anna: deutsche bank anxiety grows. equities are sent lower in the u.s. and asia. china's challenges. the yuan is going to join the elite class of global currencies this weekend. will the pboc needed to tighten policy next year? almost 100 days of flying blind. a lack of clarity is making u.k. companies more reluctant to invest.

a very warm welcome to "countdown." it is friday morning and i'm edwards. manus: and i manus cranny. tock dropbank's s yesterday evening. we hit a new record low. what did it do? this is the latest or that we have, that 10 clients out of approximately 800 have reconsidered what level of cash they looking for the derivatives with deutsche bank. you have got the department of justice's potential $14 billion bid, but that is when we saw this move. we saw a record low in the u.s. overnight, anna. this is a small number of hedge funds and they are reflecting what the counterparty risk is, what they want to take to deutsche bank. some think there could be a failure of deutsche bank, but that has not moved up to zero probability. is this a knee-jerk reaction in

terms of people's perception of counterparty risk? deutsche bank says they no longer reflect necessarily accurately reflect their counterparty risk. anna: the questions about banking have always been contained quite well in europe. the bloomberg banks and financial services index is down. but yesterday, you got a sensein in u.s. trade that this was a sector, with commerzbank and deutsche bank, this is a sector very much back in the spotlight globally. that has gone into the asian session and asian banks, they are down. are down as banks well. there is not a concern about direct exposure when it comes to asian banks and deutsche bank. the people are concerned

regarding the unseen linkgaeage. manus: nobody is talking about this being a liquidity issue. but if a cornerstone customer changes their mind in terms of counterparty risk, that is what shifts this story onward. anna: let's turn our attention to the risk radar. just he put things into perspective. to just to put things in perspective. the yen is up, but only by little bit. gold is up, but only by 0.25%. japanese banks have lost around 7% this week. and put the try quarter into context. today we closed up the quarter. in europe, nearly up 4%. it was tech and autos that dropped the pace. the wi, ti i love this.

that is how we ended the quarter, after all of that. i think of the range in the volatility. juncture,t 19% at one the lowest of 2015, and then we bounced. anna: and of course, the topix got a quick bounce. and we put the mexican peso in there. the peso, becoming the proxy for the u.s. election. this will be the focus of this quarter. the skit to the bloomberg first word news. -- let's get to the bloomberg first word news. reporter: the japanese consumer prices fell for a sixth straight month in august with household spending plunging more than 4.5%. however, this is modest third-quarter growth. this underscores the challenge faces as he tries to get inflation up to his target. u.s. treasury secretary jack lew has used a message to mexico

to deliver a pro-trade message. key technology the stress caused by globalization. stresscknowledged the caused by globalization. there are fears that this trump presidency would contribute to relationship between the countries. u.s. consumers appear to be shrugging off initial brexit concerns. jfk's confidence index increased six points, beginning th regains from june. household expectations for their personal finances improved, but business confidence remains lower. a guage indicates expansion in september and further signs of stability in china. the pmi reading came in at 50.1,

above estimates of 50 in august. home prices in major cities are soaring. some are betting policymakers will switch from using to a tightening mode. yuanhile, the optiooffshore is trading slightly lower than the u.s. dollar. it becomes a one of five global currencies tomorrow, alongside the dollar, the euro, the pound, and the yen. payments of the global are hovering near a towo year low. global news 24 hours a day, powered by 2600 journalists and analysts in more than 120 countries around the world. you can find more stories on the bloomberg at top . i'm rosalind chin. this is bloomberg. manus: thank you very much. some making headlines are coming in from the bank of japan governor, mr. kuroda. he is in parliament. tooays he thinks it is

early to discuss any exit plans. kuroda has said that bond purchases might fluctuate. we already know that particular of the ability to do a little bit more or a little bit less, but they are targeting 0% on the 10 year bond market. anna: more bad news for kuroda and his boj team in the shape of inflation data around japan. here is juliette saly with the ground up. reporter: a there are different picture from what we saw yesterday, with the exception of the shanghai composite in a positive finish in new zealand. we do see equities under pressure today. of course, as you mentioned, we can see the european banking woes started filter through into the asian region as well, particularly a lot of weakness coming through from those banking stocks. and of course, you have that oil fielueled rally coming

through as well. the nikkei is pretty much the underperformer, down by 1.4%. about this,peaking but we have seen more upside coming into the yen. japanese equities giving back what they gained yesterday. we did have some economic doubt as well with japanese consumer prices falling in august for the sixth consecutive month. so, a pretty downbeat day in asia. but september has ibeen the best quarter for asian equities since 2012. we have a big decline coming through in china. there are reports that china will cut tariffs to wind and solar power. as you were mentioning as well, we can see the weakness and concern about deutsche bank, also, spain, and wells fargo, really -- deutsche bank, also commerzbank, and wells fargo.

