from bloomberg world headquarters in new york, i am pimm fox and here is what we are watching, the congressional hearings on the volkswagen hearings are underway in washington. the first person on the hot executiveswagen's michael horn will go live to capitol hill. deutsche bank battles a tide of red ink, drastic measures the german lender takes after posting a likely third-quarter loss of $7 billion. hillary clinton is taking aim at wall street. details behind her plan to tax high-frequency trading remake the rules. half hour into the trading day, so let's go to our markets where julie hyman has taken a look at the latest. julie: a bit of a selloff,

bumping up against resistance with the s&p 500 trying to recover several times and rally up to around 2000 and come back down. that appears to be happening. all three major averages are down, the dow jones down fractionally come less than .1 of 1%. claims earlier that showed the continuing trend of decrease in those filing for jobless claims and alcoa reporting earnings after the close of trading, so those are things analysts will be watching today. i talked about the retracement we have seen from the lows and so up we saw them s&p 500. from the july 20 high, through the bottom in august, it was about a 12% selloff. as of yesterday, we recovered more than 6% from the low. tendtechnical strategists

to call a 50% retracement and you can seat several times we have bumped up against that level, doing it once again today. in terms of the stocks drag in 500, a lot the s&p of technology weakness. apple continues weakness but oppenheimer saying it is unfairly undervalued at the levels and amazon.com selling off and google also. thathree individual stocks are waiting the most on the s&p 500 at the moment. pimm: there is an interesting call in the bond market from equities and bonds and it has to do with hsbc, what are they forecasting? goes tohis prediction the end of 2016 and stephen major over hsbc is slashing the forecast to 1.5%, the yield of the 10-year note from 2.8 percent, that was the forecast previously. the tenure unchanged at 2.0 7%, but he talks about one of the reasons of what not just going on in the u.s. and europe as

well, and he said, we are less convinced the fed will deliver the timing anticipated but this is part of an international story, one that sees the ecb step in dovish mode well beyond the 2016 and. if you look at the average of other strategists, this is over the course of the last year for the end of 2016 and where they see yields. the forecast has come down to about 3%, so still double what this gentleman in hsbc has forecasted. pimm: it would have been nice to get the forecast earlier. have saved money, particularly on the 10 year. julie: he is one of the folks that that treasury prices would rise in 2014, so he has been right before. pretty good track record. pimm: we have to watch them. a confounded a lot of experts. thank you. let's check in on the bloomberg first word news with vonnie quinn. vonnie: thank you. we start with the middle east,

the syrian general decline the u.s. offensive against rebel forces. he says attacks by russian forces to give possible for syrian troops to eliminate so-called terrorists. syria's government describes opponents fighting the president assad. soccer's international governing body is defending the long-term president for 90 days. they will today against blatter, been arrested for financial misconduct. 14 fifa officials face charges in the u.s. swiss authorities cracking down on corruption among fifa officials also. saudi arabia cutting costs because of drops in oil prices. government agencies there have talking about spring hiring and promotions. they get 90% of revenue from oil. 19% ofary clinton -- revenue from oil. the democratic front runner has come out against the pacific rib traderade deal --

deal. hillary clinton: i am not in favor of what i have learned about it. there is one other element i wanted to make because i think it is important, trade in aments do not happen vacuum. in order for us to have a competitive economy in the global marketplace, there are things we need to do it home that help raise wages. vonnie: clinton was generally in favor of the deal while secretary of state and biden supports the trade agreement. vladimir putin celebrates his 63rd day, trying to burnish his a hockey gameth with tycoons and nhl veterans. they passed and his team won 15-10. that is a look at first news right now and you can find the latest on bloomberg.com. pimm: thank you. i wonder to have playing cards, like hockey stars and maybe five

is a hockey star. vonnie: he was wearing rangers colors that coincide with the russian home colors. pimm: of course. let's turn to the big debate about local economy. it is taking place in lima, peru. it is where the international meeting of the monetary fund and world bank coincide and francine will bring us he interferes with the voices and people that matter and she joins us now for a preview. great to happy with us, explain what will be front and center. you were just talking about vladimir putin's sporting prowess and i'm not sure they will talk about that but they will be talking about his antics in the middle east. they will talk about shocks, financial stability, payment, main risks, vladimir putin in the middle east, china and what we know about the economy, and whether the turmoil that we saw in the markets is symptomatic of

something deeper. whether it means we may have a credit crisis, a financial crisis, so they will talk about commodities, currency wars, and course that warning from the imf that came yesterday about the fed. there is a pretty good consensus in lima, peru, that the fed should wait, they should not be in a hurry to raise interest rates, but when you speak to emerging market experts, i even spoke to the south african governor, he told me that it makes his job easier if the fed does not hike too soon, but it also gets rid of the uncertainty if they do normalize because at least he knows what he basis. there is debate going on and they are trying to find out the risks and where the next possible shock is coming from. pimm: i know you will be speaking with someone who also has a take on whether the federal reserve will raise interest rates. tell us about your upcoming guest. francine: i have a lot of

questions for that certain someone who is the imf and one of the big thinkers of the global economy and she has been clear that the fed should wait. white she says that has partly to do with inflation and her team saying that there is some inflation sewing not wait until you see inflation to raise rates and she is worried about the emerging markets and whether that interest rate rise from the fed in the future will spur more capital outflows. i also want to ask her what she will be losing the chinese officials in lima about? i want to get her sense of what she is worried about because, like everyone else, she will want answers from the chinese delegation. i will ask her about brazil. we talked a lot about brazil. does the imf now need to come to the support of brazil? this is a huge economy crisis

linked to corruption but also to commodity prices, so i will have a lot of questions for christine lagarde in one hour. pimm: thank you so much, francine. we will be waiting for your interview and we will join you for that. lagardehat christine has already taken the podium and i want you to get a chance to listen in and we will come back within the next hour. thank you. francine reporting from lima, peru. let's turn to volkswagen and the united states boss who knew they may have had decent problems far earlier than the carmaker acknowledged, according to an advanced copy of michael horn's testimony. testimony he is delivering right now capitol hill. he faces some challenging questions about the company's plans to fix the problem. joining me now with more on this .s bloomberg news jeff green you have had a chance to take a

look at the situation in washington and ongoing hearings, what is going to be the highlight that we need to look for from mr. horn's testimony? into ahis has turned regular thing with automakers coming to congress and begin the apology process without much to say. he will have a lot of things to look into and he was say, we will look into that, we will look into that, we will look into that. we have the copy of the quote he we areich i can read -- determined to make things right, this includes accepting consequences of our acts, providing a remedy, and beginning to restore the trust of customers, dealerships, customers, regulators. the ceo ofubstitute general motors, toyota, a bunch of people's clothes or the name after the quote and it is the kind of thing we hear. pimm: exactly. i want to give you a chance. you have a story for anybody interested in the topic, tell us

