o deutsche bank. good morning. we are counting you down to the european equity market open. we are 30 minutes away. let me tell you that at the moment, wei is telling me it will be a negative start to the day. 50 is down by .5%. the dax will be opening down .5%. let's talk about what is happening around the world. the turkish lira is down by .9%. the the equity mark iet in turkey is also being pummeled. we have switched this to the g-20 to capture all of this. china and japan are having a that they on equity front. but the real story is what is happening here with the turkish markets. let's also talk about oil, a big theme today. after friday's massive drop, it is not bouncing back much. it has bounced back and little bit, but not enough to show up on my gmm. here is the bloomberg first word news with christine harvey. christine: thank you. oil has edghed higher as saudi arabia's offered to cut output opens the door to a future opec deal. they do not expect an agreement this week when members of the group will meet in algiers. saudi arabia and iran did not reach an agreement in viennna, bna. this is according to two people familiar with the negotiations. visitdraghi will brussels and berlin this week with his increasingly urgent message that governments must help bolster the economy. the ecb bank president will address a closed door session of german lawmakers on wednesday. one of his main concerns is that governments are being too slow to implement structural reforms. china's central bank has drained the most funds from the financial system in six months. the pboc pulled a net $37 million, the biggest one-day withdrawal since march. it adds to speculation it is keeping a tight rein on cash supply as part of efforts to curb excessive leverage. hillary clinton and donald trump will face each other in the first of three televised presidential debates later. the event will be moderated by nbc's lester holt. can follow that on live at 2:30 a.m. u.k. time. global news 24 hours a day, powered by 2600 journalists and analysts in more than 120 countries around the world. this is bloomberg. guy: thank you very much. we are about 30 minutes away from the equity market open. things are shaping up in an interesting fashion. we've got an interesting week coming up for the banks and for commodities. looks talk about the bond market. yields are coming down a little bit and jgb's are coming down a touch. you want to focus on the negative number here. btp's, is that where you want to be right now? perhaps. good morning. >> good morning. guy: how much clarity do think we have about what the bond market is doing right now? >> well, i think we could use a lot more clarity. certainly last week when we looked at the central i and boj,k announcement, the the fd. they changed the policy framework and i think it is still being digested. the market is not clear what that means. does that mean the target is steepening? there is still a lot the market does not know. in terms of the fed, i think we did get more clarity. i think there are much more hawkish tones to the comments -- it certainly sounded like they are prepared to let the economy run hotter. the bank of japan is prepared to let the economy run hotter. in terms of the fed, we have more confidence they will raise rates this year. the bank of japan, it remains to be seen how this policy frame will work. guy: let's focus on europe and the ecb. this is not related to the bond market, but i think it is indicative. this is a vstoxx chart. what it is showing is, you can see what is going on with oil. we are down at really low levels. the market is pricing on pretty much any kind of massive movement for both the euro -dollar and european equity fund gets. equitypean and good he markets. >> i think there is still a lot to be seen, given the ecb's supportive policy, given the fact they are prepared to let inflation run hotter. we still think they offer good yields and we think spreads will continue to contract. this is more of a medium-term view. we are cognizant of the fact that there is a lot of short-term risk, and a lot of political noise, we have to get through. but on the medium-term horizon, we think europe has a lot more to offer. we will continue to see compressions. guy: and you are not worried about a portugal downgrade either? >> it is obviously, a possibility. that could have a huge negative impact on portugal, but that is factored in to the market. in,that is lori factored again, on the medium-term horizon. guy: what about greece? >> greece is an interesting one. it is a medium-term position that we own. again, i think the market is pricing in the risks around greece and around the banking sector in europe as a whole. considering where yields are at the moment, if you look at bunds and bonds, you are getting nothing but for negative yields. as long as you are prepared to take the volatility and hold the medium-term investment, we do still the value. guy: this is interesting. this is part of the process everybody seems to be going through, being forced into more liquid markets. but portugal isn't. greece certainly isn't and you can extrapolate this into ships or whatevers, it is that is the subject of the day. but this is central banks worsening everybody out. does this end well? [laughter] >> well, that is the million-dollar question. investors are being forced out. that does mean there is a lot of risk inherent in current positions, even if you run treasuries. guy: you could take a big loss. the loss is magnified. >> that is right. quid assetsnly in ili you have to worry about. guy: when you get pushed into more iliquid assets, you have to