size penalty vw can withstand. it may be too and soon to talk about it, but it intimates they are going heavy. finesoes backs to the that the doj is putting on deutsche bank and the fight the eu has with the u.s. over apple. tom: i would agree with the idea of tying it into deutsche bank. what we know for certain after the commerzbank news last night 2020, and out to seconds ago deutsche bank breaking down to new lows of the bloomberg, it is going to be an extraordinary "surveillance." francine: let's get to extraordinary first word news. taylor: the first debate between hillary clinton and donald trump presented a stark contrast between the two candidates. it evolved into a exchange of accusations on everything from race to foreign policy. obama and secretary clinton created a vacuum the way they got out of iraq because they got out were they should not have been in but once they got in, the way they got out was a disaster. >> donald supported the invasion of iraq. >> wrong. >> that is proved over and over again. the larger point is george w. bush made the agreement about one american troops would leave iraq, not barack obama. -- theafrican command african-american community has been let down by politicians. after the election they say, see you later, i will see you in four years. i have been abused and used to get votes. it is really important that he paints such a dire, negative picture of black communities in our country. >> she does not have the look, she does not have the stamina. i do not believe she does have the stamina. >> this is a man who has called women peaks, slobs, and dogs. and someone who has said pregnancy is an inconvenience to that women dohas not deserve equal pay and less they do as good a job as men. both candidates claim a victory after the debates and financial markets judged in the case of clinton. citigroup said a trump win could lead to a selloff in equities. areas have been hit by dozens of airstrikes and some residents are calling the attacks the worst yet in a five-year civil war. russia and syria are blamed. a typhoon has been battling taiwan. heavy rain, 100 mile an hour wind, and highways have splashed the island. markets, schools, and businesses were closed. global news 24 hours a day, powered by our 2600 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. check,t's do one data and i want to go to francine on the banks. deutsche bank plunging, the into 158.s in, 160 i would watch dollar dynamics, yen and peso as well. headlines on credit suisse. francine: we are speaking to the ceo tomorrow at our very him conference and today he is speaking at another conference, and talking about changes of direction. he said he is not expecting any major changes of direction. 12 months he has been in the job and three months after he joined he revealed a huge overhaul. he said cost cuts are a priority and that is what we need to look out for. he said this with ipo is a way to make pressure more visible. credit suisse down from 3.4%, it brings us back to negative rates and starvation of yields worldwide. tom: i was going to show mexican peso off the debate but we will show that with kevin. this is deutsche bank with that leg down and this is all happened in the last five minutes. we are going to blow through 10 if this trend keeps up. here is the actual intraday chart on deutsche bank and you can see the leg down to a 10.33. in overlays now, the credit suisse headlines after what we saw with commerzbank. francine: treasuries, blackrock issued a warning. i know we have heard it before but basically blackrock has said investors need to be wary of treasuries. what did i chart for you? treasuries. this is the 10 year bond yield and it is down a touch. if you bring it back to 2012, longer-term treasuries trimmed the 2016 rally this month so something you need to watch out for. .om: this is really important i watched the entire debate and most of our team did, we are sleep deprived but no more than .evin cirilli kevin lifting the bedroom last night. wonderful of you to be here. i thought history was made last night. spin, theut the media great work that you and mark and john david and megan murphy. the game of it, what was it like in the spin room after the debate? kevin: it was a tale of two trumps. if you looked at the beginning of the debate when donald trump speaking about the transpacific partnership, for example, and he tried to link hillary clinton and her 30 year political history, a very storied history, he tried to love her as the political establishment and cast himself as an agent of change, he was successful for about 20 minutes. then it was like he went off the teleprompter and we have seen this time and time again. you go into the spin room and it is him and his top surrogates making the way, trying to make the argument he was restrained but what we saw last night was unrestrained. tom: we have a lot of respect for you. you are out in the trenches. marriott is an upgrade on the road compared to trump and clinton. with all your knowledge of the trump family, his new campaign leaders, how do they adapt and adjust to improve in the next debate? kevin: i put that not only to kellyanne conway last night but also to rnc communications director sean spicer and what he told me was they were disappointed that they were not able to discuss other topics such as the clinton foundation, such as more emphasis on her e-mail server as well as what they feel is her record as secretary of state. they are hoping in the next debate in two weeks they will be able to do that. tom: i thought they got in a little bit about the e-mail thing but you cannot get it all into one hour. francine: i just watched the highlights but actually what really reminded me of when mitt romney in 2012 is going after ben bernanke. i cannot make sense of it. i kind of can, but trump yesterday was slamming janet yellen in front of millions of viewers. 2018.rm is up in february will he replace her without a doubt when he becomes president? this is all the markets care about. kevin: i have asked him that several times and he has dodged the question. you are right, he took his attack on the central bank to a widespread mainstream audience but this is the type of rhetoric he has been issuing for several months now. , the also, i would argue same type of rhetoric that for more than a year a faction of the republican party has argued within the halls of congress and other standardbearer is arguing that on a much lower level. francine: as a european, this is alien to me. why did mitt romney in 2012 say he would predict -- replaced ben bernanke? forces in there republican party that feel the federal reserve is issuing easy money and gaming the market. is tapping into that populist rhetoric, that frustration of the pace of the economic recovery that in many parts of the u.s. is bubbling over as a result of this election. tom: the market says mrs. clinton one. what do you expect from the polling? what will you watch for in the next 48 hours in polling? kevin: no question the markets decided clinton one and what i'm going to be looking for is where are the independent voters, who quite frankly do not like hillary clinton or donald trump. testedd either janet either candidate speak to them? kevin: i think hillary did but there is a case to be made that donald trump spoke to the base of his party better than clinton did to hers. tom: kevin, thank you so much. bank,ne, look at deutsche extraordinary trying to make new lows. francine: credit suisse is talking about cost-cutting. ipo'ing that they are their swiss unit. live tomorrow from the most influential summit, speaking to the biggest names. i have a half in our conversation with keygen to jane -- tmz jane -- tmz jane. -- ♪ francine: this is bloomberg "surveillance." i am francine .acqua, tom keene in london let's get to the bloomberg business/. u.s. prosecutors are trying to figure out how big a penalty they can impose on volkswagen without putting them out of business. they are trying to reach a settlement