guy: welcome to "on the move." we are counting you down to the european open. i am alongside caroline hyde who is in frankfurt. here is what we are watching. a bad time for the pound. we approach the crucial moments of trade for sterling. later we're going to speak to the could chancellor just to the chancellor, philip hammond. -- its first profit decline since 2009. worse, brexit turbulence

is still to come. twitter tanks. a know from google means from twitter? it is going to develop with the gmm -- let's start off with the future story. the fair value 22 art a positive start -- fair value pointing toward a positive start. this is how the market is pivoting. it really is being rippled across all of the asset classes. a positive start expected in europe. we did not move very much yesterday despite that solid data. we work our way toward that payroll number. tomorrow we may start to see some movement if we get a decent figure. everything is down but the dollar. the aussie -- the aussie down. , they are allona trading lower against the u.s. dollar. we are expecting a positive

story from the u.s. a little bit later on. today.ims number is the world's best correlation. the bond market story as well. check out the spread across the atlantic. because -- we, will talk to our guest about what is happening there. a fascinating picture. it is beginning to hang on what .appens with the fed the chinese on holiday but currency is moving. let's catch you up to what you need to know. here's the bloomberg first word news with juliette saly. juliette: guy, thank you. deutsche bank has been indicted for colluding to conceal the italian lender's losses. it mismarked the transactions and dozens of others. this according to an audit commissioned by the german regulator. the german lender adjusted the accounting of 37 traits in 2016.

-- 37 trades in 2016. the lender says there's a connection between these trades. goldman sachs retirement plan is -- from lian cooperman's firm. the banking told employees of the decision in a memo yesterday. cooperman has been accused of insider trading which he denies. it is the second time this year that goldman has cut ties with former employees who have wanted to authority -- who have run into trouble from authorities. the u.k. chancellor philip hammond will meet with wall street executives today. he will tell he wants a brexit exit.hat gives a good the trip comes against -- among mounting concerns that moving the eu will prompt this is to

move jobs out of the u.k. fbi has arrested a contractor assigned to the national security agency for allegedly stealing classified documents. harold martin was employed through booz allen hamilton. it also employed edward snowden who fled the u.s. in 2013 after releasing thousands of an essay files -- of an essay files. hurricane matthew is headed for the u.s. southeast where it is expected to better the coastline and threaten electricity supplies to more than one million people. losses are seen as high as $15 billion. matthew has already battered cuba, haiti and the bahamas as a category three life threatening storm which the u.s. has not seen for at least a decade. samsung electronics shares hit a

fresh high in korea after calls for the company to restructure and modernize. he wants the south korean firm to separate into an operating company and a holding company. paying shareholders a special dividend. he is arguing that would make samsung electronics more same -- more transparent and provide taxpayer benefits. global news, 24 hours a day, powered by 2600 journalists and analysts in more than 120 countries. i am juliette saly, this is bloomberg. guy: thank you. it has been a rough few days for sterling. the currency has fallen aggressively and at the same time everyday. what is going on here at? traders looking for liquidity and pulling the trigger? you can see it clearly over the last three sessions, they go big sell their. will we see it again this morning?

we are trading just around the 127 level -- 1.2705 on the cable rate. derek halpenny, joining us. good morning. will you be selling sterling this morning? derek: the momentum is it that way. perhaps short-term. i would be very wary since brexit, we have heard from a lot of different people about the next key moment was going to be around the time of getting information in regard to invoking article 50. people were prepared to sell into that story. .hat is unfolding as we speak at the same time, you have to look back and say "what is the biggest surprise we have had since the brexit vote? it is quite clearly the macroeconomic situation has been much better than many have expected. if you incorporate low

volatility, generally favorable market conditions which is important for currency deficit like the u.k., there are positive factors. we are quite cautious in the forecast -- we are not expecting any kind of big move lower from here. the brexit uncertainty, hard, soft, that is going to be with us for years. this is a one-off initial news a story. in terms of how this plays out, that is going to be a long time before we get a clear picture. anna: how do -- caroline: how do you played at? do you just hold this trade where it is and suffer the interim volatility? how do you play this on a day-to-day basis? derek: it depends on who you borrow from. if you are a corporate and you

