guy: welcome to on the move. 8:30 a.m. in berlin. we are counting you down to the european open. imo alongside caroline hyde over in berlin. this is what we are watching. central banks take central stage. big week as both the fed and the bank of japan announced decisions on wednesday. how are you positioned? place your bets.

beaten in berlin. angela merkel party is hit hard in regional elections as the anti-immigration party siphons off voters. what this this mean for next year's federal election? afterrk steps up security the bombing in chelsea. we will bring you the latest in this story. caroline: we are less than half an hour until the european open. let us check in with what the future is market is a signaling. -- futures market is signaling. up 200 billion euros. a to mulch was time for trading and so much to build up to this week in terms of the boj and the federal reserve. guy: let us talk about last week and what the gmm function is telling us. a great place to start your week. it gives you a heads up both backward looking and

forward-looking. this is last week, friday. the close. everything sharply down. it will be interesting to see how trading stops. the aussie was up. canada and new zealand were up. currencies doing well against the dollar. finland, and switzerland on the move this morning. portugal, the 10 year. me, this will be the function you will want to pay attention to this week. whis. it is the bloomberg league of champions. you can place your estimates here on what you think the amber will look like for range of things. i draw your attention to midweek. you can give your call on where you think that whis number will be.

let us get your bloomberg first word news. a suspicious device found in a rubbish bin near a new jersey station has exploded early as a bomb squad was attempting to disarm it. the fbi was reportedly working to disarm one of five devices found in the same bag. the packagey of after an explosion in manhattan on saturday injured 29 people. morning. the rise this after clashes in libya halted what would be the first overseas in that part since 2014. reports from algeria say opec may call an extraordinary meeting if members reach a consensus on strategy later this month.

he is optimistic about the upcoming informal talks. russia will also be at the discussion with standing speculation that a deal cap out let may be met. trading started in australia more than an hour late because of problems followed by two further outages after investors were unable to buy and l shares. markets areas braced for the u.s. and bank of japan meetings later this week. global news 24 hours a day powered by our 2600 journalists and analysts in more than 120 countries. this is bloomberg. thank you very much. let us talk central banks. based at light on this week. the bank of japan will kick off its highly anticipated to day meeting tomorrow. chances are marginally in favor that the central bank will not increase stimulus. the u.s. federal reserve decision comes on wednesday.

futures are pricing in 20% of a hike. what more can central banks actually due to boost growth? we asked joseph stigler. >> they are trying hard. the fact is there is only a limit to what monetary policy can do. they understood that from the very beginning, it's the 2008 crisis. fiscal policy has not been there so they have been the only game in town. what we are now seeing, particularly in japan, is not enough. they will have to do something else. guy: they will have to do something else that's exactly what will they do? that question is vexing investors. the boj meeting is somewhat of a sideshow. we are joined on the set this

week by our guest. what we get from the boj this week? willthink the boj meeting be the most important because the yen market has reacted with anticipation to something different or more and investors are trying to figure out what .hat more maybe -- may be/ caroline: are you trying to offset any reaction, volatility? >> we have had two basic positions around the bank of japan. a weaker yen have to be part of the banks policy to help the japanese economy from a fundamental perspective. long-term interest rates, particularly very long rates, 30 year in particular at zero looked full value to us particularly even the extent to which monetary policy has

already been implemented. ratese been short the yen and the japanese yen. the banks meeting this week. some different measures have been priced in. it is hard to say what those measures will be. guy: people are expecting a reserve twist that would steepen the curve up. you think that outcome is likely? >> the markets reaction has been in anticipation of that. it raises long-term lending rate which makes their business model more profitable. some type of steepening yield curve in our mind is one of the possibilities although these things are hard to manufacture. you do not want to get too cute, or to intricate with the policy.