on the emissions cheating scandal we for is a new president. vw has agreed to pay more than $16 billion in civil litigation find in the u.s.. caesars entertainment has reached a restructuring deal with its major creditors that will allow it to reorganize. of courtends two years fights involving caesars and apollo global management and tbt capital. in germany, chancellor angela merkel's government is moving swiftly to speculation that will bail out deutsche bank. they say it is on imaginable that deutsche bank would be helped out with taxpayer money. the u.s. government wants to find deutsche bank -- fine deutsche bank $14 million amid its probe. tom: here is the intraday on deutsche bank. we saw a little bit of a bounce. there is yesterday's trading and down we go. we are not that far from that 10 level months ago. talking about 10 being a level of action by authorities. we are not there yet. had an interesting conversation with the ceo of aberdeen asset management and he said the problem is that regulators want to make sure these banks are safe and do not care about shareholder returns. there was no doubt in his mind that angela merkel without openly saying it, this is his speculation, believes she would step in and cannot afford to have deutsche bank not perform as well as it should. nandini ramakrishnan is a global strategist with jb morgan asset management -- j.p. morgan asset management. there is a general feeling that negative rates, although they are trying to figure out a way of not hurting banks, they will be the casualty of the great experiment. nandini: those negative rates are a tricky thing for banks to borrow on the short end, land on the long end, and yield curves are flatter than they have been on the past. it is important as investors are buying in the market to be aware of some much -- how much some of these indices are combined -- comprised of these large banks. is the biggest concern? you have investors worldwide starved for yield. trump, evenld though he did not win last night is performing and expecting and exceeding expectations, so he may end up becoming president. you have all this concern about banks. is there something we are not seeing that could be the next crisis? nandini: what has come to the top of the pot is the top risk. if wecal risk would be had to characterize one key theme or element. we have elections across europe, some of them questioning the eurozone. a decisive election in the u.s. with candidates who use language and rhetoric we have never seen before. that boils down to the populations expressing their views and that is rocking markets. tom: fold in the derivatives work of jpmorgan looking at the short short-term bond market, the liquidity market with what you see in equities. how do you link them? nandini: we tracked the correlations of bond markets and that has been the most unstable relationship we have seen for the past few years, particularly bumping around a bit in the past few months. with correlations in assets that are not supposed to be that way, it is tough as an investor to find diversification and protect on the downside. tom: what are the correlations right now? we just got a second bounce on jointer bank. it feels -- on deutsche bank. it feels like 2008. there is a bounce to a lower high on deutsche bank. i am looking at the german 10 year, curve flattening. help me here with the correlations that you see off your desk in london. nandini: it is tough when you have these correlations thing a bit higher than usual with assets that should not be, but when you have stories like deutsche bank, it is going to be a dramatic move in the stock rice and if you are -- stop price and if you are comparing d yield, you have a rocky relationship. these market moves are the biggest reason to be diversified across asset and write it out if you are a long-term investor. tom: this is the german 10 year. you can see down back to july negative yields. the velocity, the brutal move is really something. on japanese theology and economics in our new york studios, robert feldman of morgan stanley. francine lacqua in london, tom keene in new york. this is bloomberg. ♪ francine: this is bloomberg "surveillance." francine lacqua in london, tom keene in new york. black rock issuing a warning on treasuries as the fed moves towards a hike. blackrock think so, no one else think so. we are back with nandini ramakrishnan. the problem is when you look at what janet yellen wants to do or what she is trying to do or can do, it is modeled. we were promised for hikes and now we might not even be looking at one. nandini: let's keep one on the table. francine: just about. nandini: the data has been ok. they do have a deep enough case to hike. we will have to see the election results. if that really messes up the markets they may pull back. i think the article that everyone is reading is correct. there is a lot of duration risk across the world. given all these risks, where do you place your money? we are talking a little bit about getting higher yield. we like assets such as european high-yield bonds, a little bit of end selectively to get boost in yields but not have the volatility of equities. the volatility of currency and the impact on institutional money in the coming year? nandini: currency volatility is certainly a top risk but we are away from the sort of taper tantrum extreme currency wipeout as in 2013. tom: do you believe you can hedge here? can you sell hedging to protect yourself and make a little money? expensive tos protect a lot of the downside risk in currency and you have to do it strategically in the assets that have the most risk in localized areas so in emerging markets. the kind of move that we have seen and the turkish lira makes a hedging play for turkish assets extremely important. francine: what is the one thing that markets get wrong? i do not know whether you want to call it the biggest risk. nandini: i think overall the high valuations in the bond , in the government bond market particularly are going to have to unwind at some point and whoever is at the end of that trade is going to feel some pain with 75% of bonds yielding under 3%.one third under , weuld say when that moves might have something like last year in april 2 thousand 15 one a lot of capital was wiped off the books. tom: nandini ramakrishnan on with jpmorgan asset management. what a debate last night, history made. we will speak to trump supporters and clinton supporters. laura tyson will join us on bloomberg "surveillance" on radio in the 9:00 hour. francine the kwok, tom keene in new york. , tome -- francine lacqua keene in new york. ♪ hey how's it going, hotcakes? hotcakes. this place has hotcakes. so why aren't they selling like hotcakes? with comcast business internet and wifi pro, they could be. just add a customized message to your wifi pro splash page and you'll reach your customers where their eyes are already - on their devices. order up. it's more than just wifi, it can help grow your business. you don't see that every day. introducing wifi pro, wifi that helps grow your business. comcast business. built for business. tom: the nation transfixed by a debate. francine lacqua in london, tom keene in new york. raining in new york city. for those of you global, not too far from hofstra. -- i assume just donald trump is trying to sleep off the debate. francine: the world is transfixed, not the country, the world. tom: i imagine 30 million worldwide. we have wonderful guests through the five hours today. let me get to the data, and this is deutsche bank making new lows. i want to go through this carefully. oil has just broken south with yields coming in 150 92 157 in the last hour. futures+++ there is a massive weight to the market. mexican peso is in its own trunk-clinton world -- trump-clinton world. francine, the one thing i would say that helps with deutsche bank down 2% is yen has not moved. if i am watching one thing right now besides 10 year german and curve flattening and even sterling, it is yen towards 