about it. jeff: one of the things we did is we looked at how they are reporting injuries. honda and chrysler have said they had problems with that so we take a look at the broader landscape and lo and behold, volkswagen -- you don't know if they have a problem -- but they reported a rates much lower than other automakers and lower than honda and chrysler who have already gotten in trouble and honda claimed a $70 million fine for not reporting deaths and injuries at a rate which will allow people to detect defects and that is the key thing. if you tell people about death and injuries in a database, maybe we can find evidence of a problem earlier, so this will likely come a puzzle for volkswagen. pimm: thank you, jeff green, from our detroit bureau. great story with empirical evidence to find out something we did not know before. thank you. in addition to facing challenging questions from lawmakers, vw has cancer to the dealers. -- has cancer to the dealers,

many of whom are angry. steve is the co-owner of flemington car and truck company which includes five volkswagen dealerships and he says he feels he prodded. steve joins me now. steve: five volkswagen brands and to volkswagen dealerships. me, tell us ofon reaction once you find out they were cheating? steve:. . our customers are the most important asset, along with employees. to purposely come it a fraud, to perpetuate it for all of these years became a culture, culture exposed at being silent and it is not being kind. pimm: the kind of communication have you had with the head germany? wolfsburg, steve: i have had no communication. our local field people receive the most and information coming out but there has been no reach out from germany. i have asked for a meeting to speak to them and i would like

to know what they were thinking because i want to know who i am in business with. pimm: in business on one hand by selling volkswagen automobiles and also in the business of standing up for your customers who come in to purchase automobiles. you received a letter, kelly say that this and anecdotal -- can we say that is an anecdotal piece of evidence that you see as widely shared by your customers? received a letter from a father of a purchaser of a young lady who bought a volkswagen diesel, the vehicle of her choice, she was so disgusted and ashamed that she is driving the car because the pollutants are not as advertised that her father once to remove the nomenclature on the vehicle. pimm: the badge. the tdi badge. steve: the badge so she feels safe and secure. pimm: she is worried someone would vandalize the car or her?

steve: it is no different than the fur harassments. there are people out there who are upset when a fraud is committed or something takes place that is not proper. pimm: your role as a dealer puts you in the middle. steve: we are directly in the middle and an advocate for the customer. customer comes first. if we do not speak up on behalf of the customer, who will? the franchise model of automobile dealerships for over 400 years, this is the lies is why it is important. if the manufacture was handling all of this, there would be more quiet, secrecy, the were risks, but when the dealer stands up for the customer, the truth usually comes out. pimm: steve, in preparation for your appearance, we asked you some questions, how did you feel and so on, and one had to do with a reference to bernie made off -- bernie. can you tell us about that?

steve: if you take the total body of diesel sold in the united states, approximately $15 billion, worldwide -- $300 billion -- this fraud, not scandal but a fraud, is large and makes the ponzi fraud pale by nature. when people say scandal, i think of hollywood, i think of all of that stuff. this is not a scandal. this is fraud and people were hurt and they have been hurt badly. pimm: i want to thank you for coming to spend time with us. steve caliphate, co-owner of flemington car and august. coming up in the next 20 minutes what didt day," republican presidential voters in iowa and new hampshire really think of donald trump, jeb bush, and ben carson? opinions onheir bloomberg politics. what was deutsche bank do with ae finance and what they post

third quarterly loss of $7 billion? stay with us for answers. ♪

pimm: good morning. i am pimm fox. time for our first story. substantial capital raising plan. the capital raise and the new strategic plan will be unveiled in two weeks. the chief executive is expected to ship the bank away from fall to investment banking operations and want to focus more on private banking and asian markets. deutsche bank is bracing for the largest orderly loss in at least a decade and can hit $7 billion. deutsche bank may scrap the dividend that has been in place since germany's postwar

reconstruction and bonuses for executives are likely to be slashed. first-time claims for unemployment benefits fell to the lowest level since late july. jobless claims totaled 262,000 last week. claims have been below the 300,000 level since the beginning of july. of course, you can always get more business news at bloomberg.com. let's go over to our markets desk where julie hyman has a check on the big movers in the session. julie: the potential deal but how potential it is for a lot of -- exactly, people say that dell is in talks to comply with emc and this would help cater to more customers, maybe that person by the business a little more but emc is not up by very much, only by 1.5%. a lot of analysts are questioning whether the deal is realistic and dell has a lot of couldnd the deal

require financing to one analyst called it a head scratching and another said that dell cannot afford to buy emc, so there are questions about the likelihood. emc asked theg majority owner and they'll could acquire other shares that are down this morning. we are looking at online retail week as we have the latest numbers from channel advisor on september comparable sales. amazon, according to the company, slow to growth of 19.2% from nearly 25% in august. we also saw a basic sales in september, according to channel advisor, at the lowest since february 2011 with an increase of 1.1%. we have been talking for a while about amazon debuting their handmade service which competes with etsy and the debut happens today. pimm: what do you think about this?

julie: i don't really shop on either, but it does seem like a good competitor. pimm: thank you. still ahead, how would you describe donald trump? republican voters give their answer, next. ♪

pimm: welcome to the bloomberg "market day." i am pimm fox. what do republican voters in the key primary state inc. other choices for president? "all due respect" conducted a focus group in new hampshire and iowa in one of the questions was to describe donald trump. >> what do you think of the source of donald trump's political field? >> kind of reminds me of mike tyson in his heyday when he was vicious. >> there is a growing sense of nationalism he is tapping into,

but it is excluding others. >> i am a teacher as anyone in my class and would say, go back to mexico to a hispanic student, they would be in so much trouble, but trump can get away with it in a press conference and everyone thinks he is tough. >> he is bombastic, i will give you that, but that is his style and it has served him well today. >> just a quick summation, what do you think when you think about donald trump? >> aggressive, nonsensical, over the top. straightforward, intelligent, conniving. >> intelligent, businessman, open-minded. >> politically incorrect. >> i would have to agree with you, politically incorrect. >> amount shooting volcano. >> confident. arrogant. winner. pimm: now, let's bring in mark, the comanaging editor of bloomberg's politics and cohost

of "all due respect." in this unit to responses, they do not, the people who have driven donald trump in the polls. mark: they are mixed. guy said confident, arrogant, and winner. you can see more of the focus group tonight but they said a lot of things that basically say mixed and they described negatives as if they are against him but a lot will end up voting for trouble because they want somebody who is a winner and will stand up to change washington. we asked them who would be best to stand up to vladimir putin and in new hampshire, lots of trump would be the best. they see the warts but they like the change that cap represents. pimm: what did they see when they are given the name of jeb bush? would have to take some deep breaths, but they basically said they do not know much except he is a bush and the country does not want another bush.