woown more liquid assets. >> liquidity is very important in our portfolios. we really do focus on the footie. -- on liquidity. liquidity is very, very important. we actually rank every issue and give it an actual liquidity rating, how it will perform in different scenarios, and how quickly you can sell those bonds. we try to ensure we only have a certain amount in the lower liquidity assets. we try to make sure we have a very healthy amount in the liquidity funds as wseell. guy: coming up, oil speculators lose hope. will he get we get a deal this ? we are live in algiers. also, commerzbank kicks off a board meeting that could end with thousands of job losses. angela merkel is reportedly ruling out a system for deutsche bank. and renzi's referendum. we speak to one of the prime minister's economic advisers about what is at stake in italy. all of those stories, coming up. this is bloomberg. ♪ guy: welcome back. look, i want to take you to turkey and show you what is happening. we are talking about what is supposedly "the financial attack on the country." people seem to be surprised that this downgrade occurred. equities are down nearly 4%. we've got a big move on the 10 year. it's got a big move in the currency as well. the dollar is up .8%. so, it is hard to kind of nail down exactly how long this will last, but it is certainly a very big knee jerk reaction coming through from the turkish markets with respect to this downgrade. here is christine harvey with the bloomberg business flash. christine: thank you. angela merkel has ruled out any state assistance for deutsche bank according to "focus magazine." the magazine also said the german leader has declined to step into the bank's legal issues with the u.s. justice department. the boj is seeking $40 million in sanctions.t the brexit vote has left more than 3/4 of ceo's saying they would consider moving their headquarters and operations outside of the u.k. that is according to a survey of more than 140 business leaders from kpmg. at the same time, 69% said they are confident britaoin's economy will grow. tudor investments has closed its global trading desk. the $11 billion hedge fund, founded by paul tudor jones, will focus on quantitative research. this comes after he dismissed 15% of his workforce last month. that is your bloomberg business flash. guy: thank you very much. opec ministers are gathering in algiers. they seem to be eager to reach an accord. we spoke exclusively to algeria's energy minister, who had this to say. >> since the last meeting in june, the situation has deteriorated. now it is much more critical. it is important to see what measures need to be taken in the short-term to find a solution for a situation that is not benefiting any opec member. saudi is a very important member of the organization. if they are ready to do the maximum for the excess of this event, it is ready for any eventuality. it is ready for a freeze. it is ready for making this a success. connan joins us live from algiers. with a big move on friday. are we going to get an opec agreement this weekend what are people saying there on the ground? caroline: it is a peaceful day here in algiers. hosting thisstinis opec meeting. unlike doha, the deal collapsed because iran did not want to join. this time, iran will be there. this is the main difference between doha and algiers. iran has almost come back to pre-sanction production levels, 3.6 million barrels a day last month. since then, the oil market has deteriorated even more. the algerian oil minister told me the saudi's i ready for any outcome, possibly a freeze, possibly lowering production. he even told me that the opec informal meeting could become an extraordinary formal meeting if consensus. that could be some kind of basis for a decision in vienna in november. guy: that is what i was going to ask you. if we don't get a deal today, when do we get an agreement and will have that brought outline of that deal this week? caroline: obviously, the investors are still bearish that opec will do anything this week in algiers. but if we take it from experience, a lot can happen here in algeria. the last production cut we have 2008from opec in 2004 and fortified it right here in algeria. a big production cut is unlikely this time, but some are hoping it will be some kind of production ceiling, possibly some exemption for libya, iraq, and nigeria, the have to increase production a bit more. guy: it looks like we have a great week of coverage coming up. thank you. we are still joined on set by marilyn watson. one of the things that have come out of the oil trade is gcc companies have been selling their treasuries. as part of this chart on the screen here, this big drop-down, partly driven by the well, what is the significance of this almost reversed qe? > >> that is right. we have seen huge selling off of these assets in the gulf states, and from the chinese, and japanese as well. it does have an impact. it makes a lot more volatility. despite the lack of risk premiums in the long end, we are struggling to find value in the long end. we prefer the short end of the curve in u.s. treasuries. if the fed is willing to let inflation run hotter, we could see more inflation bonds at the longer end of the curve. guy: is that true elsewhere as well? do i buy them in the u.k. and in europe? >> we think inflation will continue to accelerate. in europe, it is more of a mixed picture. u.k. we also do inflation -linked as well, but it is much more of a mixed bag. when you look around the globe, generally, inflation is remaining very muted. the fed is the only bank that is still on a normalizing base. so, i think that