On sundays debate. Taylor Hillary Clinton and donald trump were in the ring again at Washington University in st. Louis for the second president ial debate of 2016, and the gloves came off almost immediately. Trump reeling from last weeks release from a 2005 tape in which the republican nominee discussed women in degrading terms. Clintonsto make bill 1990s scandals part of the conversation. He also discussed Hillary Clintons use of an email server while secretary of state. Mr. Trump people, their lives have been destroyed for doing 1 5 of what you have done, and you ought to be ashamed of yourself. Mrs. Clinton everything he just said is absolutely false, but i am not surprised. It is awfully good that someone with the temperament of donald trump is not in charge of the law in our country. Mr. Trump because you would be in jail. Moderator secretary clinton . Debate,prior to the trump appeared with a trio of women who previously accused bill clinton of sexual misconduct. Helicopters are carrying food and medicine to southwestern haiti nearly a week after an assault by hurricane matthew, but desperation is growing in cutoff areas where Health Health has not arrived. Power is out. Food and water are scarce. There are words that gunman have hijacked six convoys. Preparingorces are for the most significant role in iraq in years as troops prepare for an attack on the city of muscle. Mosul. U. S. Special forces are already taking part in rates of the surrounding area. In iraq. 6000 troops after the 2011 withdrawal, there were almost none. President hollande has said he has not decided whether he will meet with Vladimir Putin in paris six days from now. The longest says russian action in syria is unacceptable, and the people of aleppo are suffering were crimes that will be the subject of an internal investigation. Global news powered by more than 2600 journalists in more than 120 countries. I am taylor riggs. This is bloomberg. Tom this is commodities right now. Through the data all of this off mexican peso and the debate reaction. Today. O is a big story a quiet story. Oil churning near its 50 level. 14. 18 off of the weakness last week. Two year yield was at 0. 85. We come in two basis points over the last several days. Sterling was at 1. 23 when i walked in the door. Go back to the peso chart. Francine hassett. 18. 94 is a new, big, stronger peso off the festivities of the weekend. Francine it certainly is. I know you were going to talk about peso, but i did want to have it just in case. At the moment, the biggest proxy for how you trade the u. S. President ial election. A little bit subdued. I want to look at Deutsche Bank. , it john cryan was in d. C. Was unclear if he was meeting with the doj, we still do not have anything on that fine. Uped index, you can see, 0. 70. This is dollar peso, a debate indicator. Are going, mexican peso . It is the adjacency and export dynamics. The red line indicates a trump surge coming out of the middle of the summer. We roll over the first debate, the blue circle, the next debate last night, and we went down this morning. That is a stronger peso. The devils are in the chart, francine. Im Francine Francine had a mexican peso chart. You have stolen my thunder. It is right you are showing mexican peso. I see inflation in japan. This is the japan 10 year zero coupon inflation swap. We spoke to governor kuroda. The first circle over there, right on my right, is when abe unveiled the fiscal stimulus. The second is when the Bond Buying Program is extended. Since we had negative rates, this is going back. I imagine if you look at the forward slots for the u. S. , it would be a similar picture. Tom this is important. Peso, the question is, do we get back to this . Do we get back to this big middle ground . Mark mobius will join us in the next hour. Getting back to that is a big deal this morning, the idea of dropping back to it. Francine . To benchmark. Y it is similar to your chart. We have mexican peso here. We charted against the popularity of donald trump. You can see that clearly it is correlated to mr. Trump, how he is doing in the polls. A clear impact on the mexican peso. Tom i would emphasize for the global audience, what we are doing in the u. S. Is aggregating the polls. We really will not see that for a day or two. Kevin cirilli does not need a cold to know what need a poll to know what happened. He is torn has from st. Louis. The end of the debate, they did not shake hands. But the body language on that debate, the end of the with the microphones off, is totally different than the first debate. How uncomfortable was it . Kevin this is one of the nastiest debate in american history. We will be talking about this for decades to come. I put this question to top aides in trumps political orbit. The word they used to describe the Clinton Campaign was rattled. When i put this to the clinton surrogates in the spin room, they reiterated clintons claims they feel donald trump is unfit to be president and his performance in st. Louis was an illustration of that. Tom kevin, over the weekend, we saw a Republican Party shaken to its foundations. I put out a photo of the gentleman who explained to Richard Nixon he needed to resign. Help me with the washington Republican Leadership this morning. Mr. Mcconnell, mr. Ryan, and the others how do they move or work is to mark move forward . Kevin it will be fascinating to see how that plays out. During thatmp tower memorable display, to say the least. I have been covering his campaign for more than a year. Over the weekend stands out as perhaps the most memorable of the campaign moments. So there is a clear, clear separation between the Trump Campaign and the Republican Party. There was many calls that governor pence would actually lead the top of the ticket. Hearing inside of his political orbit as well as from the rnc officials indicates that trump and mike pence will continue onward, but they are embattled. This is a Republican Party without a leader. This is a Republican Party at a crossroads. This is a Republican Party that is now in a significant place of danger of keeping control of the senate, heading into the elections. Francine are there more tapes . Are there more tapes . I know it is the milliondollar question and we do not know. But if this is an outtake, i do not know if there is how much of a crossroads there is between tapes like this being leaked out and what his Vice President will do, Vice President ial candidate. The Trump Campaign is in full on nuclear mode. Just hours before the start of the president ial debate, we saw him appearing with several of the women who have accused bill clinton of lewd conduct, to say the least. This is a campaign that has had its back up against the wall. They are coming