happen. We have people writing crazy things. What you saw friday was a big move higher. You can compare it to whats happening to the vicks on my bloomberg. That move is substantial. Its a big move. I think positioning is going to be important in whats about to happen next. We have the global head of deutsche bank. Lets get his take on whats happening. I think on thursday and friday last week, we had the ecb disappointing some of the market by not easing policy further. The bank of japan is starting to make noise about more Central Banks easing. He fed is in limbo nobody knows what the fed is going to do. They came together in a bit of a perfect storm and caused investors to have a fright. Everybody is getting excited about this rethink. Is this something they want to seeneer . Are we going to that . Is that something Central Banks desire . They may have got a little bit too far in terms of aggression. It was not there intention to flatten the yield curve. We can see its not great. I am a big believer that the yield curve is a great indicator of animal spirits. When youve got a very steep yield curve, people can put entrepreneurial trades on. You can invest out the curve. When you have a flatter curve, entrepreneurialism does not work. In that sense, i think Central Banks are at least considering that maybe their policies are starting to cause problems in the market. Isot of the Market Reaction i dont want to see an overreaction. Get change in policy, its not going to happen overnight. Its going to be a gradual thing. Tom lets look first at that yield curve. Good morning. This is a vanilla curve. , they look at a lot of different spreads. Curve flattening is below 100 basis points. There is a little bit of steepening there, but nothing near the repression recession level. I know we like to talk about tenure and twoyear, i noticed its a little bit dicey. What is the state of the oil in the engine right now . Is quitery short and technical. End is quite technical. I dont think the fed will move. Price the market for higher probability of a move. Is the emerging market adjustment, this will be a theme thate next hour, is adjustment we are seeing, does that tell janet yellen what to do . Its a one or two day move. I think its quite clear that if , there a huge selloff are a number of assets that would be affected in the emerging markets. That would be one of the first to be affected. I think yellen knows this. I think she is getting close to being one of the most dovish on the committee. Some are more prepared to risk the consequences. Guy lets wrap the conversation up there. We will come back to you. We have a bit of news that will catch your eye. They are going to be leaving the boe. We have a decision coming up later on this week. She will be going at the end of 2017. She is going to be joining the London School of economics. We will have more on that story. We will talk about the bank of england further on down the road. This is bloomberg. Guy i am guy johnson in london. Lets get a is this flash. Is seeing its future in copier and printers. They are buying samsung enter business for a little more than 1 billion. Hp will have several new copiers for corporate clients. Shares of samsung fell the most in more than four years after warnings about the notes 7 smartphone. Regulators warn users to him easily turn off the foam phone and start charging it. Batteries have caught fire or exploded. There is a worldwide recall. A top volkswagen executive says they are not close to read putting repairing the damage. He said the worst of the crisis is behind it, but the damage is not been repaired yet you yet. Providee trying to Technical Solutions to our customers and to regulators. We have to regain the trust. And weppointed customers need to work very hard. Making progress, but we are far from fully overcoming the crisis. We have a long way to go. They are not clear if the 20 billion they have earmarked for the scandals will be enough. That is the Bloomberg Business flash. Tom thank you so much. Jim reed is with us. We are celebrating a very thoughtful report on our shorttermis him sm. I want to start with the idea of stability and instability. Your colleague makes very clear we are going to spend a lot of time on instability in the coming weeks and quarters. Where are we on that metric right now, the idea of refleeting doing it with painful instability . Last several years now, Central Banks of stabilize the market. The Financial System is fairly weak, the Global Economy is fairly weak. Central banks have stabilized it. Is centralhe fear banks deciding they cant do any more and want to store up a little bit of ammunition. We could create more instability into the market. Point, you do have to translate to a different policy. Its whether you do that gradually or suddenly and how it goes about. That is what is back the markets a little bit at the moment. Tom this is something guy has been showing every day, bring up the chart. That white line cutting above zero, thats the german 10 year with recent negative yield coming up. When you look off your desk at the shift from negative yields to positive yields, do you just assume thats a normal process with stability . Jim its really the weight of money. The ecb is lying and enormous amount of government debt. There are not a lot of bonds around. There wont be for a while. I dont think the ecb is going to change course. Iny extended the qe program december. The ecb at the moment is most likely still going to continue with the same policy. They may fiddle with eligibility. They are not going to change too much in the next few