really moving into the banking sector here. manus: it is always harder on a friday. now, the pain in the german banking sector. well, it shows no signs of abating. it has been a heck of a week for deutsche bank. plans have been revealed to cut almost 10,000 jobs. anna: caroline hyde is in frankfurt, where deutsche could be in the eye of the storm. caroline, bring us up to speed. caroline: it has been hitting asian stocks, and slightly rocking european trade as well. we understand that some 10 hedge funds that do business with deutsche bank are starting to cut their exposure. now, these are the likes of rocket capital management and money and partners. clients, weout 800 are talking about.

confidence is starting to unravel, however. why put your money on the table with deutsche if there is a risk of disaster? so, notable that deutsche bank itself is coming out and saying, "look, our clients are among the most sophisticated out there." let's put this into perspective. maybe some less sophisticated depositors don't understand this. notably, we can see the signs of stress. stocks of been plummeting, along with the bond prices. manus: later, caroline, you will be speaking to one of the key executives from commerzbank, which has already announced dramatic changes to tackle the environment. the numbers here are quite gargantuan in terms of what has been announced. is this going to be enough to turn commerzbank around? caroline: some analysts wanted more cost cuts coming from

commerzbank, but you are right, the numbers, the scale of job loss is phenomenal. 9600. when you factor in some new job s, they've only be 7300 going, but that is one in seven employees. overall, we can see them suspend their dividends again. aleman brought them back in during 2007. they are trying to edge away from the era deutsche bank is so hurting on. all of this restructuring is coming from the new chief executive, who has taken the helm. but as i said, maybe this does not go far enough. 6 millionto see euros. germany is still among one of the least efficient banking systems when it comes to the cost of making money, the overall cost you have.

the overall cost of income ratios are just too high. the return on equity needs to pump up a little bit. notably, they will also be looking to become more efficient. but as i said, some investors are working why the cosrying. anna: think you very much, caroline hyde. as we said, she will be speaking to commerzbank's cfo on the job cuts and the stability of the german banking sector, and that is coming up at 10 minutes past 12:00 london time. as our guestg us for the hour, the head of fx strategies at the bank of merril america merrill lynch. talk to us how the risk is personified within the fx market. >> i think the impact is not as straightforward as one would

expect. you would expect this to be negative for the year. however, what we saw during the forpean crisis example, they are bringing money back. marketsif you get the to move, because the euro has been used as a founding currency, this can also affect the euro. their concerns about the broader banking sector in europe. yes, this could weaken the euro. this is why the euro has been responding to headlines, but we have not seen any sustained loss. if things get worse, the swiss franc can appreciate, but even there, the s&p is ready to intervene. n will also be

honorable. so, in terms of the context, in terms of what we have seen so far in the fx markets, it is pretty contained from what you said? >> absolutely. is, if youeresting are to just look at the fx market with the exception of sterling, it is as if nothing has changed. anna: that is strangely comforting, thanos. manus: what is the underlying view of the market in terms of central banks, still fully committed? recause the bang for you manipulation of the fx markets is running thin. >> i now, the number one focus is the -- right now, the number one focus is the u.s. election. the on that, i think central banks will continue with the

key theme, will they hike in december or not? and another very interesting thing that is developing is the contrast between the ecb and the boj. both of these central bank have been challenged, the boj moreso this year. i think they have taken some steps in the right direction, but most of the challenges do not extend to the ecb. inflation is very low. if it is hard for them to accentuate this time, imagine next year, when we will have to harder.r anna: who has been more successful at the unconventional policy, the ecb or the boj? >> it is hard to tell. both of them have not -- in terms of deflation, both of them

have undergone this. it was easier for them to keep extending qe. the boj has a very hard times, but i think the boj at least addressed concerns about the sustainability by shifting yield targeting. anna: we will talk a little bit more about japan, thanos. >> difficult times for the central bank. manus: thanos, stay with us. highlights from the day ahead, it is friday. anna: in less than one hour, we get a snapshot from the u.k. property market. then, it is french inflation data. we are back in the u.k. at 9:30 for gdp. personalen, it is u.s. spending, the consumer, anna. that is what it is all about. anna: u.s. businesses are flying