out swinging. They are essentially saying, bring it on. They are pushing back hard against all criticism not only from the democrats, but also from within their own party. They are under no they are not making any questions, if you will, that they are soldiering onward and soldiering onward, quite frankly, alone. Francine thank you. Go get some sleep. Actually, we need you in the next hour. Then get some sleep. Coming up next, the bank of japan. About, we were talking negative rates, the 10 year yield, and inflation. Will he have to change the inflation forecast . This is bloomberg. Francine i am printing not quite in london with tom keene in the york. Lets get straight to the Bloomberg Business flash. Taylor another blow for Samsung Electronics as it tries to move to the crisis over exploding smartphone batteries. A person familiar with the matter says the company is temporarily halting production on its note 7 from as Wireless Companies in the u. S. Have stopped selling the note seven after reports that replacement devices were overheating and bursting into flames. Investmentloys company is increasing its stake in vivendi to more than 20 as the billionaire titans his grip over the tightens his grip over the media company. It has double Voting Rights attached to the shares it is acquiring. Francine thank you so much, taylor riggs. Lets turn to japan. Coronadown with rookie at the imf annual meeting in washington, d. C. He said the boj will continue easing in the coming months. Kuroda the market tapering tapering, as you know is a way Monetary Policy from a way of reducing, stepbystep, the amount of asset purchase. But as i said, we do not [laughter] in 10 to exit from expansionary Monetary Policy at this stage. We will continue, or even strengthen our monetary easing in the coming months and years. And for the time being, as i said, ¥18 trillion of this would continue. It could, of course, beyond go beyond that, or go less. The most important is to achieve the eu achieve the cost control. That is the most important, because by achieving the canopriate level, we maintain and even strengthen stimulating impact over Monetary Policy. Francine that was governor haruhiko kuroda. We get more from an Investment Management chief investment officer. Great to have you on the program. What i was try to figure out and asking governor kuroda, they are jgbs. Jbbs if this start selling, that would be considered tapering. That is what the market is trying to test. That is right. That is clearly the expectation to ensure there is this positive slope to the yield curve. Hirelks about wanting to inflation. The textbook says that is what you need to get people to spend more. People with fixed assets often they put up savings rate instead of spending more. Japans policy focus is not going to work. Governor kuroda, i asked him several times, is this the one . He has been tweaking. James the entire policy agenda they have been buying equities strongly, and yet the equity market is down, not up. It is clear simply throwing money at challenges, when there are deepseated underlying no pelletc problems, for accepting inward migration inflation is up 16 , but the population that works is down 14 over the last decade. No surprise there is, in effect, no Economic Growth. I suspect very little impact on the growth for the next decade. See any indication that any central bank has successfully is successfully reflating . James i see signs consumers are beginning to spend more money in europe. I certainly see strength in the u. S. Economy. And i worry less about the inflation observable in the u. S. Economy. Jobs numbers, relative economic strength, it , this year andme next year. That is reliable Economic Growth. Observing at the moment as secular stagflation rather than a future recession. Companiesat backdrop, have continued with strong returns to shareholders. Tom i want to look at japanese yen. I call this the kuroda chart. It is good to see mr. Kuroda with ms. Blackwell ms. Lacqua. Yen cannotion is the break through the little blue line at the bottom, the 100 level. As i look at this, it is real simple. To go down and tests that area of the market . Are we going to go down and tests that area of the market . James driving the yen, i would observations. Nonjapanese investors have been selling japanese assets. We should have seen the yen falling. However, what we have seen a significant repatriation of the yen by domestic players. In this environment, we want to have more yen. I do not think mr. Kurodas policies are going to reduce the pressure. It, the morepush the yen is going to be purchased by his own people. Francine why . Testing . James absolutely not. This is a logical response been a climate of poor Interest Rates were you are up in your savings bigger nestng a egg, because you are worried about how you are going to pay for the next 20 years. Francine coming up, we hear from the Swiss National bank president. We spoke about going further into negative rates, swiss franc as well. Francine i am Francine Lacqua in london. Tom keene is in new york. We are talking energy, speaking on the future of the Energy Business here in london. Joining us is the ceo of enel. Think of for joining us. We want to talk about utilization, the future of energy, and investing in europe. Israll, the Central Banks it more difficult for you to do financing in a qe environment . Add think if you can something, it is may be easier. Money is available. The issue is projects and what to do with them. Francine you are talking about digitization. Did that change the name of the game for a lot of utilities . Francesco uin this division is changing in a big way. That is because it is being digitized. Grid thed to the grid is behaving a different way, and it is great. Mean yourdoes that valued differently . Is this like the year 2000 caps off saying, we are actually a tech company . Francesco we are becoming a big platform for many things, not only energy. There is a lot of additional value. Francine tom and i were covering the Imf World Bank meeting. It was clear there was a concern about who you speak to in europe, and that europe has been through such turmoil that it is difficult for an american investor to say, i want to have 500 million in europe. Francesco europe needs to unify the energy markets. Complex. E are too we need to make ourselves more understandable from outside. Tom i look at your companys share performance. You have a very large dividend of 4 , which by u. S. Standards is substantial. Is your dividend to high . Are you distribute them too much cash flow to shareholders . Francesco it depends from a point of view. For us, i think the right evident. We are not highestdivision company in the european area today. Actually, we