months. Mario draghi, i wonder what he is talking about. What he did say was the review carryinghat the boj is out is something they would like to take a look at. Changet they really what they are doing . Jim they always tend to review. I think they are starting to be more sympathetic. Perhaps a continuation does have side effects. They did not have the same side effects. When you are in negative territory and Interest Rates are negative, it does have a side effect. Guy the Corporate Credit marker, issuance is off the scale. Central banks probably one of the ig market to be part of the investment process, we would see Large Companies investing in stuff that would make productivity better and we would live in a better world. That is not working very well. What are they looking at in terms of the review process . What is happening with the ig market . How does this all fit together . To say its love the biggest bang and most important thing to the economy. That is a small part of their qe program. I think they implemented it to give some variation to get a higher qe level. In europe, companies are still fairly conservative and still fairly defensive in nature. Being able to our own a few tenths of a percent less, i dont think theyre going to be aggressive. U. S. ,s was done in the u. S. Companies would buy even more shares back and do m a activity. There is a different culture in europe or you dont have that gung ho animal spirit. Qe has lowered the borrowing costs. A lot of the deals are refinancing refinancing. Him we are going to talk to briefly throughout the hour about Wage Inflation and wage growth and its dropped to a different animal spirit looking at nominal gdp. Mexico, and emergingMarket Reactions are a clear and present danger. Carl weinberg will join us. We will talk about the peso at 19. From new york and london, this is bloomberg. Guy i am gone johnson and tom keene is in your. Its time for the morning mustread. View. Tes in bloomberg esters investors would be well advised to the economic reality. The markets telling the fed its not live . Maybe Monetary Policy is coming to the end of its affect its had in the past . Is this time different . Jim question the fed will be they will be reluctant to get above 35 or 40. It makes it difficult for the fed. There is a slight change and you can hear the slight emphasis. Maybe six months ago, they would have cared more about the markets than they do now. I dont think its a huge stage. They are leaning more shopping the market than they would. This is to be taken seriously. I think they need to say we are in charge. We are not lead by the market. The market should be led i. S. Do you think that shouldve happened before greenspan . Banks, to now suddenly be a bit more on the hawkish side, they have to be able to take the consequences of doing that. They may be prepared to do that. I understand august was ridiculously quiet. It was deutsche banks fault. We get that. The idea of 3. 8 standard deviation, it gets my radar up. When you go to your desk this morning, what will you be watching to show that we are containing a brutal move . Marketthink the treasury is probably the first point. We dont have a lot of time to wait. It could get a lot worse or better weekly. There is agine today bit of a waiting game for the next several hours. Treasury is the first point. Tom thank you so much and congratulations on your new length of decadelong some of our cycles and what we may see. London school the of economics. We will talk about american policy. The idea of a secretary clinton, her illness over the weekend and donald trump. The presidency of donald trump would be a substantial adventure. From new york city with the Freedom Tower in the distance, this is bloomberg. Tom a lot is going on this the marketrticularly pullback. Looking at the bloomberg, 11. Guy some rebel groups in syria skeptical about a ceasefire before even begins. One rebel group aligned with al not signing on. The democratic candidate was stumbling or collapsing in new her when she was injuring injuring her secret service unit. The president spoke to survivors attack on the pentagon. He said that extremist groups would never be able to defeat the u. S. The State Government that is home to frankfurt is looking to loosen employment laws. Global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. Guy what happens next with the Central Banks. Good morning to you. As a general question, do you as a general question, do you think the markets are losing faith in the ability are we reaching an Inflection Point here . The fact that mario draghi is not ease policy right now just to prepare. I think this will come in when the especially when forecast for 19 will be available. Guy im wondering whether or not some of the unintended say a very flat reshaping policy accordingly . There are three arrows. The generalized feeling is, of twothree arrows, the other are lagging behind. Donek nothing can be only with one arrow. Guy it is called into question whether or not a steeper yield curve would bring back animal spirits, as we discussed earlier. We know that things are in trouble. Thatay of dealing with would be ran operations. An lower rates now in order to have higher rates in the future. Tom how we got where we are in the economic history. Lord desai joins us this morning. Is there a shift going, like what you have written about for decades . We will see. Situations, the lines are going across country. Tom within that, do we risk regional blocs . The repeating of history . That it feelsrks we are falling back to the 19 century. A brexit gives unnoticed notice. Of