blind almost 100 days after the brexit vote. we have more on british investment, next. yen's strongest rally ine ighn eight years has hit a psychological barrier. anna: divisions at the central bank persist. we will have more from patrick parker. this is bloomberg. ♪

manus: welcome back. it is 1:20 in hong kong. you are looking at a very dull and gloomy shot of hong kong. ang seng dropped 1.2%. small numbers of hedge fund

clients reconsider holding their collateral of deutsche bank. rosalind chin is with us for the bloomberg business flash. reporter: boeing is nearing a multibillion dollar deal. that is according to people familiar with the matter. the two companies are in the late stages of talks for at least 30 jets. valued atwould be about $6.7 billion. qatar airways declined to comments on the discussions. wells fargo's ceo has endured a second day of accusations from lawmakers over the bank's fake account scandal. the entire board of directors was dismissed. stumpf ordered that they are holding the leaders accountable. 2 million accounts might have been graded without customer authorization.

independent directors will oversee an internal review into what happened. u.s. toight ask the cover brexit related losses as a condition for making new investments in the country. speaking to bloomberg at the paris motor show, further inves investments will be dependent upon this. are warning that the possible visit by china could threaten the reason gain. he is expected to attend a congress of ministers meeting last month, but his trip has not been confirmed by the chinese foreign ministry. that is your bloomberg business flash. anna: thank you very much. there have been 99 days since

the u.sk. decided to leave the european union, and firms are still in the dark regarding the exit strategy. they are having to make decisions without any clarity on what the business environment will look like, or how easy it will be for the u.k. to continue trading. manus: for some insight into how ired aftery has fired afteare the vote, we look to the pmi data at 9:30. them, we have our weekly brexit show. thanos vamvakidis is the head of fx strategy at bank of america merrill lynch and he is still with us. so, thanos, today is, as anna wa s saying, it is about hard data, as opposed to the softa d data. so, it is a moment of formation? >> yes, we have seen a slowing

of the economy. most of this came before the referendum because of the uncertainty. one can argue that perhaps, the worst is ahead of us. any uncertainty will affect the economy. however, i have to ask, what is already priced in? based on the debt we have seen so far, sterling seems too weak. manus: that is what we were looking at so far. this is the fifth month of declines, the worst run of declines since 1984. >> depending on the time when article 50 will be activated, this will affect the markets. but when we look at stirling today, we might have to wait. definitely, there will be a

rally, but it could be an opportunity to buy. to see a sustainably weaker muching, we need weaker data than what we have seen. it is a slowing of the economy. most likely, the worst will be toward next year when we see cables going up to 1.25 anna: what about the sector of the economy that could benefit from this? the exporters. we had liam fox extolling the virtues of more trade yesterday. what do you think is the toential for the u.sk. address the imbalances of the economy through trade driven by a weaker pound? >> during the global crisis when sterling weakened a lot, we did not see exports picking up as one would expect. anna: why is that, do you think?

>> there are a number of factors. in this case, uncertainty will definitely delay investment. when we look at the current account deficit in the u.k., it is not the trade balance that is the problem. it is more transfers. the u.k. economy is a service-oriented economy. there is a lot of concern related to brexit. but definitely, the w eaker sterling is helping and the fact that the bank of england has been proactive will provide some buffers for the economy. manus: thanos vamvakidis, thank you. he stays with us. anna: we digest a deluge of data from japan, the first brother look from a change in tax from the boj. lots of detail coming out today. how exactly they want to shake that curve in the bond market. we know they want to keep the 10

year at 10%, but what about the rest of it? manus: equity markets are shaken, but they are reconsidering the risks associated with deutsche bank. this is bloomberg. ♪

anna: welcome back, everybody. this is "countdown." in tokyo, we see little or against the yen, 101.8. on.0 her e in lond a new addition of a break is now available on your bloomberg and on your mobile. the cover story, no surprise. manus: it is pervasive. the 10 players of course, who will be involved in what happens to deutsche bank is the front story, isn't it?

anna: about 10 hedge funds have cut their exposure to the bank. abr fell 6.7% to a record low. a great story we have on the bloomberg, the 10 people who will be key to deciding deutsche bank's future. the u.s. justice department, the number three official calling the shots. angela merkel is in there as well, along with many other european regulators. the next lori we are looking -- the next story we are looking ahead to is the data. we look at a flash ridding on the eurozone inflation. -- we will have a flash reading on the eurozone inflation. the fed's preferred inflation gauge picking up to 0.9%. of course, the conversation we had yesterday with our guest was about the correlation between the price of oil and the five year forwards in europe, about .8%. anna: finally, daybreak focuses

in on earnings from h&m. the third quarter results will most likely not be pretty. deutsche bank as weak sales, stiff competition, and markdowns. manus: and we have got the european banking front and center. guy johnson is with us and he has his chart of the hour. strange enough, it is bearish bets on deutsche bank. guy: so, this is the number of the options on deutsche. i am going to assume people are creating negative downside trajectory for deutsche. that is what i think this spike is. you can see it if you go into your market data on your bloomberg. you can see the short interest ,n deutsche has spiked up though it is nowhere near commerzbank.

