receiving a $14 billion claim from the u.s. justice department. the bank says it isn't willing to pay. >> lucky number seven. apple hopes its new iphone 7 will stem at two-quarter decline in sales as customers lined up to buy the new model around the world. alix: back to risk off. falling below zero ahead of a central bank decision week. ferro,n: i'm jonathan alongside david westin and alix steel. david: $14 billion will get your attention. the chief executive -- chief litigation officer. alix: we are seeing the market reaction really reflected in the contingent convertible bonds, d own to $.37 on the dollar, the weakest since july. jonathan: the question is, do they need to raise more money?

this is being viewed as the opening bid. i wonder how much leverage either side actually has. david: that's the question. what leverage do they have? they have no real power. theycryan has said again do not want to go to the markets and raise more capital. alix: and they don't want to sell the asset managements business either. what are they going to do? we will preview the fed's big policy meeting and the boj. rick rieder, coming up later in the program. a look atre taking markets. u.s. futures near the low of the session. another leg lower. jonathan: down about 0.5%. the story in europe, the ftse down around 1/3 of 1%. the dax getting hammered, 1.29%. the worst performing index on the stoxx 600, the bo -- the worst performing industry on the stoxx 600, the banks.

now, itx market right is a broadly stronger dollar. you see it on the table. you see it on the bloomberg dollar index, marginally stronger by 1/10 of 1%. risk off. brent crude down by one percentage point. wti --in the bond market , it has been a story of youth kurds deepening -- of yie ld-curve steepening the last 10 days or so. we are back in a subzero world, it seems. alix: now it makes sense, the safe haven trade. let's check around the world. in-depth coverage of all those top stories. londonartinuzzi is in with the latest on deutsche bank's battle with the u.s. government. caroline hyde is in london. matthew kanterman is in new york as the iphone 7 hits stores worldwide. we want to break down the story

-- the top story of the day. elisamartinelli -- martinuzzi. what's a realistic number for the settlement? that, in understand other cases, there has obviously been an entry point that was higher than the final amount, but just how much negotiating power deutsche bank has is unclear at the moment. the market reaction today -- you've seen the biggest drop in the bond since britain voted to leave europe -- the european marketwhich was a large event. that gives you a sense of the scale of impact it has had. alix: let's talk about those numbers. the potential $14 billion, but they only set aside $6 billion in june. what does that imply in terms of debt issuance and asset sales? elisa: they have set aside about

$4 billion or $5 billion of that $6 billion for that case -- this case. amount -- an amount that is significantly larger would lead the bank to consider what it's doing. one of the discussions was the asset management unit coming up for sale, but the bank wants to hold onto the boko that operation. -- onto the bulk of that operation. it generates a lot of revenue. alix: what's the process now? walk us through the next 1, 2, 3 weeks in how this negotiation plays out. there might be political moves behind the scenes to weigh in on the case. it is early days, yes. it all depends on the other case and the other situations the bank is in the midst of discussing. we understand the bank is being probed for other cases. it all goes into a discussion and weighs into the influence

the various parties can have. alix: thank you so much, elisa martinuzzi. 47 civil actions are still pending for libor alone. the coupon payment question is really front and center. jonathan: people are repricing that cash call. we will cover that throughout the morning on "bloomberg ." line heighta, cure is standing by as eu leaders convene without the united kingdom -- caroline hyde is standing by as eu leaders convene without the united kingdom. caroline: on the agenda is whether they make any categorical action today at all. don't hold your breath. we always know when it comes to the eu, they are slow in terms of action, but the rhetoric is heating up. we hear from the likes of the nde, saying this is a crisis of the you's existence -- the eu's existence.

we are hearing from the likes of belgium, saying this is an ongoing movement of truth. even hearing from merkel in germany, she herself has said it is a question of war and peace. will they today unfold much action? probably not. but there will be an outline for a roadmap. cackling immigration -- cattlign immigration -- tackling immigration. tackling the lack of opportunity in terms of jobs and growth. they want to push back the rising tide of populism and show that it is better in than out. the question is whether we get more integration or less integration. jonathan: the follow-up question. you are in bratislava. or are 27 of them standing around in a circle, trying -- them standingf around in a circle, trying to do something. is there agreement? is there a bigger split between them? divisions are so m

arked within the eu when it comes to the united kingdom. that's not even on the formal agenda. they are not meant to be discussing their relationship with the united kingdom until the u.k. trickles -- triggers article 50. what they want to tackle our divisions of south versus north of europe. is it more spending to help the economy, or is it stick to the path of the a third -- to the path of austerity? there were so many crises before they u.k. decided to opt out. they need to tackle the wave of immigration and whether they see poland and hungary calling for more independence and not living up to those quotas. so much divides the eu. they need to show unity. jonathan: i divided union. caroline hyde. we could have had that conversation will times over the last 5, 6, 10 years. david: we will have multiple

conversations coming up. this is far from over. apple is having a big day today. their iphone sale -- iphone 7 is going on sale all over the world. it looks like maybe it's bigger than we thought. matthew kanterman, bloomberg intelligence tech analyst. let's talk about this. do we have a sense of how big this apple iphone 7 made be? matthew: we don't yet. it looks like apple is on track to return to growth after two quarters of decline. it seems like demand is there, but there are definitely some supply issues. apple did a lot of things, including the dual camera on the iphone 7 plus, and it seems like they are in short supply of the parts. david: what do we know about the numbers? matthew: some of the u.s. telecoms have come out with numbers.

a lot of these comments are without context, and we really don't know. david: thank you, matthew kanterman, bloomberg intelligence tech analyst. now to alix. she will tell us some stocks to watch. alix: the days i used to wait on line for the apple iphone as a reporter. exxon. new york attorney general -- new york's attorney general is investigating. why didn't we see asset write-downs from exxon? bp and others clocking in about $5 billion of write-downs is 2014. not the case with exxon. also taking a look at oracle. it was down 2.5% yesterday after earnings. this is a year-to-date chart. up almost 12%, but a little bit of weakness recently. it missed on profit and revenue for the first quarter. the one bright spot was his cloud computing revenue, up by 59%.

companytech special, a that makes painkillers that actually don't kill the lining of your stomach. according to reuters, it is looking to sell itself. this is four months after the activist guys called for a sale. depomed looks like they are trying to put themselves up for sale. start board owns a 10% stake in the company -- starboard owns a 10% stake in the company. let's get a look at bloomberg's "first word" news. >> for years, donald trump has question where president obama was born. now, his campaign says he believes obama was born in the u.s. the so-called birther issue may have -- hillary clinton has resumed campaigning after taking three days off to recover from pneumonia. she hit the swing state of north

carolina and the congressional hispanic conference. clinton says she agrees her campaign should have been quicker to release information about her illness. the paris climate accord is close to being formally adopted. up to 30 more nations are expected to join the agreement at next week's u.n. climate summit in new york. still, the deal must be joined by countries that make up at greenhouse gas emissions. the two biggest polluters, the u.s. and china, have signed on. global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. alix? jonathan: i will pick up. trumput what a donald residency means for the u.s. dollar -- donald trump presidency means for the u.s. dollar and the bond market. this is bloomberg. ♪

alix: this is "bloomberg ." i'm alix steel. republican presidential nominee donald trump speaking yesterday. mr. trump: i think you're going to have low interest rates to the end of the year, maybe no increase at all, and the market will stay artificially high. the fed has become extremely political. i don't think they would do -- i really believe if it was a political decision or the right decision, they are going to go with the political decision every single time. alix: we've already seen a backup in the yield curve. maybe more inflation down the

pipeline. what could a trump presidency mean for rates? joining me, the societe generale global head of rates. this chart you sent over, looking at the 10 year yield. can you walk us through this potential correlation? >> yeah. there might be something behind that, indeed. with trump, you have a loser fiscal policy, tax cuts, more spending. and that means that, potentially, that's going to be a boost for the economy and, potentially, a -- also with trump, you have protectionism. a lot of questions about the trade deals out there. potentially, if you cut import china, for example, that

is also going to be inflationary. i believe that the recent gains -- jonathan: china, for example, tt is also going to be you have tat this rotation from monetary policy to fiscal policy. looking globally, what are the odds that disappoints and the narrative has run away with itself? vincent: we've seen that already in japan. japan had a restrictive fiscal policy last year. they have an extensive fiscal policy this year. there is hope that, in the u.k. also this autumn, we will see some fiscal stimulus. there is talk also in china. as we know, china lending has been very strong, but now the government also wants to push the fiscal policy. that is something they discussed around the g-20 meeting in particular. also, the big question is the u.s., and that's where the trump factor comes in. that will likely stick around

for a bit longer, especially as the doj has disappointed, the ecb has disappointed. there is this view that the ecb and the boj-led bond rally might be running out of steam. boj next week will be very important for bonds. alix: is it an actual catalyst or potential catalyst? as we take a look at the move index, we saw volatility all -- fall about 24% since june. david: a very simplistic since, -- sense, one associates donald trump with volatility. we talk about fiscal policy. there is also the reform side of it. taxes are very big subject. donald trump came out yesterday and talked about that. do the markets react to the possibility of true tax reform in this country? vincent: when i talk about fiscal policy, really, it's

about both tax cuts and fiscal spending. now, which one would have the biggest factor on the economy, you can debate. but, really, the difference between clinton and from is that that, with him, you get both sides. he doubled up on clinton's plan for infrastructure. he comes up with quite an aggressive tax plan -- he's come up with quite an aggressive tax plan. it could potentially impact the fed. jonathan: you pivoted to the boj. let's go there. you said that is the decision you would like to know the outcome of now, before and above the federal reserve. if they want the yield curve to stephen, what would you -- to steepen, what would you have them do? just adjust the average majority