globalizations are over. We are breaking up regional alliances. Guy we will talk more about brexit in detail in just a moment. A bit more broadly, if we are to see governments delivering fiscal policy, leakage will be a serious factor. If you think about how governments will spend, they will not want to spend 150ewhere, they wanted to focus on their own economy. Spoke earlier of Monetary Policy. Is it the kind of Monetary Policy we have seen prior . That has failed because that beyond thenot go bi thinks banks. Money is not transferring to the economy. A lot of people are saying, forget about Central Banks and the open market operations. We need helicopter money. Either you finance the deficit with printing money. Give everyically country a in the leading to thes transmission of money into the economy. About re talking infrastructure investment, borrowing while infrastructure investment, borrowing while the year is so low i have written about this. Tom lets do this. Grexit. Talk coming out, lord desai on a on a trump presidency. Why do we do surveillance . William white coming up in the next hour. This is bloomberg. The first debate, i believe the 26th, and then on to november. A beautiful washington, d. C. Guy johnson in london. We welcome all of you as the business season starts. Us, lord desai. You always surprise. Is that true . I perform the task if we trump were to win, what would be consequences. I want to know, what would happen if trump woodwind wo win. Lets prepare for the improbable. Tom the news of the morning, secretary clinton is ill. It is amazing, and you have the history to understand, what is of the short century . It is more Health Conscious now than it used to be. David owen wrote a book about how sick john kaneb he wants. He would never make it to the. Residential nomination i think america exaggerates come on, people. As long asou know, they can function as leaders, they dont have to run the marathon. Guy eight years though, it is a long time. Four years at a time. Tom four years, to terms. Guy there is a desire for Ronald Reagan is the right idea. [indiscernible] dont micromanage. Poor Hillary Clinton. Lets say, low probability. If the democrats had any other candidate, trump has no chance. He has no chance against joe biden. Guy im just kind of now thinking about 18 different questions that come off of that. It is in terms interest to keep hillary there. Guy that is why he is not saying anything at this point. How big do think the win would be if it were someone else . Wide. Guy with that feature into the house as well . It is veryi important to get the a businessman or business woman is president. We look back to coolidge. Certainly mr. Hoover as well. Im not very sure for the british, but what is the theinction british, but what is the distinction of a businessman with the distinction of president . Borrowing for growth is a perfectly normal thing. Debt is not a problem. I am fascinated by trump. Tom a point of debate here as the debate of september 26. Guy Johnsons Brexit p coming out, 5 00 tonight, of course, the campaign. We moved to the important first important first debate with all due respect. Very good. The conversation of the moment. This is bloomberg. Tom good morning, everyone. Bloomberg surveillance. Guy johnson in for francine in london. Right now, a Bloomberg Business flash. You. Ank blended and factor has entered talks to create the Worlds Largest supply of industrial gases. According to people familiar with the matter, they failed to agree on the headquarters. Star board is targeting an irish drugmaker. They are criticizing what they call operational and financial mistakes. Wantsboard once para go perrigo to consider selling gets Prescription Drug business. Venture plans to combine software and medicine. That is the Bloomberg Business flash. Guy the British Labor secretary says that work permits may be the way to control immigration after brexit. They may have to accept the terms of visas to travel to union countries. We are back. There is a sense of confusion, i would argue, within the right now about what brexit means. Everyone seems to have their own. Ersonal views there seems to be an education process underway. Please tell me it will be a short one. We are dealing with very dispersed ideas, but in a very public way. I think it is not going to be a short one, im afraid. This is a very complicated divorce. You cannot just the cabinet separation, not divorce. Separation, you can walk out. Walk out. Ou have to go to divorce, you have to go to assets, liabilities, and all sorts of things. The british people think they will go on enjoying status to travel abroad but will not let anyone else come in here. They want an asymmetrical brexit. It will not happen. In. As not sunk think, they need us, much more than we need them. There are countries out there, in eastern europe, who are not much pleased by all of this. We need to educate our top politicians on the complexity of what this divorce entails. Tom we have had a summer to let brexit sink in. I will go back to your book a bonfire of aleutians. What is the illusion the Prime Minister may has to defeat . The illusion that it is a very easy operation. Sovereign, soy sovereign now, that we can negotiate our terms with europe and europe has to lie down and accept. I do not think it is like that. They are 37, we are one. They will impose serious obstacles, kind of a cherry picked brexit. Lord owen, at the house of lords, and the money question to you is, does Prime Minister may have to develop marxist tendencies . Does she have to have a whole new stance going back to