intricate with the policy. guy: you are hinting that the markets are in the dark. there is a whole toolbox of mechanisms that the boj can call out. a risk reversal. the market is getting back to neutral because it simply does not know. if you were to put the distribution of outcomes on a piece of paper and work your way through it, how broad is it? >> the most likely scenario is that they do nothing. middle. the write down the fairway. on the other side, further rate cuts. further stimulus. for the buying of etf's. or, a twist function like trying to steepen the yield curve. or something more extreme, but

it is too early but to incorporate a fiscal package. the most extreme and the markets reaction would be the greatest. because that would have implications for the world when they think about central-bank policy. are we reaching the effective round of central-bank policy and therefore will governments get involved? that will be important because it will change investors minds set not only for the bank of japan but for the ecb. potential he. and the bank of england. that is why this meeting is really important. sensene: i want to get a when you are looking therefore at the depth section. we were looking at the cost of hedging and that making japanese investors potentially going out to italian markets. when you factor in the cost of hedging, you had a positive yield but when you brought in the italian debt, you were at

zero. you are getting zero yield if you are a japanese investor because the cost of hedging. playing in this? think that is right. that last statement is what we are anticipating. as european debt becomes less attractive on a hedge basis for japanese investors and it the bank of japan is successful in steepening out the yield curve then they become back in favor with japanese investors. of thoseurchases securities have fallen off dramatically. markets still offer value from a yield perspective but we have to watch this dynamic that if the bank is it vessel, particularly in making longer maturity jgb's

best 30 year yield are at around 50-70 basis points. that becomes more attractive to japanese investors. that flow of funds will be critical. guy: scott is going to stay with us from black rock throughout the program. up, hothouse issues. the lending curve. we will head to beijing. behind schedule, the u.k. talks about the preview of the auto locate -- automaker. loss is herl opponents gain. we will look at another big loss for the chancellor. this is bloomberg.

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caroline: welcome back to on the move. a quick check in with what is happening with the banks. --e breaking news on friday the chancellor of exchequer may not have to fight for single market access for the u.k. interesting notes coming from moody's saying losing eu passporting is manageable for that rated u.k. banks.

look out for barclays move on that. let us get into the bloomberg business flash. christine harvey is here. devicene: a suspicious found in a rubbish bin near a new jersey train station has exploded as a bomb squad was attempting to disarm it. the fbi was reportedly working to disarm one of five devices found in the same bag. the discovery of the package comes after an explosion in manhattan on saturday injured 29 people. noble group shares are up after the troubled commodity trader said it is seeking an investor and is on track to raise $2 billion but the company also warned it could be another two years before it returns a profit. a number of factors including the commodity route attacks on its accounting and a second-quarter loss has caused the company's shares to slump

over the last two years. isth korea's shipping cutting -- the troubled company has already were turned four movers and three bulk carriers to their owners. seoul is hearing a receivership. that is your bloomberg business flash. guy: thank you, christine. went up ins in china august. tom mackenzie joins us now from beijing. and does the data tell us our policymakers running out of options when it comes to cooling the market off? tom: it is certainly becoming more difficult for policymakers so they tracked 70 cities across the country in august.

prices rose in 64 out of those 70 compared to 51 in july. quite an update. you see if you brought down into the numbers, that cities like beijing where prices rose 3.8% month on month in at bus -- in august. in shanghai, they rose 5.2% in august despite cursed put in place by policymakers -- despite put in place by policymakers. rvescu akers increasing the down payment rate you have to put down before you can get a mortgage. on the flipside, there are still smaller cities, where growth is weaker where there are large inventories of apartments they need to selloff. it is a bifurcated market that

policymakers are looking at but very much of concern are the hot property prices. the people's bank of china say they are concerned about bubbles in china's property market. another key concern for the pboc is not just the property market but their own currency. the exchange rate. a huge surge on the overnight. you have been talking about it all day. this is the cost of borrowing. borrowing costs surging up 50%, the second-most we have seen on record. talk to us through this. pboc sending off bearish bets it seems. tom: that is right. that is what the analysts are saying. 15.7% jump in the overnight. the yuan rate is an indication

that the pboc is getting into try to fight off those yuan there's and this cup -- you want bears. also comes before the october inclusion for the yuan in the reserve currency basket. for the imf. analysts are saying they are trying to desensitize the yuan from external shocks. 6.7analyst is saying that is the line in the sand for china's central bank. guy: great stuff, tom mackenzie. scott joins us still from black rock here on set in london. 6.7. the markets are probably focusing on the wrong rates. can they control what is happening here as we work our way towards the fed decision