is going up pretty sharply at the moment. the market actually lightened up recently on the number -- the short interest it had on deutsche, but it's coming back. swaps we looked at the in 2011. one line from deutsche bank overnight is that the credit swaps don't reflect their risk position at the moment, but it is natural they would defend it. have a look at the function where you can see the amount of options that are traded, the volume of options. on the flip side is where the real volume is, 11.2 times the four week average. the volumes are barely four times. the most active option out there is the eight dollar. manus: the skew is deftly

pointed at that. manus: that is where you can find what options are traded on your deutsche bank trade. anna: now, let's talk about that deluge of data from japan. it shows the country suffered a lot. industrial production pointed to modest third-quarter growth. manus: now, the data offered the first broader look at japan's economy. it shifted the focus from expanding the money to controlling the interest rates last week. anna: let's bring in our tokyo bureau chief. great to have you on the program. thank you for joining us on "countdown." what is your take away from the data? we had a lot of data. the headline figure fell 1.5% in august. slightly lower

than what economists expected. but if you strip out the volatile oil and food prices, prices rose 1.2%. that still does not point to any positive signs from the boj, but it is certainly is slightly better than the headline figure. slightly more recent data from tokyo for september showed a similar figure. the headline figure fell 1.5%. but when you exclude food and energy prices, they rose 0.1%. the headline figure is pretty bad, but the actual underlying -- the price pressures remain very weak. manus: this is the first data released since the bank of japan introduced its yield curve. are there any policy implications? >> yes, it is basically only a

one-month figure. it is very difficult to read too much into this data. but it certainly does not make life easier for the bank of japan. i think the pressure still remains on the bank of japan to ease policy further. the big question is, i think, when? they might just wait and see a little bit longer before they take further action. mind you, the bank of japan's arsenal is limited with policy actions -- we will see further cuts to the negative interest rates, which will he wrote into interest rate for earnings. will only take further action when absolutely necessary. anna: thank you for joining us from tokyo.. stay with bloomberg later on this morning. we will learn more about exactly what shaped the yield curve. we will see the plan from the boj for the monthly asset

purchases. we will show you that at 9:00 a.m. isus: thanos vamvakidis still with us. three times they knocked on the door. ied totimes the yen trei strengthen. it seems to be hitting a little bit of a wall. is 100 just a big psychological break point? >> i would argue that in a short-term, perhaps there is some dollar-yen downside. particularly, if uncertainty ahead of the u.s. election increases. but in the long-term, that the question is whether the new framework of the bank of japan will work or not? in theory, it is supposed to work because what the boj has done is turned to the government and say, i will keep yields at zero. feel free to do whatever you can on the fiscal side to the

for the economy. but will it work in practice? will we see a new combination of fiscal and monetary policy? and the most important part, with the markets deliver? -- will the markets deliver? works, you don't need to spend a lot. if the central bank needs to buy more and more, then it does not work. anna: so, this will be tested like any peg in the fx market? >> it my. i think that is why the boj is giving the purchases the same at the moment. but i think they should be purchasing less in the future. manus: this is the dollar-yen. but if we look at the inflation data that we have had, let me pull this out for you, which is the core cpi. i mean, literally, this is the core cpi in the blue line.

we are so far away from this target of 2%. do you think, and this is the question we have been asking throughout the week, do you think that targeting 0% on the tenure governmenn year governmes the right strategy? do you think the curve will see a steepening? >> i think it is a step in the right direction, but it is not only an issue of monetary policy. japan isn the bank of equilibrium e spat equilibriubd is they need structural reforms in addition to monetary and fiscal policy. you need three arrows, but so far, we have only seen the monetary policy arrow. anna: inflation excluding oil and energy fell 0.1% in tokyo.

it is the first time in three years that they have seen things worsening in the japanese inflation story. this could lead to questions about whether more easing is needed from the boj. but we are in a new world now. they are telling us what they are aiming for in the yield curve, but not the amount of money they will spend each month now. >> that is part of the problem. how much can they ease? how much can they buy? this is why, i think, the boj now is thfrom the they are doing the best that they can, but they need the other two arrows. we need to see inflation expectations rising. anna: thanos vamvakidis stays with us for our next conversation. manus: china's data for september, well that met us at 50.1.