of the bond purchase program? -- average maturity of the bond purchase program? vincent: these are expectations that have built up in the market over the past few weeks. there has been talk in the press that they would cut rates again. as they go through the monetary policy review, they seem to be concluding that negative rates are being effective. so, yeah, the market is clearly looking for a cut. but also, what the market has been pricing is the fine-tuning of the qe. less buying at the wrong -- long end, more buying at the short end. the market is not sure that is going to happen. if they don't deliver, if they and noly a cut fine-tuning of qe, that might be a bullish bonds. if they have both, that could be quite painful for the long end. and nothat would feed the debat the qe-led rally -- that we have

seen in japan, in europe, in the u.k. -- maybe that's coming to an end. maybe we are reaching the limit of what qe can bring. alix: it's going to be a really exciting week. vincent chaigneau, thank you so much. jonathan: we are going to play the flatten her all over again -- flattener all over again. deutsche bank negotiations with the doj and the repercussions for european banking. from new york city, this is bloomberg. ♪

jonathan: from new york city, this is bloomberg. i'm jonathan ferro. shares of deutsche bank getting hammered and heading for the biggest decline since the

aftermath of the brexit vote. this, after the bank received a $14 billion claim to settle u.s. mortgage bank security case. the lender says it's not willing to pay. simon, good to see you. the big question, this isn't just a stock story, is it? it's at that story as well, isn't it -- it's a debt story as well, isn't it? >> if you look at the performance, it has been sharply lower, about five euros lower on the may 49 paper. just to put it in context, the selloff that we had, which was systemic risk driven, back in february, saw the stocks and bonds significantly lower than they are today. it's a limited reaction. shark, but painful. it's limited -- shaprrp, but painful. it's limited, given what we saw

in february. jonathan: down five cents on the euro in today's session. repricing the potential for a cash call from deutsche bank, or is it just a little bit of risk off in the market and readjusting? simon: we come at the week when it has been readjusting after macro concerns in the rate outlook since friday of last week, so it is compounding an already nervous market going into a thin friday. let's see what happens. deutsche said they will dispute the number of $14 billion. if they come even close -- if they even come close, it will be well beyond what they've set aside. you can postpone cocos. that will have further negative downsides. there is no reason why we possibly could and will back towards those levels if the news flows continue to generate -- degenerate. alix: if you take a look at the

general sub investment grade in the european market, in terms of credit default swaps, are we seeing the risk of -- simon: if you look at the curve this morning, there has been a steeper capital structure curve. in times of uncertainty, people will take risk off the table from the back end of the curve, of course. there has been speculation around the looks -- the outlook for the federal reserve, the fomc meeting. it's back in the curve. we see a continuation of that. jonathan: to discuss credit, we've talked a lot about sovereign debt, the adjustment for yield curve, etc., but credit issuance in europe has been immense over the last month, even with this risk off backdrop. what do you make of that? simon: the primary market is still very much alive and well and thriving, should we say,

moving towards record levels. we have been gradually closing the gap. after a lag early this year versus 2015's levels. the investor is becoming more discerning in terms of what he names, in terms of the risk/ stroke price balance. there is a deal coming up today. that could be a good litmus test. jonathan: simon ballard. thank you very much. alix: coming up, our next guest says the fed won't hike next week, but what about by year's end? this is bloomberg. ♪

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after they received a billion-dollar claim from the justice department. it has to do with a residential backed mortgage securities. are meeting ins slovakia today without the u.k. for the fourth time in 43 years. they are aiming to build a shared vision for the post brexit bloc, many risk walking we empty-handed from the iphone seven. --. customers who have not preorder the phone will be unable to buy them in stores today. that's what you need to know at this hour. let's look at what's happening in the markets. there is risk off across the board's? jonathan: futures are soft and equities are down in europe. banks are getting absolutely

obliterated on the european stoxx 600. marginally stronger bloomberg dollar, the cable rate falls back to $1.31. in commodities come up and is trading at $43. in the bond market, the steeper yield curve and today it's flatter. yields are lower in 10 year yields are sub zero in germany. markettiment in the bond is getting the meetings done. we are waiting for the fed/boj decision. they want to get ahead to next year. on the banks index, deutsche bank is down today but the real story is what has happened on the year. by 46% andnk is down

banks in europe are getting hammered. the revenue environment is tough and the regulatory environment is not getting easier and they still want their money in the justice department. a lot of banks have to negotiate. into politics now, yesterday was a big day for donald trump as he came to the economic club of new york to give details on how we he would handle the u.s. economy. he talked about taxes. the details are the morning must-read. it was about for donald trump and he took aim at overregulation. >> it speaks to the biggest businesses in the world but i also speak to the small business people and the farmers. if they have their choice between this massive tax cut from 35% down to 15% or regulation relief, they would time,lmost 100% of the

regulation relief. the regulations are a disaster. david: megan murphy joins us now. and about the growth regulation, is this a difference between donald trump and hillary clinton? this kept getting the crowd going. he said he can talk about lowering the corporate tax rate in the personal income tax rate but he says when he goes out of the trail, he says he's hearing that overregulation is coming from every industry. he says these people have been caught in this red tape that they find unnecessary. this is the big front line the two candidates. hillary clinton is of the opinion that we need these regulations to keep us in check but that regulation fosters growth by giving businesses direction. back,ls stripping them

dodd-frank to new regulation, it is what is wrong with the economy. it may be more important than taxes but he talked about taxes as well. he has refined his program but he's got a $4.4 trillion price tag on this. that would be in less taxes but he claims it will not cost that much. a classicit's trickle-down argument by cutting tax rates and taking them down and generating businesses moving back in, he will create jobs and aowth and that gap will be proposal bedroom big claps in the room. his plan isone of simple trying the tax code and taking the personal rates down just three levels. also cutting the top corporate tax rate. the one thing that is he scratched part of his plan that started controversy which is the 50% rate for certain partnerships. if you say you will only

pay 50% tax as a partnership, -- 15% tax is a partnership, we could all declare partnerships and pay that. his business enterprises are set up where they would benefit. came outproposal that and he thought it would generate support among republican establishment donors who have been set up like this. they find there are political vulnerabilities and they are rolling back on those. .avid: also his plan on jobs he says he he will pay 25 million new jobs over 10 years. there were only 7.8 million unemployed so where will those jobs go? >> we looked at house builders

to they say we need is labor come in from mexico to help us deal with the demand for housing. there was no question that his job growth plan and is overall economic growth plan is out of kilter with what economists think are retrievable. he says he will have businesses come back to the u.s. and those jobs will grow naturally. no economist can match that up with the numbers. david: it appears barack obama was born in this country according to donald trump. >> a statement from his campaign is on a topic that has become a sore spot. his campaign finally said he will acknowledge that barack obama was born in hawaii but he's glad he brought the issue to light. it's a page out of the old donald trump playbook. it's something they want to

remove as an obstacle. the want to focus on economic message and i think that's making headway for them. david: it takes off the table the debate. >> i don't think it will but there will be some real fireworks at hofstra on september 26. david: thank you very much. a rate hike is off the table according to the majority of economists. the fed debate continues before next wednesday's fed meeting. cpi numbers just crossed at 8:30 a.m. eastern time and maybe these numbers can cause janet to delay into 2017. if i told you that cpi court would come in at 2.2% and rates were like 25 basis points from for maybe have been

eight years -- what would that do? >> we are still in an environment where we are recovering from the fire mess up -- from the prior mess of the economy. the fed has been going slowly and their process has been complicated by the fact that they are not focusing on the dual mandate, they are focusing on's financial stability and global and financial conditions. they are going slow and trying to find a spot where they can sneak in another rate hike and i do not think it will happen next week. the fed scared of its own balance sheet? >> i don't think it is. the balance sheet provides some comfort for the fed. i think they were afraid of a lot of shadows. yearw that earlier this when they thought they would raise rates in june and july and then they would dissuaded from doing so because we got a week unemployment number and the brexit vote. to move awaywant

from zero but i think they will have to act more opportunistically. that means they cannot waste any chance. i think they will try to get something done in december. i think there is a reasonably high probability but as we have seen even recently, you never know what wildcard will happen. there are sticky inflation expectations. looking at this chart, it's the core cpi coming in 2.2%. the fed implied .4%. -- implied 2.4%. this is a problem in japan and how does the fed shift those expectations? >> i don't know that the fed alone can shift those expectations. the numbers you are talking about are an indication that the to see it before

they believe it. we will see an acceleration in inflation over the fourth quarter of this year if only thatse of base effects will have the good side of the inflation measures to attracting less. we have service in flushing running at 2.9%. services running at 2.9%. i think the argument will dissipate in the fourth quarter. jonathan: we've got the probability of a rate hike and we can debate whether that's a good way of doing it. what will the fed say to the market next week? >> i think they will say that

the economy will continue to grow moderately. in the second paragraph, they will say that the downside risks have diminished. they will leave that out of a rate hike later this year but that's going to come down to the which they will lower the 2016 forecast. to carrylen will have the day and set the stage for a possibility of a rate jonathan: hike. thank you very much. if you could write of the statement, you would leave it blank. coming up, that can help mary as they stream its first nfl game in an effort to improve its user base. we debate that next. this is bloomberg. ♪

alix: this is "bloomberg ." we will hear part of the interview with the blackstone chairman steve schwarzman. emma: new york state is investigating why exxon mobil is the only major oil user not to write down the value of its assets since prices collapsed. the attorney general of new york

is investigating the exxon accounting practices. an exxon spokesman says the company follows all rules and alsoations and the ag is investigating its stance on climate change. the airbag manufacturer plans to whittle down their buyers. hopes to shortlist two or aftercandidates negotiating on costs. u.s. safety regulators have made nowfficial, samsung will recall the galaxy note 72 weeks after they halted sales following reports that dozens of the plans caught fire or. the company is recalling about one million of the phones in the u.s. last: it was a big night night for dinner. it streamed its first nfl game

ever live between the new york jets in the buffalo bills. this was part of the company's $10 million deal with the league and its first major foray into the lucrative sports broadcasting world. will this new partnership market turning point for the company? here to tell us how it went is paul sweeney. how did it go? >> i think it went pretty well and twitter is pretty happy in the users were happy. there were technical issues that they will work on in terms of up the feed but the feedback was positive. arguably one of their last opportunities to try to drive user growth, reengage with their consumers and try to make -- regain a sense of momentum at the company. they have several games from the nfl but they also have deals with major league baseball and the nhl.

