francine: deutsche drops. she in germany's biggest bank slumps to a record low after worries of mounting legal charges. fizzing oil. saudi arabia could be -- could act. we are live in algiers. we asked why this tv debate really matters. this is bloomberg surveillance. i am francine lacqua in london. tom keene in new york. and new poll, trump and clinton at 46% each. tom: a number of poles of the weekend.

i really agree with predict wise . you got to aggregate them together. the tendency is clearly toward the bloomberg told with mr. trump a little bit ahead but error.got standard of i make a lot of errors. that is your standard. ryan: it is. you are right -- francine: it is right. let's get to the bloomberg first word news with taylor riggs. taylor: hillary clinton and donald trump square off tonight in the first of the presidential debates. the new poll shows of them locked in a tied to a race. the poll has the two candidates each with 46%. when third-party candidates are included, trump leads clinton 43% to 41%. they are predictions that tonight's debate could be the most watched debate ever. you can watch it here on bloomberg tv. our coverage begins at 8:30 p.m.

eastern. at the united nations security council, the west slammed russia over the syrian city of aleppo. france and the u.k. are calling the bombing a war crime good more human rights group says more than 200 civilians have been killed in the last week. russia has denied responsibility. aleppo is the center of opposition. there was tension in the skies over the east china sea. china sent 40 aircraft on what he called a returning -- a routine drill. japan responded by scrambling its own warplanes. japan says it is the first time it has seen chinese fighters in the region. japan and china claimed the islands are their own territory. global news, 24 hours a day, powered by 2600 journalists and analysts in more than 120 countries. i am taylor riggs, this is bloomberg. tom: we are going to be distracted by the debate through

all of surveillance and let's make clear, the markets are on the move in fragile -- and fragile. i want this been time on -- i want to spend time on francine to data check. dollar all over the place. yields coming in. oil not a part of the picture. on the next screen, please. the vicks, 13.95 showing the tension good curve flattening with stronger yen. you see it with weaker mexican peso. francine, front and center, there is no other story this morning. it is about the collapse of deutsche bank. francine: i don't know of we can call it collapsed yet. the share prices under significant pressure. we talk about the fact that banks are having a tough time. confidence rising to the

highest level since 2014. i want to show yen because we had government wrote a talking about it. i want to show you turkish lira, it is a slump. it is leading losses among emerging-market currencies after moody's cut the nations that rate european stocks downward -- rate. your been stocks downward. tom: by collapse i'm looking over a nine-day intraday chart here the idea of deutsche bank, 13 to a 10 handle against -- 10 handle gets your attention. i agree with taylor, it will be the most watched ever. the buzz on this debate is off the charts in america. the red lines are the recessions. half a century of presidential real gdp. 1.9%our moving average -- statistic, that is white standards is doing so well. that is why mr. trump is doing well.

morning in america, those green rectangles with terrific 1960's gdp, terrific late 1990's gdp and down below you got the eight years of george bush and 24-year obama terms -- two four-year obama terms. therefore your moving average. it is nothing near francine morning in america. francine: i like the chart. itas looking at treasury and -- this is a chart that tracks from central bank treasuries held in custody of the fed. it is a simple line chart, but what i wanted to show you is there used to be one of the most reliable sources of demand for government debt, but these days, they have become another worry. i'm talking about japan in trying to -- and china. currencies,time on what is going on in u.s.

politics and treasuries. , undress -- under his regimen. -- undressthe german -- andreas: is not the case for these to be and it is -- next line francine: eight years on, it is like your set out to do working. do you change your tact or mandate. do you abandon that mandate? why will it work this time? andreas: there is no guarantee and chances are it may not work. longer than three or four years. he said this is not a question of -- this is a question of generation.

central banks are costly changing their tactics. whatever was a policy five years ago was in three is ago. remember all the gains it? none of that -- that experiment, they don't know how to resolve this issue. francine: where do you find value? andreas: yet to find risk premium. to be -- you have to find risk premium. it could be duration. you've got to take some measure risks. sovereign bonds, spread risks as it increases, you can take some position. equities, we expect a 4% return for the next two years. better than zero. tom: good morning. you're out of lse which i consider one of the -- epistemology in theory. is there a theory in europe and economics now?

are they making it up day by day as they go? think it is not day by day, but clearly there is a big class of philosophy at the center of the eurozone. it got some of the northern european countries, germany, who believe in fiscal orthodoxy. that you needry to live within your means. there's the rest of europe -- i guess you can include the u.k. -- who believe only way out of this growth glut's fiscal expansion. that is a big issue. they are needed to make things up as they go along because there's this philosophical disagreement. tom: i give you the highest marks for leading your research report with the phrase "financial repression." very few want to talk about right now. does allianz just refuse

pressure? andreas: that is been our assumption for a number of years. we continue to be a basket case. central banks will willingly be behind the curve as a way -- if you look the 50's and 60's, as a i -- wetop the real -- are going to increase interest rates slowly than inflation picks up. that is the theory. tom: i cannot convey, francine, enough at the heart of the banks.which is this they can get out front versus which what we heard. that is where you get into the drama of last week, evidence. i was amazed how people were still talking this weekend about the yellen press conference. i cannot convey enough the profound impact.