that is up from 50, dead flat, in august. joining us from beijing is tom mackenzie. is this a relative strength in terms of the chinese manufacturing numbers? what does this tell us about the wider economy? tom: manus, it probably feeds into this picture of continued stabilization for the manufacturing sector, but also the wider economy. this is now the third month of index.or the touchini prillaman are indicators are pointing to continuing strengthening in september. the commodity prices are stronger. a lot of this is underpinned by the housing market. of course, we have seen a surge in housing prices. backsts are now stylindialing

their applications for further monetary stimulus. now, some say they might look at tightening, but it is a difficult balancing act for the policy makers here. anna: we have got the yuan joining the imf's currency reserve basket tomorrow. is this symbolism, or does it point to a growing global frole for the currency? >> certainly, from here in beijing and from the authority's perspective, it is validation of their policies to open up the economy here more. they see this as a historical footnote. it could see central banks and fund managers buying up more assets.

it could see sovereign yield dipped down, allowing beijing to borrow more cheaply. but overshadowing that is the crucial point, the suspicion that the authorities here continue to manipulate the currency and of course, the capital controls. analysts are pretty unanimous in saying, we need to see more market openness for a sustained period of time before you can call the yuan a proper currency. if you look at the china and u.s. trade, the yuan only makes up 2.4% of payment. so, it is not used widely. the authorities need to navigate better. manus: tom mackenzie, thank you. still with us, it is thanos vamvakidis. from ubs, lines they say the impact hinges on the meeting golden criteria.

as a reserve currency, it could mean that the shares will rise 5%. what would that do to the currency and the people's need to buy yuan? >> it is consistent with a gradual approach for china to become a market economy. one can argue it was long overdue, given they bought out all of the china already in the global economy. i don't think it has immediate implications. they don't really need to purchase more shares in the reserves. when you this is coming for a year now. so, i don't see immediate implications. anna: is the likely next move from the pboc tightening? >> i think that is likely at this stage. i think it is too early to start tightening. for now, i think it will be on hold. anna: thanos vamvakidis stays

with us. manus: coming up, afraid fed. i was never going to get that right, website? divisions that the federal bank purses. and we have more with patrick harvey, next. anna: hedge funds are sent pulling their money. manus: and we again digest a deluge of data from japan. and the first broad look at the country's economy since the bank of japan's change of tack last week. this is bloomberg. ♪

anna: welcome back. this is "countdown." 1:48 in48 in london and new york. it is friday morning now. the msci asian-pacific is down by .9%.

it looks as if futures -- features suggest we will be negative at the start of u.s. trade. let's get to the bloomberg business flash with rosalind chin. reporter: well, boeing is nearing a multibillion dollar deal with qatar airways. people familiar with the matter says the companies are in the late stages of talks with 30 jets. at part order it be valued $6.7 billion, although airlines usually negotiate discounts. both airlines declined to comment. has endured a ceo second day of accusations from lawmakers. some called for his arrest and the dismissal of the entire board of directors. stumpf argued the bank is holding leaders accountable. 2 million accounts were created

without customer authorization. there will be an internal review into what happened. nissan might ask the u.s to losses.t related the ceo said further investment decisions will depend on clarifying the u.k.'s relationship with the eu. nissan is responsible for one in three cars built in the u.k. last year with 80% of production exported. manus: thank you. janet yellen has worked hard to preserve consensus among the members of the policy setting fomc, but that has started to fray. officialsents from showed a desire to tighten for the first time this year. philadelphia fed president told patric patrick harker told

bloomberg that the federal reserve should lift rates. >> whatever you measure you look at, it is moving toward the 2% target. some of it is related to headline inflation. as we see those firm and increase, we will see the 2% target. i am convinced we will achieve that sooner rather than later. so, i am somewhat concerned about falling behind the curve. manus: jerome powell says policymakers should continue to be patient with a view of recent remarks from three other governors, including yellen. on monday, kathleen hays will be live at the federal reserve bank of england and have an exclusive interview with loretta mester. you can watch that right here on bloomberg tv, and catch it on

bloomberg radio. anna: let's talk about the u.s. then. thanos vamvakidis is still with us. do you think the dollar is --it is clearly, usually, about the fed. the possibility of a rate hike in december is not a certainty. is it about the election? >> the elections definitely are a factor. message from the fed is they want to hike. for the first time, the dot plot is right. in the past, it was always too hawkish and had to adjust to the market. now, it is the other way around. anna: but the market is still not going with them. 53% is not 80%. >> i think this will change after the elections. i think the fed wants to hike.