need to hedge, it is very understandable that you would be taking a vast measure and perhaps some of these flows are kind of corporate flows and trying to hedge their exposure. ,f they are a short-term trader in my sense, if you get a big move lower over the short term, that could be a time to come in. on valuation and metrics and below 25, we would be at extreme 125, we- and below would be at extreme levels. guy: the data has been looking pretty good. yesterday was a good number. it was above expectation. doesn't that price out the possibility of a near-term cut from the bank of england -- does that price out the possibility of a near-term cut from the bank of england?

derek: it is starting to creep back the other way. we don't think they are going to come again. guy: we are done. derek: i think it is going to be there to use. they clearly has not happened. ped.ink that would be cap obviously, you given what is happened in fx from inflation standpoint, there is that implication for multi-policy as well. guy: thinking further down the road maybe. derek is going to stay with us. mitsubishi. stay with bloomberg for coverage of the imf meeting. we are going to bring you the managing director christine lagarde and philip hammond. all ok at the boj. this data.s. data is

is the central bank something to cheer? -- data. is the central bank something to cheer? -- according to an audit by the german regulator. we are in front for it later. there is speculation surrounding the german support. up.of that coming this is bloomberg. ♪

caroline: welcome back to "on the move." 15 minutes until we start trading. we have a little bit of risk appetite out there. let's get you up to speed with the bloomberg business flash with juliette saly. juliette: caroline, thank you. easy annual profit has fallen for the first time its 2009 as it said terror attacks hurt demand. pulling britain's vote to quit the european union inflated its currency costs. it's a stocks plummeted 35% since the referendum. -- with lenovo. highest- shares trading in nine months. lenovo would take a majority stake in the venture. payit suisse has agreed to $90 million for claims it did

not adequately disclose -- to reclassify assets and its banks. the banking make later said more than $1 billion were relabeled in the fourth quarter of 2011 as being managed by the bank which generates higher fees. credit suisse admitted wrongdoing. former coo agreed to pay and $80,000 penalty for pressuring employees to meet -- to miss represent the asset. kfc and pizza hut fell after hours after beating estimates in the third quarter. the ceo says sales and china were down because of anti-western sentiment after an international court rejected beijing's claims in south china sea. yum still plans to finish the spinoff by the end of the month. that is your bloomberg business flash. guy: stanley fischer says central banks need fiscal help to spur growth.

we have been hearing that a lot. fischer says ultralow interest rates are not necessarily -- and calls for "transparent and sound monetary policy here and abroad." the yen's longest losing streak -- boosts the u.s. dollar. the move has given a boost to japanese exports and some relief for the boj. still with us, derek halpenny. where does the yen go? derek: very short-term, it is the u.s. story, yields are judging higher. -- yields are drifting higher. the fact that we have tried to break on the downside three or four times since brexit, and that has failed. where getting traction the other way. if you look at the broader picture, i would still say there

is skepticism in the market in regard to the boj's coverage of assessment. comehether the markets to convinced that is going to be enough to lift inflation and citation, i am not so sure. -- inflation expectation, i am not so sure. then really yields, high in japan, that brings back support. guy: let me say this chart. this is dollar yen. this is the channel that dollar yen has been in. you are not convinced about this. walk me through what you expect to see. derek: it is a break, we could get up to 1.25. without a change in perception about economics and the ability of japan to lift inflation on inflation and citation, then the nominal yields loses influence.