francine: amazed but at the end of the day, she is the only game in town. everything trades off. all roads lead to rome, you can see all roads lead to yellen. it is not the surprising that people would hang onto every single word she says. mario draghi will be in brussels and berlin this week. and even more urgent message than usual. act toe government must bolster the economy. we want to ask him a more about deutsche and the impacts on banks. stay with bloomberg throughout the week on wednesday, join us for global coverage from the bloomberg markets most influential summit. we'll be talking to the biggest names in the financial markets including tidjane thiam. this is bloomberg. ♪

francine: this is bloomberg surveillance. tom keene is in new york. as get to corporate news and the bloomberg business flash. taylor, saudi arabia may open the door to future opec deal on oil production limits. the saudi's have offered to pump less crude if iran puts output at current levels. that is going to people -- that is according to people familiar. hsbc has hired increment firm to find and for future top executive positions according to the financial times. the firm will look for candidates to fill those jobs. the brexit boat has three quarters of british ceos

thinking about moving their headquarters outside of the u.k. the firm surveyed 100 business leaders. 76% are considering relocation. believe business will be disrupted after the u.k. leaves the union. tom: it is extraordinary for those of you to focus on tonight's debate. to be clear, is the first debate of many debates. everyonewould suggest wants to avoid what i avoid doing in obama, the heart of the matter is the skeleton of the closet was obama's first debate asked number of years ago. does the president messed up so much in the first debate? megan: the thing he did was he was expected to have this rhetorical style to on the debate.

that is going to be some of the pressure with hillary clinton tonight. the expectations for her a very different than for donald trump. his bar is low. if he comes across as having firm policies, he is going to clear that hurdle. for her, the bar is higher. -- two slant from the point what items are -- who is going to be at the debate? is mr. cuban going to be there? gives an update. megan: ms. flowers will be there. she is likely to be in the spin rome. she did walk back over the weekend. they did invite her to appear tonight which would be unsettling. we don't know what to expect tonight. we don't know if he is want to stay on message and we don't know if she is going to be tried to will out a more authentic

self. whether she is going to try and be more humorous or whether she is going to go to the jugular. be everything to play for tonight. francine: how important is this? we have a posting trump and clinton are deadlocked. it is all about the battleground states, right? if you look at the picture as a whole, what are the real chances of either candidate winning? megan: there are two data points. what is really interesting about this poll is hillary clinton losing some strength among young .oters and women voters the first we have seen in battleground states such as ohio ,s the youth vote drifting perhaps toward gary johnson, these third-party candidates. women is going to be a lot more problematic for her. if they see the trend pick up

among republican women, women who have been decidedly with him . that is not good news for. -- good news for her. francine: this debate is most watched moreto be than the super bowl? the afterthought is that basically he has a natural advantage. megan: we have no idea what the viewing figures are going to be. we needed -- we expect the near super bowl viewing. it is a spectacle. googler tuning in to see what kind of match this would be. -- people are tuning in to see what kind of match this would be. tom: we forget there are multiple debates. the media plays it like this is the single moment. what is the play of being

assertive and to do versus do no harm you go the idea of i don't want to screw up -- do no harm? the idea of i don't want to screw up. megan: his strategy is i don't to screw up in this debate. her expectations are higher. she is going to have to have some sort of dominating performance. tom: francine, i cannot convey the humor within the drama of all of this. crooked lester, lester holt. francine: i like that, humor within the drummer. -- humor within the drama. >> i think it goes beyond the stock performance. it is a highly that's what we have seen with brexit and what we are seeing today and in the run-up to the u.s. election is very worrying in terms of the politics and what society -- and where society is going.

we have seen in brexit, the debate about immigration gave license to very nasty hate crimes in the u.k. again, i think the political discourse in the u.s. has been debased. what concerns me, i am listening to your program and i'm listening to people talk about gennifer flowers and people -- and hillary clinton being under pressure to perform. what we're seeing here is an unconscious bias against women. it is classic. if women can be successful, not only trusted and all of that, there need to be much more qualified than the male counterpart and even then, they may not get the top job. this is what we are seeing. there is no doubt that hillary clinton is more qualified, but that does not count. she news to do more -- she needs to do more. i find that extraordinary.

tom: megan murphy, thank you so much. when you come back, will you please expand why the debate is at 9:00 p.m. it is insane and for the kids, it should be at 7:00 p.m. it is like the world series, it's be on earlier. megan murphy will be on in the next hour. tonight, our coverage of the radio and television. michael mckee and marty shanker, 7:00 p.m.. attelevision, beginning 8:30. they're prepped for tonight's presidential debate. ♪

francine: this is bloomberg surveillance. tom keene is in new york. i picked it up because entrees into minutes here. because -- because andreas utermann is here. they need to throw over the board editing they believed for years. it will probably take another global recession to change that. very telling after mario draghi literally is going through europe telling governments they need to do more. undress, you are one of the first ones to say interest rates are lower for longer even longer than the markets think it what happens now. some point -- someone at some point you to be brave. i do know if it comes from governments are central banks,

for what needs to happen so that we move out of the state's quote? -- status quo? >> i'm sure fiscal policy is a part of the answer. when you to revisit the narrative around the growth wherein it i think it is a global issue and maybe we ship the way from narrow measures on gdp to whether test to measure whether we are successful. gdp per head is our population is slowing, we may be living in a world of lower growth trend growth. that is our assumption. around onesomewhere to 1.5%. maybe we don't have to reflate as much as we need to because we don't want to get back to 3% growth rate. beyond that, i think there are countries they can afford to this glee reflate. germany can. not enough is thing done to reform the way we are spending