inflation is not really an issue we are concerned about. it is more about the u.s. and u. k. guy: when you look at the risk you are running within your portfolios, with bonds running at such low levels, the risk is amplified. do we need to reorder the way we think about safe havens? >> i think we do. i think we need to focus on liquidity and these big flows in and out of the bond market. we need to focus on where we are seeing the risks, and where they are coming from. at the moment, oil has been in r ange for some time. we saw the jgb curve steepe n. that coincided with the treasury steepening. ofare seeing these flare ups relativity and we expect them to continue. i think we have to focus on where we can see value and the best risk-adjusted reward, overall. guy: blackrock's marilyn watson will stay with us. up next, we will look at some of the potential corporate movers in today's trading, including commerzbank. the german lender is said to be weighing big job cuts. the market open is eight minutes away. this is bloomberg. ♪ guy: it is 7:54 in london. but istanbul trading is underway. the lira is getting crunched and the bond market is moving aggressively. the equity market is down 4%. the banking sector is down nearly 5% this morning. this after the advisor to the president says this represents a financial attack on the country. let's talk about some of the stocks we're watching in europe. would you ban deutsche bank is . john cryan, indicating the government will not back stock deutsche bank. i think a lot of people will question that. commerzbank is also in focus. the meeting will start today. it might have are they got underway. they are talking about what the shape and structure of thougwhat that bank is going to be. we are dissipating the announcement, coming out later this week. the banking sector is remaining front and center for germany. a quick look at this chart, the deutsche bank koco. marilyn watson is still with us from black. european financial credit. is that where i want to be, briefly? >> selectively, yes. a lot of the value can be found in european financials. especially when you compare it to corporates in the corporate sector. there are a lot of risks out there, but there is good value to be found. guy: thank you very much indeed. the market open is next. this is bloomberg. ♪ guy: right, good morning. we are on the move and watching what is happening in the city of london across europe as we start european trading. oil speculators are abandoning hope that opec can deliver a supply deal this week. we are live in algiers throughout the morning. in the red. the bank of japan's governor move could beext to cut deeper into negative territory. angela merkel reportedly rules within deutsche bank. so, european markets are getting ready to open. we are about 15 seconds away from that market open. we are watching very carefully what is happening within the financials. clearly, this will be one of the major areas of focus this week. well, aoil area as place where you want to focus on. we are expecting a negative start, remember here, folks. let's see how the european market makers get their act together this morning. that is the ftse 100 coming under a little pressure. we are only expecting a move down of .3%. the cac is opening as well bit softer. let's take you to what is happening. -- the cac is opening a little bit softer as well. let's take you to what is happening. the netherlands, losing the most. down .9%. turkey is in focus as well this morning. let's find out how the gilt market is performing as well. nejra: we have seen risk off across the market today with bond yields coming down, much of that driven by concerns over oil and of skepticism ahead of that informal meeting in algiers. let me show you what is happening with u.k. gilts. guililt yield on the 10 year, coming down. we are at 71 basis points on this u.k. 10 year yield, down about two basis points. as we take a look at the stoxx 600, no surprise really, energy stocks are leading the losses, down 1.4%. there is a little bit of rebound within wti and brent today, but wti dropped almost a full percent friday. that caused a few jitters across red across shown by the board on the stoxx 600. energy is the worst performer, followed by telecoms, and then, financials. let me show you the stock same watching this morning. witht some numbers earlier four year revenue coming in at a bit of a miss at 3.7 8 million euros. beat on theit of a estimate. but we can see that stock. we are waiting for it to open. a bit of mma news here. the german specialty chemicals u.s.ny agreed to buy its competitor for $1.2 billion cash. this company is looking to expand its chemicals unit. let's move on to deutsche bank. basically, chancellor angela merkel, she has ruled out any state assistance for deutsche bank heading into the national elections. this is according to "focus citingne, fighting unidentified german lawmakers. guy: thank you very much. spokej governor kuroda earlier this morning and said more easing options include a further cut in negative rates. >> the main policy will be further cuts in the negative short-term policy interest rate, and lowering the target level of the long-term interest rate. with regard to possible options for additional easing, the main policy tool will be lowering the target level of the long-term interest rate. expanding asset purchases, the quality dimension, also continues to be an option. kuroda, speaking earlier this morning. onilyn wilson still with me said. how would the market reacted further negative rate cuts from the boj? >> i the market was expecting more of this last weekend did