maybe in december? >> the important thing to remember is that basket management is an important part of their process. i also think that these spikes in rates can be technical in nature. we need to see how they play out in the next few days. from our perspective, the most interesting investment options in asia are not china but countries like indonesia, india, and even korea. there is good value for the rate. emerging markets are still a buy. think certain markets that are still attractive. especially the higher-yielding local markets are where we are focusing. in terms of monetary policy, expectations are that there will not be an increase in rates in

september and they will evaluate the situation. the u.s. general election is coming up and then in december the fed will move to raise rates. that is consistent with their recent approach. rate increase policy. that should be positive for emerging markets because investors should not be surprised by a hawkish fed. guy: we will not ignore the fed. scott will stick around. caroline: we are now minutes away from the open. we are not going to ignore which particular corporate movers you should have in your eyesight today. including volkswagen. there should -- there could be thousands of lawsuits filed by the end of the day. we check in. this is bloomberg. ♪

guy: welcome back. you are watching on the move. let us talk about some of the stocks we need to be watching. airbus. they are looking to launch a cost-cutting program next month because the 350 and the 320, they have program overruns and costs associated. the 380 is still causing problems. we understand they will be looking at cutting duplication between group and operations.

there are some problems they are having and they need to get that sorted out. airbus yield to date, down 50%. caroline: looking at -- down 15%. it is also happening with volkswagen. it could be up 0.5%. that is some of the calls i am seeing. this on the back of the provision of software to volkswagen. berlin-based company iav. it prosecutors from the u.s. looking it over. vw has been exposed to a huge number of cases. we see the court cases rushing in.

it has been a year since we saw the crisis emerge. -- the market open is 20 minutes away. whs with your fed expectations. ♪

guy: good morning. you're watching on the move. i am in the city of london. caroline hyde is over in berlin. the start of european trading. central banks take the central stage. buckle up for a big week. bank of japan and the fed announced decisions on wednesday. how are you positioned? place your bets on whs. in berlin, angela merkel's party is hit hard in regional elections. what does this mean for next year's federal elections?

new york steps up security following saturday's bombing in chelsea. we will bring you the latest. looking at the open. nine seconds away. quite a big selloff on friday in european equity markets. let us see how monday morning will deliver. is the ftse 100. climbing a little. a bit of momentum. the dax and the cac following. london, a little bit better than it was on friday. when we saw the market under severe pressure. cac is up 0.8%. a 1% move going through in london and a near 1% move being delivered. here is the stoxx 600. see that spain and the

united kingdom are both up strongly. france doing well. they'll jump trading -- belgium trading up as well. s function. place your bets, i say bets loosely. whs allows you to put your number in four key things happening this week. -- for key things happening this week. nejra: we have not seen a lot of movement in bond markets generally today. in japanar yields staying unchanged. in europe also, not a huge amount of movement. 87 basis points. that is where we were before the open. we will keep an eye on this but at the moment, this is quiet. moving onto the stoxx 600 and digging into the sex -- into the

sector of health. green across the board. financials are the best performers, up 1%. energy stocks behind come up 1% as well. materials up 0.9%. and now energy leading the game. of the wti and brent today. and starting with airbus. this is called a little higher in line with the call, about 1% after the report that they are a restructuring and cost-cutting plan in october. i also wanted to look at mighty. they are operating at a profit. materially below operating views. down quiteen called significantly at the open. we will see if that matches the

calls when the stock moves. we have reports after the close on friday that u.s. prosecutors are investigating whether bosch was a part of the problem. , nejra.nk you what is the portfolio affect? how does it have a ripple effect ? a reverse twist. everything is correlated right now. >> the most important thing to look at are the returns. 7% in some of the core markets and higher in the emerging markets. that represents the continuation