are in the middle of the pack. But what we do we increase the robustness of our cash flow ratio, so we have a lot of cash flow at the same level of a beta ebita. The growth is an endless question. We do not think we are disturbing too much dividends at the moment when compared to others in your. In europe. Tom this is the shares in euros. The basic idea is regression. I am doing this on the bloomberg right here at the desk. I am concerned about the total return over a good 15 or 20 years. Clearly, you are turning it around, coming off the lows of 2013. How are you going to advance the share price . I think it is a combination of growth and robustness of cash flow. Successs been the major of these companies for too long, and i think it is time to turn to something more concrete. Make it more cash generation rich, and use that cash for growing. That is the bet. It depends on the opportunities of growth we are able to find around the world. That is why we are betting on digital transportation transformation. Thank you so much. Coming up, we speak about emerging markets and the fed. Tom new york city was focused at midtown. I walked across mr. Trumps emporium in midtown. A stir. Ere, creating there is midtown new york, mr. Trump midtown new york. I am tom keene. Francine lacqua is in london. Now we go to first would news. Taylor Hillary Clinton and donald trump had their second debate as night. Last weeksg from release of a taped in which he was discussing women include terms offered another apology behavior. Is not only it women and not only this video that raises questions about his fitness to be president. He has also targeted immigrants, africanamericans, latinos, people with disabilities, pows, muslims, and so many others. This is who donald trump is. The question for us, the question our country must answer, is this is not who we are. Mark c. prior to the debate, trump made an appearance on facebook of the women that accused him of sexual misconduct. The National Weather center says are matthews winds diminishing along the coast. Last night, matthew was still packing winds of 70 miles per hour. Matthew has killed at least 17 people in the u. S. , nearly half of them in North Carolina. Or for an outreach this week for theresa may. The conservative party leader is listing denmark and the netherlands today. Thatcomes after concerned alienating eu risks partners. U. K. Businesses have adopted since theous outlook brexits. That is according to the chamber of commerce. The u. K. Lls on government to take steps to boost confidence. Global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. Francine thank you so much. I sat down with bank of japan governor at the annual meeting in d. C. Boj maythe do boj delay hitting their target. The economy is actually accelerating growth. How about inflation tackle you the goals of inflation expectations, the current rate of inflation is around zero or slight negative. In may take flight unity more months to reach the 2 inflation rate. We have to carefully study we relevant statistics for review the focus. Changechange, we may not. At this stage, one thing is quite sure. Economic growth is likely to accelerate next year. In alets bring strategist. Thank you so much for joining us. Them on tried to push what is the Comfort Level on the yen. When do they intervene . I picked the market is looking at the 9095 level. Definitely, previous actions suggest that is the Comfort Level. Francine the Comfort Level of them intervening . It is unclear if at the end of the date it will actually work. Dollar looking at yen at 95. Rate differentials is a key reason why they had not been the yen. Ead th rate francine does it make the job easier . I think a stronger u. S. Economy is good news for everybody and therefore, i would be very hopeful. The i look where we are at interdependencies. Help the whole did our data sterling, the japanese economics, right now . Im expecting to get to a rate of 1. 15 to the pound. Caused a problem we have for ourselves with the brexit vote. In this current environment, it hasard to see why anyone this planned. Tom let me go to the bloomberg now. This is sterling, not cable. This is trade weighted in the united kingdom. Over on the left side, the 10 year in the early 1990s. Strength. Th sterling circle down below 110e interpolation of sterling on a weighted basis. What would be the ramifications if we get there . , there are a lot of effects where we would see inflation. We have seen a number of deals. Hich have come through definitely, i think, inflation, we have seen it priced in an rates have really ramped up since october. I think that will be one of the key implications. Francine this is what we paid for the morning mustread. Francine the problem is you can either explain it as a hard or soft brexit. You protect immigration or you protect the city of london. For the moment, they have given the implication that they would rather protect the city of london. Fair . Is true. That i think people have missed the point of understanding what the challenge is. It is what happens involving the rules and regulations. As soon as there is a rule change, we have to decide, do we do anything . The tariff barriers. R francine what is your forecast . If we look at a hard brexit, which basically means not having or giving up number shipped to the access to the single market, whats that mean for the pound . I think we are looking at . 2 below one dollar 1. 20. If you look at referendum results, you can see, they are overwhelmingly for brexit. Tom james, one for one, does currency depreciation mean higher inflation for the european kingdom . Not necessarily. The can be passed on to consumer. It is not to any extent connected to the degree of currency devaluation we have experienced. Tom to be clear, you can have a one off depreciation and basically the good of the economy can move forward . I worry in the near terms that the currency will deliver a worse, not better inflation. As we know, we have 10 year yields over 1 . How much further will that go . That is the real concern. Overall, what is the one thing you need to know to change the forecast for Prime Minister theresa may . There will be concessions when it comes to the finance industry. But its really interesting is received rate markets completely priced. Threat. Seen almost a i think she has to come right now and save the bank of england cannot be touched. Thank you so much. Will continue in the next hour with the dynamics of this columbus day in the united states. How they fold into the greater economy. This is bloomberg. Tom good morning, everyone, bloomberg surveillance in london. Francine lacqua. She is back in london. I am in new york. A busy monday. Lets get to the Bloomberg Business