not get it. so, i think actually, the market will take a very positively. it has been very confused by last week, when the deposit rate was unchanged. the make of japan was going to target around a 0% yield for the 10 year, and try to maintain the yield curve at current levels. guy: what is going on here? >> i take it they were trying to appease, in a way, the pension funds, who have been suffering from the very flat yield curve. but then, it really hasn't impacted the market. thei think, even with announcement that they are going to target inflation above the 2% target to try to get inflation expectations higher, because that has been the main issue, of course. i think last week was quite underwhelming. i think last week people had been expecting more, in terms of a rate cut, or guidance that way. now, kuroda is delivering on what was expected previously, so we can get a potentially steepening curve. guy: it almost happened, but didn't. let me take you to this chart here. this is jgb volatility and treasury volatility. jgb volatility has come down a lot. that is anticipating that we are running out of steam? volatility isjgb impacted hugely by having the bank of japan as the backstop buyer. they own 40% of the jgb market. it is going to get a lot higher than that. investors havetme decided to purchase more. i just think we are seeing that rates might remain less volatile now becauset t the bank of japan is targeting 0%. rather are targeting 0%, than focusing on the actual amount of qe, fighting the volatility is actually shifting. guy: army getting the message from the boj -- are we getting the message from the boj that we are just going to throw everything out? at what point does, and this is a more broad political question, at what point does it become problematic? we are in japan nationalizing the private markets. >> essentially, that is right. you can see coronation between fiscal -- you can see coordination between fiscala and monetary policy. fiscal stimulus and the use of fiscal tools is becoming more discussed and more dominant around the world. it is not only japan that is focusing on the fiscal, and also the monetary policy. elsewhere, we are seeing in europe, or in the u.s. and u.k., we are looking for more fiscal stimulus to help. the central banks can't do everything. guy: we have been talking about that for a while. they have been carrying on doing it. marilyn, we will carry on the conversation in a few minutes time. we're live in labo liverpool as the labour party conference gets underway. plus, clinton and trump go head to head in their first debate tonight. still to come, renzi's referendum. we will speak to an adviser of the italian prime minister. that is all coming up. this is bloomberg. ♪ guy: 10 minutes into the equity market session. we anticipated we would get in negative start, but this is a little bit more negative than we thought. in germany's case, we are down by nearly 1%. the cac is down by 1%. .8%.toxx 600 is down by let me take you to the mrr function on your bloomberg. lanxess is up by 4%. it is buying one of its peers over in the u.s. what was surprising is the early market calls for this stock were actually negative. the markets reacted positively to this deal coming through. in terms of the negative stocks, i think this is a downgrade. it might be a morgan stanley downgrade. 3.47%.ck is off by here is the bloomberg first word news with christine harvey. christine: thanks, uguy. oil is edging higher as saudi freeeze ouffer to cu too opecns the door talks. mario draghi will visit brussels and berlin this week with his increasingly urgent message that governments must act to bolster the economy. the ecb bank president will testify to the european parliament today and address a closed-door session of german lawmakers on wednesday. one of his main concerns is governments are being tooslow to' implement structural reforms. chinas central-bank has drained the most funds in six months. this is the biggest one-day withdrawal since march. it adds to speculation that the pboc is keeping a tight rein on cash supply to curb excessive leverage. arnold palmer has died at the age of 87. he won seven major titles, fo mastersur, two british opens, and one u.s. open. palmer was responsible for bringing golf into the mainstream in the 1960's. he was also a pioneer in the field of sports marketing. global news 24 hours a day, powered by 2600 journalists and analysts in more than 120 countries around the world. this is bloomberg. guy: thank you very much. i want to take you back to the mrr, and what is happening with the key stocks around europe. we are going to focus our tensions on the losing pile. deutsche bank is down by 1.311%. i'm wondering if this is the merkel affect, or something else. germany has indicated it will backstop deutsche. the markets seem to be pricing in negative news today. maybe it is that, but to make the point more broadly, you are also seeing stocks like unicredit down up to 3%. it is not just deutsche losing ground today. some other areas within the financial sector as well. jeremy corbyn has held onto control of the opposition labor party, holding 62% of the votes, boosting his mandate from grassroot leaders as he strives to unite his party. the labour conference is beginning in liverpool. anna edwards is there for us. anna, what are we expecting from the shadow chancellor there? anna: we are expecting their shadow chancellor to speak between 12:00 and 1:00. he will give a much more interventionist tone than might have been the case some years ago for the labor government. he will talk about the winds of globalization blown against the