of monetary policies as we know them. quantitative easing. lower rates. it isy respects, i think a market directional view from a data perspective. the full market. how it will behave if we get a dovish bank of japan and if the fed stays on hold and if the ecb incorporates additional measures. we are back in the same kind of environment where we would see positive returns on fixed income. if we don't get that, we have to deal with interest rate risk. it is a directional view. this week is important. caroline: how much are we seeing at the moment a rotation out of fixed-income? are you starting to hear from your investor based that they are wanting to start to move out of the sovereign area and get into the different pots of credit? >> investors are looking at the positive returns and they would

be surprised at how well the broad market indices have done. looking at not owning the full index of a product. is a moreld say diversified approaches what investors are looking at and less index like moving forward. forcedvestors are being to move into more liquid assets. and that has been a trend going on for a while but it has been gaining momentum. if we get into a world where it is harder to call what central banks are doing, is that an advantage or a disadvantage? >> it depends on how you think central-bank policy will play out for liquid assets. classese only two asset that have yielded more than 4%.

in order to stay invested in those in the same way, you have to believe that central-bank policy will be positive for those asset classes. the concern i have is that if we are shifting from quantitative easing to something different, fiscal spending, that signals rates are going higher and therefore you may want to pots in your investments -- you may want to pause in those investments. caroline: hold that thought in terms of rates going higher. looking at the repercussions of one asset class and particular. nejra: what i have on the chart s&p 500 etf. the three year average. the reason i am showing this is you have goldman sachs saying that with the expectation of highere -- possible

rates in the u.s., investors are not paying enough attention to sums talks that could benefit from that. they are missing a chance in fromnies poised to benefit a rate hike. a group dominated by financial firms such as bank of america and bank of new york. what this chart is basically showing and what goldman sachs is saying is that investors are doing a lot of lumping together of different stocks and they are not getting bullish enough on the groups that are more sensitive to higher rates. the cost to hedge them is no different than the broader s&p 500 index signaling a loss of an opportunity there. caroline: great charge. let us get back to scott from blackrock. get into bank credit? was pounded on their risky credit on friday.

isone of the areas that lagging has been the european arena more generally including banks, bonds, subordinated and senior, and peripheral bond markets. those are areas we are looking ino because they have lagged the rally and they are still attractive. you have to consider idiosyncratic risks as you saw with deutsche bank but more generally the italian banking system and portuguese banking system and in europe in general, and how the banking systems are doing. you have to do the credit work on those individual names and understand the risks you are taking but i would suggest that the financials look attractive to us overall in europe. guy: isn't that what mario draghi really wants? , yes.many respects

q we seems to be working in europe. you could debate if there are other factors which are helping the inflation data. but the data seems to suggest that the ecb's programs are working and they will keep doing that. thatis there an assumption for example henkel -- they can borrow money and then they use that for something useful and productive rather than buying back stock or something else. can we make that assumption? >> we are assuming the wealth affect meaning that by lowering rates you create economic activity driving the inflation rate higher. there are distortions that are a result of that. companies borrowing at negative rates is one of those distortions. many are saying that that is what we have to do to get to our objective. the ecb is different from the

bank of japan in the sense that in the bank of japan's situation, it doesn't look like the policies are working. they have not hit the inflation target forecast by the bank. in europe, you get close to the target. in many respects, the ecb is being encouraged by the economic data it is seeing and companies will take advantage of that issue with negative rates. guy: scott is going to stay with us. thank you. caroline: coming up, looking for alternatives, angela merkel's loss and the afd's gain. in afd performed strongly the regional elections. we look at another big loss for the chancellor. -- weng markets discussed. stiglitz says it is time to give japan a break. what are the expectations for

.he boj's meeting this is bloomberg. ♪

guy: 13 minutes after the hour. let us check in on the markets. selloff on friday needs to be taken into account. we are up around 0.7%. ftse up a little higher than that. we are keeping an eye on what is happening with deutsche bank.

we are seeing it down again, 2%. let us show you what is happening. this is the mmr function. i am going to refresh this to give you the latest update on what exactly is happening. deutsche bank, down by 2.38%. by 2.9 percent. some of the mining stocks are trading up at the top end of the stoxx 600. here is the bloomberg first word news with christine harvey. christine: a suspicious device found in a rubbish bin near a new jersey train station exploded as a bomb squad was attempting to disarm it with a robot according to the ap which cited officials. the fbi was reportedly working to disarm one of five devices found in the same bag. packageovery of this comes after an explosion in manhattan on saturday injures 29 people.

