Center. A quieter market day. List two data checks like we did yesterday. The german report with the seminary, finally we are getting to where the government maybe is talking about contingency plans. Yes, very well respected. We havent had confirmation but what were hearing from politicians on the ground, this is something the government doesnt want to get into. But we do here that plans for Deutsche Bank national here more on them through the show. Lets get to the first word news. Taylor mario draghi goes head to head with some of his toughest critics today. He is in berlin where he will lawmakers whoan want to and record low Interest Rates in the area. They same it makes it difficult for eu countries for economic reform. Heposition labor party wraps up the fiveday labor conference today. He says that after having been elected party leader, he has a right to campaign on the issues he chooses. He expects theresa may to call an election next year. A typhoon has landed in Southern China after battering taiwan. 100 mileperhour wind and 43 waves. 43 foot the former israeli leader has died. He was knocked at with the countrys defense establishment before turning into an advocate for middle east peace. He won the Nobel Peace Prize in 1993 for historic peace accords with the palestinians. He was 93 years old. Tom resilience. No other way to put it. Tom he was really the one to meo brought israel forward. Deeply experienced on defense and was a real balance to the dialogue in the middle east. Lets give you the balance of our data. A quieter day today. Ields persist lets go to the next screen. Joyerl doesnt what a pleasant joy today. I would note the persistency of negative german rates. 10. 18. And with the department of justice going up yesterday, it puts it on a further bid. I like that you are looking at Deutsche Bank and we are seeing as its for the banking industry. They are paring a touch to the monthly decline. Speaks toll, it monthly participants. We are nowhere near over with the troubles were these banks. It is still ugly out there. Just a little bit less ugly than it was yesterday. Tom i strongly agree with that. I think that is exactly the way it is. The oil churning let me go to the bloomberg. This is the end of the month chart. The euroyen. The 30 year trend. The three decade trend. The reason i have read circles at the bottom is to show you the room to move that the euroyen has. To bring stronger yen the line down. And there is lots of room on onoyen, and by definition, dollaryen for the strength. It would not be unimaginable to see a break 100. Francine youre right. And there is a debate going on downstairs as we speak with issmakers and one of them the former Deutsche Bank ceo. Talking about negative rates and he thinks this is a disaster. My chart of the hour. Put has risen steadily. You can see the decision not to in november 2014. The second circle is the target ratified. You can see the loss. It iss is how much costing and the price of oil is going down, nonetheless. We are joined now by Stephen Gallo and ian bremmer. Great to have you on the program. Im not her how to read the European Banks. Every day we touch a record low and then they are little bit better. View the European Bank conundrum . Stephen i think the overwhelming view of fx investors view Deutsche Bank as not a wholesale Systemic Risk from the 20102012 time. Francine Angela Merkel is up for reelection. The last thing she needs is the need to step in. Stephen the last thing she needs is the million refugees that she invited to step in. But Deutsche Bank has clearly identified as the biggest brand after volkswagen and they didnt have a good year. Timenvolved in the magazine Foreign Affairs correspondence and last year i campaigned very heavily for Angela Merkel to be the person of the year, and my argument was, this is the last year you will be able to give it to her. Shes now caught up in american politics. Francine if she is weak, does she need to change her polities . Ian while she definitely has changed her policy on refugees. That is the nature of the deal, s not like Angela Merkel she needs to give them cash so she can keep the people there. She has also definitely talked a internals, softly of will you see tax breaks for the middle class and spending i think you will. But the strongest person in her coalition is the minister of finance. And hes only going to make it harder because she is constrained in what she can do. Stephen gallo, help us out with what the market show. This is a bad sign for Deutsche Bank. Earlier, we are getting to that panic of 20102012 weekly. Ast would you advise remedial surgery . Ecb is actively involved. Factor of why they because as a whole is of the ecb sovereign bond purchases. So its very difficult today to put on eurozone breakup trades vicious feedback between the sovereign and the respected Banking Systems is effectively broken. It is dead. As you say, i think some combination of government and the main issue lack of capital these will all have to be addressed specifically. I do believe this will be an other proverbial nail in the coffin for the government in germany. Tom thats where i wanted to go. Ian bremmer, help us here with the clinic on the state of federalism in europe. I would suggest that after strasburg, it is under threat, am i right . Ian sure. Renzi last week and he told me clearly that when he walked out of the meeting, it was because he wasnt seeing leadership from europe and on july merkel in particular. That is what happens when your leaders get weaker and they are facing challenges. He