100.00, would be a huge deal. right now to taylor riggs with our first word news. the first time during the campaign, donald trump and hillary clinton went head to head. the debate made it clear how different they are on a wide range of positions. they sparred over familiar refusal tomp's release his tax returns and clinton's use of private e-mail. my tax returnsse when she releases her 33,000 e-mails that have been deleted. as soon as she releases them i will release my tax returns. mistake using a private e-mail. >> that is for sure. >> if i had to do it over again i would obviously do it differently but i'm not going to make any excuses. i take responsibility. taylor: trump spoke to mark halperin after the debate. >> i thought it was great, i really enjoyed it. i think she proved it is all talk and no action. for years she has been working on things and nothing gets done so i think it came out very well. objectives, which ones did you achieve or fail to achieve? >> i think i achieved. taylor: financial markets judged in favor of clinton. wingroup has said a trump could lead to a selloff in equities. global news 24 hours a day, powered by our 2600 journalists and analysts in more than 120 countries. riggs.aylor this is bloomberg. francine: thank you so much. thes get more on all banking news with lionel laurent. a nemesis for angela merkel is deutsche bank. you were on the air with me an hour ago and deutsche bank shares were gaining a touch. we know the problems and the fine and the questions about what angela merkel will do. in the last 50 minutes it has gotten to a record low. a worryi think there is about market sentiment and how this can spin over into the wider market. we have seen big corporate -- german corporate scrapping bonds so this is not the time to be raising debt or equity. the credit risk is going up so i think investors are worried about a broader market spillover. we had been here in february and months after brexit. could this be another deutsche bank moment that goes beyond the fundamentals? francine: if you are the ceo, how do you reassure. there's the fine with doj. we do not know the outcome. do not know the political stance on deutsche bank but if you are john cryan, what do you tell the markets? of out ofis is sort his control. months ago he was able to calm markets by buying debt. i do not know how much financial room they have to move now. again atconcerned yet a time when the ecb said governments need to do more that the markets will demand more from the ecb. new lows.y get as francine correctly stated, up we go and we rolled over once again. let me start with liquidity and solvency. are we beginning to see in deutsche bank derivatives offer your gadfly work or within the german market liquidity or solvency questions? certainty on solvency and certainty on profit, we do not have that. it is totally true that deutsche bank fills all the requirements but the point is the market wants today what regulators want next year, what they want in two years time. that is the big issue and you will see in terms of valuation on the cash market, deutsche bank shares and german bankshares are at the same discount as italian banks. you do not have the certainty today about what is going to happen tomorrow on profits or capital. ,om: the shock and awe particularly for anglo-saxons is the idea within the commerzbank announcement of doing a 2020, thatedo out to is totally un-american. frankly, i would say it is on -rbs.- un why do they think they have the luxury to wait for years before they do a restructuring? lionel: if you are the ceo of the european bank that is all you have control over. they can talk about job cuts and a great strategic plan. the market wants certainty today and the regulators are relatively in control. the announcement from commerzbank may be about the dividends. tom: agreed. lionel: the turnaround was supposed to be over and capital returned. the worriers are going straight back into turnover mode. where is the utility banking sector that investors want and hope for? not here. francine: lionel laurent with a great overview of all of the banks. onto commodities and oil, iran not willing to freeze its oil output and does not plan to strike a deal with other crude producers in algeria this week according to its oil minister. let's get more on opec. kevin, we were hoping for a deal. markets thought that maybe we do not get a deal and we speak to the iranian minister and he says i am not here to make a deal. no deal? kevin: it looks like a deal is going to be difficult to achieve but looking at things from a broader perspective, does the market really need an opec freeze deal at the moment? if you listen to some forecasters, the international energy agency, the answer would .robably yes demand is looking pretty good, especially in asia. car sales are strong. global supply is adjusting very quickly. years it was expanding at a rate of 3 million barrels a day and a year ago about one and a half million barrels but currently it is falling about a million barrels a day in a matter what opec does. most people when they look at the market can understand that by the time you get to 2018 and 2019 it will be much tighter and we will need lots of opec oil. it is a matter of how quickly we get there. and freeze or cut would certainly see that process up. be --looking quite help healthy at the moment without an opec cut. francine: it seems iran is the kingmaker so after saudi arabia being the only one that can play with production, whatever iran decides saudi will follow. that is right. i think people were optimistic that there were better chances for an agreement this time becauseompared to doha it relies on countries producing more oil but iran, the sticking point is it share of opec production. clearly that means they want to increase their production quite a bit more so i think it looks him likely. let's be honest, opec has not really done anything to constrain production since 2008. anything here would be no and i think very difficult to negotiate. the practicalities of negotiating a freeze, there is no quota system in place. most of these oil producers have ever had to negotiate before so the practicalities will be very difficult. i think if opec gets out of this meeting, the impression over to the market that it is talking, that has got some common understanding, that would be a step forward after doha which was a complete disaster. barclays --or at kevin norrish at barclays. commerzbank and credit suisse moving down. i am really interested in your discussion tomorrow at the ceo of credit suisse. as we look atsit new lows, what is a distinction between deutsche bank and credit suisse? francine: first of all, the share price. the credit suisse share price has fallen a lot and the deutsche bank share price has fallen even further. i think it is clear they have similar troubles with a lot of the german banks and swiss banks. if you look at deutsche bank they also have this huge fine that came out of nowhere. it was only last week that the doj offered $14 billion. we were expecting a fine of $3 billion. that changes the game completely for deutsche. tom: i am just baffled by the thing. this is the first morning where i am sort of back to 2008 and early 2009. an important conversation at the bloomberg influential summit tomorrow with tijane thiam. , we are going to look at china. the new slow this morning is extraordinary. -- michaelgo my key mckee and myself with julian robinson. 