inflation is picking up. it would be at a gradual pace and they will be behind the curve, but not by much. manus: you talk about them being behind the curve. this is two year government bond yields. for all the fed's speak, it has done nothing to move the two year notes. we have moved nine basis points, the tightest range since 2014. what does it take to shake the bond market? >> the market does not believe the fed yet. up to an extent, the fed has been trying to hike this year. there were always external shocks that kept the fed on hold. so, this is why there is so much uncertainty and why the market is waiting. even if they kept the december hike, the market might not price the pace of hikes yet.

one would continue pricing each year. but i think the fed would like to do so faster. anna: you mentioned the u.s. election in conjunction with the islar, but the mexican peso the currency in the spotlight. it really has become the proxy on the election, hasn't it? do you make assumptions about it is as ifusef: macquari >> the u.s. elections don't matter. the only place where the market seems to response to the election is the mexican peso. manus: how much more is there? >> the peso responds with about 15% of its value, which is a lot. it is like flipping a coin. the we know the result,

uncertainty will be resolved. after the election, the big event will be the fiscal policy in the u.s. jump, if much of a we did see a clinton win, how much of a jump what we see in the peso? >> positioning is not stressed. there are other reasons about keeping it where it is. manus: we were looking at the risk radar for the quarter and we were talking about oil. it dropped 19% and it finished the quarter down 1%. it is scraping up to 50%. mean, we have a vicarious oil trade. run.uple has had a >> i think they are extremely interesting. we started the year with everybody saying it was dead. i think this puts a floor on the oil price.

thatis the currency depreciated the most after the opec decision this week. also, it is undervalued. this is the loosest monetary policy at this point. it is the most undervalued currency. anna: so, you see rate hikes from the norwegian central-bank? >> not necessarily. not at this stage. but so far, they have been easing, despite the economy really doing very well. so, being on hold, is that enough to support them. i think so. anna: this friday morning here on "countdown," thanos vamvakidis. manus: up next, there is only one story in town and it is deutsche bank. it could be running low on options, but investors have been falling over themselves to bet on the stock's trajectory.

anna: we are back in frankfurt next. we will have the latest from caroline hyde, who is in frankfurt with the latest on the to bank. we will bring you an interview with commerzbank. this is bloomberg. ♪

3 wishes banks to reduce their financial exposure to the german investor. china challenges the one set to join the elite club of currency this weekend but the economy is stabilizing. will they need to tighten policy next year? plus, almost 100 days of flying blind. the charity on brexit -- parity on brexit. >♪

>> a very good morning to you. >> welcome to the program. 7:00 in london. we are getting numbers. >> third quarter comes in at 4.82, the estimate was 4.85. they plan to open more stores in , stickingve markets to that plan opening more stores. in september 2016, they expected sales. a warm summer, strange enough for rhine europe. bumpis expected to see a in margins. this is a key issue. , the market was looking for 54.3. a slip on estimates.

4.8 2 billion is what we have there. iceland, and pakistan in 2017 and they plan to launch one or two new brands in 2017. intelligence making the point that they are making an online investment where they can garner more margin. the weather resulted in a challenging start to the autumn season. prices u.k., house prices rising month by month according to nationwide. the year on year increase is 5.3%. year5.3% increase year in was an estimated of 5%. a little punchier than the estimate. 0.3% month by month compared to ms -- estimate of just that. interesting data overnight on the u.k. economy.

consumersshowing continuing to shake off brexit concerns as economic optimism surges. interesting, the bank business barometer also increased by eight points. it has regained a little ground. >> we will wait and see. whether it is a hard or soft brexit. i gave you the net income, but the pretax is a red hair line. 6.3 billion. a miss on the margins, but we will see what happens. london down 9/10 of a percent, harris indicated down 1.5%. we saw deutsche bank and the united states of america make a new lurch lower. what we have, 10 out of

removing 800 clients some funds from deutsche bank and one line that cop my eye. failure of deutsche bank, now it has moved from zero probability. the risk elements don't reflect our position. >> banking stocks around the world, it weighed on asia overnight. various parts falling around exposure to deutsche bank. just to put that in context, there is nervousness in the market, the extent of the flight to safety. a fairly flattened dollar-yen. this is the extent of the move on the mci, down 9/10 of a percent. >> the close of the third quarter, stocks in europe rose by nearly 4%.