the fiscal dollar or physical euro. too much is spent still on supporting social programs and not enough on long-lasting investment and infrastructure. juncker said -- it is not the spent. we're not focusing enough on the investment part. francine: andreas utermann, thank you. he stays with us for the hour people speak with chuka umunna. tom will be talking about brexit, asking him how he sees the u.k. differing after that brexit vote june 23. this is bloomberg. ♪

tom: bloomberg surveillance worldwide. markets on the move. let's get right to the data. we will do this all through surveillance. markets really moving off the

ugly friday. futures that -11. the 10 year yield at 149. next screen. this is where you start to see some of the nuance. massive curve flattening. stronger, stronger yen. we are even seeing the mexican peso+++

let's bring up the chart. deutsche bank, nine day chart. this morning's action which is news laden. that is remarkable deterioration. it would be amazing to see deutsche bank under 10 euros, something the bond guy predicted months ago. francine: this goes back to the concerns we have had of deutsche bank, back to the doj settlement. it is quite unclear whether people will stay on the record. there is a fear that it is a little bit of a europe versus u.s. fine fest. tom: we will get back to the markets. right now, our first word news. taylor: republican presidential candidate donald trump looks to apply his new campaign discipline to the first debate. trump and hillary clinton face off at hospira university in new york city. in recent weeks, trump has risen in the polls by learning to stay out of his own way. whenp feeds winter party -- third-party candidates are

included. you can watch here. coverage begins at a: 30 on television. in washington state, authorities say the 20-year-old man accused of killing five people at a shopping mall has had a number of run-ins with the law in recent years. hisas arrested outside apartment complex. spoke today.ys tha thousands of migrants are camped out near the city. global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. francine: thank you so much. jeremy corbyn has held onto

control. it could have implications for his party's prospect. and edwards is at the party's conference in liverpool. >> we have seen over the weekend this battle over the last a few k politics. it has not really been concluded. we are joined here are us about how tell you bring the left of uk politics back together. -- how canple saying we believe it? >> the nature of the election system that we have in the uk is you have two main parties of government. order for it to win, it has

to be a broad spectrum. , ithe fraction splits apart goes to the right for many years. 1981.that in infraction the left and the conservative party under margaret thatcher governed fora long time. everyone knows we don't want to repeat that mistake which is why now we have a contest to determine whether jeremy corbyn continues as leader. people want to draw a line under the issues and look outward to the electorate where we need to win support. increasingorbyn leadership of the party.

when does the rest of the party get a chance to run things and make a success? 2020? >> i think the members have spoken and the members of the party from all different wings .ant us to come together i think this issue is settled. it is important to know that the they expressed a view of the leader, that was summer. the 40% of people who voted in the contest that we had expressed the concern as well. we have pretty much the same issue as last year. the issue as well of the leadership. most importantly, the public should have confidence. we know we lost the general election because people had

found concerns about competence, economic competence. and, brexit, in brexit, we saw over one third of labor voters t voting to leave the european union. what are we saying about that? >> you are speaking more about immigration. i'm wondering if that is your tactic now, to go out and win back some of those voters. >> i think it would be wrong to posedhat immigration has challenges in some areas. wayoes not have to be that if you make the right investments into areas and probably integrate communities.

once you do that, it is trusted and understanding -- it is not hard for the far right, whether in the uk or france are any of these other parts -- much harder for them to walk into the vacuum and take a foothold. >> thank you very much for talking to us today on bloomberg , joining us at the labour party conference. francine: we will be back with entry is reutimann -- andrea's utermann. make business you here. what will the uk become in three has it for years from now? articleve not enacted

50 or renegotiate the terms. one can be hopeful. on the basis of what is happening today, one has to be extremely concerned. i think the country will be potentially meaner, we have seen that with the attacks on immigrants. r.rtainly the country is poore and, the terms of trade will be less advantageous than the product of single markets. that is not a good thing. also, we have completely underestimated the positive impact of immigration on the uk significant growth in the last few decades has been sealed by that. howe's no answer of they will deal with the potential dismissal of thousands of them, even if they were grandfathered.

permitsto issue board for thousands of thousands to pounds anfes at 10 hour. whether you look at the macro or my good details, this is a very concerning situation. deutsche bank, not making new daily lows, but inching there. the german-based, english-based bank -- bank -- if they have toe dramatic cuts to the stock price, etc., will become out of london or the greater dramatic system? >> if they come out of the greater dramatic system, i should say, i was trained by deutsche bank, very good training, and i'm sad to see the bank in such trouble. if you look at the global

banking system, clearly it is financialfrom repression dynamics. the bank is able to refinance itself. i do expect that there will be some policy adjustments. deutsche bank is clearly caught in the crosshairs. it is very volatile, very public. public is a very morning. thank you so much. please stay with us. in the next hour, we try forward the market discussion. and, we are thrilled to bring in gary shilling. worldwide, in london and new york, this is bloomberg. ♪

tom: let me do a data check. the markets are on the move on this monday. we follow through the ugly friday. elevated vix. yen.rong to, aank weakness, point new weakness. i would call it soggy over the

last hour. francine: that is a technical term from francine. i would call the oil market also a little bit soggy. we spoke before a meeting of opec producers. it a is available to make success. we're joined live from algiers, where the opec meeting will take place. what are the chances of an actual meeting? likely better than what we had back in april. iran is going to be here for meeting on the sideline. the difference as well is iran has almost come back to

pre-sanction production levels. algerian minister i spoke with yesterday is actually pretty optimistic that some kind reached.ould be he even said that the saudi's theireven lower production to attend way levels. 10.2actually produced million barrels per day in january. it would be half a million barrels per day less on the market. saudi,e: the thinking is according to algeria, is ready to pump a little less as long as iran pumped the outlook.