the idea of british marxism . One of the things is, i think we should call it Something Else to make it volatile. I have been in this country when of a you. T part of a in order to come, i had to get a work permit. Work permits are not something new. We have to make the u. K. Politicians and imagine what it was like in the 1960s. Can the u. K. Become like that and still win . Tom always valuable. Thank you so much. Greatly appreciated. Thank you for the perspective, particularly on secretary and mr. Trump. Coming up in the next hour, guy noting mexico moving out to 19. Carl weinberg will join us. And, and of the on the range that oil seems to be training on. We will do all of this coming up. In the distance, the Freedom Tower, this september 12. Tom now to bloomberg first word news. The Defense Ministry says that the north may deploy another device. A Syrian Rebel Group associated with al qaeda says they will not respect the ceasefire beginning today. Russia and the u. S. Worked out ceasefire. They plan to coordinate attacks with the British Labor secretary says be a way permits may to control immigration after brexit. The British Government wants to reduce net migration to fewer than 100,000. In brazil, thousands of protesters marched to show unhappiness with the new president michelle tamura temer. They call his government illegitimate. Global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. Tom thank you so much. Let me get to equities bonds, the market on the move. 14. Es at tell futures, 121. The euro holding steady. That is american oil, 45. There is mexican peso, launched well over 19. That gets my attention. Dr. Weinberg will join us in the next part of the hour. Guy lets show you what is happening on our side of the pond. Italy, interesting as well. The periphery has been hit a little harder than the core. A lower closing this morning and going sideways, waiting for a little bit of direction, i guess, from your side of the atlantic. Tom very good. We will talk oil in a bit, but lets go to the equity markets. The correction . No bear market, there is scale because we have not had one. We have become immune to volatility, sudden brief pricings. Have . O you guy i will talk about a related subject here you talk about fall until the. Simply did not believe the ball to the volatility was going to spike. We saw the spike on friday. Part of that is positioning, is positioning, part of it is repricing. You have to look at what you are looking at here. They are beginning to get a little bit nervous. And fascinated to see how the trade works. Tom i love that charge. Right now, we need to get you going with markets, looking at the bloomberg. 119 on dow. Futures pricing nicely below 18,000. I think they are all linked. Michael cohen worries about this, about the linkage between different Asset Classes. What is the briefing now . It has been quite high. Because soe seen is much concert is on the demand side, there has been a very strong correlation between other Asset Classes as well. I think they all feed on each other. When we have seen extremes as much as we have in the past few weeks, we see oil go to extremes. The opposite has been much more long positioning. That has led to this kind of track down that we have seen in the last week. Lets go right over to breaking news. We are thrilled to have michael with us to give us perspective. He will not give me an opinion on calgary 15,000 bodies bodies merging. As love this, a merging of equals. Protests i have never figured out the correct pronunciation. I butchered it, right . This is not an issue that i follow. Tom it does go down to the battle over commodity deflation and how corporations deal with it. How corporations deal with it. You work within the idea that they are dealing with long grind structural commodity deflation . I think longrun a lot are facing this problem. Facing a stranded resource overtime. This is something that saudi arabia worries about as well. Over the course of time, there may not be a place for oil getting into the 20302040 timeframe. Guy which is the biggest factor with our consumption of oil. Im facing a stranded resource overtime. This is something that saudi arabia worries about as well. Over the course of time, there may not be a place for oil getting into the 20302040 timeframe. Guy which is the biggest factor with our consumption of oil. Im wondering how they describe fully Different Things and how they plug into the models. I think there is a low probability that we get any decision from opec in september. They will meet in algeria. They will talk about the market. At best, i think we can expect some type of statement from them. What the market and the investors are much more concerned about over the course of the next 23 weeks is what do. Fed will there seems to be a disconnect between arrays hike and what the market believes will be the rate hike. As we have noted in the research , we do expect that over the course of the next week or 2, 8 we could see even today, from ne of the Federal Reserve members speaking, the higher probability of every hike will the strengtht on of the dollar and could see some weakness into oil. Guy im trying to understand what will happen next. If we have finite demand for oil, we will seee will technology overtake its usefulness. We will see the developing market shift away from hydrocarbons. What is the most rational way of policy. Is it to pump as much oil as you can . I think the problem right now is they are caught between these two conundrums. On the one hand, if they come to any kind of agreement or urge to an agreement, they spur on