6:00 p.m. tonight, looking forward to that. ♪ us, thrilled you are with bloomberg "surveillance." we are watching deutsche bank, the market moves. there is a lot of correlation out there as well. we are going to died -- digress to china. if you like to read china books, this is the nest -- next must read. the guy who wrote it will give you a lack of height. he owns the imf shop on china. and a guy named bernanke say shut up and read "gaining currency." congratulations on your new book. what is in this book for mohamed el-erian. you cannot teach him much. what is he going to learn for gaining currency? >> the history for paper currency goes back to the 1970's. -- theong the earliest story goes all the way to the present, to trying to think about what is happening with the currency and i argue that the currency is becoming an important international currency. it is going to become a reserve currency on the first of october when the imf makes it a lead to their currency. i do not think it is going to be a game changer. paul krugman parachutes into your class internet -- in cornell and you are looking at the architecture of economics, is china using the architecture the united kingdom uses, the u.s. uses, that poland uses? are they using conventional economics? trying tona is encourage the use of international finance with a different playbook. it does not have a fully open capital account and yet because of its sheer economic clout and size it has managed to make the rmb and international currency. it is trying to influence the rules of the game and make up the rules of the game. if you think about the payment system, most international payments go through the swiss network. china is setting up its own payment system. it is going to be largely domestic that it gives the chinese the ability to ramp up and control payments so they are not enthralled to the u.s.. china is making a determined effort to the promotion of the rmb to increase its international info lens and right the rules of the international financial system. francine: the problem with china is that it has been eerily quiet . we know they have a huge debt problem and what you are talking about is occurring on the sidelines, but china will go through volatility. wire the markets ignoring it? moment china is off the table because things seem a lot calm her. --, or. --calm,er. the investment sector seems to have stabilized but the key of china is not only about .hort-term growth i think the market has overhyped the concern. the issue is of medium-term growth, i do not think there will be a growth or financial sector collapse. i worry it will be expensive to solve these problems and the biggest question always is before they start living the economy in the right direction is the financial system better in terms of allocating resources and not wasting as much money. francine: you said they seem. the markets get it wrong a lot of the time and you could argue they did not pursue the crisis many times. are they right to ignore china or is it a mistake? eswar: i think at the moment the worries about china are medium-term so certainly there is a lot more to worry about in international finance these days . the fact that there is a move away from worrying about china i do not think is a big problem. the fundamentals of china certainly give one room for pause and a lot of concern. given how large china is, the second largest economy in the world and the biggest contributor to growth since the financial crisis, what happens in china will matter to all of us. tom: i want to bring up this quote as we go to break. the limited rise of the renminbi, while the yuan's -- it is vastly overblown. hinges on how seriously the chinese government follows through on various and broader economic reform. i need to go to a data check with deutsche bank breaking down in the middle. we are going to come back with process are -- professor prasad on chinese culture. if i was teaching a course on lower highs, that is a chart i would use. extraordinary to see deutsche bank breaking down to 10.25. let me do a board right now with markets on the move. vix moving,ng, -- futures evaporating. the mexico peso is off of trump-clinton with clinton doing well. from new york, this is bloomberg. ♪ tom: extraordinary news flow this morning. the debate and fall out of the debate. the markets really on the move. francine lacqua with that important conversation tomorrow with the leader of credit suisse, and here is deutsche bank, breaking down to new lows at 10.25. we are watching kick by-kick through the morning. --h us is as for personal ad eswar prasad. with gdp under 3%, is that a global recession? it is not a global recession but it is very low growth. it signals the lack of business and consumer confidence and if his miss and consumers are not investing and consuming, that means a difficult long run. i do not think a panic stage given the fact that we have inflation and deflation building around the world with the u.s. being an exception. i think we are in a period very low growth. tom: this is the decade moving average of world trade. this is one of the great failures of the modern age. the 10 year moving average of combined imf world trade is below where it was in the 1980's. there is a world trade recession. why? i think the protection sentiments in every country have started kicking in. monetary policy is taking on the big burden of supporting growth, maintaining financial stability, and making up for the fact that other policies are not doing much in terms of boosting growth and confidence. monetary policy for a number of economies does work for the exchange rate to make up for weak domestic demand by boosting exports. not everybody can play the game moves same time so that into protection sentiments and weaker trade which feeds back into weaker confidence because people are concerned about uncertainty and the fact that you could have trade wars breaking out. trade is crucial for world growth so it is very unfortunate where we are right now. going around in circles and this is what politicians do with central banks. how do you fix this? do we just need to accept we are not going to get inflation, a growth is 1.5% and 2%, and we should deal with it? unfortunateuld be but i think the reality is we need to get a better mix of policies. since the financial crisis, virtually the entire burden of not just preventing financial implosions but trying to support growth and bring up inflation has all fallen to monetary policy. they are not working well because the financial system is not working well. trying to push harder with monetary policy does not generate good returns and we have seen that in a variety of dimensions. the question is whether we will get other policies speaking up the slack. so far they have not. a nice cornell red. deutsche bank front and center making new lows. there is another plunge down. we are looking at deutsche bank and the correlations into german markets. what is not moving? japanese yen. robert feldmanr, of morgan stanley and kate moore as well. ♪ tom: the market speed. linton takes the late one as the mexican peso strengthens. kate moore and david rosenberg on america's economic politics. there is no debate. you should own stocks. and the desperation of japan. in this hour, robin feldman of morgan stanley and tokyo. this is "bloomberg surveillance" live. september 27, prancing with quiet in london and tom look francine lacqua in london. i would put it as a multiple-day decline. francine: we need to be careful what language we use. the markets are nervous. it has to do with angela merkel. the politicians maybe have not reassured shareholders enough. it has to do with a huge sign from the boj. deutsche bank share price is volatile to say the least. to really try to understand why there is so much volatility -- how do you fix it? in thee: -- tom: afternoon, commerce bank with the idea of managing 2020. their goal is to get to november maybe as a first idea. here is taylor riggs. taylor: the addresses were highlighted between hillary clinton and donald trump. at hospira university, the candidates faced off for the first time. a big issue -- jobs. mrs. clinton: we have to build an economy that works for everyone, not just the top. we need good jobs with rising income. i want us to invest in you. trump: our jobs are fleeing to mexico and other countries. you look at china making our product. they are devaluing their currency, because they are using our country as a piggy bank. mrs. clinton: i have met a lot of the people who were stepped by you and your businesses, donald, who you refused to pay when they finished the work you asked them to do. mr. trump: i take advantage of the laws of the nation, because i am running a company. my obligation right now is to do well for myself, my family, my employees. mrs. clinton: we also need a tax system that rewards work and not just financial transactions. and the kind of plan that donald has put forth would be trickle-down economics all over again. in fact, it would be the most extreme version, the biggest tax cuts for the top percents of the people in this country that we have ever had. i call it trumped up trickle-down. after: a poll conducted the debate had 62% of those surveyed saying clinton won. eld areas in aleppo hit by airstrikes some are calling the worst in the war. with countries are accusing the u.s. and its allies of the in the cease-fire. a typhoon has been battering time on, as 20 foot waves/the island. 