9% -- 603.89%. the topic in japan doing a lot better. up by over 600% as we saw by the boj. that switched things. peso, raisedican rates in mexico to try and counter this position but the growth numbers, inflation numbers under pressure. the peso is about 15% undervalued but would it rally on a clinton victory? some, but not all. >> let's get the bloomberg first word. japanese consumer prices fell

for six straight months in august. plunging more than 4.5% from a year earlier. a modest surge however in growth. u.s. treasury secretary to mexico to deliver a pro-trade message and create deeper relations. globalizationd and says trade is the best way to see growth. u.k. consumers appear to be shrugging off initial brexit concerns and their worst fears -- as their worst fears are allayed. 6.2 minus one in september, beginning a ground lost in

beginning in june. household expectation improved as did the outlook on the economy. a private gauge of chinese banking outpost indicates expansion in september and further signs of stability. manufacturing tmi reading came in in line with x immense. the economy generally stable for some analysts are betting policymakers will switch to a tightening mode. the off-shore u.n. trading lower versus the dollar. yen comes one of five currencies tomorrow alongside the dollar, the euro, the town, and the yen. global news, 24 hours a day,

powered why more than 26,000 journalists in more than 100 country -- 120 countries. this is bloomberg. before we check out what is happening in the asian equity sector, rbs. it is renaming its investment banking unit. you thought you work for rbs investment bank, soon you will be working for mark -- west markets. latest in thehe market action, containment in the deutsche bank story, that is what we are tracking in asia. >> and we have seen a lot of banking stocks in asia hit hard today. you can see there is a downside to most markets. china up one third of the

percent. this market is going to be closed all next week, the golden week. a little by happening on the final day of trade. a different story elsewhere from yesterday when we had the l -- oil feud rally really help out the markets. today we are seeing those oil and gas stocks take a breather. a lot of concern in the market -- deutsche bank's was going to become something bigger. and lest contained than many hoped for. you can see some big banking stocks come under pressure. mitsubishi closing down by 2%. it has been an excellent quarter for asian stocks since september 2012. thank you.

very latest on the markets. there is pain in the german banking sector. after a week after we saw deutsche bank's stock come to a record. plans for 10,000 jobs there. frankfurt tracking the deutsche there, they could be in the eye of the storm again. caroline, good morning. give us the context, the latest news on deutsche bank. you are right, the eye of the storm is where it is going to be. i am here in frankfurt and , at leastank falling ,0 hedge funds that we know of millennium partners, rockers capital management, cut the derivative positions with deutsche bank. putting it in perspective, 10

out of almost 800 hedge fund clients. only a small amount but starts to shine a light on concerns. the number one investment bank here in europe, we have already have deutsche bank fighting back saying we have sophisticated clients. they understand the realities of our financial position. goldman sachs putting out a note this morning that coverage ratio is better than other banks. this is what john cryan has been trying to put forward. levels andrisis nevertheless, this is an issue of confidence. this is why we see credit default swaps. this is why we see on yield spiking. share price near record lows. thaturrounding the issue less sophisticated hedge funds or retail clients, what about depositors? will start to move away from doing business with deutsche. >> this is where the market

begins to reassess. 10 clients out of 800, that is one context. whether cornerstone clears with deutsche bank really begins to shift the dial. that is where one day possible move turns into something with more aggression. commerzbank, huge losses. the thinking there? is this enough to stymie the right on commerzbank? cuts,at swings of job factor in some of the boost in jobs created by the digitalization of the bank. that is one in seven employees, that is one in seven employees, big moves being taken. they reinstated it after 2007. was bailedive itself out itself. having to take drastic steps, cutting costs.

all to try and prove that in this environment of mary low interest rates, environment of over back germany, they can return on equity and start to turn business around. we will be speaking with the cfo later today. is it enough? >> caroline hyde in frankfurt. it looks as if the unit -- initial european trade is down 6.2%, a very initial call on the deutsche bank stock quarter. is that difference between u.s. financials and european is at the core. >> caroline will be speaking with commerce banks cfo. that is all coming up in 10

minutes past 12, london time. the chief executive of investment management. good morning. give us the context around the deutsche bank story for you. how nervous doesn't make you when you see this story gripping the european banking sector and also affecting u.s. taking, asian sector, people talk about exposures? the markets at -- are nervous at the current levels. they take anything that is adverse, that throws them off. it does nots me -- worry me too much about the stability of the banking sector but tells me we are not back to normal. >> it is not systemic? >> know, the systemic problem is confidence and trust is not back to normal levels. >> let's put this in context.