additional demand. That also results in a reduction of their market share. Over the longer term, any the price goes a little higher, they that they are not eating into the long term demand of the commodity. That is why they face this issue. On the other hand, if prices stay too low, they face the prospect that they could actually reduce the amount of cisco reserves and they threatened the Overall Economic strength of their country. It is a bit of a tradeoff that they have to face month to month. At this point, the can continue to pump as much as they want. Tom we will come back on oil. A canadian merger we see what regulators think of that. When we come back, megan murphy will join us. This is bloomberg. Tom the dialogue shifting yesterday across this nation, and in particular, in washington. And exhaustion ofhaustion secretary clinton. We are thrilled to bring in another perspective from megan murphy. We could talk the entire hour of this. There was a shift as secretary clinton stumbled yesterday. A huge shift. When she left 9 11, we were not clear on what happened exactly. We thought it was heat stroke. A video showed her apparently stumbling. It makes a serious question for campaign moving forward. Tom we have seen this before. Reagan, kennedy, and certainly bush as well. Is she getting proper medical care . She did get diagnosed with pneumonia as far back as friday. It is about hurt getting i think we are also very cautious chair diagnosis from outside, people say, this is what it looks like. Be called for her to release medical records to be a little more transparent and of front about what is going on. Tom what is the cost of taking two days off or even a week off. Once her mother to get better. This is the thing. Even though it is a political dynamic, this is donald trump. Once her mother to get better. This is the thing. Even though it is a political dynamic, this is donald trump. This is not a man to shy away. He has told us that he will remain, as he calls it, radio silent on this, and wait for her to get better. Precedencere any for changing a candidate, this . Ate in the election people will be talking about it, and if you were ever above can party strategist, you understand, you have done the background on Hillary Clinton and understand what you are facing. I wonder how the whole situation could change. There are obvious names in the frame obviously, joe biden, or something Hillary Clinton, this is a campaign that she has run. They knew that this could be an issue. They tried to dismiss it as a conspiracy theory. Something on the margins has now moved front and center with the this they do and what happened yesterday. Tom help us move forward to september twice six. How will this debate be different . Will it be the same old, same old . Is this debate different . With matt lauer last week, you saw some foreshadowing. Was thet form showed weakness of the candidates, and not their strengths. Tom we will not talk policy. This is the whole thing, will we be able to get through without vicious attacks on each other . Tom does this affect the markets, nonpolicy campaign . The whole dynamic of the market is politics. People are very conscious as to how this campaign could turn out. There could be indications for trade, for u. S. Economic policy. I think this is being very carefully watched in europe. I think the debates will make a difference on how markets over there are behaving. Guy the fx channel was very effective when it came to the brexit story. Risk reversal showing there was reversal showing there was big downside potential. When i look at the risk reversal into the u. S. Election, they are not looking at anything like that. Will this be a nonevent for the market . As i remember, brexit did not become a big thing until couple of hours before the results were finalized. I think the market is sitting back and waiting. I dont think anyone is prepared to take a hard position. I think people are watching with caution. Is elevated a bit. Lots of things going on. Lots of things going on. Tom making, very megan, very quickly, speaker ryan is scheduled to speak shortly. Where does he fit into the election right now . He has a huge role to play dragging forward the establishment. Tom it is not working, is it . When we talk about policy, it is his policy framework. Tom will the republican establishment support donald trump . What about in domestic politics . Here is the thing, they want him to win. Tom megan murphy with a monday on donald trump and secretary clintons illness as well. Will moversation forward this evening on with all due respect. From london, from new york, this is bloomberg. Tom bloomberg surveillance. Guy johnson in london. Im in new york. It is time for the morning glass clean and the morning must read. Lets get to that. This really caught my attention. It is a very self for note thoughtful note. Putin in bloombergin is this week business week, on stands worldwide. What mr. Putin has done is domestic rivals,tic opposed the putin regime, and you are likely to end up in prison or dead. Carl weinberg is a student of the international lands it, as is Michael Michael cohen. You have to be kidding me. Donald trump finding elements of good in a russian czar. It is interesting that paul krugman, a nobel laureate, is writing about this. The prospects are daunting for a took candidate. Tom you will leave it there. You can tell us all about russian oil, the background of russias power. It is. They have been able to cut cost, they have seen the ruble devalue. They devalue. They can survive at these lower levels. The growth will be capped. Tom the