of course there are many scenarios. we could see some surveillance .rom iran also, iraq. the iraqi minister who walked in an hour and half ago, he said he was confident a deal could be reached although he was not clear on what level of protection that means for iraq. thank you so much. i guess entrees, i don't know how predictable it is to predict the market. absolutely. our subject is the oil price will be somewhere in the region of 45-50 five dollars over the .ext months

that would help because the higher price relative to a year .go would feed into inflation we did a cold winter, clearly, an agreement by opec to reduce or cap the price. it is no lack of demand. that is the assumption. we think that markets would react quite positively to that. tom: could you buy major oil stocks here? you talk about buying straw hats in winter. is big oil something that ali on -- alianz look that? >> definitely. stable andof sometimes increasing dividends. the oil stocks have that. it is an advantage over what you

can get. beyond that, i think the view needs to be tempered with the fact that we are in the carbonized economy. i look again at the synthesis of all of this go back to the survey from last week. i'll be in the global recession? near, i don't think we are global recession. we need to get used to somewhat lower real growth rates. we are missed interpreting -- misinterpreting that. it is more likely closer to 1.5-2 percent today. francine: thank you so much.

this is a picture of overall market. incks dropping in asia, europe, also foreshadowing some losses. we're live in algiers. i put this on the screen. i don't do that often. this is bloomberg. ♪

tom: bloomberg surveillance worldwide. let's get right to a business/. here is taylor riggs. taylor: the company that just became the biggest hotel operator in the world will thend its workforce in middle east and africa. hillary clinton and donald trump square off tonight in the first of the presence of the bait. inew poll shows them locked a two-way race. the poll has each candidate at 46%. when third-party candidates are included, trump leads.

there are predictions that tonight's debate could be the most watched presidential debate ever. you can tune in here on bloomberg tv and livestream on twitter. coverage begins at 7:30 eastern on television.30 that is the business/. francine: thank you so much. reached a they shares new all-time low. thet to have you on program. what happens now? >> we are probably going to lurch from scioscia bank moment to deutsche bank moment. germany is distancing itself.

if they were to pay, they would have to pay $34 million. this kind of uncertainty could go on for some time. tom: there is a rationalization going on. i will be blunt. we have seen this before. where is the tip point on the stock price? when do we go to outright panic? >> that is a good question. all this year, we have seen the two shipping share price reaching all new lows. we cannot work out the client panic and risk. i think that state support has a lot to do with that. merkel would be distancing herself from georgia bank. this is an election year. this is a very political issue.

sadly it will be politics, and not share price. tom: agreed. you saw that in an article this weekend. ecb step in as the adult in the room? >> another great question. i think they have their own issues between managing monetary policy and regulating the bank. it has done a pretty good job of both. as you see in italy, the answer is not there yet. this could take a long time. the u.s. elections will come in before then. francine: we had the irish finance minister on the program on friday. he remains diplomatic but maintains it is purely coincidence. a it is coincidence, but strange quinces, isn't that?

i do not buy at all what is coming out of germany, the chancellor of germany not wanting to step in. it is too important for the german economy. whicha political issue will get a result at a lower price. we are going to have to leave it there. thank you so much. theur next hour, on markets, gary shilling. worldwide this is bloomberg. ♪

tom: morning, there is no debate. merkel will not bail out

deutsche bank. new lows.nged to it is no debate. it is the call of our generation in this hour. qe.he death of finally, there is no debate. america will be riveted on tonight's clinton-trump effort to good morning, everyone. this is bloomberg surveillance life from the new york headquarters on this monday. i am tom keene in the land of debate. francine the quad looks on from afar. the buzz on the debate in london. is there any interest? francine: it is huge. it is a little early or late depending on if you are an early riser or late riser. the new poll shows it. they are really can. a european, it is quite difficult to grasp. an amazingl be

evening. we will have coverage on radio and television. right now, to get you up to speed on the debate, taylor riggs. taylor: hillary clinton and donald trump to square off tonight in the first of the presence of the bates. a new poll shows them locked in the two-way race, each at 46%. when third-party candidates are included, trump leads clinton. there are predictions that today's debate could be the most watched presidential debate ever. you can tune in here on bloomberg. coverage begins at 7:30 eastern time on radio and 8:30 on television. at the united nations security council, the west blamed russia over the bombing of the city of aleppo. france and the uk call the bombing a war crime. civilians have been

killed in the last week. aleppo is the center of opposition. there was tension in the skies over the east china sea. china sent 40 aircrafts on what they called a routine drill. japan responded by scrambling their own warplanes. if it is the first time they had seen fighter jets in the region. he inspired the american golf boom with thrilling victories. has died.mer winning winning seven