this is a major step forward. if it works, what will they achieve? >> they are focusing on live sports because that resonate with consumers and viewers online and off-line. they are looking to establish twitter as a place for users to go and see content. they are trying to drive live content on their platform to attract new users and engage them longer so that twitter can go to advertisers and say this is a place you need to spend your advertising dollars. they took the cbs feed which had commercials and i'm assuming twitter did not get a piece of that. >> they simply took the feed. the business model. as they look to sporting events and live video to try to reignite user growth and that the platform. 325 millioned at users were other social media sites like facebook and snapchat

grow considerably. their job is to reignite user growth and once you have them, to make them more engaged on your platform for longer. that's what advertisers are looking for, large audience that is engaged in your platform. those are the consumers that advertisers want to reach. david: when will we know if this was successful? >> it will be over the course of the year. they have many nfl games this season and i think investors will want to see increasing user growth area they want to see a recognition of user growth across the platform. it has stalled over the last two years for twitter and they have been searching for ways to reengage their user base and attract new users and i feel sports is an area they can do it with. david: twitter stock is taken a bit of a beating this year. i think it's down 14% for the second time in two months. do they have any other ideas be

on this? in addition to making more compelling content on their platform, i think they are trying to make it easier for non-twitter users to get on twitter and make them more appealing for a broader user base. many people engage with twitter that are outside the twitter universe. they can see it on television or other feeds and they are experiencing twitter but they are not logged on.therefore, they are not a user base that can be advertised to. twitter wise to make it easier for them to get on the platform. david: there was talk about a possible deal for twitter so is that gone? >> i think investors look at twitter and say the stock has bottomed out and there is no growth momentum at the moment. users and325 million it has a high profile can can

the user base be better monetized by a larger player? i think there is speculation but we have not seen anything to date. david: thank you so much. a deal with it are as well so we are not being left out. alix: coming up, we will look at three charts that will make the job of the boj harder when they need. this is bloomberg. ♪

jonathan: this is "bloomberg ." risk off, equities soft and futures down by half of 1% and down in europe as well. the bankst loser in indexes deutsche bank after receiving a $14 billion claim from the u.s. justice

department. they say they will not pay it. i had a big central bank decisions, this is how we are trading across assets. commodities, oil is softer and on the cable rate, we come in at $1.31. the dollar-yen, the yen is stronger. the boj is front and center before the fed decision and they are evaluating monetary cutcy next week and could rates into negative territory. that could be problematic. morgan stanley says negative rates should be helping boost inflation with higher nominal bond yields and higher inflation expectations. cut rates into negative territory. that could be problematic. it could put pressure on them. this is actual inflation versus inflation expectations.

expectations moved higher ahead of actual inflation in 2013. then it moved to 0% and you found inflation expectations take a dive in and has not been able to stabilize. in 2015,boj cut rates inflation expectations moved decidedly lower. that's the investor perspective. what about the business perspective? what do businesses think, will prices stay the same or fall? this index is the difference between rise and fall in prices. the estimates were for prices to -2013 by the 2012 orange line shows what has happened since negative rates with the line coming down and that means most businesses think rises will fall versus rise. that is the dichotomy between

inflation expectations on the investor side and the business side. then what happens with nominal yield? morgan stanley says you want the pressure on real yield to come down which would help inflation rise to 2% and that has not been happening. this is the idea of inflation expectations, either investor expectations are market pricing. it has seen a rise in yields. as inflation expectations continue to come down, you are seeing a rise in real yield making it difficult for any inflation expectation to come through. rise 106% since the lows in 2014. it's pretty substantial. it raises the question that even if the boj goes more negative to

help steep in the yield curve, will it make any kind of difference with inflation expectations? in the bojotal transforming the japanese economy. jonathan: a lot of this is really technical. we going to say fundamental recalibration of inflation expectations? i'm not sure we will get that answer next week. coming up, one of the top analysts from the street. demand for the new iphone seven hitting stores worldwide today. from new york city, this is bloomberg. ♪

david: deutsche bank plunges

after receiving a $14 billion claim from the u.s. justice department and they will not pay. jonathan: lucky number seven, apple hopes its new iphone 7 will stem the decline in sales. off, stockso risk falling back below zero ahead of the week of central-bank decisions. david: welcome to the second hour of "bloomberg ." westin with jonathan ferro and alix steel, live in new york. the hits keep on coming. jonathan: you wonder what is going to happen and how much leverage a have to get it from the $14 billion claim and how much lower it can get, relative to it you set aside. with other banks with pending issues with the justice department, questions being asked. alix: deutsche bank wiping up from the stocks today and the real question is what does it mean for debt? convertible contingent bond

also sinking, raising questions about the ability to repay debt. david: you wonder what is changing, we knew they had litigation risks, so does this mean it is worse and we thought it was? for: $14 billion, that is sure. we will discuss that and the action and fixed income and a preview of the fed's big meeting and the boj's. rick reader will be discussing all of that and the rise in the yield curve. we take a look at the markets overall and futures right around the load for the session. lows in the session over in europe, as all. jonathan: we will look at the markets with futures and equities down across europe. let's get to it with stocks down in the dax by one point 34%, led by what is happening with deutsche bank and german lenders , not just european lenders, $14 billion is a claim on the table and negotiations begins with you is got the leverage area that is usually the justice department. the fx market at the moment is a stronger dollar story, captured

by what is happening with the weaker pound at 131.76 from what is happening in fx. wti comes in, down by -- down by 1.87% -- 1.78%. on the brands, down. in the bond market, the story is for basis points and back into subzero territory. a story we have gotten used to over the last year. not a good at the moment. toward next week, if the fed decision and the boj decision and has the momentum shifted toward the buyer? we were dropping a document the boj decision rather than the federal reserve. alix: many others we are talking to relic into the boj in the steeping of the yield curve there. let's check in with our bloomberg team with all the top stories. we are in london with the latest on the legal battle with the u.s. government. caroline hyde is there as they gather for a post brexit summit.

and john butler not standing in line at the iphone store is looking at all things iphone 7 worldwide. the lead story of the day, jonathan from bloomberg intelligence, joining us from london on deutsche bank. the number 14 billion dollars. goldman and paid $5 billion, bank of america paid $17 billion. where's deutsche bank going to end up? jonathan: quite difficult to say. as you say, goldman ended up paying $5 billion from the initial gambit of $15 billion, but clearly, this comes from hot from the heels with what happened with apple and a higher tax, and there are some concerns that maybe the u.s. is looking to play hardball as a sort of gambling told. -- gambling tool. alix: if it is hard in the 5 billion but lower than the 14 billion dollars, what is it due to the actual cash and where do they need to go to find that?

are twofold.ues one, in february, they were concerned back then that deutsche bank may have trouble honoring the coupons in the additional bet. maximumsomething called mbas, and the concern is if they report bigger losses than expected, suddenly, you have to ask if you have enough capital? kenya paid the bankers? having with the loss be? how areecomes -- can -- the losses? this 7, 8, 9ort of of the range, that is worst in what people factor in. it would be fair to assume that the power very much rests with the u.s. rather than deutsche bank. alix: jonathan ties, thank you. thank you. if you look at the asset management, will they have to sell that? all the things they did not want to do. jonathan: they say that really

price the cash call. no more cash, no more cash. i wonder how much this changes the story and if they can negotiated down from the 14 billion it stands that. let's go over to caroline hyde in the eu minus the u.k. meat. what is the story? caroline: the helicopters circle as the 27 leaders come into [indiscernible] the story is a ramping up of our direct but probably not much action. we hear from the leader belgians, saying this is a moment of peace from the eu after the u.k. decided to split from it. we have president of france saying this is the question of the eu's existence and angela merkel says it is a question of war and peace. they are taking trips down the dan knew from the castle behind me, but the question is what action will we hear? we will hear perhaps a roadmap

coming from the leader of the european council. expenseso see more built around the eu and how they will react to the immigration question and how they react to the threat of terrorism and how they will try to convince the use of the eu that they are still relevant and there are job opportunities within it. the key issue is making sure that everyone feels it is better inside the eu rather than outside after the u.k. decided to break away, but there is so much division at their very heart. there are two camps, one, more integration and power in the eu or number two, more power to the states. jonathan: how much is everything behind you and when did we get down to the nitty-gritty and discussions on the future of europe and the relationship with the u.k.? caroline: this is all theater until article 50 is triggered. do you said, the brexit debate is not on the form of agenda and they're discussing climate change, potentially the uniform defense policy between european union and amendment states.