ruble devaluation is critical. Walk us through that. The are not dependent on imports. They can benefit from the devaluation every day. If you look at the connection between russias Foreign Policy aggressiveness, or lack there of, in oil price. When we see extremes in the course of russian history, we moreseen russia take much more aggressive actions. We look at georgia in 2008, the collapse of the soviet union. All of this has happened at the very same time that oil prices have fluctuated. Obviously, it is an important thing that mr. Putin be involved be involvedussion in this discussion with opec countries about whether or not they freeze production. That is why he is so concerned about it. Guy is it russia an example of why saudi should be pegged from the dollar . Who, im sorry . Guy saudi arabia. Dollar pegged,he it will limit your options a little, wont it . It will, but the valuation is not costless. You can move the pain in the drop of Commodity Prices from the producer to some other sector of the economy. Maybe it is the consumer or importers of capital goods. Someone has to pay it the end. All you are doing is moving the suffering around from one to the other. Strategy for russia is much better to keep to work to keep the price of oil up. The same thing for the saudis. Tom we will come back. This is a strong way to get your monday started. Some background reading, you can do that in Bloomberg Businessweek. Any numberidestepped of themes, but some real substance there. Mr. Putin, he would just like to be friends, maybe he can be friends with mr. Trump. Thrilled to bring q William White bring you William Whites. 9 00 thisat at morning on bloomberg radio. From new york, the september 12, sun coming up on the chrysler building. In the distance, the Freedom Tower. 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 i am guy johnson. Tom keene is in new york. Thats it to bloomberg first word news. Rebel groups in syria are skeptical about a ceasefire before it even begin spirit the u. S. And russia announced a truce friday, and it takes effect today. One rebel group aligned with al qaeda is not fighting. Quiet trump plans to keep on Hillary Clintons Health Issues for now. She has been diagnosed with pneumonia. In newhows her stumbling york as she was helped by staff and secret service agents. According to people familiar with Trumps Campaign planning, he and his aides refused to comment. Kospi says he will not run in the 2018 election. Tennis, Stan Wawrinka is the mens singles champion. He beat Novak Djokovic in four sets. He is the oldest u. S. Mens winner in 46 years. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries, i am Sebastian Salek, and this is bloomberg. Guy thanks tom thanks so much. Holy slams injure holy slazenger. Are you kidding meac of the onehanded backhand . Are you kidding me . The onehanded backhand i do not know what the equivalency is with football english football, american football, or rugby. There it was to that was a onehanded return. It is great. Guy is one of the oldest guys on the circuit. Wayrobably learned tennis back in the day, so, yeah, oldschool wins occasionally. Onehanded backhand. Absolutely stored married. Lets do what we do in, finance, investment. Worlds worst tennis player. E. M. Go to dr. Weinberg, let me go back to you, starting 20 years. 30 years back, is e. M. That are for the education that can come now . Is it a new emerging market versus other crisis . So many e. M. Economies have their basis in commodities, and Commodity Prices have been so weak now for less two years and continue to show no sign of life. Emerging markets in general are in a delicate state. There are exceptions. Countries like china, for example. Producers, itity is particularly difficult. E. M. Exico is a proxy for here is a chart for mexico. This long slope matters and shows the success of mexico, peso stability in light blue. They want to avoid the brutal move indicating the red box back in 19941995. How do they do that . Are you optimistic they can avoid the brutal moves of the past . Carl we have to see some economic action in mexico right now. We have to see some consolidation on the part of the government, new economic policies, some stimulus. Mexico is adjusting to commodity price declines and a Slower Growth than the u. S. Would like to see. It is about politics, too. Guy i hope you can see this, but i have a chart on my bloomberg showing the highball, the hong kong equivalent to libor. A level that seems to be defended by the chinese authorities. We move into a new world of central banking policy. What can the chinese do . Carl they seem to be letting it go. The chart i like to look at is the tradeweighted yuan rather than just the dollar alone. It isfocusing on more a standard deviation below its recent trend. That signals that maybe the chinese are prepared to let the yuan go cheaper right now. They are seeing the benefit. Experts are up four points at 4. 