has his own referendum. The u. K. Is leaving. Who are we excited about right now . The netherlands . No, they are having an election. You can find a place in europe right now, it does not exist. So we are seeing a crisis of legitimacy with the government and the only thing that would give you any cause for pause is the fact that the americans may decide to elect their own challenge to the global order in the few weeks. Love the fact that you say there is not much you are excited about politically and then we come into the u. S. A little bit of european bashing. Ian bremmer and Stephen Gallo. We are getting breaking news. Downstairs there is an extremely interesting panel. A former Deutsche Bank ceo forcreating seriousssues pensions. They say this will be painful. It will correct and they are expecting the purchase to be ugly. Many marketshat are distorted. We will talk more about the distortions and the game that Central Banks are playing. This is bloomberg. Francine there is a great panel going on downstairs in the london headquarters. It is about negative rates and the impact that it has on markets and the correction they go through. The former Deutsche Bank ceo is saying that a correction of corporate debt markets will be painful. And this is because he believes that Corporate Billing of debt at negative rates will correct. They are also talking about europe and structural reform. Now, the chairman of ubs faces a negative demographic and we need to rethink monetary and fiscal policies. Very much what he was thinking when he was the head of Deutsche Bank. The rest of europe is now aligning. The it goes back to federalism debate and it will certainly be the debate in october of this year. With us is Stephen Gallo and in and ian bremmer. He studied at stamford. Duke university is number seven on this list. Surprises were two nights ago, with the debate, ian bremmer you were in europe did you watch the debate . Ian i watched it were two nights ago, with the live at 2 0 a. M. , i guess i am not counted in the nielsen debates. It was pretty painful. Tom please discuss. What do these two candidates due to the second debate to speak of your International Relation and what everyone wants, it a discussion on the topic immigration. The wall wasnt even mentioned. It is the first time ive ever seen donald trump in a significant format where he didnt talk about the wall but he was off his game. When donald trump has is speaking points when he is on his cadence he does timing well, he drives the point home. When he starts playing defense, he gets into the weeds. He goes over details and he meanders and is all over the place and he is boring. And boring is the death note for donald trump. Francine does he not need to play nice . Hillary clinton turned around and said being prepared is not that. Not if you want to be the next president. Does the next few months, he need to watch the personal attacks . Ian i think hes actually going to go back to the personal attacks. He played nice it he allowed himself to be rated by Hillary Clinton. So on the gentle on the gender issue and on the taxes issue, he was playing defense. He cant do that. I mean, i am delighted that he does because he is a problem for the markets. But in an analytic sense, it was clearly a problematic thing. Now i think it is very cap that when he left the debate, he actually said that lester holt was great. Because if you want to show that she one you want to not blame things. He did start saying that his lesterone was broken and holt is in Hillary Clintons pocket and coordinated with her on questions. I happen to believe that lester holt was biased. He definitely was Fact Checking hard on donald trump. But that was good. I dont know when that ever is a bad thing. Ian i say this as no fan of trump. You think the media is going to undermined under a donald trump presidency, you have a bias. I want to spin forward to the next debate. How does secretary clinton address immigration. It is something that donald trump continues to win on. There is a large part of germany who are dead set against a broader immigration. What does Hillary Clinton do in the next debate where donald trump will be very comfortable on the immigration section. The one thing she lost on in the first debate that was significant was trade, nafta and tpp. On theeed some rhetoric importance of immigration and the fact that they are hardworking and not criminals but she should not spend a lot of time on that. She should stick to her message. She gets painted on immigration, it is clearly a loser for her. Tom looking forward to that. We have Stephen Gallo with us. For your Political Fix tonight, i urge you to listen to the with all duef respect. Withcular the conversation donald trump tonight at 5 00 p. M. Francine this is bloomberg surveillance. We were talking about it but about the impact of negative rates, the u. S. Election and Deutsche Bank and European Banks. This is the picture we are looking at now. Nothing good about it. Lets get the thoughts of ian bremmer and Stephen Gallo. Andou go around the world you look at various regions and countries, it is very clear that europe is moving to new politicians. That is one leader untainted . Or who is doing the job of sticking to globalization but also keeping their people happy . Ian renzi is showing leadership. On the lineis job and basically said, if i dont done. Is, i of course, hes now trying to walk that back. We could easily see the back of him very soon. You have to focus on asia. The three big economies in asia. So in the Worlds Largest