titles. he remained one of the highest-paid athletes, with millions in endorsements. tom: arnie's army. youth,t convey, in my arnie's army would charge of the fairway. just extraordinary. only inventednot the game but redefined sport. now a check of markets right now. extraordinary this morning. we could spend an hour on the data check, so much coming in. onto to the next screen where we have all of the action for you. equity bonds, currency commodities, the curve flattening, the weaker mexican peso. deutsche bank finally with about. the last couple of minutes. 5.8%, but iill down

take your point. i want to show the banks. you can see, overall, the index is being driven lower. there is also concert on european banks about capital raising. crude, i am watching that because of what is happening in algeria. i want to show you the turkish lira. it is just a little bit lower cutuse the country has been to jump. tom: let's go to the bloomberg right now. on the debate, megan murphy will join us with perspective. this chart is the economic backdrop for mr. trump and mrs. clinton. morning in america are the two green rectangles. buoyancy of the 60's, the late 90's. the blue circle down below, the

bush administration. then, to four-year terms for president obama. 49% onat one point american economic growth. intois the tension going tonight's debate. francine: it is. i really like your chart. this is a more simple chart. it simply goes to show the fact that central banks have health lastss treasury in the weeks. you can see it going down. it has huge market implications .or treasuries tom: very good. it is wonderful, on this day of market movement to have gary shilling with us later in the hour on this inflation and deflation. to sum up what the dynamics are,

alberto joins us. good morning. i look at what is going on and think what i would suggest is how close we are to financial instability. front andeen put center, a regime change. close.ink we are we had a brief moment earlier this month with the bank of japan pushing back. we're now back with the dovish trend to buy everything in the markets. political uncertainty is very high. we think the debate tonight is a 50-50 percent of them. the markets have underestimated the probability of a trumpet advantage. this was the products .ith exit in the uk you are right, growth is low, people are angry, and we're getting close to instability and

policies that are damaging on the international level. tom: on the international level, it can be this, that, the other thing. the question is, is it controllable? is there a smooth path to wherever we are going? >> china is under control. reserves have been stable. risks., there are other , a new the syria crisis bombing just days ago. we have instability in turkey, russia. having more policy around the does notnegative, it do anything to reduce these conflicts. medium-term, it does not look good. francine: what needs to happen? is there a way of tempering this? medium to long-term, it does not

look good. working banks to to temper this? monetary policy and central banks remaining the only game in town is wrong. they have been trying to tell us for the past two years, especially in the past few months. you had every jewel banker telling you that is so much we can do, we cannot lower rates. the boj told you native rates have a negative effect on lending. make products if the interest level is negative. francine: i understand what you're saying, but i don't understand how you can fix it. the banks have a mandate, and you stick to that. >> that's right. but, too much anesthetic creates addiction.

the government has to fix it. looser fiscal policy in europe. the european commission is very proud of its numbers, but they are estimates based on some investments. then, japan is trying to do it paget is at a much worse than other countries. tom: i want to fold in deutsche bank. you have some freedom now to speak about this. chart.ry, i look at that technically it is a disaster. it shift just one does to tactical solution, but this rebounds into your world as well, doesn't it? >> it will take 10 years to fix the bank. tom: but they don't have 10

years, come on. there is a point when you need tactical repair, don't you? >> the problem is that business model was based on trading for many years. up with very little capital, offsetting dividend and it does not work anymore. manner iseart of the when does this affect ms. merkel and others. there is a point when this becomes front and center. largeis a very institution. it needs a lot more capital. more portly, the issue that german banks have not restructured. you have the highest percentage of ownership in banks. it is the subsidized banking

system. bank -- deutsche bank does not have a commercial bank to get back to. it is not profitable. it is not like berkeley's that can do more private banking in the uk. there is no domestic work it to get back to. at the moment, it is not a solvency issue. the market is spreading a little bit too much. they need a lot more capital. tom: francine? francine: thank you so much. lo.erto gaal stay with us throughout the week. we have a very busy week. join us for live coverage. we will be talking to the market.names in the

this is bloomberg. ♪

francine: let's get to the bloomberg business/with taylor raikes. taylor: the brexit photo has three quarters of british ceos considering moving their headquarters outside of the uk. 76% consider some form of relocation. over half believe that business will be disrupted after the country leaves the european union.

donald trump plans to apply his new campaign discipline to the first debate. in recent weeks, it trump has risen in the polls by learning to stay out of his own way. a new poll shows the two are at a dead heat with 46% each. donald trump leads when third-party candidates are included. on can watch here live bloomberg tv and radio. that is your bloomberg business/. flash.ness n seltzer, extremely good with poli. make murphy knows how difficult polls can be. she joins us now.