if you look at nominal yield spreads, check this investors are used to historically 400 basis points of spreads. we have nothing at the moment. it is creeping higher, but if you look at real yield spreads and the correlation of the dollar yen, all the way through abenomics, that correlated very strongly. that inflation expectation element that you input, you calculate your real -- it is more important given that abenomics is a strategy in place in japan. caroline: what are people saying costs,he dollar funding because it has been expensive for european banks? it must've been extensive for japanese banks. how much of that has started to ease? story i think the basis

is probably here to stay. p -- rosieosie that's the bif rose a piece on this. the bank's ability to play the arbitrage to remove that, so that covered interest rate parity remains. spread in the forward market is the same. that is broken down because of regulatory developments, the inability to use your balance sheet to close the hedge, to close that arbitrage, i mean. in that sense, the cost of dollar funding is a story that is here to stay. we have this money market reform regulation which is going live on the 14th of october. that is having an influence on dollar libel rates. there is aus is

structural element that is going to remain in place for some time. chart.want to find my we'll come back to that in a moment. this is the real interest rate chart, the yen one. -- andu are telling me this next chart, the two-year german yield spread, that is not a significant factor for euro-dollar as we traded the moment despite the fact that we have nominal interest rates widening out. derek: what have been sick that's what i have been saying is it is playing a role -- what i have been saying is it is play numeral and the risk for euro-dollar playing higher. guy: you expect the euro to be higher? derek: euro should be lower.

-- the spread tells you euro-dollar should be trading below 110, but it is not. it is higher than that. it is that kind of discrepancy that is not driving and lower. if you look at real yield spreads, it is more consistent to wear euro-dollar is. in this kind of environment where you are at the lower bound, investors are paying more attention to what is happening on the inflation side. countries where we're talking about inflation overshoot in japan. if japan becomes successful in achieving and overshoot, the yen the weekend. i don't take investors believe that is what happened and therefore the yen remains well supported. againne: euro-dollar come dollar. let's talk you a story -- let's talk u.s. story.

what's number do we need to see tomorrow to make you think november is alive? a good question given the fed politics have become entangled. think north of 200,000 but in portly some of the other dynamics showing strength as well. ratep in the unemployment and a pickup in the wage story, if all of those three were combined in the reports tomorrow , and it will make for an interesting furniture market conditions, because i'm sure an element of the market will perhaps start to consider that they may be in a position to where they go in november. we think it is very unlikely. if things continue to improve and they will be under pressure for them to not go would back up of idea of certain elements the board of governors are holding off for political

reasons. guy: derek, never enough time. derek halpenny, the european head of mobile markets research of mitsubishi. no misses the conversation with christine lagarde coming up later on. we are minutes away from the european equity market open. some of the potential corporate movers in today's trading. the just trouble mounts -- deutsche's troubled mounts. we will talk about that later. easyjet feeling the brexit headwinds. all the stories. the market open is seven minutes away. this is bloomberg. ♪

guy: 7:54 in london. easyjet -- external event affecting the profitability. this as well the extranet events of the brexit. also what is been happening in terms of terrorism affecting the business sharply. the stock is called the lower this morning. bank caught asche little bit higher. speculation swirling, not confirmed by bloomberg. we're hearing that the german government is speaking to the department of justice. a great piece by bloomberg showing auditing of the deals -- overall potentially with some -- some 30.

called up 12% on the back of [indiscernible] guide. ♪

guy: good morning and welcome to "on the move." i am here in the city of london alongside caroline hyde in frankfurt. we are moments away from the start of european trading, and caroline as the morning brief. caroline: guy, fx headwinds. easyjet sees its first profit decline since 2009, but is the worst of the brexit turbulence still to come? twitter tanks. butcharacters per message, two from alpha that are enough to crush the shares. what google's no means for twitter. and samsung surges hit a fresh high, as it calls to restructure in modernize. we are live in seoul. guy: we certainly are.

we will take you there later on. let's talk about what's happening with the markets. we are expecting a mildly positive start to the morning. let me take you to my bloomberg and show you what's going on. the white line is the ftse 100, usually the first open. cac, the ftsethe up. it's climbing a little bit and we are expecting a mild open. solid data out of the u.s. yesterday, and the fed should be moving interest rates. stocks are stabilizing here in europe. we are up by .2%. let's see with the details are and find out what's happening with manus cranny. manus: the biggest one-month jump in 20 years is playing through in the asian markets, carried through the european opening. the imap ope on the upside; london, paris, frankfurt getting a little bit of a bump.