it is until they can start negotiate informally, but at the moment, this is a show of unity, certainly what they need to show to the rest of the world. that they are stronger together and that they can overcome the insurmountable issues of the money that concern about the rise of populism when france, the netherlands and germany take elections next year. jonathan: thank you very much. david: fascinating story of it there. we will turn out to the cpi, consumer price index numbers coming out of 8:30 this morning, just 23 minutes. we bring in mike mckee. on the heels of a disappointing retail sales, what are economists expecting out of cbi i today- api today -- c -- cpi today? mike: i will show you either

think inflation will go up. you look at the chart and you can see that for the past year, this is the chart and the difference between the cpi and pce. couple percentage point difference is but they're both tracking about the same. he went to see those go up and we look at the base of the numbers and the numbers for the last are up this period of to this year, you see that prices were going down last year up to this point, and they are falling out of the calculation, so inflation should go up mathematically. that is not happening. we are seeing the forecast for for a 1% increase and that will not raise the lines on the chart i just showed of 1%o the fed -- .4 increase in that will not raise the lines in the charter just show you, so the fed is going to watch medical care incorporated, and the reason is it gets a bigger awakened the p -- bigger weight on the pce.

that could affect how the fed thinks about it going forward. david: thank you. now we turn to apple. they did because they are bringing their iphone 7. we are joined now to talk about what is going on with apple. how big a launches this for apple? john: the iphone 7 is a big lunch because we come off the couple negative quarters, 65% of apple sales, higher percentage of profits, so they are looking to the 7 to restore growth in that core product line. are good butions it will take time to really tell for sure. david: how much time? when will we note they can turn around those two quarters of down sales on the iphone with the iphone 7? john: the important quarter is not the current quarter because you will only get a couple of weeks of iphone sales at the end

of september and then the quarter is over for them. it is all about the holiday period this year. it is a big giftgiving time and smartphones are high on the list for a lot of people and perhaps for iphones. david: how much is u.s. and overseas? john: the u.s. is over 20% of apple's business, but as you look abroad, there are important markets like china, in particular, india has gotten a lot of attention lately, so apple really is a global platform in the u.s. does not matter as much as it used to. david: that is john butler, bloomberg intelligence senior analyst, thanks. let's get an update on the headlines and return to emma chandra with first word news. emma: for years, donald trump has questioned word president obama was born and now his campaign says trump believes the president was born in the u.s. trump himself is not said that

but he will address the matter today. the trump campaign believes that the so-called worth issue has support effort to win from black voters. republicans are having second thoughts about the build to let families of 9/11 victims sue saudi arabia and they want to post on the vote on whether to override president obama's expected veto. the echo the president's [indiscernible] suewing u.s. citizens to another government and they open the same door for the same thing to happen in the u.s. an appeals court has upheld the detention order for wikileaks founder julian assange. they look to question him and relation to in investigation. he has avoided exhibition from their sins 2012. he is concerned if he goes to sweden, he will be turned over to the u.s. are publishing secret diplomatic tables. he went out field to the sweden supreme court. global news 24 hours a day,

powered by journalists in more than 120 countries. this is bloomberg. you.han: thank coming up, deutsche bank says it will not pay before 2 billion dollar claim from the u.s. justice department. we will bring you analysis on the headwinds facing europe's biggest bank. from new york city, with deutsche bank down by about 8%, this is bloomberg. ♪

jonathan: from new york city, this is "bloomberg ." sharesnkfurt rico, aware at deutsche bank write-down by over 8% and heading for the

biggest decline since the aftermath of the brexit boats. they received a $14 billion claim to set up a u.s. mortgage case. the lender says they are not willing to pay. katie next and joins us now, chief investment officer who oversees over it 3200 -- billions of dollars in assets. onwill start with eddy litigation. this is seen as an opening bid, something we had a discussion about, but who has got the leverage on getting that back down? eddy: $14 billion was higher than people expected. our estimate was a settlement of about $4 billion to a billion dollars, so this is higher. deutsche bank said that they -- that it will be much lower. numbers another press reports say that it could be that they want to pay $2 billion to $3 billion, so it gets to about $8 billion, which is the high-end of our range. in terms of leverage, the justice department has the

leverage because the deutsche bank does not want the lingering risk hanging over it. david:'s or any rhyme or reason to the settlement with u.s. banks? had they come up with the numbers? is a blacklot of it box and that is why there is uncertainty to are the final number will be. overall, the justice department is looking at all the various that was sold from 2005 2 2000 seven and looking at the losses that were incurred by investors -- 2005 to two 2007 and looking at the losses that were incurred by investors and what is actual broad. jonathan: we're talking about eight years since the financial crisis was blown up and we are dealing with a hangover from 2007-2008. to some of you in best, is there so that they had went or is that kind of or when will we move on from this? atie: it is like jason from

friday the 13th, it keeps coming back and it is hard to get away from it. we think about what it does for the macro outlook in europe and we were talking previously about how the european banking system was facing an income statement issue another balance state issue with low and negative rates, but now it is a balance sheet, and it is not just deutsche bank. we have rbs and credit squeeze dealing with the same thing and it keeps going. david: we knew about these issues. these are not new issues, but does this reported offer really game? the does it tell us there is more out there, not just for deutsche bank, but for others? i think it is the magnitude. proposedtude of this settlement is just much, much more than the market expected. frankly, double what deutsche bank set-aside for legal issues, so i think it is the magnitude that has shocked the market and why you see this impact bobby financials in europe. jonathan: i want to have the

tablet discussion now. there is a narrative in europe at the u.s. justice department goes off on european banks a lot harder than u.s. banks. backs.ck elliott: i have heard that from .uropean clients the fact of the matter is that the justice department went after u.s. banks first and that was driven by public sentiments that the banks did not pay enough after the prices, so i'm not sure there is too much to that story. the u.s. banks are prioritized by the government. paid: and bank of america $17 billion almost, which is higher. is it possible that if you were negotiating for deutsche bank, you would rather have donald trump justice department settle this rather than a hillary clinton justice department? elliott: many people said that, but i think the counter to that is that deutsche bank does not want this risk extending over the course of many months or years, and who knows, maybe if trump would take a harder stance

and european banks? he does spend himself as a asulous -- brand himself jonathan: a populist, so it is uncertainty. if you were a shareholder of deutsche bank, would you want to wait for the next justice department? a risk. think it is i think the risk of prolonging this uncertainty could be so damaging to deutsche bank's reputation, stock price, ability to raise necessary capital, you may not want to kick the can down the road so far. jonathan: katie nexen, thank you. she is staying with us and elliott, thank you. alix: coming up, speculation of the japanese central bank that it will undergo a shift in monetary policies and change in the globe. find out what it means for fixed-income assets in your investments, next. this is bloomberg. ♪

alix: this is "bloomberg ." it is the chart of september. take a look at the terminal and you are looking at the 530 yield spread, huge backup since the beginning of september now sitting at 126 basis points. is it technical and fundamental? nixon still at this, and what is your answer? katie: why would the yield curve steep and? either the growth outlook has improved or you think inflation will spike up. we do not think either is the case, so i think this is much were technical in nature and driven by what happened with the japanese yield curve several weeks ago, and the rumors that the bank of japan was considering pushing down the short end and doing an opposite operation twist with the longer and that there bond buying, so it is more function of that kind of reaction than it is a

reflection of any fundamental change in either growth are in flushing -- inflation expectation. alix: dewey by the debt or do you just ride out the stupid name? steep -- do you buy the debt or ride out the steepening? curve willhink the flatten out and reflecting the benign outlook, and we have been stuck in this trend for some time and there seems to be list to get us out. at the risk of getting in front numbers coming out, we do not think efficient will be an issue at all. we will get six numbers and there is only one of those that is about 2% at this point. cpi, and all the other measures are trending well below 2%. technical, have we given up on the yield curve as an indicator of possible recession? if we arether way,

not growing fast, we typically steepen the yield curve and do not worry as much. katie: i think the yield curve has lost some to be a stock signaling because it is so heavily manipulated by central banks. you ask about the recession and that is not the base case. we think it will want along in the benign way, but very low inflation and that is the foundation for an economy that probably will not go into a recession anytime soon. alix: i understand that idea that we will see the curve again, but if you look at the terminal, i asked the terminal to calculate how many times he fiscal stimulus in bloomberg articles and it is a basic way of saying recently, we have seen the expectation or hope of the school stimulus to the likes that we have not seen since 2008. does that precipitate a huge bond selloff that changes the market? often times attack

about central bankers where words speak louder than actions, but we will need to see action and not just words and we think that will be a long time coming. we talked about the political climate, perhaps, they're being rhetoric around fiscal stimulus but really not the desire to actually get too much done, so we think the fiscal era will be stuck in the -- era will be stuck in the quiver for some time. look at the debt to gdp ratio for some of the countries. it will be really hard to put anything massive in place. alix: are you buying the long end in u.s. treasuries? kaite: absolutely -- katie: absolutely. we have thought that the yield curve is going to be very flat and the fed would stay on hold for the perceivable future and that probably makes this a buying opportunity. david: are we seeing the same steepening of the yield curve outside of sovereign debt? we have things that are

sort of bond proxies that have sold off and a little selloff in the high-yield market but not as much as. it has been a sovereign issue. alix: interesting development into spreads. thank you so much. pening atg but stee all. we'll get a better read on inflations and breaking it, but we will show you some of bloomberg's exclusive interview with blackstone's ceo, coming up. this is bloomberg. ♪

jonathan: from new york city, this is bloomberg. a check on the markets. points in the2 dow jones up by five on the s&p