free market, more in favor of intervention by governments. he will say good business does not mean no government. while this speaks to the left-leaning rhetoric to the k. politics, this comes at a time when the conservative government here is talking about industrial strategy and messages that would normally be associated with governments and parties in this country, trying to work out what the brexit vote means, and what it tells them about the u.k.'s people have a type of globalization. we will have more talk about intervention in british markets. guy: many mp's would argue, anna, that to influence policy they would have to be a credible government in waiting. we have seen a confirmation that the labour party has become a protest party. if i am sitting here and i am an international investor in wondering about what role the party will play in shaping policy, putting pressure on the government, what am i thinking about what jeremy corbyn's leadership is going to mean? anna: yes, the relevance on the international stage of what we have seen here, the re- confirmation of jeremy corbyn as the leader really does raise questions about how electable they are. you can see that in the opinion polls. one suggested they have got really a large deficit by opposition standards, in terms of the way they are running with a 15 percentage point lead. others put them 10 percentage points behind. bigoes seem to have a mountain to climb. but they are trying to do something different. they say the polls are not something you need to listen to intently. they also say they are trying to create a groundswell movement, rather than parliamentary politics, perhaps. a lot more to talk about in liverpool throughout the day. guy: some great interviews, coming up. anna edwards, joining us from the labour party conference in liverpool. that is what is happening with deutsche bank this morning. the stock is under pressure and we now have an intraday record low for deutsche bank. the record low was 10.93. as you can see, we have continued to sell off since then. we are down by 4.65%. watson from blackrock is still in the studio. angela merkel and her government are not going to backstop deutsche. deutsche is a systemic we important bank globally. this bank is having significant issues. does the market really believe that germany is not going to backstop? hthe ripple effect of that would be huge. >> that is right. but we saw a few -- what we saw a few years ago when we had the bailout, people were willing to step in and help out. now, there is a lot more caution. regulationven the framework in europe, it is very difficult for angela merkel and politicians to come out and say they are going to go against those rules. but in relation to your question, i think the market does not expect there will be some form of help at some stage. a process tobly be work this out exactly. guy: this is the question i would like you to answer kind of more an tangentially. if a major bank triggered a coco, how big an event would that be? >> it would be a big event because there are many risks in the financial sector. it is a very mixed picture for european banks. some have a very good value. given the tightness of the market overall in corporate financials in europe, given the fact that investors have been pushed down the credit spectrum, then, i think it will be a big event. it could potentially spike volatility again and reawaken investor concerns that we will see these issues. guy: mario draghi will be talking about policy and where we go as well, but his job as well is to be in charge of the financial sector. he needs it to work because it is a transmission mechanism. we have got deutsche bank, we've got issues there. the plumbing is not working from his point of view. >> when you see the outcome, more needs to be done. i think this baby steps because this framework, and the regulations at all the countries and the national sovereigns need to abide by these rules. they need to not be seen as going against regulations. the ecb is doing as much as a possibly can, but i think we need more agreement between nations and at a national level. you marilyn watson, thank for joining us from blackrock. up next, turkish markets take a beating after moody's credit rating. we are live in istanbul with the latest. this is bloomberg. ♪ guy: welcome back. you are watching "on the move." in london. here is how the turkish market has been reacting to modoody's cut. were people expecting the downgrade to have this big of an effect? >> i mean, that is a good question. to some extent, yes. a lot of investors have been pricing this in after snp downgraded the country's reading after july's failed coup attempt. to some extent, this was priced in. obviously, thet, reaction today, we can see many investors saw this as unexpected. the lira is trading down. stop and bonds are down the most since the failed coup attempt. somewhere pricing this in. -- some were pricing this in. there was also a knee jerk reaction. a lot of funds will not be able to hold assets after the downgrade. they will require at least two other agencies to have the investment grade rating to invest here. there will be some for selling. guy: i see one of the key advisors for the government to the president describing this as a "financial attack." how much more pressure will the government pile onto the central bank to deliver more rate cuts? what is the read across of the policy as a result of this? >> that remains to be seen. we have to see how the central bank will react to this. it has been easing policy and lowering rates since march. list be able to continue to do so if the lira