what is the distinction versus the show we have seen before? megan: we have to remember how many candidates he was competing it's in the republican primary. one on one. one moderator, three people going at each other for 90 minutes. tom: how much do you expect it to be the two of them going back and forth or is it like she speaks, he speaks, she speaks? as factester holt checker has come for front. hosting a form, was accused of not the visually

coming back -- not sufficiently coming back at donald trump for his comments. aexpect lester holt's to be forceful presence in this debate, especially on fact checking. that said, it is easy to get them off message. hillary clinton is a master at swaying a question to the soundbites she wants to get across. francine: that is a good thing, right? i know they were probably coached, what is the biggest question? if she can steer the attention on donald trump or whether donald trump 10 stick to script? megan: our poll that we showed earlier shows them deadlock at 46-46. what is the biggest issue for democrats? in the poll, it comes down to the economy. she has to make her case for how she will jumpstart growth, jumpstart jobs in america. for him, on the flipside, the

biggest issue is terrorism and keeping the nation safe, threats of isis, threats of lone wolf terror attacks. he will want to hit that hard. also, what stands out in the poll is how unforgiving will -- unfavorable both candidates are. be expect him to make a big deal about her e-mail and track record with the public about being less than transparent on certain issues. we know? how much do historically, if i am an undecided voter, joy wait for the first debate, try make up my mind that day before? isthe first debate generally fairly decisive. .e have seen obama come back it does not have to be make or break tonight. if either of them have a particularly bad night, that

for either of bad them. gallo with us. literally, you will be able to watch this in the debate, dollar-peso. >> you can almost correlate the peso to trump polls. beenweakness has gaining in anticipation of trump. there is a crisis. people out of the labor market. people angry. unfortunate, fact checking does not work anymore. we have seen this in europe. no one thought brexit would happen. the same in other european countries. the risk is bigger than we think. tom: we will be watching so throughout the

coverage. this is really exciting. tonight coverage begins on bloomberg radio, 7:00 p.m. then, we migrate forward to a: 30 on bloomberg television. from london, new york, the markets are on the move. futures, -13. this is bloomberg. ♪

francine: this is bloomberg surveillance, brought to you live from london and new york. we are looking at deutsche bank shares. they're losing a little less than about two hours ago, but still down. this is on investor concern that legal bills may force them to raise fresh capital. now on the phone. great to have you on the phone. we talk about deutsche bank a lot. what needs to happen so we do not talk about it enough? how do we fix this? >> yes. thank you for having me, first of all. it is an ongoing story, really. i think a very difficult one for deutsche bank to solve. bailey, the market is pushing them hard, especially on the uncertainty over litigation

expenses. maybe the catalyst could be that the bank will try to raise capital. in reality, in practical terms, they of course cannot easily raise capital ahead of being able to tell investors a number of the settlement might cost them, and therefore, how much capital they might need. for the time being, i think it is still basically a waiting game. underlying this is a more medium-term restructuring that is going on. tom: you do a great job of linking equities dynamics over to the fixed income markets. what point is the balance tipped? >> i think that is a great

question. there has been a lot of debate recently about the additional hybrid security of deutsche bank. they have dropped in price and are reacting to the news as much, or sometimes more than, the equity price. i think there is a little bit of a mispricing going on there. there is a difference of looking elds. if you look further up the curve, the senior funding, if that became difficult for the bank -- tom: we have to run. good morning worldwide. ♪

i am francine lacqua in london. tom keene is in new york. this is the picture for banks overall, but more generically for stocks.

clearly deutsche bank is dragging everything lower. worldmarkets around the are a little bit under pressure, as investors are seeking the safety of government bonds. the turkish lira -- i wanted to show you that for good measure because moody's has downgraded turkey. 1.2942. there is a real way to sterling this morning. there is wait to sterling this morning. francine: ceos interviewed are thinking about getting away from the uk, so it is significant. let's get to bloomberg first word news with taylor riggs. taylor: hillary clinton and donald trump square off tonight in the first of the presidential debates. a poll shows them locked in a tight two-way race. the poll has two candidates, each with 46%. tonighte predictions

that the debate at hofstra university could be the most watched presidential debate ever. you can tune in on bloomberg radio, tv, and live streamed on twitter. our coverage begins at 7:00 p.m. eastern on radio, 8:30 pm on television and twitter. in washington state, authorities say the 20-year-old man suspected of killing five people in a shopping mall has had a number of run-ins in the law in recent years. he was arrested outside of his apartment complex. he emigrated from turkey and is a legal u.s. resident. for severalwaters thousand people to leave their homes in cedar rapids, iowa. water levels are lower than in 2000 a when a major flood devastated the region. still, people and 5000 -- people in 5000 homes were asked to evacuate. france plus president -- france's president spoke today in calais.

thousands of migrants are camped out near the city. they tried to board buses and trains. baseball is mourning the death of one of its young stars. miami marlins pitcher jose fernandez was killed in a boating accident early sunday. fernandez had escaped from cuba by boat as a teenager and saved his mother's life when she fell overboard. pose a fernandez was 24. tom: thank you so much. this is something. dying at 87lmer after a wonderful and lengthy life. pose a fernandez was more than just an outstanding young pitcher. he was bringing a new spirit to baseball. he was exceptional. it was exceptional to see people yesterday morning jose fernandez, and a new "where baseball could go" with more showing ofand a

emotion. a big loss for all of baseball, and particularly for the success of cuba in baseball. right now back to our economics. alberto gallo is with algebras. -- gary shilling joins us as well. on this inflation and deflation. gary, i am sorry, the tide is going against you. sector, 3.1% inflation. is this up we were even gary shilling can turn to a concern about rising inflation? gary: do you consider the fact that you bring your house from yourself? does that really matter? but service sector is rising. the curves are moving up, gary. i mean, it is a phony baloney, the idea that you rent your house from yourself. they have to plug in some kind of number to take account of