, when does this start shift? this is reminiscent of what happened in 2007-2008. points pulled money and it snowballed quickly. it has the potential to be exponential. when does this story shift? refinehifts once you sick -- refinancing rates seemed to threaten the software -- solvency of a bank. if you look at those spreads that are going up, because you can short credit risk, that pushes up their cost of finance and eventually the solvency of a bank. -- undermines the solvency of a bank. that is always the concern. if you have the situation we have in germany with deutsche at the moment. it is also a question of, is

this real or in the heads of a whitend actually knight investor coming in from the sidelines can make a lot of money because he can underpin those concerns or make them go away and all of a sudden, stock price not be -- might not be real anymore. >> if you think the story has been overblown and it could concern,be too much what would be the west -- best way to play this? we have been asking people, do you buy the stock? some say it might be the way to go. some people have suggested that perhaps that could be. >> we have seen early in the week that people thought this was the worst, let's make a killing. it can go either way. i would be watching this a little bit as to how much

tougher it gets. i think we are getting to a point where perhaps, -- >> what we have here for you is the all well financials in white. , is almostcontagion contained within financials if you look at u.s. financials versus european financials. european financials were down 24%. >> this is a year to date figure. by u.s. banking stocks down 4.6. this has been the european story. about the 10g people who could decide the fate of british banks. first one is not anybody in europe, germany, it is somebody over at the doj. even if it -- there are

underlying problems well understood, that $14 billion number that seems to raise flags for investors. >> if i think about it, this may be helping deutsche bank with a negotiating position. want to -- with the boj bring down systemically important banking? us, i do needth to do an attribution which was the indication. that indication? -- potential, not the equivalent of the market count of deutsche bank. >> we will see how that number develops. up next, august didn't hold a cpi fell and housing

fell. we discussed this in bloomberg.

manus: 7:31 in london. germany commerzbank has indicated 2.2% lower on the trade date versus the backs. hold, concerns grow about deutsche bank and commerzbank. anna: the banking sector in europe in focus. the country's economy spotted along in august. immodest third point -- third-quarter growth. manus: data offered the first broader look at the japanese

economy. shifting focus from a monetary stimulus to expanding money supply to controlling interest rates. officer attive investment bank. truck -- bank of japan trying to find a new direction. dollar-yen, every time they say they have lost a troll of the currency, knocking on the door of 103 times in the past six weeks and we have not broken it? have we lost control? guest: i don't think they have lost control. they might have confused us over the last two weeks as to what they are wanting to do but we are increasingly optimistic about japan. we are watching wages go up but we are also noting how difficult it is after race -- a long. period to get people

interested in rising prices. guest: -- change we havee seen in the oil price as you look at the change today. that is not really giving central banks the lift we need. it has not moved in the way they wanted to where you look at it -- where was last year. how does the boj need to get a grip on this? i think the oil price, the best thing about oil price is eventually drifting out of the ones -- when your calculation so it should not be too much of a problem. up,s about getting wages gross up in japan and we are seeing that coming through. i am not as concerned about the inflation figures as i have been. with: we started the show prices, but we also had the .uarterly returns for equities

a great deal of bawling from opec at the end of the quarter. 1.57%. give us your take. how do you position into the back quarter? we have an election, juror just germany, italy under pressure. guest: the third quarter played out to be a nice goldilocks environment. not what you expected when it started after the brexit vote. lots of nervousness. that sort of gotten -- goldilocks environment may be going. we have seen more volatility now since the politicians came back, since everyone came back. with the presidential election there and a few other things that thereould note is a greater chance for more volatility and downside volatility. we are generally optimistic and list about the medium-term future, i think the difference

between the bulls and the bears could not be more extreme than it is at the moment. anna: are you buying european assets despite the political race that loom large on the 2017? european,are buying but more excited about asia, japan. we are buying the topics but also the developed world in asia because we see them really benefiting on what is happening in china. manus: thank you very much for joining us this morning. chief executive officer at investment management. it is risk off for sure in these markets. hong kong, korea, all lawyer. -- lower. anna: a big focus on the banking later for another day, yesterday weighed on the

deutsche bank listing opening in the u.s.. other bad news for the banking sector weighed on stocks. that will be your countdown. on the move is up next. this is bloomberg. ♪

>> welcome to "on the move." we are counting you down to the european open. i am guy johnson, alongside caroline hyde. this is what we are watching. the morning after. deutsche wakes from a rough night of trading in the u.s. as anxiety mounts. hedge funds reduce exposure. contagion concern. short interest in commerzbank hits the highest level since 2013. we speak to the chief financial officer.