depreciates too much? that is one question. the other, what does this mean for turkey's growth? our borrowing costs -- are borrowing costs going to continue to grow? we have seen signs of a slowdown in growth. those are the two things investors will be focused on. guy: constantine, thank you for taking the time to be with us. a big day for turkey. , joiningne courcoulas us out of insta ball. -- turning a set of istanbul. -- joining us out of istanbul. clearly, the government is externally irritated by what is happening here. up next, we will talk more about what is happening at the labour party conference taking place in liverpool. we will speak with john prescott, the former deputy prime minister. he will be joining anna edwards at the labour party conference. we will talk about what this means for brexit as well. that is coming up. this is bloomberg. ♪ guy: welcome back. 30 minutes into the trading day. how are things shaping up, or shaping down? there's a picture for the markets. as we look across europe, we are seeing decent losses beginning to develop. cac and dax hitting hit reasonably hard, banking front and center, particularly german, although there is some good news in the dax. yang talk about the union -- the yin and yang. caroline: we are having a down day after all in the biggest loser is deutsche bank. i know you are covering it extensively, but just to show you -- down 4% at the moment. are falling to a fresh record low one concern that its capital buffers will be undermined by mounting legal charges. and we had the reports from "focus" magazine that angela merkel has ruled out state assistance for deutsche bank and has to collided to step into their legal issues. deutsche bank very much having a down day. intercontinental hotels also falling, this after it basically got cut by morgan stanley to underweight. this share has outperformed its peers over the past year, but morgan stanley is now saying it trades in line despite wage growth. it looks fully valued and received multiple signals that the cycle is speaking. this is one of the worst performers as well. and one of the best performers , hitting its highest since 2015. this is a german specialty chemicals company that has agreed to buy its u.s. competitor for $2.1 billion cash. close 19% higher than its on september 23. what it will do is allow lanxess to better compete in the market for lubricant chemicals. company has indeed been looking to expand its chemicals unit, the stock gaming on the news. guy: thank you very much. let's take you to liverpool again. jeremy corbyn has held under control of the opposition labor party, 62% of the vote. in a leadership contest, he strives to unite a divided party. we were at the conference and we are joined now. anna: thanks. yes, i am joined by wh someone who can tell us where the party goes. let's speak to john prescott, x that the prime minister -- asked deputy primex-deputy prime minister. i have been listening to many big voices thinking they won't see another labor government. do you think you will see another government? >> i certainly do. i've been involved in two more. some ofn't you think his older guys who let the people get on with it -- that hundred 30 people voted for corbyn twice, right across the range. he has earned the right to try and convince the public what our policies are and win the election. get these voices on the side are now saying, well, you can to win it. can you just shut up and let us get on with the job, that the mps and leadership argue what labour stands for? anna: when we look at the polls and the labour party is 10% behind the torys, some polls put it wider, you say they don't mathematically -- >> they switch around depending on what people think. there is no doubt that this is the most hostile place any leader of any party has had. our job and the job of the leader is to get our case across the people. butes on health, on rail, juste moment, it's -- stand aside and let the people get on with it. most of them will have to face the electorate. been to channel -- you've talking about we can work this out, everybody needs to come together -- do you think the party can, in a way that convinces the electorate -- >> we have to do that. it's a difficult background, but i have been long enough and iitics, 50 years -- remember when that chair was first elected by the torys. everyone says, great, we are going to win, we will beat thatcher. well, the rest is history. we have to put the case across, and to give us a chance to talk about the policies of the labour party. and what the members of this includece one is to someone who has been out of power for 18 years. anna: went you think the next election will come? there are words that it could happen sooner than people think. >> things are going to be worse than thatcher, but it's very uncertain in their party. there are real problems in the tory party. just give us a chance to put our case across. no other leader has been elected twice, let him get on with the job and we will see who's right at the end of the day. one thing is certain, if you continue this way you will definitely lose. just have some sense. that's what we are trying to do. 30,000 members say we would like to give this man the chance. anna: you have long experience in government and you know what it's like to be found delectable. do you think the message we will hear over the next few days will have a broad enough residents with people in the country? i hear what you're saying about give this guy had chance, but with all your experience, do you think that the messages we are going to hear are going to be electable enough? >> most of