people living in their houses. that does not make much sense. janet yellen, as central banker to the world, the world is not falling off a cliff but is really soggy. does that come right back to the united states? gary: i think janet yellen is more concerned about the labor markets than anything else. the labor markets are so-so. they are not falling apart, they are not running ahead. a "wall street journal" article talks about things leveling off, but a lot of people basically did not find new jobs after the recession. they do not have the skills. you have a globalized economy. that has been a dominant force in the world the last 30 years, and these people are not able to compete. tom: do you support a read increased to move from stan accommodativemate to janet yellen's moderately

accommodative, to raising rates? gary: back in january, i said the next move of the fed will be to raise rates. tom: francine? francine: what used to happen for them to go from rate hikes to a reduction -- what needs to happen for them to go from rate hikes to a reduction? what kind of data are they looking at? gary: they will not do anything unless the economy gets soggy, that i think it could very well. leg down ine a big oil prices. you simply do not have the strength in the economy. you look at other major central banks, i think there are about eight of them that have raised rates after the great recession. no precedent. -- after yourlso thoughts, i would love to get to alberto gallo on this. isn't this just a new reality?

we will not see 3% growth anymore, get used to 1.5% or 2%, and that is not bad. gary: i wrote a book -- shameless plug -- and in there, i said 2% growth as long as this process lasts, and we are now nine years into it. walknk we can say 2% and away. you do not spend a lot of time getting all the nuances. tom: what is your take, alberto? do we need to look at the metrics of the economy differently? alberto: i have two words for the fed -- "mr. opportunity." "missedsaid -- opportunity." next year there could be a slowdown. you are going into a slowdown with very limited room to do anything. that is a mistake. it is not whether inflation is getting to 2%, or growth getting to 3%.

we are deleveraging for many years. we are not going to get there, but we need ammunition for the next slowdown. tom: alberto has a great phrase -- "collateral effects." one of your collateral effects is the savings paradox. bring up the chart. i did this chart without even knowing that gary shilling did this chart. this is a savings rate to personal disposable income. on the right side is that leg up in savings. are acting normal, aren't we, given all these distortions? gary: postwar babies have been notoriously poor savers, and they have to say like crazy or they will have to work until they die. another interesting thing we are seeing in japan is that low interest rates encourage people to save more. you can say, well, low rates, they do not want to save anything because it is not worth it. but if you have to look at a retirement goal and you do not have the money and interest rate

are not there to do the job, you have to save more. tom: gary shilling is with us. 10.71 right now. in new york tomorrow, we're thrilled to bring you robert feldman of morgan stanley. what a perfect time to have an extensive conversation with dr. feldman, on his japan. worldwide, this is bloomberg. ♪

francine: i am francine lacqua in london. tom keene is in new york. this is "bloomberg surveillance." let's get to the bloomberg business flash with taylor riggs. can china's takeover would turn this into the largest

supplier of pesticides and agrochemicals. there are two other big takeovers pending in the sector. dow chemical and dupont. and bayer's bid for monsanto. republican presidential candidate donald trump looks to apply his new campaign -- trump and hillary clinton's face-off at hofstrant university in new york city. in recent weeks, donald trump has risen in the polls by learning to stay out of his own way. arel shows the two of them in a dead heat with 46% each. you can tune into the debate here on bloomberg radio, tv, and live streamed on twitter. our coverage begins at 7:00 p.m. eastern time on radio, 8:30 p.m. on television and twitter. that is your "numbered business "bloomberg business flash." the one of their themes is

currency litmus system. you have?kee, what do michael: one of the things they teach you right away in economics is never say this time is different. it appears since the financial crisis there is something different in the financial markets. for the first time since anyone can remember, the volume of 40 strange traitor -- the volume of foreign exchange traded around the world is falling. that may be connected to some other things that are not supposed to be happening. let me bring up something that is wonky but i know you will love it. .overed interest parity the closest thing to a physical law and economics that there is. it means the difference in price between the spot rate and the forward rate in any currency pair should equal the interest rate differential between those countries. is out with a report that showing -- that is showing the physical law is not working

anymore. the lines should be at zero. they are negative. they blame it on a growing demand for dollar hedges and increased information, so that people are not arbitraging that delay anymore. alberto: if you have negative interest rates, as a bank you as a centralepo bank. but as an investor you do not make money by shorting bonds and negative interest rates. it is almost a symmetry. mike: part of the problem relates to the bank of england, the bank of japan, the ecb, and the fed. the normal relationship interesting markets is that currency weakens and trade goes up. your exports rise. that is not happening around the world right now. goldman sachs put a chart together showing what is

happening in japan. throughout the last couple of decades, as the currency weakened, trade went up. the blue line is exports from japan. the white line is the trait-weighted yen. in trade-weighted yen fell 2010. exports fell. that is not supposed to be happening. gary: that assumes a lot of other things are going on, in terms of the global demand for imports and exports. currency is one factor, but you have a lot of other things going on. mike: sure, there is weakened demand around the world. you look at that chart, and the relationship holds throughout the decade. gary: the banks are being forced to being pulled back from trading. mike: that is what the b i.s. is saying. there is less arbitrage going on. gary: but you would expect others to step into that breach. monopoly on have a