there has been a lot of discouraging things for jeb bush in the last three months, particularly the polls coming down and these two focus groups in these states are disproportionately important and down on jeb bush. pimm: quickly, carly fiorina and ben carson? carson a lot and like fiorina some. marco rubio also doing well in the focus groups and you can do that tonight at 5:00 eastern. pimm: thank you very much. mark, the cohost of "all due 5:00 p.m.oming up at eastern today. still ahead, there may be bad big banks.for we will look at the troubles piling up for deutsche bank. ♪

>> i did not think something like this was possible. pimm: live testimony from michael home, -- michael hunt,

of volkswagen, and the seeming in the diesel commission scandal. the company making a prepared statement and a comment that they are determined to make things right but they have stopped short of saying when consumers could expect repairs or what the fix is to the automobiles would do to their cars and the performance. we will monitor that and give you more details testimony befoe the house subcommittee. we go right to vonnie quinn with more. vonnie: we start in asia. will challenge china's territorial claims over part of the south china sea. according to the financial times, the ships will sail inside a 12 mile zone that china claimed around artificial islands. this move could increase tensions between the u.s. and china.

a warning from turkey's president. he says russia's military buildup in and around syria is unacceptable. he says moscow should consider its trade ties with turkey when it ships fire missiles at syria. in columbia south carolina, flooding is threatening the city's water supply. crews have given up the attempts to patch a breach canal. the threat of flooding in coastal areas could last through the weekend. the decision to stop searching for the crew of a sunken cargo ship angering some of their loved ones. the hunt for survivors from the el faro and did last night. the coast guard will keep looking for the ships data recorder. it sank in the bahamas during hurricane joaquin. the week after that mass shooting in oregon, senate democrats are preparing new gun-control legislation. the proposal calls for wider background checks to cover sales at gun shows and online. the plan is unlikely to pass.

that's a look at our first world d news. pimm: thank you very much. big banks are bracing for some big bad news in the third quarter. newseutsche bank, the bad keeps coming. the german bank expects a report to report a $7 billion loss and cut bonuses for employees. that could cause some of the senior staff to exit the bank. i want to bring in our banking reporter michael moore and our international correspondent hans nichols joining us from berlin. i want to start with you. tell us what is going on right now with deutsche bank. when will we get the details of how bad it really is? >> in some ways, they frontloaded the details. they were supposed to report at the end of the month. they are saying a 5.8 billion euro write-down. they expect a 6.2 billion euro loss.

they are setting aside about 1.2 billion. i have done a lot of deutsche bank earnings in my time. 1.2 is generally for loss provisions in the range of what they have been doing. there is a psychological aspect to this story. if deutsche bank does indeed not pay out a dividend -- they haven't said definitively that they won't. if they don't, there is a psychological effect. they have paid a dividend every year since 1957. and then the bonus culture of a bonust is pretty much culture state. there has been reporting that if they don't pay out any bonuses, if ourt was that -- shareholders aren't getting dividends, maybe employees shouldn't expect they will get bonuses. you may see some staff attrition. they will have to get rid of a bunch of staff in general.

they want to be about one fourth of the size. it is a transition for the bank. i suspect is going to be longer. pimm: we will focus on that later. while i've got michael moore here, is this a set of circumstances particular to deutsche bank? you cover the waterfront with the banking industry. should we be bracing for every bank to be seeing something similar? >> certainly on the european side. -- europeank cutting has been a little bit behind on building up the capital. the u.s. banks really took their medicine in 2009 and have been in a little bit of better shape since then. i think europe with the slower economy and with the capital rules coming in a little bit slower, europe is playing catch-up right now. pimm: what about the mix of

businesses that are profitable for big banks? >> investment banking and trading right now is not where it's at. pimm: even with all these mergers and acquisitions? >> investment banking is doing better. but trading so overwhelmed that. it has come back so far and really hasn't picked up there it another tough quarter with all the volatility in august. it is really the trading holding things back. all the banks want to be in the capital late businesses. wealth management, asset management. you are seeing morgan stanley making that push. future.certainly the if trading turns around, we may see a reversal of that. pimm: if trading is a tough place to be, they are all going to try to get the wealthy clients to manage their money. doesn't that indicate that we have this herd mentality? there will not be enough wealthy

people to go around. >> there is certainly a lot of competition in that space. people are trying to get to scale. up if they some give are not able to get to that large-scale. there is certainly a herd mentality. this is where the capital rules are pushing us. pimm: i want to ask hans about vw. volkswagen wanted to get to scale and it has come back to bite them. can you tell us any more updates? i heard something about raids on homes.s' >> probably executives' homes. they are going ahead on the criminal proceedings. there are reports they have rated some offices as well as lksburg.es' homes in vok

it is a company town of about 120,000 people. about 60,000 of them work for volkswagen. it was built by the company during the nazi period. it is not surprising they are doing company raids. it gives you a sense on how many fronts they are fighting. they will have epa testimony. we still don't know about all the lawsuits they are facing in the states. 229 class action lawsuit's last i checked. and then criminal proceedings in germany. they have 11 million cars in more than two dozen countries. this is going to continue to be a difficult problem. right now they are focused on a technical fix for the diesel engines. a lot of them will have a software upgrade. some of them will need to swap out crucial parts and that is

not easy to do. pimm: thanks very much, hans nichols. my thanks also to michael moore. up in the next 20 minutes of the bloomberg market day, why did the federal reserve decided not to raise interest rates last month? fedill find out because the market committee meeting minutes are out in just a few hours. hillary clinton is taking aim at high-frequency traders. how much will the so-called flash boys have to pay if mrs. clinton wins the white house? up, an interview with international monetary fund manager director. -- managing director. ♪

pimm: this is the bloomberg market day. i'm pimm fox. story, the uaw committee will decide tomorrow whether to recommend a new contract for its fiat chrysler members. unitedomaker and the auto workers tentative agreement earlier today. at oneon says significant gains and it also says it reached a deal minutes before a strike deadline. german authorities investigating the volkswagen emissions cheating scandal rated company facilities and the homes of several employees today. more than four dozen officials searched bw factories -- vw factories. it may be a less than jolly holiday season for retails. sales are projected to grow at a slightly slower pace when compared to 2014. the national retail federation predicts holiday spending will be up about 3%.