flash. Noble group has agreed. O sell u. S. Energy group the embattled comedies recorder says the cell includes the repayment of working capital and an additional 200 billion dollars. The deal is expected to close in december. Is here in that interview with their own Francine Lacqua. You have to distinguish between Exchange Rates for negative rates at a creative channel. Whether the Exchange Rate channel is working. Francine would you become double going even further into negative territory . Jordan is in washington at tipping the meetings of the International Monetary fund and the world bank. That is the business flash. Francine thank you so much. The very latest on the Swiss National bank. We have a number, a very interesting imf. I caught up with thomas jordan. Im not sure to what extent negative rates are having an impact on banks in europe. Are they an excuse . A little bit what brexit is . The fundamental problem is be in a little overbearing europe. The this as well as do not make sense to investors. They certainly dont. We cannot expect the central bank doing anything other than keeping the market guessing. The commercial banks will play the banks quite horribly. Francine i do invested in the European Bank . No, not the moment. True. S that troo. E are invested i worry that the negative anderest rate in eurol condemning the rate of commercial bankers to a hostile environment. We still have a mess because, after all, they do not flatten the balances. We have several significant entities borrowing, including the bank of italy. We have not only dynamic tensions, but also from the central bank. That will lead to some serious bad news at another existential crisis of the euro, in my view. Tom right now, Tracy Alloway joins us from the gulf states. A phrase that we heard a lot last night. I think we all understand the gulf states. Mrs. Clinton and mr. Trump brought it up a number of times. Two starkly different views. One mr. He states react trump says they are not doing enough, and critically, theyre the ones that need to go after isis . There is a body of commentary ae that would agree with the sentiment of taking an less than their fair share of immigrants. Subjects here. Terrorism is a concern for the ruling family. There is a need to balance the interests of security with the needs of the immigration force. Tom within that is the idea of the gulf states. Is saudi arabia a gulf state jack are they a part of what they were talking about last night . Or are they so dominant, they are separate . In terms of oil . But not in terms of oil, regional politics. Is saudi arabia a goal state or are they separate . I think it is fair to say of athe u. S. But has Something Special relationship with saudi arabia. It is to be able whether that is on the verge of morphing into something else. Certainly, when people like donald trump, Hillary Clinton, to some extent, talk about unrest in the middle east, saudi arabia could be on the list. The tension is there. Francine of a talking of saudi arabia, the saudis are saying the oil recovery could see 60 by the end of the year. To figurelly trying out what the agreement means for the market. Thats exactly right. You and tom have covered this very well. There is a lot of optimism deal. On this opec freeze happens if we had some curb in production. There is a lot of interest in this topic at the World Energy Conference happening now in its simple. We know we wont get details on the exact cut until the november vienna. Meeting in investors are reading the tea as to as for any clues whether this comes to fruition this week. Tom thank you so much. It is the annual derby coming around for columbus day. Award. A more obscure heart on contract law and economics as it dovetails into economics and law. Analysis. Cure these are not names that many people, even in economics, will be familiar with. This is bloomberg. Tomfrancine this is bloomberg surveillance. We are both back from the Imf World Bank meetings in washington, d. C. Dough should bank it Deutsche Bank executives have failed to reach an agreement. A person familiar to the matter has told bloomberg that negotiations with the doj are continuing. Lets talk to the finance. Inister when we came in this morning and the stock price was down, to put three 2. 3 , tetris about the fears. The scene of a potentially difficult week. There were discussions over the settlement and they did not come to fruition, as we understand. The longer they face the uncertainty, the bigger the issue becomes for investors. They really want clarity now on how much this figure will shift. Tom doing know what it will shift to . I thought the mistry over the weekend with the idea of where point a is and where point b is. Do we know . We have seen in other cases, this could take weeks, months. There is not much visibility in the process as you would expect. What you do have is the. Enchmark from what we understand, the s is what thest final number came to. That is what we have for now. Francine what is one thing that would change your mind about european financials . I am worrying we are seeing an escalation of aggressions by global regulators. We are not getting a flattening. If i were them, i would worry about customers, rather than sales. I would be thinking, how many of my customers will walk away because they dont want to be with me anymore. That is the underpinning. Any day. Ces will move i wonder what will happen is customer start to go. Tom thank you so much. A little more on the nobel prize winner. This is the of secure area of contract law and has to do with the firm. The two words are principal and agent. We talk about it as if we know what we are talking about. There is a point that it had to begin. It started in the 1980s. Im call this may be the most obscure nobel prize in years. Francine maybe it is exactly what the world needs since we dont know exactly where we are headed. Tom absolutely. Coming up, mark mobius. Tom this morning, the devil is in the details. A fragile poundsterling signals for name must signal a hard exit. N this hour, mark mobius they have a devil of a time adapting to janet yellen. This morning, a stronger mexican peso. Secretary clinton perhaps takes not, the debate. Everyone is off but meet and Francine Lacqua. It is an odd holiday in america. Everyone is off, but the markets open. We will do it full scale anyways. You take away from the debate last night. Francine you know, Christopher Columbus was actually from my hometown in italy. My overall take is that, when you look at the pound, we need to look at how the pound keeps on getting hammered. The sterling falling for a third time today. Because it is folly to quickly, it may confuse markets, and it is getting painful. Right now to first word