up by .1%.re you notice that materials are virtually unchanged and energy is virtually flat in this section, which takes me to gmm; when you have wti at 49.60, we are still above 50 in brent. it's $51. goldman sachs says you will probably see the market run out of sync. the gilt market will be a focus, a huge amount of issuance today in europe. you will see the british government issued 24/7 maturity. gilt up, have a look at the yield at the bottom of your screen. 10 year government bond yields . futures rally. 2047 paper is out today, 2 billion pounds worth. france and spain will come to the bond market as well.

keep an eye on sterling. it's politics, not the economy, that's necessarily going to join it. that was the view from cibc. this is the czech republic chief to go shooter when he said zero chance of getting immigration and access to the market. let's kickoff the stocks to watch. easyjet at the start of the roundup. we are waiting for the opening. that will take it a little more time to open on the london market. let's have a look at i'm not doing well with the opening flats. 70 is the bid, a 12% stake. will i have a third strikeout? let's have a look at bank populare. there's a dividend playback and pound.

that's in spain, up. let's see whether we will have the pretax profit guidance, still out there. try as i might, it is not there. 195, 28% lower than 2015. the pound it's the currency for the price of 90 million pounds. originally at the time of brexit, they estimated it was going to be 35 million pounds. let's have another look at osram. 70 euros per share. i leave you with that. a little bit of m&a and the cost of brexit. you can't make british beaches as sunday as they are in spain. guy:: they are, they are lovely. manus cranny. unicredit having a solid morning. $4 billion for the pioneer unit,

the wealth management business. it should be interesting to see how the trades. let's get back to easyjet and find out exactly what's happening. the profit is expected to fall for the first time since 2009, with terrorist attacks hitting demand. it also says the decline of the itsd inflated foreign-currency costs. joining us now, the once fund manager for ffm global. the brexit hit, let's talk about that. they have been cautious on giving guidance on what it will mean. >> yes, and there's of course is just the pound related hit we are seeing, 35 million pounds more than the currency impact pre-june 23. what we don't know yet is the impact of brexit on-demand, both in terms of how much the weaker

pound is going to dissuade britons from traveling abroad over the winter and into next summer, and also of course the awesome impact on the economy and whether or not that stores up more trouble for next year. caroline: chris, i want to turn our attention to an amazing chart we have been rustling up, showing how in lockstep the market capitalization of easyjet is with the pound. it really has been rattled by brexit. give us a sense of the turnaround, the growth trajectory. how do they turn the market cap back up? >> well, she says she is planning to press on with her growth plans. 8% capacity increase plans for the year that has just begun. the view at easyjet, and certainly at ryanair, is that it's times like these when the cream rises to the crop. they think they can squeeze the

smaller discount carriers in the majors and come out ahead, and we are already seeing some of those smaller carriers really struggling. u.k.ve a monarch in the that has had to resort to a refunding, and on the continent we have air berlin slashing 1200 jobs and possibly exploring qe. this bigwe have seen profit decline at easyjet, the first since 2009, carolyn mccall is still very upbeat about emerging from this period as a more dominant player. guy: an 8% drop in the share price at the moment, very big negative reaction. why didn't the market see this one coming? we knew brexit would be a problem, we knew the terror story would be there. the market reacting so

violently to what is going on? >> the figures suggested slightly below the missed estimate. 520 million pounds, about 20 million below that. i think seeing that sterling hit in black-and-white, being published at the time when we know sterling is in the grip of such volatility is bound to raise concerns, and perhaps also that pledge to carry on with the capacity splurge at a time when there is huge overcapacity in europe. there's a massive glut which is pushing fares through the floor. in many senses, it's a great time for brits to travel but when they go abroad they won't be able to buy as much. guy: they keep seeing lots of easyjet sale signs around london. alexi, let me bring you into the conversation. the direction of travel for easyjet, excuse the pun, looks