that is lower than last season. it could mark the first decline since 2012. you can always get more business news at bloomberg.com. time to get caught up on the market action around the world. from hong kong to london to the nasdaq, this is your global market check. i will begin in asia. the nikkei fell by less than 1%. the hand saying finished -- the shanghai composite as well. they are still closed. chinese markets surging from their weeklong holiday. let's go to shery ahn in hong kong. >> markets surge to catch up with a global rally as investors speculated the government would take more steps to boost the economy. the shanghai composite gained 3% lead by tech and health-care shares. policymakers are increasing target stimulus as five interest

rate -- november has failed to reverse the slowdown. -- pimm: thanks very much. i want to go to europe. mark barton has the latest. rally rans four-day out of steam in the last hour of yesterday's session when it .10%.ded with a gain of the ecbhad minutes from rate decision in september. we have had some german data. we're looking ahead to the minutes of the september federal reserve meeting. back to those german export numbers. exports slumping the most since the height of the recession in 2009.

just giving us confirmation, as if we needed it. germany is definitely feeling the pain of weakening global trade. weak industrial production. confidenceness unexpectedly worse. topping the leaderboard in europe today, the longest run in two months, vw also gaining. vw hasn't risen for four days since march. of equities and into the bond market. look no further than the german after that disappointing export data. and after the european central bank said its qe program would be somewhat frontloaded to prepare for an expected drop in liquidity in december. the remark came in the minutes of that meeting in september. hsbc said today that ecb is stuck in dovish mode.

interesting comment from the ecb executive board member. he said today that seeping pessimism is hindering the recovery in the eurozone. have a look at what happened to the pound today against the dollar after the bank of england kept rates unchanged. it has signaled there is no scope to keep interest rates at a record low as inflation weakness persists. sterling is falling against the dollar. back to you. pimm: thanks very much. mark barton. now for a look at the u.s. ets, we have matt miller. >> looking at the tech stocks year. very interesting stories are running a trio of online marketing stocks. i'm talking about amazon, ebay, y.d ets

amazon has launched its handmade section of its website that will sell artisan's goods. end of like exactly what tsy cells. u can see that effect on etsy stock as well. 20% growthless than in september compared to 25% in august. ebay had about 1% growth in september compared to 3% in august. also in the news. a market neweals, site is saying that intel will get european commission approval for its alterra deal. move intelping to

and alterra shares. a lot of talk about juniper possibly going private. pimm: thank you, matt miller. the federal reserve will release the minutes from its latest meeting at 2:00 p.m. eastern today. investors want to learn all they can about when the central bank will begin to raise interest rates. this morning, former federal reserve chairman ben bernanke gave his take on how the central bank is looking at recent market volatility. >> the fed is not in charge of making sure investors make money. it is in charge of making sure that financial stability is preserved. of fed is looking at all these financial conditions and trying to think about what could happen. what are the risks? the concern the fed has is not that somebody loses money. it is that because of leverage or other reasons, the loss of money leads to instability in the system. that is the concern. pimm: joining me now is michael mckee.

i want toget to that, pick up on something ben bernanke said about how the federal reserve's job is not to help people make money. but hasn't that really happen because the low cost of money has allowed people to go out and speculate? itwhether you call speculation or investment, that was the fed's goal. he wanted to drive up asset prices to create inflation in the economy and to create confidence in the markets. ben bernanke would argue that they have done that. it is not the going up that it is concerned about. it is whether or not stocks are extremely volatile. people have suggested that there is -- bernanke said that the fed will never let the market go too far down. they put a floor under that. he is arguing against that, saying it is not the fed's job to care whether you make money or not. pimm: having said that, i know that the minutes today are going to be scrutinized for some details. what are we going to look for in terms of inflation?

there doesn't seem to be a lot. the line from the fed has been that inflation will return. it is not happening right now. it is going to be low for a while and then it is going to come back. on what do they base that? people will be looking for more details and how they came to the conclusions they did. they say that unemployment is going to continue to go down. why do they see that? we are looking back and see some slowing in the economy. which makes these interesting minutes. a lot of what they would have said at the time no longer would hold because we got that lousy jobs report and everybody thinks the world has changed. pimm: or ended in some cases. what else do you think they will talk about? fed said at the time in september that they did not raise rates because of events overseas. people are going to want to read into it. what they were thinking the

impact would be. what was that they were so worried about? we heard from janet yellen at her news conference who said, we just felt it was useful to take a pause. to step back. to wait. others have said that it was a much closer decision. a very close call. how close was it? were they poised to raise rates for the first time at a very narrow majority decided not to? or was there a general agreement that the economy had some problems and they needed to wait? that is what people will be looking for the most today. pimm: and you will be checking in on that for us. 2:00 right here on bloomberg. thanks michael mckee. the bloomberg market day, taxing the flash boys. hillary clinton takes aim at wall street with a proposal to tax high-frequency trading. we will explain, next. ♪

pimm: this is the bloomberg market day. i'm pimm fox. democratic front runner clinton has her eye on wall street. bloomberg politics's phil mattingly joins us from washington. i want to talk specifically about her plans to tax high-frequency trading. we have seen from a lot of folks on the democratic side is a broad wide-ranging transaction tax. the clinton campaign will be announcing today a more targeted version of that. they will be targeting excessive order cancellations. the idea is that in high-frequency trading, what you are trying to do is get out in front and then cancel as a way to profit. where this comes from in large part is gary gensler and his team inside the campaign. he is the former cftc chairman. he took an interest in high-frequency trading while he

was there. that is a key component of this plan. another issue to look at is on the volcker rule. hillary clinton will be targeting hedge funds. specifically how much banks can invest in them. at this point the level is 3%. she would eliminate that entirely. that is the financial regulatory side of the proposal. it is the regulation that will get most interest on the campaign trail. pimm: is this -- you take something, you give something away? go as far assn't her key opponents. if you look at bernie sanders or martin o'malley, who are on the democratic side advocating for breaking up the banks or free imposing the separation between commercial and investment banking, hillary clinton doesn't go that far. her team's point is that this is a more nuanced approach. if you have a strong volcker rule and keep banks from holding their swap portfolios in subsidiaries that kerry insured

deposits, that is more effective in today's banking sector then re-imposing a glass-steagall. you will see similar things going forward. the big question that hillary clinton has faced from the left has been issued to close to wall street? close to wall street? this plan is an attack on certain aspects of wall street. the big question on the democratic side will be, does it go far enough? pimm: and we have the debate coming up next wednesday in las vegas. what about the debate in the house over who was going to be the next leader? phil: that is moving on as we speak right now. there have been private meeting throughout the day. well-likedthe chairman of the house and means committee, giving the nomination speech for kevin mccarthy. the vocal start at noon.

it will be as old school as it gets. -- the vote will start at noon. it will be as old school as a gets. paper ballots. kevin mccarthy will become the speaker of the house. the vote matters because there is a group of 40 hard-line conservatives who have already stated they will not support kevin mccarthy in this boat. that won't hurt him today. houseober 29, the full will vote on the speaker. mccarthy needs votes. that's where it will matter. pimm: thank you, phil mattingly. coming up in the next half hour of the bloomberg market day, we go live to lima, peru. ♪

pimm: it is 11:00 a.m. in new york, 4:00 p.m. in london. welcome to the bloomberg market day.