these people have been undecided before. there were some mps in danger of being elected last time who said i won't serve in the shadow cabinet. i feel for my colleagues here. come back in and fight the case. there are millions of people who don't want to come on terror it -- come under it. we went to them that you can't do this unity i hope everybody will get behind and do it. let's see who's right or wrong, but most importantly, put our people who are suffering under this government. anna: would it be a sign of unity for some of the groups that were formed during this leadership contest to disband the likes of saving labor, labor tomorrow --should they go by the wayside? >> i belonged to tribune group when i came in, and that labor tomorrow has hundreds of thousands. it seems to suggest that people are in it. they want to continue that war. that would be disastrous. i am saying to all mps, we have all got to change. can we change to something different and to begin to put the case? all i am saying is we want to put our case. john mcdowell is getting the economic one. austerity.challenge give him a chance, get behind him. labor, oldr, new labor -- now it is about labor, getting our case across. the: do you think that treatment of article 50 is something that the labour party needs to be on the same page as? have you got a few on with the timing should happen? >> it's a real big issue. i fought against going into the commonwealth back in 1975. i think the issue has changed considerably. but it's a very contentious issue. we have got to fight that case. a lot of people wondered where a chance to give us give a case across and we will see who was right. then we must be prepared. anna: thank you very much. we have plenty of time to get back to that. i expect that the prime minister in the uk. guy: thank you very much. right. we are going to go from liverpool to italy. is duet, matteo renzi to announce a date on which the italian public gets to vote for or against his social reforms. did he play his cards right? we will stick to his government's spending review commissioner. this is bloomberg. ♪ guy: age: 42 in london. -- 8:42 in london. i want to get you caught up with the bloomberg business/and christine harvey. christine: thanks. deutsche bank shares have dropped to a record low amid concerns that the lender's capital buffers will be undermined by mounting legal charges, including a settlement tied to the sale of u.s. securities. a potential $14 billion to settle a probe into mortgage backed securities is more than twice the amount of the bank set aside for litigation. a german chemical maker has agreed to buy a u.s. competitor for $2.1 billion. they say they would pay $33 and $.50 per share -- $33.50 per share. the deal will help them expand their lubricant additive and flame retardant businesses. wells peter investment has closed its singapore trading desk as part of a global trade up. one of the people familiar with the matter said the billion-dollar hedge fund will maintain staff in the city, focusing on quantitative research. the move comes after they dismissed 15% of their workforce last month. and that is your bloomberg business flash. guy: thank you very much. italy is due to announce the date of the referendum on reforms that could mean a mor smaller senate. the referendum outcome is seen as a make or break moment for prime minister matteo renzi, who previously promised to resign should he lose support of course he subsequently regretted. joining us from berlin, the economic advisor to the prime minister. good morning to you, sir. thank you very much. give me your sense of what matteo renzi's thinking is right now as we head toward the referendum. is this something he thinks he can win? he seems to have backed out of the idea that he would resign if he didn't. >> well, we think we can win the referendum. the referendum is one of four pillars the government has been undertaking the last two and a half years, which includes labor market reforms and reducing taxes. the refrain is starting now. we probably have a couple months until the date, and we are convinced that people understand the content of the referendum and we will have a positive answer. guy: how damaging is the uncertainty for the italian economy right now? >> well, uncertainty is never a good thing, but we are moving forward with a vast reform program. lawre working on the budget that will come out next month, that will contain a lot of important elements in terms of trying to incentivize investment. so we are moving forward. guy: when you look at what could happen subsequent to winning, when you think about the positives that could come through from this, and i am trying to understand the signatory of risk we are running with, does the downside seems substantial? if this is lost it we don't know what happens, that's a big negative? is the upside symmetrical with the risk you are running on the downside? >> well, the upside is clear. itthe reform goes through, means that the decision-making processes that have hampered italy for making decisions -- 63 governments in 70 years, all of that will change. we will be in a position to make decisions, take them through, execute them quickly. long-term,um- to this is a huge reform. guy: can i clarify something? this is something people have been speculating about. if it doesn't go your way, if it doesn't work out, if the italian people decide to put a cross in the wrong box, is it your sense that matteo renzi is going to stick with his current role as prime minister? >> well, this is obviously a question that you would have to ask him directly. he said i think why he doesn't