280,000 homes have lost electricity. markets, schools, and businesses were closed. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. to get tot francine her data, which is more eurocentric. here is what you need to know. into a 1.58. has not moved. that is the key determinant for me right now. 100.40 6 -- you would think that would be 100.20, and it is not. we are watching yen as the determinant. francine: this is my data board, and i want to look at thanks. you brought up deutsche bank. it is also leading between losses and gains back to losses. we are seeing pressure on banks overall. deutsche bank down 3.2%. we know they are concerned. fundamentally, nothing really has changed. and yet investors are selling off stocks. there is certainly market nervousness. , i will have a link the conversation about that tomorrow. the same story. they are seeking to cut costs, but do not have control of the situation. they are seeing negative rates. overall, i want to show you the vicks index, because it is down. you are seeing stocks down. an incrediblyom: compressed surveillance this morning. david rosenberg and robert feldman will join us with a little bit. right now, kate moore of blackrock, their chief entity -- equity strategist. with us. he was in the trenches last night of the spin room, and has followed mr. trump. learned lasttrump night about the american political system? kevin: i think the preparation is key. for weeks, i have been asking senior trump advisors, how was donald trump preparing for this debate? he was being advised by rudy giuliani, senator jeff sessions, newt gingrich, and other more senior campaign aides. but the bottom line is this. you watch the debate last night and you see hillary clinton, for 90 minutes, be able to not only give coherent answers, but even her body language in watching trump's response don't's -- let trump's unraveling occur. tom: how will this change pennsylvania, one battleground state? kevin: the polls actually had donald trump within two points. tom: why are you even coaching with the eagles 3-0? kevin: that has been one of the best parts of the week, to be honest. it all comes down to suburbs outside philadelphia. i think last night hillary clinton made a pitch to suburban america. the swing voters will be all important. tom: did mr. trump speak to the marginal voter? kevin: the conservative marginal voter, not the independent. francine: is donald trump, if you becomes president, really going to get rid of janet yellen? why so much focus? i think he gives voice to the conservative contingency that taps into the populist rhetoric that is pushing to call for more transparency. argument,eir critics' that is more politicization of the federal reserve. really,an escalation, of the faction of the conservative mean that for a long time has been critical of the fed. it has echoes of the libertarian movement. think back to rand paul. globe is i know the looking at the debate, and they are looking at the election, but if you are a market, this is what you can immediately trade on. absolutely. i think if you are watching the republican party, you alluded to make romney politicizing the fed. there are many people with establishment republican circles who are uncomfortable with this rhetoric. i did everything i could last night to stay out of the debate. to me, the most a real moment was the vice presidential candidate of the gop talking about, we needed a broad shouldered leader. we now bring in the strategy for blackrock equities. broad shouldered? what is going on? equity and forget about clinton-trump and the politics. what the hell does broad shouldered mean? i am not sure. i showed up this morning just for you. my take away from the debate last night was there was not a lot of change in terms of policy. no real nuance in terms of the policy platform. i am not expecting investors to react differently today than they did over the last week. tom: let us go to a broad shouldered morning must-read. we in broad shouldered leadership? broad shouldered. there it is. mr. trump seemed oblivious to the harm he was wrecking upon himself. instead he seemed to be reveling in. -- in it. i mean, that is vicious. does that have any weight with marginal voters anymore? kevin: i am not sure. to be honest with you, i think trump -- the public that trump is speaking to is looking at him through a different lens then perhaps the pundits and we in the media are looking at him through. broad shouldered. francine: thank you so much. from bloomberg politics. coming up tomorrow, join us for life global coverage from an influential summit. we talked to the biggest names in financial markets, including and theit suisse ceo berries management ceo. all of that coming up. ♪ francine: i am francine lacqua in london. tom keene is in new york. let's get to the bloomberg business flash. here is taylor riggs. taylor: u.s. prosecutors are trying to figure out how big a penalty they can impose on volkswagen without putting the company out of this list. authorities familiar with the matter say the government and vw are trying to reach a settlement on the scandal before the new president in january. the w -- vw has already agreed to pay more than $16 billion in the gay confines in the u.s. -- in litigation fines in the u.s. a deal ends two years involving caesars palace. isela merkel's government moving to quell speculation it could fail out deutsche bank. a senior lawmaker says it is unimaginable deutsche bank would be helped with taxpayer money. there are talks that germany's largest bank might have to raise capital. the u.s. government wants to find deutsche bank $14 billion. ne budgeting $14 billion. robert are speaking with feldman of morgan stanley in tokyo. he joins us in our studio. kate moore with us. dr. feldman, you are the leading english voice in japan. is it conventional economics of the bank of japan, or are they in new, unorthodox territory? i think the idea of targeting yields is in line with targeting interest rates. interest rates have been part of their story for a long time. it is unorthodox in the sense they have brought it in a different form than they have been talking about it before, but i think that there is a lot of orthodoxy behind it. their problem is they have to implement it in a way that is clear to markets. tom: i thought during the yellen conference -- i thought of you. the idea of what the bank of japan did before bernanke's lecture in tokyo -- bring up the chart, if you would right now. this is the most important idea of remorse within central banking. in the early 2000's, the bank of japan raised the target rate, and then they had to reverse. are they still living off of the regret and remorse of that model? robert: i do not think so. i think that incident -- that event is very well understood now. the boj's problem is they have a mixed system, where they are quantitative, but they are part tracer range, sticking to announcing an interest rate target at the same time. so there is confusion among investors. that came up in the governor's press conference. are you targeting