oil is on the rise this morning after clashes in libya halted what would be the first overseas cruise ship in from the port since 2014. meanwhile, reports from algeria say opec a call an extraordinary meeting if members meet a consensus on strategy later this month. that he isry said optimistic about the upcoming informal talks. non-opec producer rusher will also be at the discussion. thoughts that there could be a cap meeting. australia's market is having glitches. investors were unable to buy and sell shares. the issues, as markets are braced for the u.s. and egg of japan meetings later this week.

margrethe vestager tweeted that she may investigate other major u.s. companies. she meets with u.s. treasury secretary jack lew in washington later the today. -- later today. global news 24 hours a day powered by our 2600 journalists and analysts in more than 120 countries. this is bloomberg. caroline: christine, thank you. let us talk european politics. angela merkel's party and its coalition partner have lost support in the regional elections in berlin as the alternative for germany along with the greens gained voters. we spoke earlier with a cdu member, david mcallister in berlin. he gave his dots on the afd's performance. partyis a single issue giving simple answers to complex questions. what we also see is that a lot of voters are not expecting them

to deliver results. show protests.to i hopefully believe they are not here to stay. caroline: let us get the views of scott from blackrock. populism on the rise throughout the eu. how disturbing is this for the market? angela merkel not running again for example. investors clearly are paying attention to political developments across europe. depending on how much the french politicalve into the situation will be important but the trend is something we are focused on. there are a lot of political events coming up in europe and some are crucial to the direction of european rates. spain, italy, coming up in the next couple of weeks. those elections, the referendums, they will be important in terms of the direction of european banking.

guy: i am watching the program in new york, i am up early. why would i want to change my habits of recent past and invest in europe? what will it take for u.s. investors to change that mindset? look atinvestors will the political situation and want more clarity and unfortunately they will not get that in the near-term. they will want higher interest rates and they will not get that either. they have to look at the opportunities in the asset class. whole swath of negative yielding bonds across europe in many different countries and it is clear that the ecb policy will be on hold until december and therefore we will not get much clarity. it is hard to make a bullish case except for some pacific cases in specific countries and opportunities for the european market more generally. caroline: i am that new york is envisioninguy

and i am looking closer to home. the domestic political environment is one of risk also. >> the u.s. elections are something the u.s. investors need to consider. we have done a lot of work on this. particularly as the polls in the u.s. it closer. it is obviously not clear what the markets reaction would be to a change in the political landscape in the u.s. it is something investors have to pay attention to. it is not obvious to us which way the interest rates will break due to a change in the political landscape. if we do get a change, there could be adverse reactions across the markets. guy: we will come back and discuss that in a few minutes time. do what it has been threatening to do?

share your predictions in the bloomberg league of champions with the function whs. the more people that get moreved in this, the useful the function becomes and we can all benefit. so, we all need to get involved. details next. we will show you the function. this is bloomberg. ♪

guy: welcome back.

let us talk about a couple of things going on. i want to update you on the markets. the mining sector is looking solid this morning. the energy sector is looking solid as well. dominating the top end of the stoxx 600. a couple of interesting highlights. the first one is deutsche bank down another nearly 2%. it is under pressure. keep an eye on that. ryanair also under pressure. what i really want to show you is this -- whs. there you go. this is what i want everyone to get involved with. this is crowdsourcing economic expectations. .ut your estimates in put your number in for

the fed interest rate decision, all of these things. the more people that get involved, the more useful this becomes for all of us. we are crowdsourcing these numbers. it is worth doing. let us move on. language, welated have two huge central-bank decisions -- the fed and the bank of japan. to call in adest long time. how volatile is the market ultimately going to be? allus get scott's take on of this. monday morning, bright and early. it is definitely early. what is the buildup to wednesday going to look like in your mind? will people take their money off or table and do nothing given the range of outcomes, how do we play this? >> for us, the bank of japan meeting and the fed meeting will the u.s.ant as well as