regional economy, if that werent true, imagine what the world will be like now if after the 2008 crisis, you didnt have the ability of the chinese to plow forward and do real stimulus and continue to have real stability . That is a very good story. To 2008, going back are we entering a new crisis . We have fiscal policy that is hardly there. I think you will see an unwind of a lot of Central Government systems. It will become harder for governments to govern. Basically, globalization has been about emergingmarket labor taking jobs away from the developed markets as well as populism and antiglobalization that we see in the u. S. And europe. Not in japan. In the next five years you will probably see a shift from emergingmarket labor to automation. That means the locus of antiglobalization will lap up onto the shores of the countries i just mentioned. Start addressing these issues. And if you dont, you get crisis or you get decentralization. And decentralization is ok in a place like the united states. Europe, brexit might not be the worst possible thing. But to get from here to there you have to negotiate the most complex policy with a completely dysfunctional policy. Francine next to me come back, one hour on europe. Bloomberg because we have coverage of the Bloomberg Markets most influential summit. Tom good morning. This is bloomberg surveillance. We have a most eventful day here at bloomberg. We have our most influential series right now in london. Let me do a data check right now. Not as exciting as yesterday but we will take it. There is new wants here. Robertsontom, julian fired up about negative rates. 0. 7 , thatwoyear, is ugly. Deutsche bank is doing a little as well. R this morning with us is Stephen Gallo. Filter in julia robertsons comments last night to us. Was exceptionally negative about the outcome of negative rates. When its time to get out of negative rates, how do you perceive that will occur . Ok, well there are two issues here. There are two debate. One is that Central Banks have brought us here to try to stimulate growth. The other one is dealing with surplus and conditions and so on and so forth. So i dont think there is a clearcut answer. But there is more and more becoming available. The private sector, corporate, they have built up significant debt burdens as a result of the low rates. So they prefer Debt Financing over equity financing. When in fact, they probably should prefer more equity financing. So this situation is not good. Its not a good place for the Global Economy. Now andhin where we are what we have learned, there is a massive divide between olivia blonde chart and Julian Robertson and on the other side, people like adam pozen and ken rogoff. Is it a question, Stephen Gallo, of not negative rates but not having the courage and will to do negative rates the correct way . I dont know what the answer is to that question in terms of what is the correct way to do negative rates. I think there are different levers of Monetary Policy. On the regulatory, monetary and fiscal side that all may to work in conjunction. But one of the issues that we are faced with is that a lot of the decisions are not taken in coordination. They are not taken in coordination domestically from a domestic policy perspective and on a global basis. Globalot taken in a fashion. Particularly when global trade is weak, there is a tendency of National Authorities to revert to turning inwards rather than outwards. And so this is the situation we are in. Banks, idea that central despite the fact that there may be more central stimulus in the pipeline down the road, the idea that Central Banks will then step away from the accelerator in my opinion is not correct. Every single amount of fiscal stimulus is ending up boosting cloaks credential in the developed world then potentially Central Banks can step aside but if it is not. And if the money is potentially wasted, Central Banks will have to continue printing. Tom so there is the conundrum right now. Stephen gallo. We need to catch up on this mornings news with taylor riggs. Taylor Hillary Clinton is moving quickly to exploit donalds stumbles in the debate. The democratic candidate campaigned in North Carolina seeking support from suburban women, middleclass men and young voters. Meanwhile, donald trump says he did very well in the debate. When the civil war in syria appears to be getting worse, the u. S. Will provide money in aid. The money will help United Nations and independent charities offer independent care. Millions of syrians do need that help. They are living as refugees in neighboring countries. Americans Tax Collector will cut thousands of jobs because fewer people are filing paper returns. The irs is illuminating seven is eliminating 7 million positions. Eliminating 7000 positions. Global news, 24 hours a day. Powered by our more than 2600 journalists and analysts, in more than 120 countries. 45 a barrel after saudi arabia signals it could compromise with iran on the future output agreement. We have Stephen Gallo still here. Talk to me a little bit about the oil markets. In 10ket was pricing that they were fined to figure out a solution here. So it was always very unlikely. Absolutely. There has been a lot of talk and very little result. There is a big divide in the position between saudi arabia and iran and we see that during this particular meeting and in anythingi think positive that could come out will be a setup for the next official meeting that will be happening in vienna in november. Francine ive covered opec for many years. Saudi arabia, the last ti