quantity or price? they are trying to do both at the same time, and people are confused about what they are doing. are right.ou they are confused. japanese banks, for instance, raising the advance. what is the killer question you would ask governor kuroda to try to put some clarity in what they are trying to achieve? robert: the question to governor kuroda would be, how would you adjust your 10 year interest-rate target as economic conditions evolve? if the interest rate goes up, what we do with that zero target? do you raise it half? i want more clarity in the formula they are using to set the yields target. backine: ok, so let's go to the yield curve. are the markets saying that provides little benefit? or are they questioning how the control it? robert: i think the markets are confused. they are not sure whether this is a quantity or a price. they are not sure whether this is an increase or decrease in quantity. among financial markets, among investors, immediately took the statement that they could raise or lower the amount of quantity to hit the yield chart -- i put that as a potential tapering, and therefore revalued in response to it. i think the markets are quite confused. they are confused. rightly so or wrongly so? what i want to get a sense of it is, who is wrong? it is boj versus markets. clarifythe boj needs to what the policy is. they are working slowly through with themselves. i do not think they know precisely whether the ¥80 trillion that governor kuroda said it is consistent with zero rates. they are not sure if it is the right number or not. it is hard to figure out what the number is in a situation like this. they are trying to figure out what their new policy is as they go on. tom: going back to you and very eichengreen-- barry a few years ago -- kate, you are not going to believe this. this is tokyo inflation and abenomics. is a shoot up in inflation, and then down we go. did we prove that is a one-off strategy? robert: i do not think that is quite the case. the course of inflation over the last four years has been early success for the monetary component. we now have even the core inflation rates at about 0.5%. but before all that started, it was negative one. they have been somewhat successful. they have just not hit the 2% yet. tom: help me with dr. feldman's world. folded into the outcome in asset bubbles. stephen roach, the academic of yale, wrote a scathing piece yesterday on fed policy trading bubbles. is your world of equity in the bubble? when we are talking about japanese equities, we are finally black this year. multiples are not stretched. you have a market that looks fairly valued. what we did not get was huge confidence from the investing community about the sustainability of future policy, and the ability to meaningfully affect economic growth. to investate domestically instead of using capital overseas, which has been the pattern of much of this abenomics. a new bubble -- no bubble in japanese equities, but we did not get the catalyst either. tom: kate moore from blackrock. which bank at 10.25 after an ugly morning. -- deutsche bank at 10.25 after an ugly morning. a conversation with julian robinson, coming up. ♪ morning. incredible news flow this morning. francine lacqua is watching european banking above all. in new york, and amazing postdebate dynamic. with us, robert feldman of morgan stanley and kate more of blackrock, their chief equity strategist. will there be a change in use of cash next year? is there a point where ceo's say, enough? we have seene: companies really pull back on their spending. there is a ceo survey that comes out quarterly. in the third quarter, it was showing that companies were saying over the next 12 months they were going to have the lowest capital expenditure since the third quarter of 2009. tom: why? kate: uncertainty. until equalities start getting implemented -- things are not moving through congress. no one is going to stick their neck out, so you have preservation of cash. tom: but on a dividend discount model, you needed anchored to the system. it is what business needs and the stock market needs. does it need chair yellen to give them the anchor of a legitimate yield that is not modestly accommodative? kate: i agree with that. signaled they believe the u.s. economy is in good enough shape they can continue to normalize policy rates. one thing we have consistently heard from companies is they lack confidence from the fed and central bankers. it has started to call into question the quality and the consistency of their sales and earnings growth. what am i missing, they ask. what do they need to know? if the fed is telling them things are bad in the background, i am going to wait it out. francine: what are they missing? is this a policy mistake from the fed? are they concerned about dollar strength? is there an underlying assumption that if they rise to quickly, we see the markets sell a little bit? the: that is the worry with fed. if they normalized to quickly and do not take into consideration global financial conditions and the impact of the dollar, it will be growth-destructive, and we will see a greater slowdown in investment and spending and it will hurt the economy. i actually think we are in this sentiment game of chicken here, where no one wants to be the first to move and move out of sync with other global central banks because of the impact on currency markets, the impact on sentiment at times when we were really talking about policy diversions. -- diversions. looking at corporate balance sheet in the u.s., the amount of leverage, interest expense -- we are not sure it will derail corporate health if the fed continues to normalize. be in play should for the fed. francine: thank you so much for staying with us. coming up, we speak with the nigerian oil minister. opec from algiers, where members are meeting. there is a standoff between the saudis and iran. markets are selling off in the back of it. ♪ tom: the world riveted last night on the view out on the horizon. hofstra university played host clinton, and mrs. an extraordinary historic moment for the united states. just extraordinary theater last night. thanks to mark halperin and john halloranfor -- john for their coverage. say if we look at the intraday chart? there is right now. i do not know, francine. absolutely shocking on a book value. we are way below 0.30 tangible book. just extraordinary. have a littleo bit of a bid. we have not been able to explain it so far. it was up a little bit earlier on. the story has not moved on from what we were talking about yesterday. so this is pure market movement. --re were questions about because it is nervousness on the market, as the ceo, if you were john prine, i do not know how you address it. it seems out of his control. tom: i am looking at the bloomberg over here. the yen has not moved. that is the one constructive signal from deutsche bank this morning. here is taylor riggs. timer: for the first during the campaign, donald trump hillary clinton went head-to-head. they battled at half three university in a debate that make clear how different they are on a wide range of positions area they sparred over familiar ground -- trump's refusal to release tax returns and clinton's use of private e-mail servers as secretary of state. my taxmp: i will release returns against my lawyer's wishes when she releases her 30,000 e-mails that have been deleted. as soon as she releases them, i will release. i will release my tax returns. mrs. clinton: i made a mistake using a private e-mail. mr. trump: that's for sure. mrs. clinton: if i had to do it over again, i would obviously do it differently. but i am not going to make any excuses. it was a mistake, and i take responsibility for that. taylor: after the debate, trump spoke with mark halperin. i really enjoyed it. it is about making america great again. it is all talk, no action. for years and years, she has been working on things, and nothing ever gets done. mark: the objectives you had, which did you achieve, which did you fail to achieve? mr. trump: i think i achieved. look at the online polls, and we are doing well. taylor: financial markets in favor of clinton. mexico's pesos rebounded, and the yen and gold fell. this could lead to a seller -- a trump win could lead to a selloff in equities a boat in italy may seal the political fate of prime minister renzi. he has set december 4 48 referendum -- for a referendum that he argues all mean speedier legislation and in and to italy's revolving door government. journalism by analysts in more than 120 countries. this is bloomberg. tom: incredible news flow this morning. incredible news flow for 2016. maybe it is time to pause for a moment and consider one of the most important cultures and nations, japan. robert feldman of morgan stanley, out of the massachusetts institute of technology, working at the imf right now -- robbie feldman on his japan. this is a book from 60 years ago. she taught the present emperor of japan. if you were to reread "windows for the crown prince," what would it tell you about the shift that will come for japan? robert: i think the lesson of that book is that the u.s.