want to talk about his role in his position. this is a reform for the country; this is not a referendum about the party or the prime minister. again, this is just speculation, and i obviously note it -- but the finance minister, is he a safe pair of hands for italy right now? >> he's doing a fantastic job. the economic reforms we are taking forward are important, deep. they are already having significant results in the long term that will have much more. so definitely doing a good job. guy: so when is the referendum going to happen? >> well, the decision will be made today by the council of ministers. it's likely to be toward the end of november or december, but the decision will be made today. guy: ok. we are going to get a date, excellent. can i ask you about the economy more broadly? one of the issues we face of italy, and it is something that's happening in germany as --l, is the banking sector what can you do to help with this speeding up, the fixing of the italian banking sector right now? visits beating up the mpl workout? what is it you think you could do to make a meaningful difference, to get that sector back on track? >> yeah. well, before i answer specifically, let me make an important point. if you look at the italian banking sector in terms of performance and health, it's in a much better position today than it was a year ago. profitability of banks is going up. the npl stock is stabilizing and starting to go down. and we have reformed the factor. 1/3 of the sector is made of small, local banks, 2/3. big international banks. the part that is made up of small banks has been reformed. we are heading absolutely in the right direction. issuee now a contingent related to a decision made by the regulating body, by the european central bank, that requires monti to pesky to increase -- monti tde paschi to increase its base. there is a pool of record will banks who have committed to take this operation through. through, i that think we are on course to making the italian banking sector stronger. guy: ok. let me ask you a more broad question about i think we are on course europe. are we ever going to get a banking union? >> we should. we need to get -- we need a banking union. we need a capital market union, that's the other important piece that is missing. and hopefully we will get there process,mplex, long but i think we are on the right direction. guy: one final question. if the city of london is cut off from the eu, do you think that capital market's union will take significantly longer to achieve? that is certainly what was indicated when we spoke at a conference recently. is that what i can say we have uncertainty around brexit and we wanted to be resolved as soon as possible. it's my view that we need to get into negotiations and agreeing on details as soon as possible. issuesll unravel all the and eliminate uncertainty. guy: a great pleasure speaking with you. thank you very much for taking so much of your time to talk to us. yoram gutgeld. up next, doubting deutsche. shares slumped to a new record intraday low amid capital concerns. we will discuss that story next. this is bloomberg. ♪ [applause] guy:. welcome back. we are seeing some fairly big moves this morning in a number of asset classes. you have got this downgrade from duties really having -- from moody's. you can see what's happening with the turkish lira and bond market. the u.s. 10 year, 160, a bit away from that. the banks, look at the banks. they are being absolutely smashed. and we are struggling to find out exactly what is going on. one of the reasons, and i would pour a huge amount of caution merkelis, is o angela has ruled out state assistance with deutsche bank according to "focus." but we have got this huge it. overhanging i'll take it to my terminal. this is deutsche bank. since the financial crisis. the high, 93. if i take it over here we have come an awfully long way. the other thing i want to roll in is the mrr. sector, sector to deutsche bank getting hit, unicredit down. bank,s not just deutsche it seems to be quite a strong selloff across european banks. investors are selling on weakness -- one sector that remains weak. problemstill remains a for deutsche and unicredit, which need to boost their buffers significantly. guy: is ther ean implicit guarantee for those organizations and governments? >> well>>, there's a lot of debate over the italian banks and how large could be done around. it would have allowed state aid to come in. willately the plan that improve has no state involvement. moment,d to tell at the because the rules are very new. while there have been big investors that argued it should be set aside and european banks should get an equity injection to put this behind them, it's certainly not on the table as far as we know. guy: are there any key triggers coming out? it's doing this on a rapid level. is there any point need to watch out for? >> the ones we know about are the big u.s. claims of $14 million to settle the rbs case. we know that they will be negotiating that downwards, and that could take days, weeks, months. it will be hard to tell when it will come to an end. guy: we'll wrapup on that. thank you very much. that's it for "on the move." ♪ go to drops. shares in germany's bank slumps to a biggest low after worries -- we areting legal live in algiers. the debate as trump looks to apply new discipline. we wonder why this tv debate really matters. ♪ francine: welcome to the pulse, live from bloomberg's european headquarters. we are getting some breaking news out of me for. this is for the month of september, coming out

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