500. he talked about the banking store in europe throughout the day. banking stocks in europe down. yield down three basis points in the 10 year and we trade at 1.66%. a real risk obsession captioned by what is happening on the dollar-yen. .own by what .3 of 1% alix: backing out energy and coming in slightly higher than estimated at 1.3%. estimates were for 2.2%, so a increase -- .1n of an increase. general cpi number month on month increased by 2.21%. taking a look at labor markets for the fed, relatively stable and immigration at the core slowly creeping up. .1 of 1% away from that estimated target. you have to wonder how did they square that at the meeting next week? jonathan: lyft we have the bond -- we have the bond market and here is at the front end of the two yield, two basis points to

0.75 percent. we give a little bit of that up off the back of this inflation data. research at the board to get to the action in the fx market. 10 year yield giving out some of the lower movement we have had and yields go a little bit higher off the back of this come up .3 31%, a stronger dollar index. does it changes the calculus of the flimsy next week? i would say most would say no, but let's bring in david, global market strategist. the bond market is adjusting a little bit off the back of it and what do you make of it? i would not put the cart before the horse and the fed will stand pat next week, but we are beginning to see that there is in fact more inflation in the pipeline been a lot of people appreciate. we are of the view of the labor market with the unemployment rate below 5%, we should begin to see a little bit more wage pressure and that should

manifest itself in inflation. the most recent numbers were lackluster, but the trend has been more positive than i would expect over the next two quarters to pass through into higher inflation. alix: let's say the trend -- jonathan: let's say the trend continues, but the fomc does not get moved. does that run anything on the fed? david: it sounds like they're comfortable running the economy a little hot. there have been former post saying that when he and the economy hot can boost productivity, which has been the issue when it comes to overall growth. in remainder of the year, you see the strange dynamic play out and this feedback that it has found itself in. the dollar strengthens, interest-rate rise and the stronger dollar and higher rates time financial conditions and that makes it more difficult for the fed to do what they want to do, which is normalize monetary policy. hikeis said that once the rates and nervous about hiking rates anytime the market is a tantrum, they kind of stuff off

to the side. alix: this point is to the next segment, my chart of the year, maybe. you are looking at those poor cpi numbers, ok, inflation may be creeping higher, but they are embedded with expectations that the fed and beer to try to contend with inflation: expectations are more important than the underlying inflation itself, selected inflation citations tell us? when we look at inflation expectations, particularly over the past few years, they are a better flexion of the current state of inflation and has to do with prices or oil prices are. they are extrapolating that forward. to me, inflation is too much money chasing too few goods and you get that either through bank lending or wage growth. think we will see a little bit thinke growth, so i

inflation expectations may be sending the wrong signal, and you will, given the current levels. jonathan: another thing is the next recession potentially down the road. larry summersith yesterday. take a listen to what he had to say. larry: if another recession comes, the federal have very little room to address it. they will lot have anything like the 500 basis points they have had historically. that means they have to lean over backwards to make sure that another recession does not come. former u.s. treasury secretary larry summers. there is this argument and a lot think it is ridiculous that you need to hike a note to cut later down the road. his point is to get hiking now, you have to do everything you cannot to make it happen because you want to address it. is that embedded on the fed? david l.: the fed is of the view if you are flying the airplane that 10,000 feet rather than 30,000 feet, it makes it easier to crash and the reason they are

cautious if they understand with growth so low and productivity lackluster, a 25 basis point increase can have a larger effect then it saying we are broke growing up 3% to 4%. i think a 25 basis point is fine for the economy and if the hike in december, it will not derail things. i agree that the cautious approach is required because the economy does look weaker than it has. david: that is one way to look at it. y at sign ate 10,000 feet. is there another alternative that they're not so sure of their models now? it did not happen and is and that more troubling it there not sure their models? david l.: i would say that it's more of a global issue. we are running into this limited monetary policy conversation and how much asset purchases can do and how much does leaving rates of zero boost the economy? what we have seen this quantitative easing is great for boosting asset prices, boosting

confidence, but it does not do anything for the real economy, and that is why we have seen the drumbeat for more fiscal spending for things that actually may boost growth and get louder over the past few weeks. lebovitz thank you. , alix: coming up, the fed is at the forefront as of it closer to the next meeting. blackstone's group stephen schwarzman joins bloomberg go what he thinks the fed's next move is. they will think increase interest rates. this has been a topic up almost numbing boredom to me. [laughter] for years. going on for years. one small increase in three years? more -- it occupies more headspace than almost anything i have heard about. betty: do turn out to think about it then?

stephen: i know the u.s. economy is not particularly strong, and central banks, who are aware that there is their fiscal cooperation in the united states for years, so they are the only quarter call. they're the only people look and do anything. they know if they miss play their hand and accidentally throw the u.s. into recession. this is a disastrous type of outcome for them. i always knew. all you have to do is know the people. they are not politically on us do, so they know it is on them. they have the desire to be aggressive and potentially have is verytcome and it low, one reason why all these people kept saying, the fed is increasing interest rates and they were wrong, so we will have a new president one way or another and the new congress,

and it may be some room to do some things this goalie to stimulate the economy, and if there are, then the federal -- the federal have more comfort it can raise rates. anyway it goes, i think, the probability the fed does , 25 basisggressive points, 50 basis points, is going to affect markets, but it is not going to affect the u.s. withmy, so i look at it some sense of perspective from these things and realize that markets are volatile and a lot of people make markets and if they all react to the same thing at the same moment, you will have one reaction, but you should not have much in the way of long-term damage. david: that was blackstone group's ceo stephen schwarzman speaking yesterday to bloomberg. one of the things that perplexes me is we hear someone like

stephen schwarzman say 25 basis points does not make that much difference to the economy, but in england, we have mark carney, who cut 25 basis points and you believe -- and a lot think it kept him away from recession. jonathan: i'm not sure how many people think that but if it is more about the confidence channel in trying to stimulate that way. i think the accession session of the federal reserve for the next move is not just stocked by the markets but by the federal reserve. i addressed them in a carney in an inflation report a couple years ago and said, what is the biggest session of the bank of england of moving 25 basis points? he said, first of all, we are not obsessed. you are. [laughter] that has always been the attitude of the central bank. it is not the media and the markets, it is the federal reserve and every single global central bank that has made transparency and forward guidance of communication the utmost important thing of what they do. that is what has created the up

session. alix: and it session with data movement and you can see it without they jump into year yield across the yield curve, but that selloff in the front-end. it makes inflation data all the more interesting. you have a little rise in inflation and it is a tiny bit broad based. medical and insurance up here on deer. one thing we have not seen our core goods moving higher, so that as broad as the fed would like to see but the markets reacting. david: how broadly it is based is the critical factor not just a number. it is not just the overall headline but it is also that it is .3% compared to the .2% expected and it was dragged back down by energy at negative. alix: as long as you have medical cost moving higher, you wonder if inflation will pick up in a big way. coming up from sydney to new york, the iphone hype surrounding apple stores worldwide. will the phone meet customer

expectations and will david westin be able to buy one? we will debate that, next. this is bloomberg. ♪

go.than: this is bloomberg in the human packet enterprise -- in the human packet enterprise going up -- hewlett-packard enterprise going on. emma: i am emma chandra. deutsche bank is not backing down in the u.s. investigation over the sale of mortgage backed security. the german lender said they would not pay the $14 billion that prosecutors want to settle the claims.

aresche bank negotiations just beginning and expected to lead to what they call a materially low amount. shares of deutsche bank are lower in frankfurt. the world's biggest banks want the u.s. to help protect london's financial hub after brexit. they have asked him to lobby european union policymakers and the goal is to allow london to maintain access to the block. that is according to barclays chairman. the report that [indiscernible] is in talks to buy honest company, the consumer product retailer cofounded by jessica alba. they are discussing a deal in the billion-dollar range. that is substantially less than the $1.7 billion valuation put on honest around last year. that is your bloomberg business flash. this is bloomberg. david: thanks so much. big day for apple worldwide. its iphone 7 hits stores around the globe and crowds align lining up, not to buy the phone

as much as to pick up the phone that the pre-ordered. apple says it is oversubscribed. a byealyze apple and has week none the company with a 100 30 three dollar price tag. he just got back from the apple store in new york to check on the preorders. this is my question, where we all wrong? a lot of people said ho-hum about the phone but it is bigger than we thought. walter: there were a lot of people wrong and the expectation was that the decline in iphone sales with continuing to the september and december quarter. apple said they were not release any information about preorders. it was a big surprise and operators said the preorders were in fact up, so i think there is a surprise. as far as lines -- david: you are at the apple store new york. lines are short, but their analysts who go out the count and there's not correlation. it was a massive success for apple.