-japan relationship is on a firm foundation and has been for many years, is by the horrors of world war ii. even prior to world war ii, there was a very long and good relationship between the countries. often trouble on immigration, but a positive relationship. what that book says to us today thiso we want to continue positive, productive relationship between the countries, despite some issues here and there on trade? do we want to continue the relationship that has been the anchor of the civilization? it is a tough neighborhood, and the u.s.-japan relationship, that foundation is very, very key. will this continue or not? that is the issue. in: i am the ugly american tokyo. i get to a hotel like bill murray did in "lost in translation." taylor riggs would climb mount fuji or something. that is what she says. if i go outside tokyo, how is mr. abe treated and how are the tokyo elite treated? robert: the japanese people are remarkably united. this is one of the strengths and one of the background for my people are interested in japan. populism we see in many countries is not present in japan anymore. we went to a populist period even under some earlier ldp governments, but the country is now united, realizing that each individual has to do his or her own part in raising productivity to maintain the standard of living. this is not a joke anymore. on a go around the country, i asked people -- we have a big deficit. how much do you increase taxes, cut spending? i get clear answers from people that tend toward the spending cuts, even the left-wing groups. they know the system sustainability requires that. i think we have a coherent public. when -- tom: -- francine: you look at unemployment, how you fix japan is get women back to work, get immigration. that goes to the social fabric of society. without immigration, without women going back to work, this country is going nowhere. force: women in the labor in japan are basically about the same participation rates or better in various different age groups as in the united states. difference inest the 30's, but it is not very big anymore. female participation rate has been about 50% for the last 35 years, as male participation rate has come down. the mill participation has been significant. importantn is another issue. even conservatives like prime minister abe have moved, saying, we need more immigration. we even need unskilled immigration to help in areas so we do not force people to leave work, particularly women, to take care of family. prime minister of a himself switched his position on the immigration issue. of movinga matter forward with legislation. that is one of the new things that has come out in the last couple of days. francine: tom, i think you were in davos with me when the economy minister of japan said, how do you get women back to work best and mark give them better bathrooms -- get women back to work? give them better bathrooms. ♪ francine: this is bloomberg surveillance. the opec straight to meeting. iran says no deal. the minister told bloomberg he is not ready to freeze output at current levels. let get to algiers for more. our market anchor is there with the nigerian auto -- nigerian oil minister. yousef? yousef: plenty happening here this morning. we spoke earlier about some of the comments we got from the saudi arabian oil minister and the iranian oil minister. let's get more perspective on the latest developments. we are joined by the minister for petroleum resources for nigeria, dr. emmanuel ibe kachikwu. thank you for making time to come on the program. let's get straight into the meat of the matter. what is the latest proposal out there you see? emmanuel: lots of proposals. proposals moving from cuts to freezes to do nothing. we are going to have the meeting tomorrow. at that time, we will see the proposals. everybody is broadly optimistic about what is going on. that is certainly helping. yousef: the you expect a breakthrough? emmanuel: good question. i am always optimistic. will be a lively conversation, very positive. but we will actually be feeling each other out, just to see whether parties are ready to make some sacrifices to settle the issue. yousef: at what level would nigeria be able to freeze production to accommodate a wider deal? emmanuel: it lasts 11, 12 months. we have lost about 500,000 barrels a day on average over this period. realistic for nigeria to make more sacrifices. we would expect to be granted exemptions if this is going to go forward. yousef: would a freeze make sense at this point, or has that ship sailed? do you need to go further as a group and perhaps look at production cuts? emmanuel: i think more trending toward production increase. freezes at current levels are fairly high. but there have been some arguments that we have a very unwilling coalition right now. discuss a softer model and progress from there. the realistic situation -- unless you have realistic concerns, -- realistic cuts, it will not impact prices. yousef: what would make this week successful? emmanuel: honest ilog. minimum have a freeze and at maximum have a cut. happens in what november. yousef: the cease-fire with the niger delta avengers -- there have been ongoing attacks. can you talk us through the situation? a dialogue is uppermost, engage them as much as you can. we would like to find a solution to this. government is not in the region as much as we should be. at the end of the day, you could have a robust military response. attacks, but to respond. solution have a proposed. yousef: a good deal of production remains off-line. what are you looking to get online? we were up from the low-end two or three months ago. we think if we can finalize the dialogues in the month of atober, we will end the year an output of about 2 million barrels. there is time to repair, times of production. that has been constrained. enbridge will take two or three months to be finalized in terms of repairs. yousef: what else are you doing , toinister of the sector move the industry forward back home? again, you have a lot of challenges. what is the top of your priority list apart from the security situation? emmanuel: frankly, and urgency of now. this is a time when it is so difficult, considering the financial circumstances. a petroleum roadmap will cover everything from the niger delta solution, the security of the , protecting the government from cash cows, looking at assets, and seeing how we can deploy vast sums of money to provide critical ,inance to local governments driving a lot of private initiatives, private investment. so widespread, and a template. you for joining us. that is a minister of petroleum resources, dr. emmanuel ibe kachikwu. more and robbie felt -- kate moore, robbie ,eldman, when you listened probably the most difficult thing to predict, and yet it goes back to inflation and inflationary targets. what is opec need to do to help