elections. my sense is that there should not be too many portfolio shifts between now and wednesday or thursday given that everyone has debated and discussed what they think is going to happen. there is a wide range of outcomes for the bank of japan but no range for the fed. our sense is that there has been some position squaring ahead of those meetings. what is happening in commodities and currencies and some european individual equities is what investors are focusing on now. i don't think that the fed meeting -- guy: the bank of japan. >> i think looking forward, the u.s. election is something investors, u.s. investors need to focus on and the applications in the bond market and the stock market. caroline: bringing you back to today's moves -- oil is back on the rise. viewpoint on whether opec will

freeze or not freeze. oil play into the rest of your portfolio management because it has been so locked in step with the stock market? given the stability we have seen in the second half of the year, oil needs to break out of the $40-$50 range for us to think about investment implications. in that middle range, it should not be too impactful on the fundamentals. the market is looking at political events in the u.s. and europe as main drivers. the oil in that $40-$50 range will not move our asset allocation to much. guy: thank you for sharing your time this monday morning. it will be a busy week for all of us. scott joining us from lycra. upoline: up next, building

stronger foundations. we will look at the numbers with mark. stay with us. this is bloomberg. ♪

caroline: welcome back. 30 minute into your trading day. we are into the green and we have eight up for all of friday losses. for all ofmade up friday losses. look at the ftse 100, up more than a percentage point. cac, outperforming. this: i am starting with group which is one of the best the stoxx 600 at the moment. it provides engineering solutions and focuses on the mineral and gas markets.

this stock is rising. it has risen as much as 6%. still up 4.8%. i wanted to highlight anglo-american because we have commodity producers as the best performer on the stoxx 600. every industry group within that is gaining today. you are not just seeing anglo american up but the likes of rio tinto and glencoe as well. it restarted its operations after a strike in central chile boosting supply from the world central producer. it is a bit of a mixed picture elsewhere in industrial metals. mitieted to highlight

group. this is the biggest drop ever for this company. the stock has hit the lowest level since 2011. the company said first-half revenue is significantly lower and full-year operating profit is materially below prior views. thank you. london house prices rebounded this month they rose 1.9%. market joins us, the company's commercial director. mark joins us, the company's commercial director. mark: more expensive properties come on the market after a recess. that does have a skew affect on average asking prices. if you look in london versus in london isn,

still behind. out of london is more positive, up 5%. guy: let us take a look back. ,he beginning of the year things were hit hard and then brexit. mark: we have had a lot of more expensive properties built in london chasing the foreign investor market. they have been looking at capital growth. there are signs that capital growth has slowed down and therefore that sector of the market, even though some of them have got their assets held in thatterling currencies, makes it cheaper but they are looking for capital appreciation because the rental return has not been there. very much a cooling there. a loss of momentum. -- 1oving up between will million and 2 million -- ordinary houses do not fetch

that much in london. really starting to hurt. though, theyat still need to get on the latter. family moves are still happening. but the jumps you have to make in london are quite considerable to move from a two-bedroom to a three-bedroom. caroline: the foreign buyers looking at capital appreciation in the cheaper areas of london. east london in particular is doing relatively well. does that hurt first time buyers even more? mark: that would be the sensible idea. are focusinglopers on package deals for foreign investors. is the cheaper boroughs

looking at properties under 3000. it has gone up 11% year on year. foreign investors -- if they were to come back, being more selective in choosing the cheaper areas. effect isuch of an the government having? mark: they have increased their levels of help to buy in london. you can get 20% of your mortgage interest rate -- interest-free for five years. they have been concentrating to a large degree on foreign investors because they often have cash. whereas now they are changing their strategy towards this helped to buy sector which is good for the homegrown economy as well and homegrown purchasers looking to live and buy in the

capital. an important strategy change by developers and that can take time to happen. caroline: what about the supply side? wavee seeing a potential come on from the building area in particular. will that suppress prices? will there be a glut coming on in terms of cheap housing? >> i hesitate on the cheaper buildg but a glut in new in certain sectors. targeteddevelopments at the foreign investor market. these take time to work through but we should not criticize new builders. they are important for the capital. but it has to be the right sort of property. and perhaps more affordable with different specifications than what the builders have been building for the foreign investors. one of the downsides were