news. Mark c. Hillary Clinton taylor Hillary Clinton was in link again for the second debate of 2016. The gloves came off almost immediately. The Trump Campaign manager from the release of a 2005 tape in which the nominee discussed lewd terms. O another target for trump, Hillary Clintons use of a private server as secretary of state. Eight is a disgrace. Honestly, you must be ashamed of yourself. Mrs. Clinton. Everything he just said is absolutely false. Im not surprised. Taylor prior to the debate, trump made an appearance, broadcast live on facebook, of a trio of women who previously accused bill clinton of misconduct. Growing in cut off areas where help is not yet arrived. Power is out, food and water are reports ofthere are gun convoys. France also lined france will hold on french president lande says action in syria is unacceptable. Global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. Bloomberg, ifhe we could, the mexican peso. There is the chart it the trend of. This is the movement here. Trump is doing everything good. Then, debate one, debate two as well. We are staying with a stronger pesto this morning. Wisdom down from megan murphy. Good morning. I look at the debate debris, and everything really dont know where to begin. Last night,here what with the observation as the debate ended . Very i think it was different when the debate started. That is for one reason. Donald trump actually managed to write the carnage that we saw in the first 30 minutes of the debate. There were many people in the reallyncluding myself, did not think we would see the end of the debate. It was so nasty, so personal. It went from his sexually aggressive comments to talk about the clintons pass, and a real, true, personal, almost physical, philly in the room. That being said, the next hour was different. We moved on to substantive policy topics and covered significant ground. At the end of the night, the takeaway was she could not put him away for the night. Kerry end up to himself right into today. Tom this was the tweet of the night. I kept looking at a gets feed looking for her tweets that are brilliant. This is from wall street journal. Megan only one week prior, on syria, that was really shocking moment. We will be watching to gauge the reaction of this following the video on friday. The second thing we are watching is the continued sort of movement from Establishment Republicans away from donald trump. People s say they will not support him. We are watching paul ryan today. He is still considering his position, despite the performance last night. You call it what you will, but he did not give up his entire campaign. Francine unlike pence, you say he was less than impressed by this latest controversy. Will he remade loyal . I know that is what we are trying to figure out. At the moment, it seems he is loyal. Megan we should not underplay how personally they were from the comments about women. First, that isan how he describes himself. We expect to hear from him this morning. It was very strange last night, the note about the Vice President ial candidate. Again, did he do and not to stem the tide . The last 48 hours have been unbelievable to anyone who has that in politics. Well have to see whether they can regain any sort of momentum. Expecting, i we know it is difficult to answer, any more tapes on the donald trump side or even from Hillary Clinton . Megan donald trump talked about that last day in a very passive way. They were literally drowned out by this controversy surrounding mr. Trump, who has been unable to get any headway. Tom professor feldman on the law that we witnessed last night. Functioninges democracies from failed once es . Gled failed on tom there is the legal ballet of last night. How does a market pro like you fold in what we observed last night . I think we fold it and if we think it is a potential outcome. We always have potential outcomes and probabilities. You look at the problem really 75 ow and is probably about. Most Market Makers would put it at a 75 percent probability that mrs. Clinton wins the election. Toht now, it is unpleasant listen to, by dont think the markets will discount this substantially. As you pointed out, we are seeing that in the trading of the mexican peso. Tom if we look at the mexican peso, why are we not looking at the Canadian Dollar . Bring it up, if you would. This is canada with the rally of another trudeau. Down we go, up we go. Then, this recent, massive weakness in canada, and we turn again. When does the Canadian Dollar, like the mexican peso be a proxy for the election . I think it is about immigration. If there is any immigration, i think, the talk is that it may be from the u. S. Up to canada for this election. Tom thrilled to have you with us today. From london, new york, this is bloomberg surveillance. He is executive chairman and, of mobius for years, mark on the emerging markets. Mark mobius on the view of clintontruck. Good morning. Francine this is bloomberg surveillance. Im Francine Lacqua in london. Fresh back from the Imf World Bank meetings. That is where i sat down with governor. F japan we were talking about the boj, the fact that they will continue easing in coming months and years. Here he is. Exit at not intend to this stage. We will continue, or even strengthened the monetary easing in coming months. For the time being, as they said, they will continue. Francine that was governor kuroda speaking to me over the weekend. Back with bob cinch. Mark, nice to have you come on. We want to talk about globalization. First of all, i have to ask you take on japan. What i was trying to discuss at was the fact that he wants to cap the 10 year yields. Curveappens if the yield goes below 10 . If he starts to sell, that would be seen as tapering. Exactly. I think they are up against the wall. Everything they have tried is not working. A lot of other Central Banks are against the wall as well. We are in a situation where it , but thefor markets same time, the risk is tremendous. Francine it is tremendous, and they can actually spend a lot of money for not doing much. Continuing to do what they are doing which creates a y unusual situation. Francine i want to take you to my chart. This is the japanese 10 year on inflation. The circles there, on the left of the screen, if you are a viewer, on my right, is when play. Ics first came into the third circle is when they go into negative rates. Is actually more of a worldwide problem compounded in japan . It is a global problem. Japan is leading the way for other Central Banks to follow the same kind of policy, which is not working. Also, what is so magic about 2 inflation . Why is this such a great number. Francine a mandate. Does not makehat sense, when you get down to it. We are