5 . In a shrinking world economy, they are doing better than most. They probably feel their currencies helping them get there. Guy back to the conversation we had earlier on. Is that what we can expect more of . Are ending up in a period where central banking steps up, are we going to see much more of this . Will they let it go significantly lower than where it is now . Carl the central bank, the g7 will see higher Interest Rates at the end of the yogurt. Canada, exception of which is a commodity producer. We will see a cheaper canadian dollar, some cheapness on the part of norway and other advanced economies, major commodity producers. But overall, higher Interest Rates will be a drag on the emerging market. Tom michael, this is a chart, the old crb, called the cci now. I have adjusted it for inflation, and it shows the e. M. Reality, which is 60 years of persistent commodity deflation. Do you guys at barclays look at ishina bull market that a one off, or is it a shift finally from deflation . Michael i think there are a lot of factors that led to the kind in alloff price rise commodities. The way we see it is that there are a lot of different components of commodity demand that we see as becoming more efficient and less the china that will emerge in the next three to five years is not the 2009 to 2011,n and a year or so before that. There are a number of things that in the short term can see commodities demand and oil demand increase. What we have seen over the last years is investment in china has increased a lot. In july,a bit of a dip but there are a number of new state initiatives that were announced in the last week, and ethyl and at the end of july that we think will support commodities demand through the end of the year. Weinberg writes a lot about folding into macro economics. Do you have confidence that emerging commoditybased nations have finally caught a bit . Carl i do not think so. Commodity prices have been nominated by supplyside effects, and i cannot agree with you. I do not see Strong Demand side it effects i do not see Strong Demandside effects. They have reduced the production of fossilbased activity last year. Even though they increased the amount of electricity substantially. Tom respond to that, please. Michael there are two sides per at on the one side you have the service sector, the demand the electricity, the consumer that is demanding more cars, purchasing more suvs. You have the oil story, that in our view remains more constructive at the end of the year, into the first half of next year. I agree that on other commodities there is a case to be made that we are in this longterm trend. On the industrial side, the emerging Market Industrial side, depending on whether you are oil demand, or call, is weakening. , is weakening. Over the course of two months or so, people were concerned about brexit. It is still a concern longterm, but that was a major reason why we at barclays revised our gdp forecast recently slightly higher, because that brexit related gdp growth did not is actually going to be higher than if brexit had led to that strong impact. Tom we also have carl we also have the supplyside. Over the last five or six years, with sustained lowInterest Rates and Commodity Prices lead to overinvestment, overcapacity. I do not see that going away anytime soon. We will see oil prices down in the dumps and Commodity Prices in general down in the dumps for a long time. Michael Commodity Prices will definitely remain down in the dumps for some time. We are starting to see the investment cuts in other commodities that we are seeing already in oil. For oil it is different because there are different types of oil that are needed. We are seeing very strong indications that we should not see inventory draw as we come into the winter time frame. Guy michael, who is out in front on this . The mining stocks in london are baking are being hit hard today. When you look around the market at the moment and you guys do your research, what do you see . Glencore is cutting there. There is an understanding that they have to do this. I am wondering how it all works. Michael little by little, the investment is being cut. Each company is doing it in a different way. They all have different constraints on their respective Balance Sheets that enable them to see costs lower. So every single dollar is going a long way. What we saw over the course last over the course of the last week with the barclays equities conference is that everything will dollars going down much further. 50 oil price, and every single one of those dollars that these companies are spending is going much further. Tom we await an important opec report. Carl weinberg will report as well Carl Weinberg will return as well. On our fiscal policy this douglas holtzeakin will join us. Worldwide, this is bloomberg. Guy welcome back. I guy johnson in london. Tom keene is in new york. Here is Sebastian Salek with the Bloomberg Business flash. Sebastian some of the bestknown hedge funds are having Trouble Holding onto capital. His only had four winning years. Year hedge funds suffered from the biggest withdrawal since the financial crisis. The biggest funds have min hurt the worst. John cryan says Asset Management will remain a central part of the company. He was responding to reports that go might sell the unit. In a message to employees, he said they should not let themselves become distracted about speculations on sales plans or mergers. Hp is seeing its future in copiers and printers, agreeing samsungs printer business for a little more than a billion dollars. Hp will show off several new copiers at a corporate conference in boston. That is the Bloomberg Business flash. The bank of england Deputy Governor has resigned after a couple of years. Over one of take the highprofile positions at the London School of economics. We go to scott hamilton. Carl weinberg is still in new york. Out of the blue . It is a Good Opportunity that she did not want to pass up and she has taken the job. It is a higher profile job. She will be her own boss. She will have a Big International process the institution has a big profile as well. That is going to be a big loss. A certain extent, with brexit coming up, can that fulfill certain response atlities yet nevertheless, this