pretty difficult. what do you make of it? >> we aren't that negative on easyjet. i think the stock reaction was a bit overdone. we believe it is a good company it is very cheap,, the market is probably overreacting today. but within the tourism area, we are more negative on ota's, on flight travel agencies. names like priceline, for example, i would be more cautious on. that's a completely different situation, where the whole consensus is puzzled. ota has become too big. that theyconvinced will grow in the future like they used to. if you think about it, priceline's market cap today is larger than the largest five hotel chains put together. so we are in a situation where the booking system is larger than the hotels. and they have been squeezing

hotels, taking between 50% and 20% commission. they are trying to fight back, pushing clients to book directly on their own websites b giving them free wi-fiy, breakfast, points. so if you want to see this change behavior for the consumer, hotels might impact that and might be able to pay less ota's. we might see some pressure. and ota's has been adding hotels every years. now most of the hotels are on the ota's. so we might not see much growth coming from incremental -- yeah. they might have to continue to do m&a. so it's not the same situation. caroline: alexis, talk to us about m&a. with easyjet we saw the rumors that they might buy a cheaper german rival.

-- within the hotel industry is that one of the areas you see fostering some winds, if you are betting on travel stock in europe? >> yes, i think that's a very pressing topic. we have seen a core buying raffles, the mergers with starwood. this is definitely a theme within the hotel industry. it's going to continue. and that is also something that's interesting, because the bigger these groups get, the more negotiation power they have against rta's in order to lower the commissions. guy: chris, before we wrap up hearing rumorse that easyjet will be an easy takeover target. cheaper, those's rumors -- it takes out a lot of money, it's committed to that story. went to the arguments sit in

terms of privy equity interest rate now? >> fundamentals are strong. they're all there. the founders easyjet wasn't particularly happy with the way it was being run even when times were good. i think it's impossible to rule out that possibility. at the same time, i think there's the possibility of easyjet being an acquired; whether that will be a defensive measure is under question. but it's certainly not beyond the realm of possibility, that easyjet could look at what's available, possibly the monarchs and so on. guy: great stuff. chris, thank you very much. chris jasper. alexis will stay with us. plenty still to come. also, we need to talk about deutsche. we will talk about the latest with germany's biggest bank. billionaire activist says

samsung should be split into two companies. shares rally on the back of that. our guest has a decent decision and that. then, carney's countdown. will the bank of england governor stick around until 2021? he has fewer than 90 days to decide. plus, we will speak to the chancellor of exchequer. is there more to come for the british pound? almost questions on bloomberg. this is bloomberg. ♪

caroline: welcome back to "on

the move." 10 minutes into trading risk appetite abound,. the dax is outperforming, german battery orders really beating expectations in august. we are also seeing the services sector in the united states doing great, pushing asia higher. the u.k., though, seems to be the laggard. guy: also the pound. has seen a lot of volatility on sterling, as a result of which the u.k. has outperformed. let's talk about some of the movers today. i want to take it to the banking sector. youets are going higher, can see this sector going well. with the report down in italy suggesting that mundi may have an offer of around 4 billion. businessr the pioneer they are trying to offload. unicredit reacting well to that, a decent pop. list -- bank in the top

it was a little bit earlier on. we will come back to that story in a moment, but let's get the first word news with juliette saly. juliette: thank you. goldman sachs is pulling $300 million from omega side. they pull the employees in a memo yesterday. he has been accused of insider trading, which he denies -- it is the second time this year they have cut ties with the former employee who has run into trouble with u.s. authorities. in august they pulled money from another over bribery inaccurate. philip hammond will meet with wall street executives today, telling representatives from wants a brexit deal that secures good access to european markets. mountingcomes amid

concerns that leaving the eu could prompt banks to move jobs and operations out of the u.k. and you can watch our sitdown interview with philip hammond later today on bloomberg television. has arrested a contractor assigned to the national security agency for allegedly stealing classified documents. he was employed through a consultant. the company also employed edward snowden, who fled the u.s. in 2013 after releasing thousands of classified nsa files on government surveillance. the shares fell on the news. global news, 24 hours a day, powered by over 2600 journalists and analysts in more than 120 countries. saly.liette this is bloomberg. guy? guy: thank you. a reminder that it is dividend today in london. that is coming of the market. let's turn to the banks and talk about exactly what's happening here. deutsche bank has mismarked