iphone 6 line was very long. remember, china and many launches did not get it as fast or as soon, so there were a lot of people in line, taking their phones and they were on fifth avenue and shipping -- david: probably not a big line right now and fifth avenue. walter: it went around the block before and it didn't now, but it is interesting to watch and see if there is any correlation to sales. earlier,is was taped do not want to mislead viewers. walter: i can tell you there was not a long line. david: this turnaround has been to quarter straight of downed iphone sales for apple. walter: getting that info was nice, but getting more feedback from some of the other global operators about how sales are going for them, up or down, china will be a huge market determining whether the company can return to growth. other people get inputs out of

the suppliers to see whether they are getting more orders or less orders, so as the week progresses, we will a better sense. based on the u.s. operators say, which 25% or so of launch quarter, that is a positive data points and gives us confidence they can return to some small level of growth in the december quarter. david: you have a buy rating on $133. i'm told apple is on track for the biggest weekly gain in five years since 2011. is that what you expect? walter: there was a lot of concern on whether they could return to growth, so this is a positive data point that there is hope. we have been talking about valuation for a long time, but stocks will stay at the violation of investors think they are in declining growth and there is risk of margin contraction, so you are buying time. if you can show some small growth, remember, apple spends a lot of money and r&d. the percentage of revenue the

last couple of years, a lot of money. people speculated about cars, living room send god knows what else, but if we can get some growth, every rating in the market right now, and you get a free look at some of the new products they might be able to develop. david: take us and how the market develops. maybe it is not enough that they do well but their opposition does not do so well? samsung is having a tough time 7 and theote recall. walter: it is not hurt. it takes off some of the comments on this fund given what is happening to samsung right now. i'm not so sure that it will shift the major market share over to apple. people have chosen their systems already. there were apple market share gains, but apple is a product that focuses on the high-end of the market. the vast majority of the world is buying a hundred products because they cannot

afford apple, even on a used basis. david: take us into 2017. there is supposed to be of big product launch in 2017 and that is the year to look for, the 10th anniversary. walter: i am not sure they told us to lisboa to that. is it enough to come out with a much improved iphone or do they need to go beyond the iphone and get another arrow in the quiver? to countou never want them out, but the iphone 6 two years ago was a unique situation. fore was a lot of demand larger sized products, but apple is stuck with the smaller screen and there was a massive push through, which resulted in 30% growth. this is a massive company growing to 2 million phones on a regular quarter, 59 million -- , so to expect a product to launch them back to the growth, i do not think that is in the realm of possibility at this point. never say never, but a lot of people have phones but it is a

matter of how quickly they update them. david: that would suggest there is another product is the iphone came after the ipad and what could that be? the wearable? you are talking but growth in general for apple. some of the frustration is you generate a lot of this cash flow and using it for sharing purchase, which helps with earnings growth as opposed to making acquisitions to other areas. you are investing in r&d and that is going up. the watch generated billions of revenue and it does help for the growth rate, but there is the expectation, if not hope, that some of the product and deliver growth. nothing will be as big as the phone. however, you do not need something as big as the phone to provide that extra couple hundred basis points, several percentage points of growth that apple has perceived as at least it is not declining. if you can get to mid to single digit growth, 10 percent growth, that has different implications for the value of the stock and that is the ultimate goal as far

as some of these r&d projects. .avid: that is walter piecyk thanks so much. alix: coming up, the jumping yuan rates. i will show you in battle of the charts, next. this is bloomberg. ♪

david: this is "bloomberg ." time now for battle of the charts. alix steel is up against lisa abramowicz. you said is one of our favorites, so bring your a-game. lisa: i want to talk about a is really important

and cannot be understated right now. after a decade of central bank, foreign central banks buying u.s. treasuries, we have seen a steady reversal of that trend, but it really with china and japan selling u.s. treasuries. for longerortant dated u.s. bonds. you can see here that the total holdings of foreign central banks and the new york fed had declined to the lowest since 2012. this is not completely reversing anything but it is a new dynamic underpinning the $13.4 trillion u.s. bond -- u.s. treasury market, their most arguably important market in the world. david: good chart. alix: that is sort of the game over the last decade, but i have something over in asia that could have implications in the u.s. the white line is how much it in hong kong and the purple line is s&p 500 and the blue line is shanghai composite. this has a significant

implications. we see high board jumping to a seven-month high within a percent move over the last two days. the typical movies one to 2%. pbocof that is part of the wants to make it more expensive and perhaps you have funding cost rising into the end of the corridor. nonetheless, a rise have big applications for stocks across the board. back in august and shanghai sinking lower and another increase back in january and then you have stocks selling off. you did see that shanghai composite wally number a little we in for the same kind of correlated asset relationship when it comes to chinese stocks, u.s. stocks and high board? lisa: i learned something. david: is the pboc selling long-term u.s. treasuries to buy the yuan?

jonathan: my vote is going to go at alix steel, certainly it is not february, but let's think about the big stories in the fx market. say they could come into the basket and china, that does not look like a freely flow of exchange. does anyone think it is anytime soon? you look at the use of the yuan, , down -- yuan, down, down, down. quite clearly, there is manipulation. i will say does not february because you don't have the market shakeout on the back globally. david: i vote for lisa because steepening of- that, and lisa wins. jonathan: all right, rick ri eder as you can you down. futures negative. ♪

jonathan: from new york city, this is bloomberg. we are 30 minutes late from the open. alongside alix steel and david blessed them. risk off in the session. alix: take a look at stocks. deutsche bank leading the dax and reverberations in europe. all moving averages and you have the financial still down 2% around the lows of the session. jonathan: did his risk off and we have seen the downside in the data. production, u.s. retail sales and an upside surprise and u.s. inflation and not when you see in the fx market with a stronger dollar captured by the bloomberg dollar index and at the front end of the curve, things shaken up with the two year yield up about two basis points. alix: stronger dollar weighing on commodities, brent off by 2% and the oversupply issue with libya and the stronger dollar not helping commodities. the one thing it has is the opec and when do we

finally get that meeting? alix: the 27. we have to wait over the next two weeks with more volatility ahead. if you take a look at the futures market, relatively flat but the s&p 500 teachers looking to open lower on the session and you have to watch that level, 21-20 two, the 100 day moving average for the cash open, so watch that as you head into the open. nonetheless, futures have been positive into the cpi data, but there was a reversal, so good news is not bad news. i way back to that rhetoric? s&p 500 has had a lot of the swings, 1% swings. we had not seen them for 43 days . individual market movers, exxon off by 1%. according to the wall street journal, new york attorney general coming in to look at the due diligence over exxon, saying why has there been no asset write-downs as oil prices fell? you have shell, bp, all saying they booked about [indiscernible]

and that has not been the case with exxon. citigroup getting hit with the downgrade over at goldman sachs, on equity forurn goldman is well below management twitter up 10%, and getting a boost. if you are david reston, you are streaming the nfl on your twitter feed yesterday and that was big news. about nine more games to come in that helps twitter. get a new card up on other areas, you have abigail doolittle joining us from the nasdaq. also over to mark barton in london. abigail, you will connect gopro. abigail: happy friday and gopro shares higher in the premarket under a new initiation of coverage at merrill lynch with a buy rating and street price target of 19 dollars per share. this is ahead of their fourth quarter upgrade product cycle. merrill lynch sees come back for gopro. also higher, shares of the health care company higher on the reuters report that the

active investors of star board have export sales and talks are expected soon. plunging in the premarket, down more than 85% in the premarket on the news that the company's respiratory disease vaccine failed to meet the primary endpoint of the critical phase three study. i am betting that investors who were long, those shares of novavax are equally surprised. alix: let's go over to europe with mark barton in london. deutsche bank all day. goldman sachs also downgraded euro stocks today. mark: it is all about deutsche bank today. worst-performing industry group, down by 1.7% in the index, the stoxx 600 down for a fourth day and the lowest since august, down for the second consecutive week, longest losing stretch. this is deutsche, 8.1% lower now. to 1.5 billion

euros and received a $14 billion claim from the doj to settle this investigation into sales of residential mortgage securities. georgia says it is a figure they will not pay. have a look at the stoxx 600 ranking industry, the worst-performing industry group in europe this year. this is the one year tarp, here today, look at the decline of 60 three percent. first performers principally the italian lenders, but deutsche today, this year, getting absolutely hammered. 46% lower this year. the world for europe's banking industry continues. for europe's banking industry continues. jonathan: the question is for $2 billion is the opening bid for the justice department and they have $6 billion set aside for it can they get it down to where capital? to not raise you have credit risk on one and the cash call on the other. this is right down the capital

structure on deutsche bank. this is how we are trading on the day, down by five cents on a little bit also attention if you are not testing the lows of february. the question analysts will explore in the months to come until he finally get a settlement with deutsche bank and the department of justice. until then, the risk of capital raising on the table. david: john cryan had to come out and say, they can pay their bills and it was pretty bad back then. rick rieder is joining us now. the markets are reacting to the deutsche we have seen and they and hit debt and equity they're hitting other european banks. we all knew that deutsche and others had litigation problems. is it worse to me that? the: the headline number is are the people anticipated. i think all of these headlines initially are higher and then they get negotiated down. the markets view is that this

will get negotiated some way under half of that number. that being said, you still do not know the answer to that and it is a big headline. news from intel, the company raising expectations for third-quarter revenue. 15.6 billion dollars, give or take about 300 million dollars and the previous estimate was for $14.9 billion. why? who would have thought better pc demand? one in thet 4% of premarket and expectations are on higher pc demands. david: just when people have written not pcs. terrific. the, let's get back to deutsche bank and broader question of what this says about the strength of banks in europe and around the world. other banks are really challenged as well. what does that do to the economy? rick: it is tricky. you think about that dynamic around to raise capital, but

when your stock trades, not deutsche's, but when it trades at a fraction of the value, you make one or two decisions as a financial institution, either equity,r assets, or so so what happens is the financial institution shrinks and does not make economic sense to raise capital to dilute shareholders. -- both see both your here, but it is a difficult conundrum of dropping interest rates and amended grows. we have a banking system where a, you need to raise capital hashas a hard tim -- b, a hard time doing it and that means you cannot build capital organically so you do not get the lending mechanism that play that you had historically. a big deal and this is why i think, particularly when you go to negative plates, they did not create any greater dynamic around philosophy. i think the last because the other way, what you see play out today and you see it in the bigger story. david: cap puts it at the feet of the central banks and the fed