critical time with brexit . There was a big overhaul at the bank of england, and both of them brought a lot of International Experience to the bank. In terms of brexit, they will need that experience. It is a remarkable phil at the London School of economics. And then her doctorate at oxford. Lselessee is a global is a global institution. It is really an outreach by the school to its international audience, isnt it . Thats right. ,he London School of economics a lot of people have pointed to International Organizations but also within the u. K. Political establishment as well. She is not the first bank of england Deputy Governor. Howard davis was a Deputy Governor in the 1990s, and he took over for eight years and left in 2011. Tom give us an update on dissent at the by giving one. What is the level of dissent give us an update on the dissent at the bank of england. If you are not keeping track, bank of england is like game of thrones. Lucy. Is like i love except it is i love janet. Scott she is definitely part of what is probably the middle pack of the bank of england. Line with thed in andrnor since she came in in august of 2014. Owl,escribed herself as an not a hawk or a dove. It is going to be in terms of her presence economically, her have tried to give her a personal guy there have been concerns that has become more political. In some ways, she softened that. The gender issue was as part of the narrative as well. That changes the political the mix quite a lot. Scott i have terms i have talked with members of the bank of england, the rank and file. Bemeetings, she is going to also in terms of she has played a big role in if give markets review. Tom scott hamilton, thank you so much for the briefing on the Deputy Governor leaving for the London School of economics. Futures are weaker this morning. Is well up over 20, a remarkable move, with a real look at 18,000 on the dow. This is bloomberg. Tom next in peso, how about that, guy johnson in london . Im looking at mexican peso lead. I rarely do this. I usually leave the peso for the end. I was at Yankee Stadium last upk, guy, and somebody came to me and said, to hell with the red sox, quote dollar canada more. So i am quoting dollar canada for a guy who was vicious to me at Yankee Stadium. Guy that never happened to me at a rugby game, but i look forward to the moment. The paper story is interesting as well. Ups look at what is coming on bloomberg go. Alix we are talking about a potential trump lead could mean for the equity markets. We will cover what to expect from Lael Brainard speech later today. Cooper says that his call is now for a 50 chance of a september rate hike increased because of her speech later on today. Plus, with the selloff, are we looking at more distress opportunities per jamie head ofn, the global the Situations Fund that kkr huge gaps. Going to talk about whether the market is distressed enough to start putting money to work. He . 3 billion. Tom thanks so much. How about this, folks . Cosan extent. The opec report, Michael Cohen was with us cosagh khazakstan. Michael cohen is with us. One oil field can make that much difference . Michael it is a great story, zakhstan. D in ka you know what companies actually call this . They call it cash all gone. Tom like chevron, right . They got clobbered. Is a field that by the end of 2017 should be pleasing about 300,000 barrels a day, compared to alaska, which produces about half a Million Barrels a day. So it is not as big. Opec talked about not opec is ruining our life right now. They are looking at a couple of other fields in norway, in the north sea and all of these fields are coming on and kind of pushing nonopec supply to be basically flat on the year in like ither than down will this year in 2016. Guy how much Global Supply is currently affected by war, terrorism, etc. . What is the impact . Michael you have to break it down into parts. You have nonopec and opec supply that has been disrupted. We estimate in the range of the range of 2 million to 3 Million Barrels a day. You have the neutral zone, which is a field shared between saudi arabia and kuwait. That is another half a Million Barrels a day. Sudanou have sudan, south , places like yemen, all of those. They are small, but in commendation they add up to 400,000 to 500,000 barrels a day. You are looking at a range of 2 million to 3 Million Barrels a day. It could come back, but it also could get worse. Gdp . What is the drop in what is the nominal gdp . Oil prices iow think are going to sustain. We have seen these shortterm fluctuations, but overall there i thinkamount of they will Keep Oil Prices down. When you look at what that means phenomenal world trade, it means countries that produce oil are comingo get less revenue import less from the rest of the world. That means a general depression of exports. Tom you have been way out front on this. Michael cohen is with us as well. The wealth effect, the income effect of the oil price, much more involved than just monitoring tick by tic. This is bloomberg. Jon rude awakening. The stock market falls out of that. Volatility comes surging back. David the last word on september. All eyes turned to Lael Brainard as investors see volatility on the timeline. Alix and Hillary Clinton cancels her twoday trip to hell california. Jon a warm welcome back to alix steel, who comes back from vacation. And a warm welcome back. Volatility comes bouncing back to it although in fairness, it is not up to high levels. It is back to sort of the norm. Alix i go on vacation what happened . I come back, there is a global bond selloff, yields are backing up. David