in a situation where Central Banks are now driving the economy, driving markets, where they should not be. Tom mark mobius, you have a lot to do with invention. You invented the bluechip purchase and expanded to other countries. You have a new view on globalization. Here is my view. Bring it up, if you would. This may be my chart of the year. Aggregated. D trade we are back on the 10 year moving average back to where we were in 1989, a 10 year, decadelong moving average. What happened to globalization . What is the new globalization . I think the new globalization is towards more and more protectionism. It means that a lot of emerging Market Countries will be impacted negatively. Also, investment follows trade. Of course, if investment is not there, it is not good for everyone. I would say, this is a very worrying trend. The buy mobius is on side. You are telling people what to do. How do fold, in the case of the u. S. , net exports into your calculus . Was think the export sector one that was focused early on on d obama administration. It has actually been a benefit economy,s. Particularly with agriculture and energy. Those are two areas where pricing is coming down. Of very quickly, the idea trade dynamics, is that their problem or our problem ch . I think it is a little bit of everyones problem. We think the dollar is going a little higher. As that takes place, we will see further pressure on trade on the u. S. Side. And stabilize. We could have another hit to u. S. Comparatives competitiveness. As we lookcome back at foreign markets and foreign exchange. A columbiak with university professor. He is really an interesting guy. He was picked to him of japan and mr. Kuroda. Worldwide, this is bloomberg hearing word. H, my there it is. It is gorgeous. Francine its gorgeous. The pound falling, though. That means, a week picture in currency traders lines of what london will become. Tom there it is, a beautiful london. Lets get to the morning mustread. This is for francine. We get up, if you would, right now. This is from the financial times. Tom francine, discuss. Francine i have heard that a lot, tom. We work interviewing a lot of newsmakers who were saying the a hard brexit, meeting, severing ties with the eu on immigration, could we new york. Is that true jet go there is no other city like london. I would agree with that. I think a lot of this will move towards the east. Francine singapore . China, in particular. China has this shank i connect with hong kong. This could become very, very day, bigger than new york. People have to start looking at the possibility of a lot of this business moving to china. Tom within these dynamics, what is your call on poundsterling. Initially we thought the pound with stabilize around 130. That is before the Prime Minister injured into the picture and changed the dialogue quite substantially. Im not sure what the objective is. We note the u. K. Is already leaving. I think she unnecessarily upped the ante on this process and created a lot of tension. Of time inent a lot london. Did you have to believe in london moving forward . She has made the belief a lot more difficult. I think we will see a lot more Companies Looking at alternatives. Tom mark mobius, argued optimist on the future of are you an optimist on the future of london . Will still bedon here, but, because of brexit or not, there would be a move into asia. Tom a wonderful mix here. Today, we willio speak to james steel. We will find out, and get an update. This is bloomberg. Francine this is bloomberg surveillance. I am Francine Lacqua in london. Having two espressos after the weekend we had. Thats get to first word news. Taylor Hillary Clinton donald trump had their second president ial debate last night at Washington University in st. Louis. Acrimony was in the air. Trump, reeling from last weeks 05 tape in a 20 which he referred to women integrating terms offered an apology. Hillary clinton it is not only women and his video that raises questions about his fitness to be our president. Because he has also targeted immigrants, africanamericans, latinos, people with disabilities, p. O. W. s, muslims, and so many others. So this is who donald trump is. The question for us, the question our country must answer is, this is not who we are. To the debate, trump made an appearance broadcast live on facebook with a trio of women who previously accused bill clinton of sexual misconduct. Matthews winds are diminishing along the North Carolina coast. It was still packing winds of 75 miles per hour. Lifethreatening floods will continue over the pushes of eastern North Carolina, that received record rain. Matthew has killed at least 17 people in the u. S. , nearly half of them in North Carolina. For foreign outreach theresa may this week. She visits the netherlands today after local concerns that the governments focus on immigration controls in at least the eu risks alienating international partners. She is trying to build understanding out of this months eu summit out of brussels, which will be her first. Oliver hart and thing hallstrom and thing hallstrom and holmstroem awarded the nobel prize in economics. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries, i am taylor riggs. This is bloomberg. Francine . Tom . Tom thanks so much. It is an economics that all of us knows, the idea of my toy policy. Holmstroem and bengt this is about the microfoundations, the microeconomics of everything we do every day pretty it is a different world. It is a whole different world. Macroeconomics is based on micro. It takes a buildup of micro to get to macro. I think that also this maybe suggests the fate of the world in the economic theory right now, that the macro world is really struggling with the whole foundation and how the economies are operating. Part of this is the idea of contract theory principle in agent, and that goes to Central Banks where janet yellen really cannot control her story as a principle of the Macro Economic debate. Talked aboutve this before. I think Central Banks are struggling against limitations of what they can achieve all over the world, and the more they interfere with markets, with this process, the more imbalances they create. We are seeing that in japan, where they do not know if they are trying to talk about the quantity in the system, the level of Interest Rates. The d the more deeply you get involved, the more consequences there are. Should why the fed start normalizing rates and let the economies operate in a normal tom manner. Tom francine in a normal manner. Tom mark mobius is with you in london, francine. Francine we are back with mark and bob sinchen, in new york. Is, whether they have taken the idea that the fed is hiking or that they will be surprised if they do so in 