concerns of developers that came out today were they were worried about skilled staff shortages particularly with looming brexit. they are relying a lot on foreign developers. they say they may not hit on london targets. how much does the big picture you look at correlate with the broader economic data? >> on the demand for housing, very much affected by economic data to a degree but if someone needs a roof over their head, first-time buyers, cheaper to buy than to rent with rates at their current levels. the demand for housing does carry on but at the more discretionary mover level we are seeing an effect there. guy: in terms of mobility what

are we seeing their? -- what are we seeing there? mobility of the workforce -- agents report investors coming back into the market and they are looking at diminished bank returns. the solidity of bricks and mortar and the yield of 4%-6% are looking more attractive. at: commercial director right move. thank you for joining us. caroline: up next, looking for alternatives. angela merkel's loss is the afd's gain. that is as the anti-immigration party performed well in berlin. what is next for the chancellor? this is bloomberg. ♪

guy: 8:41 a.m. in london. this is on the move. let us get you a bloomberg business flash. here is christine harvey. christine: a suspicious device found in a rubbish bin near a new jersey train station exploded as a bomb squad was attempting to disarm it with a robot. that is according to ap which cited an official. the fbi was working to disarm

one of five devices in the back. this discovery comes after an explosion in manhattan injured 29 people on saturday. joe kaser says geopolitical turbulence could hurt orders in 2017. the head of europe's biggest engineering firm told bloomberg that certainty could have customers delay projects. everyone is after efficiencies. it is not about capital spending. there is a lot of uncertainty in the market place. this the geopolitical tightness in the world. another interesting year for the industry. group sharesble are up after the troubled commodity trader says it is seeking an investor and it is on track to raise $2 billion but it warned it could be a another two years before it returns a profit.

a number of factors including the commodity route, and a second quarter loss has caused the companies shares to slump in the last two years. caroline: christine, thank you. let us talk european politics. angela merkel party -- angela coalitionarty and its party has lost votes. earlier, we spoke with cdu member david mcallister in berlin and he gave his thoughts on the afd's performance. >> in my view, it is a single is givingy that simple answers to complex questions. we see a lot of voters not expecting them to deliver results. they just want to show protests. i hopefully believe they are not here to stay. caroline: we are joined by

patrick donahue. to get thateresting take from david mcallister. sayshas he thinks that he -- he thinks that the afd will not stick around. ago, the afd was only polling in the single digits. for this party ticket 14% in the capital is extraordinary. currently part of the refugee policy. how will it work in terms of the coalition and the extrapolation that people are making into the federal elections? >> the federal elections are still a year away. for angela merkel, she will have

to contend with a lot of resistance especially in her csu allies in bavaria. they have already called for a cap.tion the chairman is making this a condition of his support for her in 2017 if she decides to run again. and it looks like -- it is a question as to how far he will go before he cannot back out again. caroline: if she decides to run again, there seems to be a growing concern amongst political journalists as to whether she will run again could the fight she is having stop her? the million euro question. among thetion politicians in berlin is that she will run for a fourth term. she has not decided.

we just do not know. caroline: is there a date we should look out for? cutoff might be the point in december despite what her plans are, the party is putting her under pressure to decide by the cdu convention in december. the assumption is that we will know by then whether she will run again. caroline: patrick, i know you will be all over this story. thank you. optimism the federal reserve will delay raising interest rates has helped spur markets. let us get a breakdown of what is going. tracy is in abu dhabi. how much of this rally is driven by central banks in the developed markets? excellent an question.