the world economy? kate: i look at this of course through an equity lens. what would be the applications of stabilization or a slight improvement in terms of the oil price, in terms of earnings? energy earnings are going to be a huge drag on aggregate equity earnings for 2016, and probably the beginning of 2017 once again. i think you go back 12 months ago, people were very optimistic that oil prices would stabilize, that there would be supply rationalization, that inventories would flatten out, but we are not quite there yet, and we are not going to get the tailwind from improved energy costs. tom: but do you capture a 6% hotel dividend while i wait, or is that financial engineering on big oil? kate: there are some oil and energy companies that pay very healthy and chunky dividends, and will be very hard working to keep that dividend, because it is a huge part of their investor base. there are others that might have to read into their dividend policy. upoil prices do not move significantly from here, or are unable to work through this glut of global inventory -- tom: thank you for coming in. i gradually -- i greatly appreciate it. we will continue with kate more on bloomberg radio. robert feldman will stay with us . ad we are thrilled to have discussion of inflation politics and maybe inflation dynamics. andontinue, michael mccann myself, on television and radio, a needed conversation with julian robertson. julian robertson on mr. trump. ♪ tom: it is the outlier today, japanese yen. we are thrilled you are with us today. off thethat big rally perceived clinton victory in the debate. just a little bit in the last 20 minutes. japan-mexico -- we have never done yen-peso. there it is, even against the yen, the peso moving with a vengeance. francine? francine: coming up is "bloomberg ." alix is in the studio. i know you have a great show lined up. and you speak to former chancellor george osborne. yes, we will speak about the economy, the fed, and the election. george osborne is an exclusive interview talking about what brexit winds up meaning. but what are the implications? we will be talking with tom barrett. elections front and center. markets front and center. a supporter of donald trump. i want to get his take not only on the debate, but about taxes, about debt, about how donald trump would pay for his plan. tom: it has been a wonderful "surveillance" so far this morning. we will go on on the radio. we were just reminiscing about morgan stanley, robert ferrell of merrill lynch. an annual visit to bloomberg surveillance. montreal stepped on the ice the first time this season. on politics, how do you fold our zany politics into your analysis of our economics? -- >> i think for the time being the impact is going to be to the market, and probably it will be temporary. now everybody talks about is if trump wins the election that there is going to be this uncertainty selloff. if everybody expects it, it is not going to happen. there is no near-term economic impact. i think if there is a market that could have some problems, it is not really the equity market. it is the treasury market. and you consider the inflationary and fiscal impact of a lot of the policies, not to mention the pressure he is going to put on the fed. tom: where have we gone from understanding that we take corrections in bear markets and they are normal? yet we are in a frenzy seeing a 3% decline. david: it is interesting you say that. in the last go around when we had the 3% correction a couple weeks ago, the vix had a conniption and surged 50%. 3% today feels like it is 15%. it brings back the horrible memories of 2008, 2009. i think that is a big part of it. a lot of it is psychological. but going into not just the election, but going into the constitutional referendum in italy, and the precarious position of the european banks and the elections in europe, there is enough event risk beyond the u.s. election to consider, at a time when you pressing against the hunch for a cycle. corrections are probably going to be more the order of the day for the next several months. i do not think it is a reason to panic. outright bear markets only happen in a recession scenario, and the odds of a recession are not zero. i would take them closer to 20%. fundamental bear markets, a correction can take a lifetime to get capital back. tom: i will have francine jump in. francine: give me a sense of when the markets will price in a possible donald trump win. i know there is a lot of risk of their, but it is unclear to me what the market is expecting or pricing in at this point in time. david: it is hard to know exactly what the markets are pricing in as far as the election his concern. he would look at more the sector performance. major averages. there are winners and losers under a clinton or trump victory. thatould know for example the relative performance of health care reform, if it's just to do well, that would be a sign part of the market is pricing in a trump victory, because we know where she stands on biotech and drug pricing, and where he stands, which is more laissez-faire. if you start to see producers in space outperform clean technology, you would think the market is pricing in a trump victory. we know where he stands and where she says. it is not as simple as what the stock market is doing. it is more the underlying sector performance. you can get a lot of information from with the markets are thinking, electionwise. huge impactis has a on the yen, because it is a haven. robert: the impact of trump versus a clinton victory would first be felt in where the u.s.-japan relationship is going to go. where does japan stand in its region? yeah-dollar is part of that. direction underlying of where peace and stability will be guaranteed -- that is what japanese investors are going to be interested in first. tom: thank you so much. we will continue with dr. rosenberg on the radio. dr. feldman, thank you so much. i will put out on twitter the books i talked about. deutsche bank down after a one hour recovery. we are going to go through the new lows on deutsche bank. we will have that story through the morning. coming up on bloomberg radio, clearly in support of the secretary and mr. trump. ♪ mrs. clinton: i have a feeling by the end of the evening i will be blamed for everything that has ever happened. mr. trump: why not? mrs. clinton: just join the debate by saying more crazy things. >> hillary clinton and donald trump trade jabs over trade. the u.s. economy and foreign policy in their first face-to-face debate. reboundsxican peso from a record low, a sign investors see hillary clinton as the winner of the first debate. x: oil lower after iran says it is not willing to freeze output at current levels. jonathan: i am jonathan ferro steel.de alix >> there was a lot of drama, i must say. you had to appointing

Related Keywords

Turkey , China , Syria , Algiers , Alger , Algeria , Aleppo , Lab , Russia , Mexico , Nigeria , Massachusetts , United States , Poland , Switzerland , New York , Georgia , Tokyo , Japan , Doha , Ad Daw Ah , Qatar , Niger Delta , Nigeria General , Blackrock , Germany , Iran , Philadelphia , Pennsylvania , Taiwan , London , City Of , United Kingdom , Iraq , Saudi Arabia , Montreal , Quebec , Canada , Hofstra University , Italy , Nigerian , Italian , America , Saudi , Chinese , Mexican , Turkish , Saudi Arabian , Saudis , Iranian , German , Swiss , Japanese , American , David Rosenberg , Jeff Gundlach , John David , Sean Spicer , Robert Feldman , Julian Robinson , Michael Mckee , Ben Bernanke , Kate Moore , Robert Ferrell , Janet Yellen , Mohamed El Erian , Mitt Romney , George Osborne , John Holloman , Stephen Roach , Robin Feldman , Tom Keene , Tom Barrett , John Halloran , Nandini Ramakrishnan , Newt Gingrich , Michael Mccann , Paul Krugman , Angela Merkel , Lionel Laurent , Ken Rogoff , Megan Murphy , Barack Obama , Julian Robertson , George W Bush , Laura Tyson , Rudy Giuliani , John Prine , Barclays Kevin , Hillary Clinton , Taylor Riggs , Robbie Feldman ,