18 months. Mark if you look at the 10year history, there is absolutely no correlation between Interest Rates and the markets. Emerging markets, at least. Francine but there has been a temper tantrum in the past. Mark exactly. You see cases where Interest Rates went up and the market went up with Interest Rates. I would say that we could be rates god if and when up. If they do go up, they will go i by a very small amount, and do not think it will be material. A lot of the emerging markets are dealing with 5 , 6 kind of Interest Rates, and therefore i am not that worried about it. Francine it is very clear that we have seen a rally in emergingmarket stocks or equities. Really beenot keeping up in terms of number and size per it why is that . The basically because of latent fear that people have of markets generally. But it is changing. You can see more and more i feels, gingerly in china, ipos, see more and more particularly in china. Francine how do you choose what countries are more investable . Brazil does not look as good as mexico, obviously. What else do you like . Brazil is quite interesting because they have been going through this reform process that looks very positive mexico looks good. And particularly india india looks very exciting with all the reforms coming in. Tom i look at the politics folded in here. How many basis points, how many Percentage Points of return do i pick up if i have courage to be in emerging markets versus being in developed country stocks over the next 10 years . Mark i would say you are. Alking about 8 difference the emerging markets are now running at 4 average growth. Many countries are doing much better than that, and usually the equities would be about double that growth rate. Tom and everybody watching worldwide, just leaned forward just leaned forward when mark mobius said that. Mi buying philippine stocks as a proxy because i cannot get it good yield coupon . Robert i think that is the case. The distortions are brought about by the Central Banks, by buying up so much government that they depress yields. We know they have pushed a lot of investors domestically into corporate bonds, into equities, and those who traditionally were buying domestic equities have to look into the emerging world as an area to find both yield and potential appreciation. I think a lot of this is a distortion in the core market and the Central Banks, and it keeps spreading. Tom we heard bob sinche talk about a dollar list here. Coming up, how do you fold in the dollar . Thedo the job how to dollar dynamics change if i am in the u. S. . Mark there is no question that recently a emergingmarket currencies got stronger against the u. S. Dollar. If the dollar gets stronger against those currencies, that will be a negative against investors. I do not see it happening to any great extent. A lot of these emergingmarket currencies are still at their very low points. Francine do you think the fed will allow a significant dollar rally . Mark i do not think so. Regardless of who wins the election, that is going to have an impact. Whoever gets in his going to be putting pressure on the fed with regards to Dollar Strength. , i want to put you on the spot, with Great Respect to your work with the templeton group. What would the late sir john this amazing about mess in america . He came out of tennessee, dirt poor. What would he think . Mark he would be quite surprised and shocked. He was the kind of guy who would look at, here is an opportunity. He would say given the crazy situation we have now, chances are there is an opportunity that we should take advantage of. How do you model on Donald Trumps president s a . You talk about Dollar Strength or not. I am not sure what you would model ahead of november 8. Mark whoever gets in will be focusing on u. S. Position in trade, and the Dollar Strength is an important part of that. If trump gets in, he will be a negotiator. Towill be flexible, willing negotiate something with regard to which country you are talking about, and i think clinton will probably have to find the same. Francine mark mobius, thank you so much, of templeton. Robert sinche stays with us. Coming up tomorrow, we speak with Catherine Mann. We will be speaking to dr. Mann about evaluations. This is bloomberg. Francine this is bloomberg surveillance. Look at the beautiful picture on capitol hill. Tom and i were there over the weekend. We are back in our respective capital tom in new york, i am in london. Its good to the Bloomberg Business flash with taylor riggs. Another blow for Samsung Electronics as it tries to move past the crisis of exploding smartphone batteries. The company is temporarily halting production over its note 7 phones. Greeces finance minister is at odds with german counterpart wolfgang schauble. Here is that here he is speaking with Francine Lacqua. I explained that i do not understand how he has this triangle where he believes the. Rogram will work something has to give, and i think deep down he understand that. Taylor euro area finance ministers are reportedly likely to discuss recent debt issues in a Second Review of the greek program. At their last meeting of 2016 in december. That is your Bloomberg Business flash. Tom what a great set of interviews you had over the weekend, saturday and sunday. Francine i was i am sad that the finance minister of greece because we spoke about the immediate concerns for debt relief, about how the imf will join, but we had a bigger conversation about populism. It is very clear that populism the imfg, and globally World Bank Meetings are trying to defend it. He has a unique perspective because he is donald trump really represents populism. It was an interesting conversation. To storieset on about banks print Deutsche Bank executives have failed to reach an agreement on multimillion dollar penalties. A person familiar with the metal with the matter has said that negotiations with the boj are continuing. Lets go to Michael Moore. We also have amherst pierpont analyst rob cinch in new york. The market want to figure between the boj and Deutsche Bank. It soon, but it takes longer to negotiate with the boj, and it is taking us a long time to negotiate. Michael the doj is also in talks with barclays and credit squeeze, so it is not like Deutsche Bank is the only thing on their plate right now. There are a lot of details to iron out. The fact that that 14 billion number has been out there, the fact that the market is so focused on this number for Deutsche Bank really ups the scrutiny. Francine and the market is questioning whether they need to raise capital, cut costs are the problem is that we cannot even speculate, given indication of what he will do next until we have a number, right . There is a difference in the numbers