dozens of trades with monte dei paschi, according to an order by theission german regulator. could it mean more legal costs? we are joined by our banking reporter and our guest. michael, great reporting. what do we know? back in well, this was 2008 when they did the monte dei paschi deal which came under a lot of scrutiny. what they did was they structured the loan in such a way that it was not a derivative, that they did not counted as a derivatives, even though it acted like one. so that allowed them to keep it off their balance sheet while also not having the client take the immediate loss. they could spread out the loss over time, help monte dei paschi. deutsche bank also, once they

had developed this structure, did it for other clients, and this audit said this is a very clever arrangement but it doesn't reflect reality, and you have to reflect reality and make it a derivative. that boosted the assets. caroline: that michael, they unwound, recalculated them in 2013, even though more than 100 were done. this was a 2014 audit. how much of this will play into the share price, and how much of it is the psychology of deutsche bank doing two complex deals as their own full? michael: right. i think it's more of the psychology front. the question is how much has changed for deutsche bank, to have new management that's trying to shrink the bank. but part of the concern over deutsche bank has been, what are the unknown unknowns? what is not on the balance

sheet? having deals like this that weren't available to be seen by the average investor on the balance sheet, that just does play into that psychology. guy: let me bring you into the conversation. you are not a big holder of banks. this sounds monumentally complicated. is that the reason why? > >> yes. [laughter] guy: civil answer for complicated question. people are moving in and out of them -- this is a big holding on many portfolios. >> we believe it is difficult to value banks, to know what they are worth. all theate, with problems with legal issues and so on. so we would rather focus on tech and disruptors rather than traditional banking. guy: is volatility better or worse? >> probably the same. [laughter] guy: thank you very much, for

bringing us the latest on deutsche. there's a story floating around that the german government is acting on deutsche's behalf with the doj. alexis will stay with us from mfm. up next, a big task in the big apple. philip hammond meets with wall street execs today to reassure over the brexit. don't miss our sitdown interview with the man himself later today. this is bloomberg. ♪

caroline: welcome back to "on the move." let's talk about holdings, where you should be investing. what helps one particular fund gather 22% growth this year? we are talking about msm. alexis with us, fund manager at msms. you are up 22%. you have a stake in sam's on. talk to us about -- in samsung. talk to us about that on the back of recent news. >> yes. we are expecting this to happen. i think the market has been to ang about moving fro holding structure for quite a while now. we have also been waiting for the news -- they are really pushing the matter further down the road, and it seems to work as the stock is up almost 4.5%.

samsung should also continue to increase dividends, share buyback, and that is going in the right direction. but i think it is not just a capital structure story. samsung is fundamentally innovating. they have spent more than apple in r&d recently. they are coming up with great product. look at how this divested the recent problems of the battery. the stock is reaching new highs, as if it never happened. we are glad this happened because we were convinced that samsung's products are usually of great quality, and that i think the stark market is proving it. guy: compared with google, how does apple set with those? >> i think it's a different animal. it has little exposure to hardware -- guy: with the phone -- >> right, but historically hardware has not been a focus

for google. we think this might be a next year story. but currently i think the iphone 7 hasn't been such a great relief. the battery is still fairly small. they haven't come up with many functionalities. i think apple hasn't really innovative in the last two years. last spring it was extremely disappointing when tim cook went to cupertino and said, innovation is the new color, and here's a smaller iphone. it's very expensive and we will sell it to china. we were not impressed by the lack of innovation. but i think the market is not realizing that what allows apple $800 that iphone for costs $200 is because of the software content and ecosystem. but the ecosystem is under threat, because you have all these apps like spotify and pandora going after i music, like dropbox is going after iphoto.