from bloomberg world headquarters in new york, good morning. i am pimm fox. hour, we will speak live with christine just days lima, peru after her organization cut its forecast for world economic growth. we will also be speaking about the global economy with world think president jim wong came -- jim. in the united states, stocks are fluctuating near seven-week details they wait for from the new -- that is at 2:00 p.m. eastern. we are 90 minutes into the trading day, so let's go to julie hyman with the latest.

julie: we're not seeing that much movement, perhaps people waiting for that is fed minutes for little more context on the fed's last decision. the dow is little changed. because of a decline in technology stocks, we are seeing the nasdaq as the worst performing of the three major averages. take a look at the bloomberg terminal. technology are not doing well. in health care, we have really seen a whipsaw around in health care and biotech. biotech had a big rally yesterday and it is back down today. switching to some of the other asset classes, if you are looking at the bond market today, we were talking about the 10-year note. if you look at the 10 year today, we are not seeing much change. a little bit trending upward in

yield 2.07%. the u.s. dollar, which has recently been on a losing streak versus a basket of currencies, is down a little bit today about 2/10 of 1%. rounding out our look at the various asset classes, let's look at commodities. materials are the best performing group today. we are seen gold and copper lower, but oil continues its rebound. optimist has crept into the oil market so maybe we will see more stability of the glut we have seen. maybe the glut will update. it is a good word. pimm: it describes what you are feeling with oil at $100 a barrel. julie hyman, thank you very much. let's check in on the bloomberg first word news with vonnie quinn. : we start with volkswagen

,nd the hearing on capitol hill house members or question top officials about the scandal. michael moore is telling lawmakers vw is sorry. company, if of our would like to offer a sincere apology, sincere apology for volkswagen's use of a software program that served defeat the regular emissions testing regime. vonnie: vw one not sell any of it 2000 -- of its 2016 models in the u.s.. republicans will vote on their choice for the next speaker of the house. kevin mccarthy is the favorite but even if he wins, conservative republicans could try to stop his election when the entire house votes in three weeks. in south carolina, officials are warning residents of coastal areas. they could be in for flooding

just like the middle of the state, and it may continue for several days. saudi arabia is feeling the pinch from the decrease in oil prices. government agencies there have talked about retiring and promotions. saudi arabia gets 90% of its revenue from oil. it is chaos as soccer's worldwide governing body has suspended sepp blatter for 90 days over the corruption scandal. official that was expected to succeed him was also suspended. wordis a look at our first news right now. you can always find the latest news on bloomberg.com. pimm: thank you very much, vonnie quinn. it has been about seven years ande the financial crisis the federal reserve was at the

epicenter of trying to calm the market panic. in his recently reduced book on the topic about the financial crisis, earlier today, ben bernanke took us down emery lane to give us details -- memory lane to give us details about the biggest moments during the crisis. >> the scariest moment was what is called lehman weekend, which was lehman week. over, weynch was taken had to bail out aig at great political risk. morgan stanley, goldman sachs, will be a, a lot of firms became under pressure. it went through the roof. it was a turning point because at -- on one hand, the crisis got so much worse but on the other hand, that was a beginning of the political reaction. stephanie: if there was something you could change, what would it be? >> we could not save lehman.

we did not have the tools to save it. in savinge right call aig, although it was a scary decision. i think we were at full thrust and did not have other options. >> one thing that strikes me about this book is the extent to which the president and congress delegated to you the decisions. you described going into the roosevelt room with president bush about aig, saying we need 85 billion dollars to bail them out. then you went up to capitol hill. them forhink better of letting your delegate or did you secretly wish someone else would take responsibility? >> president bush was very standup. he said, you are my guys, do what you think is right, i will stand behind you and defend you. he went on television and was

going against his own party. stephanie: many of the books we have read about the financial crisis do not mention janet yellen. you talk about your posse. where was janet yellen? much engaged in the crisis, at least in washington. thehe time she was head of federal reserve san francisco. she was involved but not essential. to washington and became a vice chair and was a big part of the monetary policy planning that we did. >> you talk about the fact that monetary was not really the approach that needed to be taken when it came to the bubble in mortgages. you said that financial regulations supervision should be the first line of defense against asset price bubbles. has that been corrected now? there was a regulatory fail, wasn't there?

>> yes. >> has it been corrected and has it been overcorrected? >> i think the critique of the fed prior to the crisis, a lot of it is focused on monetary policy. people who looked at it carefully generally agreed monetary policy was not the reason for the housing bubble but the one way the fed was responsible was not doing enough to prevent the bad mortgage lending. one reason was there was this very strong political support for sub prime lending because it was creating home ownership so broadly. stephanie: strong political support. example, who for has been so critical of bad bank behavior in the financial crisis, which you say it was barney frank who was promoting this? it is part of the american dream? >> it was not barney alone, it was the regulators.

subprime lending is positive because it improves home ownership, so it is a goal that a lot of people were pursuing. in doing so, some bad practices. >> it goes well back into the 1990's to encourage homeownership, particularly for lower income people. >> i think those specific things have been addressed it a significantly and have lot of dust a lot of complaints about mortgages being too hard to get. we have made the system a lot stronger, so capital in the banks is a lot higher. breaking news from bloomberg regarding bill gross and his former employer timco. mary childs is here with the details. what can you tell us about this? y: bill gross is suing timco and alliance saying he was

bullied out. pimm: and he has filed suit in court in california? and what does the suit allege? details.re are so many if you have a good hour, i recommend getting your coffee and picking back -- kicking back, because it is bill's take on what happened. he had been pushing against these riskier assets and was uncomfortable, but greedy -- "mm: he describes it here, driven for a lust for power, greed, and a desire to improve their own financial position and reputation at the expenses of investors." mary: that is exactly right. pimm: that is a strong statement. mary: you can tell this is very fresh for him.

he was pushed out of his own firm for greed, and one of the things he asserts is because he argued for lower fees. people who wanted to stay really rich were like, no, and got offended, and felt the need to push him out. pimm: i know we are going to have lots more on this will grow suit. i want to go to lima, peru, because standing by his international managing fund christine lagarde, speaking with francine the coif. laqua.cine francine: we are pleased to be here at the imf. i'm chatting with christine lagarde. usnk you so much for joining . it has been a busy few weeks, months, and years.