the answer is probably a lot. we know there is an epic search for yields going on around global markets driving investors into e.m. assets. the question is of course whether the benign conditions continue given what is happening with developed market bonds. we also know the bank of japan and the european central bank are bumping up against the technical limits of their bond buying program's very and we have the fed. markets are pricing in a 20% chance of a hike tomorrow but that said, the fed is entering theyteresting space where will have to make a decision on whether it wants to overshoot on u.s. inflation to spare the emerging market world from additional tightening in financial conditions. that will be something to watch. i am sure you investors are thinking about that hard. guy: we have seen the fed talk about the international dimension to its decision-making

process. emerging markets versus the fed fund which is inverted. what about worries over the amount of borrowing i e.m. countries, dollar borrowing? china is backing up a little bit. walk us through this angle. had thethe weekend, we bank for international's settlement publishing a lot of stuff in its orderly review. it published an update on emerging market debt. they did the same thing last year which sounded alarm bells on the ability of emerging market companies and sovereign to service their debt. the concern is if we get a strengthening u.s. dollar those debt burdens come more expensive. the ironic thing is that banks -- thanks to the e.m. rally, e.m. companies and governments

have been issuing more debt. if anything, the borrowing levels have increased over the past few months. and yet, when it comes to portfolio managers, they don't seem that worried about it. it only seems like some analysts that are sounding any concern about that. guy: crazy, great stuff. tracy joining us out of abu dhabi. fascinating the moves in the emerging markets. we will be talking much more about the central banks in the developed world. there is little consensus on what the boj will do on wednesday. some investors are even closing out there dollar-yen positions. details are next. this is bloomberg. ♪

caroline: welcome back to on the move. 52 minutes into your trading day. we are a percentage point higher on the stoxx 100. -- stoxx 600. argentina holds a monetary conference today. tomorrow i'm a more central bankers. the fed and the boj kick off their policy meetings and wednesday we get the results of those meetings followed by press conferences. first the boj and then the fed. thursday, we will see the new zealand central bank make great decisions among several others. with fedof the week

officials taking part in a panel in philadelphia. it is central-bank heavy this week and back to the big event, the boj -- there is so little consensus about what the bank of japan will do on wednesday that investors -- some investors are abstaining. guy: let us talk about the three months risk reversal. we are joined by our chief economic correspondent in hong kong. the distribution of outcomes when it comes to this meeting is wide and there is so much at stake. so hard to call. what is the black box? >> good morning. well.ve just laid it out it is a confusing outlook heading into the meeting. there are two reasons for that. on the one hand, we will get a

big policy assessment they have been working on since august. a report card on how things have been working. on the other hand, we are going to get the typical policy statement or decision. and economists are not certain what will come out of the mix. there are two big headlines we should watch for. make deeperd they the negative rate. there is a view that they could make -- use that as an option. they could also tweak their bond buying mix. there are concerns that they are hurting banks and investors and pension funds. they may have to shake up the composition of their bond buying. that the bankse of japan will not be going for shock and all.

they may be tweaking specific target measures rather than a big blast me a scene in the past. caroline: is there a risk that they could be doing nothing at all? >> yes. they could say the policy is on track and they are already coming in extreme stimulus by any measure. they could say that there 2% interest rate target -- inflation target is some distance but they are staying on track. but at the same time, the governor has always been at pains to say they could add more stimulus if it is merited. the view that the boj will not at least change the composition of its purchases -- i don't think -- i think it is too good of an opportunity for it to pass. a busy day for you on

wednesday. meanwhile, assets are trying to work out what to do at ahead of the big central-bank decisions. guy: i think a lot of people are waiting and getting more neutral. in japan, they are taking the day off to pay respect to the aged. this is the breakdown of the stoxx 600. what you are getting is a solid did attached to the mining and energy sectors. u.s. some of the banking stocks and -- you are getting some of the banking stocks trading low. deutsche bank is down by another 1.1% this morning. the pressure continues on john cryer. caroline: and plenty of news came over the weekend to do with

what that find will look like. willoughby 14 billion or something smaller. up next, it is the pulse kicking off a conversation. this is bloomberg. ♪

francine: investors focus on the boj and fed this week. central banks decide on their next move. calling for calm, the london mayor offers reassurance for the -- brexit negotiations. alertrk and new jersey on . a bomb goes off in new jersey this morning as new york city deploys 1000 more police after an explosion on saturday. we will break down what this means for your selections. ♪ francine: welcome to "the pulse." lfr