back here. you have the interest rate issue and you also have increased regulation as each bank has a more lucrative line that is riskier. how much is that affecting the banks underlying ability to function? rick: 100%. i think there is some regulation that makes a tremendous amount of sense, but i think there is this cloud over the industry in terms of whether it is the ,ortgage industry in the u.s. internationally, or riskier assets and how you hold them on balance sheets. about half are impacting their ability to grow their business lines and at the interest margin and how do you land in what types of lending to do. it makes it difficult for velocity to pick up and that is why we see a different economic and game. fixed incomeal in and ironically so that regulation to central banks makes you more likely the banks can pay their bills. does that make the credit march active in financial institutions? more: -- make the credit

attractive in financial institutions? rick: it does. ultimately, where the raise capital or you so assets, you are running a lower leverage paradigm, so the credit quality to improve but they just take time. like i said, we would like to see the long side but the ability to build interest margin to grow capital organically and that would put it in a lot better place, but we do think credit quality is improving. david: you mentioned if the bank like deutsche bank did have to raise capital, because there is speculation, given the site of the reserves, if they did have to raise capital, does that make their debt more attractive because there's more insulation? 100%. it is you are raising capital or you are reducing leverage and from a credit point of view, debt investor point of view,

they have grown in big u.s. in their willingness to hold the debt. i think in terms of funding, there is a positive business model going forward and really creating a stable net interest thein see business on capital those organically and that is weak at the best of both worlds and that is where spreads tighten but that will take a long time. david: rick will stay with us for the entire hour. update on use outside the business world, go to emma chandra. for years, donald trump has questioned where president obama was born in now his campaign says trump believes the president was born in the u.s. trump himself is not said so but will address the issue today. the trump campaign believes the so-called birthing issue has hurt his effort to win support from black voters. two republicans having second thoughts about the bill to let families of 9/11 victims sue saudi arabia. they want to postpone the vote on whether to override president obama's expected veto.

they echo the president's complaints that allowing u.s. citizens to sue another government may open the door for the same thing to happen to the u.s. government. an appeals court in sweden has upheld the order for wikileaks founder julian assange. he is wanted for questioning by prosecutors and a rape investigation and has avoided extradition by staying in london since 2012. he is concerned that if he goes to sweden, he will be turned over to the u.s. for publishing diplomatic secretive tables. he without field to the sweden supreme court. global news powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. alix: thank you. intel shares are up by 4% on that breaking news that it is raising its third-quarter revenue guidance, replenishing their pc supply chain inventory. gross margins will be 62% and r&d will also rise, so better pc

market from intel and that stock on the rise premarket. coming up, black racks insulation bets. ieder one with rick r my he is shunning those. and the obama administration giving israel the largest a deal the u.s. has ever given to any country. we will speak with israel top finance minister officials later in the show. this is bloomberg. ♪

."vid: this is "bloomberg the big news in the bond markets over the last few days has been the steepening yield curve

around the world and setter with the japanese government bond and it's both over into the global market. we have a chart showing the spread between the yield on the u.s. treasuries to year and 30 year bond. although it has been coming down for much of the year, you can see a sharp rise in september. rick rieder is still with us and he understands how the sovereign bond markets were, so what is the cause of the yield curve? rick: one is obviously japan and steepening started in japan and one of the big things when you go to negative rates and the japanese have a hard time in terms of whether it is banks, insurance companies, lying to mend us amounts of the back end of the u.s., it has become expensive and that was the first . the japanese yield curve steepening out was incredibly important and that precipitated curve.epening of that we have talked about the cpi number recently in in in to view a couple of weeks ago with you all. we think it will let inflation run hotter and you have seen

pretty decent numbers on inflation today and we think we will continue to stephen on the curve. the curve is flat and we have known that for a long time. andou get has flattened there's not a lot of pilot 30 year treasuries and 244 and they were at 223 and there is not a lot of value, so we come in on the curve that will be stable. let's talk about signal versus noise. if i said this is the trend over the last year and you did not see that pick up on the far right, the answer i would get is there is no signal anymore. why on the way back out into a there not some signal in the treasury curve? rick: first, your point is you should not overstate what is happening. we have flattened tremendously, but there is something that is worth thinking about. one, what do we think is happening to inflation? i do think that the fed laid out that jackson hole and the williams peace and that was incredibly important. i think it will let inflation run hotter and that has

ramifications for investing assets across the board. letting it run harder, can you print 2.5 core cpi into higher year? next that is a big deal and it hasn't locations for global rate markets and equities and commodities and other assets, so think that is a pretty big deal. the other side is i think there is so much focus on the front end of the yield curve. whether they go 25 basis points are not on overnight funding, investing, to funding, it uses the back end of the yield curve. because of the duration of effect, the price movements when you talk about using the back end, these are historic yield levels and it means interest rate sensitivity is so they're on the back of the curve that it leaves a mark in terms of the market, see have to be focused on the back end. i think the markets -- i would say people focus way too much on the front end and where it does not really matter. the optics are important but it

is the back end that alix: is hugely important. overit is backing up all the world, so a steep in yield curve over in japan, do we see that foreign money come out of the treasury market and go back into the domestic market and sort of remove a huge portion of the sellers or buyers that we have seen over the past be months that help support the bond market? thing is, the first the bank of japan next week will be very interesting i think are quite comfortable and letting the yield curve steepening out. you will stay in the conversation earlier, you approve the liabilities to mend by domestic assets and do it and not have to hedge the currency, etc. very important. second point i also think is quite significant is the focus on what other types of assets can you five to hit the return target? this is why things like high yields, emerging markets, that 10 year treasury is not going to do it form and it becomes tougher, but i need to get my

yield and hit my liability stream, so i will go down the credit spectrum to decorate more yield on the backside. if i could do what i need to do by buying 10 year treasury, i will do that and i cannot today. jonathan: i want to talk about what is happening within the market and you take us inside the market because we talk about the back end belichick about the noise versus signal out of the curve, but talk to me about whether it has improved in japan and you mentioned to ration risk and you talked about what happens when yields are already at low levels. you can take a 10 basis point pattani basis point move and that is huge in terms of price, but it does not take much to pull it off at the long been to japan, so what is happening inside the market? every day trading, getting in and getting out in terms of price movement? rick: liquidity is tougher and asset prices like long dated jgb's, particularly when the bank of japan is taken that's a many of them, and the price action and it is hard to

determine you are going to be. either way, there is no volume in owning the back end of the curve, so liquidity is not great and you get some pretty, like you saw in japan in the last few weeks, some pretty dramatic moves, which are written -- where liquidity is not that great. it is part of our actually white it is surprisingly, we talk about credit markets nec better liquidity when you go into parts and it isb interesting, particularly when you take the volatility because of the interest rate component, so it is a very different dynamic. jonathan: that is what i want to explore because we talk about it back up in yields and all of a sudden, everyone wants to make the inflection point, but we solve this in april 2016. they rolled over again. if this is the back end of liquidity against some of the risks coming up in the next months, is that is why we see credit hold up in a big way? rick: the technicals and the demand for yield is tremendous, and defaults are still going to

stay low, so demand for credit will continue. obviously come with the bank of england and in terms of credit dynamic over there and with with the ecb has been is pretty important. i think the demand for credit, aboutgo and we talk a lot that supply fixed income, credit is the only thing that is issuing today. in the securitized market, there is issuance but not that much. if you need to investigate yields and put money to work, that is what the justice department is as the only game in town and without a lot of event risk, not zero, but not without a tremendous amount of event risk today. you talk about the fed wanting to run the economy hot on inflation, are they succeeding? we just got cpi numbers that less than one hour ago and they are pretty modest, so i be able to run the economy hot? rick: i think it inflation runs hotter, it is because they are running inflation, and i think the fed is quite comfortable

with the ability to bring down inflation if it accelerates and you have a series of interest on excess reserves to dull inflation when it happens, so i think they're willing to let it run hot. there is the question about what is, and i have talked about a bunch on the show, what is the real influence of interest rates and the front-end of the yield curve and if the fed does 25 are not? i do not think it is that to medic on the economy. i think they can let the fund rates move up and i think they will go in december, but i think that quite frankly, this transitioning postelection stethoscope. if you talk about what will let the economy or promote the economy's growth, it is fiscal initiatives as opposed to monetary policies. alix: we'll get to corporate later in the hour, but looking at the pimco strategy, buying inflation to protect lawns. seems a more coming on the trade. rick: i think there a few things to talk about and we do think inflation is on the low side and

i think there is a technical dynamic. the tips market has a lot of issuance and oh dan at buying. i do think it is too cheap and i think inflation is price significantly to cheap in the markets, but i do think it is part of the augments of how you a balanced portfolio and tips that will break even on the inflation part of it. 10 year breakeven zarif 147, one 48 and inflation is running at core cpi around 230 and we do think that will accelerate. david: that is black rocks -- blackrocks's-- rick rieder. this is bloomberg. ♪

jonathan: this is bloomberg. i am jonathan ferro and we are four minutes and 15 seconds away from the cache open in new york. futures down by about point -- one third of 1% and getting hammered by over one full percentage point. a couple of movers we will be watching and we will be looking at intel, raising the profit forecast for the year ahead and pc demand picking up. up by 3.72 percent, but the big mover for global markets inequities is deutsche bank getting absolutely hammered, down by 8.2% on the session. the cash open in new york is next and we counted down to the market open. ♪

jonathan: let's get you up to speed on the market. futures down about a quarter of 1%.