when will inflation come back? >> i am more concerned about the lack of investment. investment needs to pick up and be on solid data so monetary policy could evolve. confidence factors will encourage a bit more investment going forward. francine: we have the chinese reserveon, the federal unknown of when interest rates will rise, the emerging market and how they will do with that. what is your biggest overall concern? francine: we are seeing massive -- ms. lagarde: we are seeing massive transition. china is moving from an investment driven model to a more consumption driven model. this is a choice, this is

deliberate. when the president and premier were talking about quality growth, that is what they had in mind. it will continue. it will not be without bumps on the road, but it is a good evolution and legitimate at that stage of development. isthe same time, and that where the balancing act is also very necessary, the chinese authorities do not want to have a brutal devolution. they want to smooth the pace and make sure the rural to urban transitions are taking place in an orderly fashion. in the same vein, they will have tools that monitor the leverage that are second place in the chinese economy, and will have to do that without dampening growth too much. monetary policy in the u.s. is going to be another transition, which will have spillover

effects than he to be taken into account. when you look into the emerging market, we are now in lima, peru, there is also a transition taking place for economies that are going to have to diversify, to rely a bit less on commodity exports, a bit more on their own internal factors, and all of that is taking place at the same time. which does not mean to say it is doom and gloom. it is just a lot of unknown, transitions toward a different situation. if it is managed properly, it can be extremely positive. francine: are you confident they have a good handle on the situation? market turmoil something more symptomatic of a very weak economy? ms. lagarde: in the advanced economies, the market movement we saw in august has been

ispletely -- the situation back to where it was before. i think that what is happening is as i said, deliberate in terms of economy transition. in terms of financial transition as well, we are clearly saying authorities who want to be more market-determined in the exchange rate in the fixation of the interest rate, and this is an enormous change. absorb, difficult to difficult to manage, difficult to communicate, but i do believe the chinese authorities understand that phenomenon, want want toby the rules, monetary expectations as much as they can, but it is draining. it is a process that will also have bumps on the road. francine: the imf warned the fed should not take too soon.

what is too soon? is six months from now something that makes more sense? ms. lagarde: we are not in the business of prescribing a particular move to the central banks, and we highly respect and value their independence. article for after article for all across the world. says, we willity be data-dependent and our two drivers will be unemployment and inflation, what we are saying is inflation numbers have to be solid. we have to see them and for the moment, there is not much on that horizon. neither on inflation nor on wages. francine: inflation has to do with commodities, right? how do you see the commodities going? the commodity slowdown has been gradual but also quite steep in the last couple of months. is that china? ms. lagarde: commodity prices in

general -- and i'm talking about they have gradually reduced over the last four years. it started in 2011 and it does accelerate recently as a result of the perception, as well as the reality of a chinese slowdown of its own growth. it was a major demand address. i would say that it has an impact on inflation, but some of it as you know is taken out of inflation and core inflation is not including the price of oil, the price of food. you have a much more, sort of stable numbers that you can underline, irrespective of the commodity variations. francine: how much do you worry about brazil? the situation seems to be getting from bad to worse. should the imf step in?

has anyone asked for your assistance? ms. lagarde: the imf does not step in. the imf is asked or invited to provide systems, and this has not been the case at all. we forecast negative growth for -3%, -1% nextar, year, and hopefully improving. i think there are many factors at play. there's a combination of the overall economic environment, low commodity prices, but also some purely domestic right -- factors which have to do with a business-friendly environment, with governance. you can look at it from a negative or positive angle. from a positive angle, the fact that one has affected us has come out clearly and is being addressed is a positive.

it has an impact on the economy. francine: we are around the world in 12 minutes. greece, talk to me about what that re-profiling of greece would look like if they stick to the agreement. ms. lagarde: i would say first of all, the imf would volunteer into a program with greece alongside the european partners in the eurozone if a program could walk on two legs. the first leg, complying with the reform commitments and on the pension fund, we think there has to be strong commitment and delivery. the same on the bank governance. is, a deadleg operation. for that, i do not want to prejudge for the moment,. francine: next year, will we see you as head of the imf or possibly running for the french

presidency? ms. lagarde: you will see me again with my voice back. francine: great timing. madame lagarde, thank you so much. she will get her voice back. that is it from lima, peru. exclusive interviews to understand where the world economy is going. pimm: thank you so much. christine lagarde speaking with bloomberg's francine lacqua. we will have more coverage of the international monetary fund coming up. i want to focus on some breaking news involving bill gross. he is suing his former employer pimco for hundreds of millions of dollars because of his ouster. mary charles wrote the story and she joins me. let's recap for people who are not following this. mary: bill gross is saying that himo conspired to oust

because they wanted a larger profit. he is saying, this is obviously a large chunk of change and some of the managing directors worker they were not getting more, especially when they felt like they were bringing in more than maybe gross was. they say -- he says they breached a contract and oh him hundreds of millions of dollars, and is saying it is time to pay up. they refused to pay him for his bonus, his compensation. he was supposed to be paid out. pimm: when he left pimco, that was x number of days before the end of the quarter. the normal process according to the complaint is that you pay a proportionate amount. it is prorated, and bill is saying he did not get a penny. on top of that, they wait the the bonuses.ight

not cry thatld many tears for bill gross in terms of the financial implications because he is already quite a wealthy individual. he states, according to his lawyer, that if he were to prevail, tell people what would happen to the money. mary: he is giving every penny to charity, including the pen care foundation which he -- the pimco foundation which he founded. what he really wants is to be shown that he is right. pimm: some words were listed in improper,int, dishonest, and unethical behavior. if that is substantiated, what is that going to do to what is left of pimco's business? they saw huge redemptions when he left in september 2014. mary: these are some strong words that he uses and vindication would be massive for

gross and pimco. i think it would be really bad for pimco. i am not sure to this point where people are going to come down on this. it is possible that they will say, this happened years ago, and a jury will not agree with him. it is possible pimco will be vindicated and bill will not. what if this goes through and pimco has to pay out millions of dollars? there are some vast implications for clients. risk, oreputational just going back to this point in terms of what dell is seeking, -- bill is seeking is an authentic record of what happened. he details meetings that took lace, associations between various individuals that in a sense conspired to cheat him. mary: there are allegations in there that andrew balls, cio at pimco had used a second cell phone, a secret cell phone to leak to the media. these are allegations, so

we understand this is not a legal case. mary: this has not been substantiated, but these are things that he said led to his demise at pimco, that they worked together to push him out because they wanted all the money. pimm: the redemptions are an issue ongoing, and he is managing the unconstrained bond fund. mary: right. pimm: as part of the complaint he talked about something having to do with the actual investments, that he wanted to lower the fees for investors and shift his investments to lower risk fixed income. mary: one of the main differences of opinion in his bur, he wanted to focus on gers and bonds. pimm: the basics. mary: and mohammed wanted to diversify.