this. you have hedge funds and private equity, a lot of other people that theoretically ought to step into the breach. francine: alberto, you should step in. if you go back to the boj, it is unclear whether there is whatent on confusion over governor kuroda does next. alberto: there is another factor here. credit risks of banks, they do not feel confident in arbitrage with each other. the globalization. we are seeing anti-trade policies around the world. this is something that pushes people toward money in their own currencies or in dollars. gary: let me ask you this. think that trade is the result of economic activity, or way does the cost out that run? i can never figure that out. tom: alberto? hasrto: globalization

benefited a lot over the last 20 years. over emerging markets, wage growth. it can go the reverse way. overall, i think it would be bad. this is a basic principle. tom: that goes to the heart of the matter, something that you and i cover every day, the horse before the cart. this monday morning, there is a big feeling about which is the horse and which is the cart. is a problem for the central banks. they decide how to go forward on this. will the dollar inhibitor said? --should not if this new will the dollar inhibit the fed? it should not if this new relationship is holding. one report looks at the volume of foreign exchange going down, and one of the reasons they say is because people are doing less trading, they need to do less

because we are moving more toward services exports that are less price elastic, so we are not seeing big movements the way we saw before. francine: how worried are we about liquidity overall, alberto? we had a bounce where the markets were really crazy, and now we are talking about the bubble burst. how damaging is the lack of oblique city? -- how damaging is the lack of liquidity? alberto: everything sold off 10% across all risky bonds, but there was no real catalyst. but noty is an issue, one got killed in february. no bank defaulted. so you can have these binary markets where the market is fine for many months, and then volatility spikes up. that is a consequence of the fact that central banks are the only game in town. when the safety net disappears, then you have this problem with

liquidity increase in volatility. if you look across balance sheets, funding liquidity, there is a lot of that. we do not see defaults or a solvency problem. gary: if you look at this whole issue of liquidity, you have two worlds. you have what has dominated since 2009, and then you have the economies, the world on the ground. they have been in a very different world. you really have to say how much centralliquidity is banks in there, and what effect does it have on goods and services and production? tom: we will continue this discussion on radio. we may look forward to driving this discussion forward, particularly deutsche bank with a modest bounce on an ugly morning. record lows, remarkable to see deutsche bank at 10.7 three euros there.

futures are negative this morning. this is bloomberg. ♪

francine: this is "bloomberg surveillance." i am francine lacqua, with tom keene in new york.

announcement -- they will not split into two separate companies at this time. it was about three months ago that pfizer will not make a decision on this by the end of the year. chiefst time the executive officer spoke about this was back in august, at at the time he said they are mulling whether the drug giant is better together or apart. at the time he said there was no wrong answer. this is a company that was going through m&a. today they say with a will not -- they will not pursue a company split. tom: the end stronger at 100 and 40 -- at 100.40. this is a proxy for debate dynamics that we will see tonight. we digress this morning to what you observed yesterday -- down in flames, the jets. crushing the philadelphia eagles

3-0. i cannot figure it out. o'neill, theott bravest person in sports. what do you do when you take on the philadelphia 76ers and the resurgent new jersey devils? he drags along gregory richardson, who has experience in gaming as well. i know you are working full-time on the real world of traditional sports. and whereth e sports the next thing is. next thing inthe the world. you have 100 million people playing a game a day, so it is a big sport. we think bring it together, the infrastructure has a big future. tom:'s budweiser going to advertise on this? this is a 22-year-old who has no job, laying around, right? >> budweiser might not, pepsi

might. red bull might. there is a great opportunity to engage in business circle that same world as the sports does. be huge, esports can but they could need federal regulation to attract main sponsors. >> it is the most regulated sport in the world. in fact, right in your backyard, we have crystal palace. josh harris and david blitzer are pretty much heavyweights, with the sixers and the devils in crystal palace in south london. it is big. tom: you have an esteemed history in vc. blowups,talk about the but let's push that aside. ey are you wasting time with

sports when there are so many other opportunities out there? >> it is a remarkable business. when you have a quarter of a million people watching esports out there and the average span -- the average fan spends hours a day? you do notportunity want to miss, investing in any sports team -- in an esports team. to -- i'm thinking of another loser, twitter. the issue with twitter is that they cannot make money. is this thing going to create revenue? how are you going to do it, greg? greg: you think about traditional sports. the average esports fan spends close to $.70 a day. that is why the sixers value add here is going to be big. the opportunity for the fans to interact with players. it is always good to bring a

smart guy with you. tom: to me it is fascinating. it is a huge generational thing you see in the house. scott o'neill, thank you so much. greg richardson, thank you so much. i am looking forward to the new jersey devils. can i say that? devils. it is like a new team. thereose of you globally, are three teams in the new york market in ice hockey. that is a marketing and revenue challenge. tomorrow on the program, much of the debate follow-up, and we are thrilled to bring you dr. feldman on his japan. from london, from new york, this is bloomberg. ♪

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♪ round one tonight, trump and clinton share off --

square off tonight. david: shares of germany's biggest lender's long -- slumped to a biggest low. opec's credibility, to question -- come under question? i'm jonathan ferro along david westin and alix steel. the markets are front and center, deutsche bank and other record low. david: a new record low for the stock. that $14 coming off of million asked from the department of justice, it's tough for deutsche right now. we have seenix: areas with the divergence of the two. all of this lays the groundwork for the big event tonight, the debate, we will be sleeping because it's 9:00 p.m. i will melt tomorrow if i do. seeing a lot of notes coming