the ftse down by 2%. the big mover, deutsche bank. switch on the board very quickly. off the longest rally. at 6.8%.ain down by one full percentage point. trading in with a one-on-one handle. trade at 4287. let's strip some of this back and get back to alix steel. alix: we see all the indices open again. the nasdaq lower by 2/10 of 1%. the number that has been hammering all week, a one day moving average. we have seen four days of 1% in the last five days. did have goldman sachs here,

oppenheimer coming out and down grading s&p today over the short term. hello inflation, you have the dollar a little stronger. that dragging the market lower. individual names, we have three big ones. deutsche bank down 9%, not just the stock. all of that hitting quite hard. deutsche bank will have to put the money to the $40 million potential settlement and not kate -- and not take coupons on it debt. deutsche bank continuing to trend lower. the company raising its third-quarter revenue guidance. now expecting over $15 billion in revenue. the previous estimate was under 15 billion.

check out apple. it could see its first down day of the week. apple adds a lot of points to the dow, 85 points to the dow. what a real story on the market has to come from is that back up on the yield curve. whether you are in japan are here in the u.s., this chart shows why it can be so comesctive area do this to us from morgan stanley, looking at the global correlation of indices. idea -- they own stocks, they own funds. they are going to have to go in and sell other assets as well. have high bond valuations, high bond equity valuations.

that leaves the adjustment in equity markets as well. this to me is key when we get the central bank meetings. one we went into the brexit vote and came up the other side, we come out of this one where things selloff altogether. this is where things have gotten more complex. >> you have to wonder, will it eventually throw off that hedge? >> the boj announcing -- and joining us in new york city, abraham, city research director of global economics.

i want to start with a question on the boj. end of 14, beginning of this year come up with sting stimulus and taking negative rates. in both occasions it was a split monetary policy committee. and they find agreement next -- can they find agreement next week? guest: the boj's facing some tricky decisions, and what they outlined will be hard to bring the majority, let alone a broader consensus. there has been a story from the bank of japan. they have been floating negative freights, adjusting maturity. can they work out what to do next? guest: when you take a look at what his act -- look at who is actually speaking at the bank of japan, you create a very mixed dynamic.

tricky onean is a and promptly why you don't see a tremendous amount. because you do have a split coming in today. fed thing with a communication. when you count of who's ready for a rate rise, it looks like you are ready to go. when you think about with voting , that is why a district he with the bank of japan and the fed. >> how high is the hurdle for easing and how high is the hurdle for a height that for a fama theyhe fed? don't really have many tools left. native interest rates didn't work so well for them earlier in the year. i think they are under a lot of pressure to open up new ways of easing. marginal going to be a

-- in this case they may talk about the possibility of a rate move but don't exercise it. we talk about this massive rotation, i want to talk about moving away from a buy. we have hardly seen any evidence of that whatsoever, so my question is as follows, is the narrative from away with itself -- guest:yes peng ice i think markets move on a different policy than timelines do. we have to go through all the hoops. markets having too much anticipation of a paradigm shift. time we are seeing gradually looser fiscal policy.

there may actually be an acceleration. is -- when have this you have this expansion it is going to cut into that benefit and fiscal multiplier. the government winds of extending those maturities. can prime minister dashcam prime minister abe help -- can prime minister abe help? to create ay have dynamic where the fiscal is funded to the bank of japan. usare you helicopter ring today? >> i think functionally they are creating a dynamic. it is the only way you create real growth in japan.

>> are we going to see that fiscal multiplier take place over at the boj? guest: yes, it eventually. but coming back to the timing they haven'tnk fully bought into the idea of fiscal monetary policy should -- policy monetization. >> we just spend five minutes. >> you can correct me if i'm it began, it was agreed that abe spoke to corrode and corrode a was going to expand monetary policy and they would be able to run the deficit off of that.

they are buying north of 80% of the issue. our going to present -- are we going to pretend that is not happening before already? >> even when we talk about helicopter money there has been a gradual move toward bigger monetary support for allowing at least fiscal deficits to remain very large. we are talking about gradual changes, but nevertheless those gradual changes over time can be quite significant. up allowing for a bigger fiscal stimulus. >> wednesday, september 21. what is the most important decision from japan or d.c.? >> in my view it is the bank of japan.

>> i don't think that either is going to do anything dramatic and they are going to wait a bit longer. >> thank you for being with us. cio, we will ask top finance start -- top finance minister officials what they're doing to invest in their country. this is bloomberg.

pandora'sgren, ceo and cofounder, will be speaking with emily chang on bloomberg west. : the united states is committed to providing israel with $38 billion in military aid over the next decade in the country leads -- country remains a leading recipient of u.s. foreign aid. welcome to bloomberg .

let me say we are very grateful for this deal. i think this shows great friendship between the united states and israel and the great commitment between both countries. >> why was the deal done now? you had another year or two to run? guest: this was a decision of the prime minister and the minister of defense. those three would be concluded with the administration, because it was part of the thing that should have been concluded before the rich changes in the united states. changes with some the deal. the sum we have had to spend the united states

has grown, so we will need to invest and purchase more from the u.s. industries. >>'s a you are responsible in part for the overall israel economy? you have something to do with it. your economy is growing fairly well by global standards. >> we have seen second quarter 3.7%. we are all looking at what we have seen, the investment has been going down globally. incentives, huge incentives for i.t. companies, huge tech companies to invest. what has happened is a company could have their ip in one country and they are in deed registered in another country.

this has led to tax exemptions and the company has developed the i.t. property. you need to put your ip and register where you develop. what israel is doing is in order promote --der to what we have done is reduce texas drastically. for a large company, they will only pay 6%. drastic increase. for medium and small sized company, it will be 12%. grants togive companies. >> as i understand your central bank has issues with that.

>> you don't generate companies -- it doesn't do their ip or rl in israel. what we're looking at his new money, new investment coming in. in order to make the israeli let's take the cyber. more than 10%. we are looking to take where we have the advantage and try to pursue this investment so they can upgrade that value. >> there has been bits and starts in getting that going. guest: on the backs and forth have been concluded. also starting the reservoir.

i'm sure that this will be sold in the near future and take place. -- >> are you finding some hesitancy because there have been so many ups and downs? i think what we have generated is the government is very firm in respecting what we have negotiated and offered to the company. ,lthough there are changes through the whole time the government was pushing it all the way. companies can now feel more assured. >> there are also some fields off shore that the palestinians

have rights too. asked ofis should be the politicians and government. on in aernment official place of implementing the policy, not setting it up. jonathan: 19 minutes into the session let's get you to seat on global market -- global markets. over in europe the tax hammered by 1.4%. deutsche bank one of the biggest losers. $14 billion. that is the opening bid. deutsche bank saying they are pushing back. the stock readjusting. year by one on a 10 pieces point and crude with a 43 handle. >> up next we are taking a look at the credit market. game init is the only

town. this is bloomberg.

it is the only game in town according to rick reeder. and the market seems to agree. take a look at issuance we have seen. $1 trillion, we have a $9 billion issuance. 30 bit -- 30 billion back on monday. what point you say it is too risky, we are going to amplify the default cycle? we like other parts of the market better in terms of an investment paradigm. the leverage is going up. debt to revenue, debt to equity, though leverage -- the leverage is going up custom rates are so

low. why central banks have to keep rates down for a long time. it is not coming down in most places. debt service doesn't grow that radically. even though we are going to raise rates it is going to be very slow and deliberate. >> a lot of guys are in that three-month libor rate fix. are you in that camp? market -- weof the have actually looked and invested on some commercial paper on the backside of that. those are short-term interests.

we talk about places where particularly there was this backup with huge flows that come in. we like some of these assets. we like the front end of the yield curve. some part of the commercial market, we still like it. get us yield, continue to roll down a yield curve. that is where we like to do investing today. >> the debt keeps piling higher. billionutflows of $2.8 of high yield. our investors unwilling to take on the risks? year they have done amazingly well. some of the lower qualities have done extremely well. you get outflows from time to

time. i still think there is money at high yield. the part where we like high yield better -- some of the rally is overdone. those are stress companies. a lot of the financing is refinancing. i think the technicals and high yields tend to be pretty good. i feel at we should put you on the payroll. good to have you. week for of a big central banks. here on bloomberg , a stellar lineup. alan greenspan, former cleveland fed president karen hone, u.s. commerce secretary and former ge chairman to top it all off.

let's check out these markets and wrap things up. the s&p 500, 16 minutes into the session. we are down by half of 1%. 14 billion dollars is the opening bid from the u.s. department of justice. negotiations will continue. the yield curve, 1.69%. the front end selling off the long end. full coverage right here on bloomberg. the data continues with bloomberg markets from new york city.

10:00 a.m. in new york, 3 p.m. in london, and 10 p.m. in hong kong. mark: welcome to bloomberg markets.

vonnie: quit going to take you from new york to london in the next hour and we are covering stories out of buffalo new york and frankfurt. deutsche bank shares tumble. will the bank have to pay up? >> european stocks pointing largely lower. meanwhile the rally in government 10 year yield below zero for the first time in a week. and european union leaders are meeting in slovakia, discussing what life will be like without the u.k.. we are live with the latest. now we do have some breaking economic data area the consumer confidence