we need to push into equities. pimm: diversify the holding. mary: he calls it a cheesecake factory holding. he thought it was too risky and scary, there would be a lot of hell to pay if these things turned. he claims in the lawsuit that when he tried to bring this up to mohammed, and was suggesting he would step back, mohammed surprised him. claims mohammed did not want to take on the responsibility of managing all these risky assets because they had taken on too much. pimm: we should mention that mohammed is an advisor to alliance, the parent company to pimco, and that he is also a bloomberg view contributor. this allegation was filed in santa ana, california state court. what happens next?

they file the complaint. someone is going to unseal it and they will make a decision. mary: this will go to trial, provided they do not settle in the interim. step is tomy next call everyone and to get their comments, and allow them to refute the. pimm: it or be easier if they sent you an e-mail. tell people how they can reach you. mary: sent me to bloomberg. pimm: this will be an ongoing story for quite a long time. still ahead, more from lima, , we will berld bank speaking to jim yong kim next. ♪ ♪

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"bloomberg market day." i am pimm fox. vonnie quinn, you have more details. vonnie: we are starting on capitol hill on the volkswagen hearing. u.s. isexecutive in the facing some tough questions from a house committee. michael warns said he and the company are sorry. >> i apologize on behalf of everybody that works at volkswagen. cooperate, find remedies for our customers, and work to ensure this will never happen again. vonnie: he says volkswagen will not sell any 2016 diesel models in the u.s.. also on capitol hill, house republicans are preparing to vote on their choice to succeed john boehner as speaker of the house. kevin mccarthy is the favorite, but even if he wins this vote, house conservatives could try to deny him a majority three weeks from now.

the coast guard has quit searching for that missing cargo ship your the bahamas, and some of the crew's families are not happy. the coast guard will keep looking for the ship's data recorder. it sank during hurricane joaquin or the bahamas. it is now nearly three miles down. syria has launched a new offense of against rebel forces. the general said attacks by russian forces now make it tosible for syrian troops eliminate what he calls "terrorists are co-that is how they are describing opponents to bashar al-assad. here is something you do not normally associate with the city of light, rancid owners. paris is starting to wreak as the garbage strike enters and forth day. havethe waste workers walked off the job, saying wages

are not keeping up with the cost of living. pew to have ale comeback. pimm: i do not know what to say except maybe sacre bleu. now, housefrom leaders will be meeting behind closed doors to select the next speaker of the house. phil mattingly joins us live in washington with what is going on . is this a done deal? phil: in some way, yes. he is going to win today's vote. question is not necessarily whether he gets the majority of the vote in the closed-door meeting, it is what he has to do to get to hundred 18 votes on the house floor. that is where the real challenge is. it is not that the republican

conference does not support kevin mccarthy. there is a group on the far right that will not support him. that would cause major problems, so the impression i have got des isalking to house ai kevin mccarthy is going to reach out and make some promises, related to the debt ceiling, appropriations, and budget. what those promises are will dictate with the next couple of months and possibly the next couple of years, that is the big question right now, not whether kevin mccarthy will be the next beaker. pimm: there are some challenges to kevin mccarthy, and they know they are not going to and up as the house leader so why are they running? ffetz.eve congressmancha phil: jason chaffetz has made a lot of news, including some

bipartisan investigations over the last nine or 10 months. he says he wants to push for cohesion within the republican party. he feels like there is a huge split between the more conservative members and the more moderate members. you also have daniel webster, a republican who represents that kind of hard-line core group of republicans. he is who the 40 or 45 republicans have pledged to back. jason chaffetz, daniel webster, they do not want to win but they want to be in position should something happen with kevin orarthy, to take the spot, to push kevin mccarthy a specific way on the issues. where that causes problems, promises will have to be made and those promises could include throwing a lot of complications in for things like increasing the debt ceiling or trying to reach a budget deal to keep the government open. pimm: phil mattingly from

washington, wennberg politics. interesting dynamics. let's turn our attention to another top story, volkswagen's executives are testifying on capitol hill. the chief executive has apologized for the emission scandal and has promised a full investigation. jamie butters is standing by at .ur detroit euro it seems as though the drivers seat no longer has a steering wheel, it has a gavel in front of it. what do we expect to hear from these people? jamie: there have been a few surprises already. one of the things that michael moore talked about, after they fix the filtering and make the cars compliant with the epa rules with the clean air act, they will still be able to get as good a mileage as is on the window sticker. ?ow can that be

they did not want to ruin the performance of the cars. diesels, people often find their real-world mileage is better than what is posted on the window, the opposite of what you see with a lot of hybrids and even small cars. pimm: that is a very important point, and of course you raise the question, if they were going to do well with the automobile gas mileage without tinkering with the emissions test, somebody must be going ballistic in germany about this. absolutely, and he'd knowledge they probably will lose some ignore it -- he acknowledged they probably will lose some performance at the higher end. if the truth is that they could have met these requirements and still produced a very competitive car, then it really seems like a real waste. jamie, have not heard any

details about the company's plan to fix the cars or recall them or compensate the car owners. jamie: they are still sorting through it, although i have to say based on the first hour or so of testimony, he has had a that the first hearing with congress. that one was such a beating. they made fun of her on saturday night live. investigating and until we are done, we cannot say anything, and that was correct but it did not look good. it made for a whole day of people in congress renting out how stupid gm looked. he has been able to break it down. set of cars has another problem and we will need different solutions for them, and it makes it seem a little more justified why it is going to take some time. this process, this one will have

a different process. pimm: what is his future at volkswagen? just quickly. jamie: the dealers rallied around him. he was seen very early on in some of the publications in europe had flagged him as someone who would take the fall, because it originated in the u.s. the dealers has said he is their champion. beggedanked -- volkswagen not to fire him so if you worked through this, he could be a rising star and folks rise in -- volkswagen. pimm: jamie butters joining us from our detroit bureau. the president of the world bank, dr. jim young can, bringing you live coverage of the imf and world bank meeting. ♪

pimm: this is "the bloomberg market day." i am pimm fox. fundnternational monetary and world bank are having their semiannual meeting taking place in lima, peru. these annual gatherings include christine lagarde, the managing director of the imf. standing by right now is francine lacqua and her special guest is the head of the world bank, dr. jim young king. that is exactly who i have, and i'm very excited. thank you so much for being on bloomberg tv.

we worry about inflation because it seems like central banks do not have control over inflation and it is difficult for them to spur inflation. mr. kim: there is no magic formula in any of this. in japan, for example, if you look at the situation, they --ged their voluntary monetary policy to a 2% inflation rate. it helps them, but it keeps inflation down. is very high and many countries have reacted to the low commodity prices high producing more. we do not really see the end of low commodity prices anytime in the near future, and we are watching this very closely. that creates more headwinds for latin america. francine: what is your biggest concern for emerging markets? he said they are linked to commodities. we do not see the prices going anywhere fast.