you have to give away. Michael the number will ultimately determine what actions they need to take, how dramatic those actions need to be. If it is something in the 4 billion range, most analysts think the current litigation reserves can handle that and the bank and go along with its current plan. Tom the ether that Michael Moore works in lets go from that to Robert Sinche, dealing in the trenches of a major bank. How do the troops deal day to day with strategic executive upset, at any given bank . Bob i think it creates a level of uncertainty in terms of activity. People are less willing to take on good risks. They are less willing to create new opportunities in the marketplace, and i think it is a whole level of regulatory thereny that has not been in the past. To some degree, that is healthy, but the cost this puts on Financial Firms in trying to operate their businesses are substantial. The amount of what we would call backoffice resources relative to frontoffice resources in terms of creating business and transactions has really swelled and ballooned. That is kind of the hidden part of all of this, in addition to low Interest Rates, Financial Firms are facing extraordinary scrutiny. Tom the bonus structure is now delay, delay. If you go here, over to the bloomberg, bring it over here, if you would. The basic idea i am down here. 10 euros per share. My whole world changes if i am in the trenches on a given day. Bob absolutely. I have a lot of friends at bear stearns. One of my early career stints was there. Wealth, this is paper and that can get destroyed pretty quickly for people who have worked a long time, day in and day out. Michael, what is john cryans immediate problem . The share prices down it was down 3 , now down 1 . Is there a concern that he will lose key talent . Michael i think that is definitely a concern. The European Bank employees have lost 2 billion worth of wealth from the share price declines on deferred shares. That is why on cryan, every cent every message he sends out to employees, they focus on your business, on your clients, they give talking points for when clients ask about this. The big fear is that this turns into a big business problem, where they start to lose revenue because clients are taking a step back. Francine Michael Moore, thank you so much for the brief. And Robert Sinche of amherst pierpont. This is the picture for Deutsche Bank as we head to the break. Deutsche bank a little bit under pressure, losing 3 early on. Now it is just moving 1 . The mexican peso is climbing to a stronger level. There is speculation that Hillary Clinton will prevail in the election. This is bloomberg. Tom good morning, everyone. 19, thatan peso under is a big deal. Almost at 20. Debate 1, debate 2, clearly that tilts and indicates toward mrs. Clinton versus mr. Trump. The euro, very importantly with sterling weakness, we also have Euro Weakness as well. Francine . Francine the conversation has shifted. We were saying the pound is weaker people are saying the pound is twoo week. Coming up shortly, it is bloomberg daybreak americas. What do you have on the show, alix steel . Alix we have a new name, a new look, and we will be talking about what you just mentioned. If you look at the inflation spec patience, we will cover that throughout the show and highlight some more of your interview with mr. Kuroda from over the weekend. Plus, David Malpass will be here. He is a trump surrogate. Where he thinks trump will wind up going next. Will revert to my oil love we will be talking about an oil minister in norway. Is with us from amherst pierpont. I look at the curves, the movement of the curve, the u. S. Curve since the beginning of the year. We have curves steepening in the short end, and we have a flatter curve on the long end. Single best chart, moving from the yellow line down to the white line. It is adea flattening. What does a signal around this pivot point . Bob what it is telling us is tot the fed is moving closer beginning the normalization of rates again. The annual december move. At the same time, Global Forces are really pulling yields down around the world. Tom is it a demand for paper or a prediction of weak Economic Growth . Bob i think it is a demand for paper. I do not think it tells us much about Economic Growth. This is a global world where the ecb and the boj continue to take massive amounts of paper out of the global markets, and investors are looking around the world for safe assets. If you are in the Foreign Sector and you do think the fed one of the things the flat yield curve suggests is a stronger currency. We have seen that historically, curve tells us about currency movements. The move down in longterm yields is really a global phenomenon. Francine bob, where do we find yields . You are saying that investors need to find assets which are safe. They also are looking for yields, and that will change when the fed raises rates. Bob it will, but as mark mobius said earlier, this is a tiny move we are looking at. I think investors continue to look at alternative assets. Equities have been a big beneficiary. We continue to see modest increases in dividends. I think this Asset Allocation shift out of government bonds toward equities is something that is likely to continue as we go forward because that is where the yields actually are right now. Francine do you think fiscal spending is really coming . Yes,i would like to say but i think that it is too easy to rely on the Central Banks. We are starting to see i have argued for a while Central Banks are running on empty. I think we are starting to see the push back. That is one of the risks in this whole move of populism. Do we continue to get pressure on Central Banks from the government authorities . We have seen the japanese get involved a little bit in boj policy. We have seen a very surprising comment on monetary by Prime Minister may, and i think we could see more of that in the u. S. Also. Tom we will continue on radio. Bloomberg daybreak, coming up on Bloomberg Television in a moment. Tomorrow, Catherine Mann of the oecd. This is bloomberg. Jon this is bloomberg daybreak. Rename alcome, as we flagship morning show in new york city per lets kick things off with the market check. Side, are on the front the dow up four points. In the fx market, a weaker pound. 2154. 26. Y continues at alix the sterling grinding lower, yields declining for a fifth straight day as Prime Minister may yet set to take a brexitance in negotiations. Investors pull back from British Assets per Deutsche Bank shares falling as people familiar with the matter say talks with the doj are continuing after Ceo John Cryan was reportedly unable to reach an agreement in washington. The second president ial debate in washington univty