how concerned are you that a small policy misstep, possibly from the fed, will hurt global growth? mr. kim: we are just reading auto emerging markets is the largest we have seen in the last 30 years. the commodity prices are a big worry. we know that costs are going to go up even more. we are already hearing for many of our clients that capital which used to be very easy to access. for example, zambia got eight your money for 6% and that is just not happy now. our business is exploding and will continue to go up. we can still provide 15 year is a at 2% or 3%, which great deal for developing countries. now, we are going to see a lot of headwinds, especially in

access to capital. developing countries have to get serious right now. francine: social reform, you mean? levels, theyeveral have to make sure their public spending is as efficient as possible. important to continue to invest in health and education, but they need to get the most for their money. they are going to be compared across the board, and those who get capital are the ones who move most quickly in terms of making the reforms. small entrepreneurs and large entrepreneurs and countries do not have the access to capital, so we have a role to play, to make sure the financial sector in these countries is stronger than it looks like right now. francine: do you worry about a global recession? we think it may be a systemic

risk. how worried are you about a global recession? mr. kim: all of those factors i have told you about have us very focused on making sure the developing countries can respond. if you look even 10 or 15 years ago, the developing countries today our overall much better prepared so countries have a lot more fiscal space. management of monetary policy is much more effective than it was before, so we think they are more prepared, that we are struck at quite -- how strong the headwinds appear to be blowing. this is going to be a very intense few days where we are really trying to help countries send signals. what we have been saying, the structures were not sure. if you do not signal now that you are serious about it, your short-term borrowing costs may go up. everyone is dealing with the same thing.

countries have to distinguish themselves. let the capital markets know there is ability and policymaking, and that you are serious about adjusting to the new reality. francine: we talk a lot about the refugee price -- crisis. is this a political response that we need? mr. kim: one of the things that is happening that is very important, the un's general assembly, i had the opportunity to speak with chancellor cameron and merkel. we need to change the way we respond. refugee 17 life of a years now, so we cannot think of this as a short-term fix or even a humanitarian response. we have been traveling with the secretary-general to these areas as we want to link the political response and humanitarian response to the developmental response.

we are trying to come up with different solutions were refugees in jordan and lebanon so that they have jobs and better education. if they have access to those things, they are much more likely to stay there than risk their lives. francine: the world bank president. we have great interviews coming up. , andve the chairman of ubs this is trying to figure out exactly where the u.s. economy has gone -- the world economy has gone. pimm: francine lacqua joining us from lima, peru, speaking with m, formerly the head of the harvard school of social medicine and growth. let's get you caught up on the market and go over to the nasdaq for a look at u.s. markets. matt miller is standing by. matt: sitting down at the nasdaq.

we have kind of a sea of red behind me, the nasdaq down just about 1%, almost 1%. we see three big internet retailers involved in a lot of stories today. etsy, and ebay all following right now. amazon said september sales grew 19.7%. august sales grew almost 25%. the same story holds at a much smaller relative rate for ebay. 1.1%.ber sales of slowing growth is the theme of these two big-league companies. one of the smaller lead companies as far as internet retail is concerned is etsy. that stock is getting hurt by reports, and not just reports, amazon has a new piece of its

website called handmade for --rtismal goods a goods. that is what gets he does to make money, and if amazon moves into your business space, you could be in trouble. ibm is buying out terror and there are reports today that the european commission is going to improve -- prove that purchase. with that, it has one hurdle crossed. obviously there are others to go but ibm and altera, interesting news, the approval. juniper was thinking about going private. bloomberg intelligence looked into that. juniper is one of the few winners on the nasdaq today. emc is another one -- enc is another one. they are in many stories that dell might be involved in a

combination with enc. not quite clear how that would work. as well as controlling almost all of the voting rights so those two stocks are moving as well. pimm: what do you think, amazon's handmade slap in the face to nc? -- to betsy? matt: i think that will destroy them. pimm: still ahead on the bloomberg market day, we will have today's options insight. that is next. ♪

pimm: welcome to the bloomberg market day. i'm pimm fox. two julie hyman with a check on what is going on. julie: let's talk about the markets.

i think people want to know what is going on. we are seeing a mixed picture, the dow a little bit higher, the s&p a little bit lower. let's figure out with the options market is making of the action, or lack thereof. joining me today is dan deming, managing director of k km financial. dan, we have seen the s&p 500. i think this was the third time since the august selloff, that it made the attempt and fell just shy to break above it. what do you think of that, and the options market? dan: this is a key technical level. if you look at the 1995 level, we closed just above it. there is does go critical points. what we are seeing in the options market is some repositioning, defensive in nature when you look at what is

going on in the spx. 75,000 october calls have been purchased. a little bit more of a bearish tone to the market. do you see any of this being tied to the release of the fed minutes this afternoon? .an: it is possible we have had this nice momentum run and if you were able to catch it through the higher end of the range, it makes sense there is some defensive positioning going on, taking some of that money off the table. plus, given the fact that the fed announcement is coming out today i think it could basically with this market, another opportunity to think, maybe we will not be able to hold these levels. julie: let's hold on to your trades -- move on to your trades. it is the financials etf.

there is some debate about whether an increase in rates is going to be negative or positive for financial stocks. you are on the positive side of that debate? .an: i am i think in the long-term it will be a positive and in the short-term, there is so much bearishness out there, i think the xls is a great way to play that. i think the xls will benefit from any hint that there is going to be an increase in rates. give us a 2-1 risk reward. back to the higher end of the range in the xls, and it is good to find risk. if the market does not necessarily take that level, you have got to find risk on the downside. julie: we have not seen a trade in that range since the selloff in august. if its your downside

does not manage to rally in that range? dan: we got knocked down after the fed did not move to around the 22 level, and i think that is probably the lowest out of the range. now it has been able to catch a rally, but any hint that rates yre going higher, i think the will benefit. julie: thank you, dan. joining us to talk options in lf. and the reaction to a fed increase. stay right here with us on bloomberg tv. ♪ . .

it is noon in new york and midnight in hong kong. scarlet: welcome to the bloomberg market day.

from bloomberg world headquarters in new york, good afternoon. i'm scarlet fu. alix: i'm alix steel. bill gross is suing pimco for hundreds of millions of dollars laming wrongful termination. this stunning allegation of --er, and greed and dishonor dishonesty against pimco. and the imf managing director aboutto bloomberg news emerging markets, corporate debt and the emerging economy. get the highlights from the annual conference in lima, peru. we want tot first get to the market activity with julie hyman. everyone thought china would serve -- would search when it reopened fra