guy: it has been good to see you. thank you for sharing your time. this is bloomberg. ♪

caroline: welcome back to "on the move." we're looking at where the markets are currently up to. risk appetite apart from the u.k. factory orders beat u.s. services, orders beat overall, the we are seeing the u.k. lagging. why? it is dividend today. dividend,ng ex dragging down that particular benchmark. usually they outperform on the back of the pound. guy: they do, that as you say, it's always a thursday, and it's having an impact. let's take a look at the top stories we are watching in a little more detail. osram, the lighting company, spinning off in m&a target.

well, potentially unloading its pioneer business. easyjet, that's a series of extraordinary events, according to karen mccall. stock is down due to brexit and terrorism. they could see the first drop of profit in quite some time in the market is down aggressively. let's talk about what's happening in the emerging markets. shorts are being taken off on some of the big ian funds around the world, and the market is only getting a little more positive. i want to show you a quick chart that caught my eye overnight, what's happening with the offshore chinese currency. usd cnh. that we areine watching carefully. i want to show you that we did have a touch of asset before retreating. the chinese are on holiday but the fed story is front and center. let's talk to at perth, the

executive vice president of franklin templeton. he joins us now from tdubai. good morning to you. how worried you think the chinese authorities are going to be with what's happening to their currency right now? are they going to put it down to the fed? think we are expecting to see a significant movement from here. we think ultimately the path forward would be far more gradual. the fed has been on hold. we think the economic fundamentals of the u.s. do dictate a migration upward interest rates, that we are at a point ahead of our election where there is a collective holding of the breath. as we get through that, you will see some modest increases in fed funds in the u.s. going into 2017. caroline: give us your outlook for the rest of the emerging markets on the back of fed fund hikes.

is it time to be taking a short soft? >> in general, across emerging markets, we do expect a pretty supportive level of growth. i think the one thing that our teams are focusing on is the unique fundamentals across different markets. there are areas across developing asia, whether it be in the philippines, indonesia, malaysia, that we think will be supportive of growth. obviously the back drop is a supportive environment overall in the chinese economy, although a lowercase of growth. but i think the emerging markets teams are also pretty focused in the latin american region, where clearly there has been a lot of volatility in brazil, a pretty tumultuous time in that economy, but as we go forward, mexico, chile, peru, and we think the situation in brazil has the prospect of improving as we move forward. guy: how much of what we are

talking about here is a yield play? this search for yield for many investors, particularly high net worth individuals that want high-yield and low risk? where does begin story fit into that? think fundamentals are much more supportive in a number of e.m. markets in light of that. i don't know if it is exclusively a yield lower volatility play that has migrated. we are certainly seeing u.s. equity markets perform quite well relative to a lot of other regions of the world. that we think that fundamentals are a lot more robust in many of those markets, and you will see that differentiation start to play out more as we move forward. we continue to think the u.s. economy will be pretty resilient. the economic recovery has been a bit slower. we think look forward,

there is a lot of prospects, that this could be a continued, more durable and lengthy recovery, and that will certainly be an important hingef for many regions of the world. caroline: ed, we were talking about latin america and volatility. we are talking about volatility in the united kingdom fx. when you are investing, are you looking for fx exposure or hedging? >> you know, generally, in our equity portfolios, we are not looking for fx exposure to be a significant component of the outcome that is delivered to our investors. if there are particularly global portfolios that has access exposure to currencies, we won't take it out of the exposure. in the situation, my investment role is more geared to u.s. markets, but i can tell you with the decline in the pound we are certainly looking at it as a potential opportunity for asset

exposures in that market. we certainly want to watch the situation closely going forward, but we do think there are some opportunities when you have this extreme of a movement. guy: back when we had the fed taper to drum, emerging markets -- we saw one surrounding the ecb over the last couple days. is there a read across there? >> we think it is quite constructive, actually, as banks and markets move away from the push toward negative rates, that it's quite healthy for the economies across different regions. particularly as it is more supportive of the financial system. we think ultimately the health of the financial sister is important for overall progress in economies. caroline: give us a sense of topics, when you are look -- top picks, when you are looking for sectors are regions -- sectors

or regions. >> one thing that we are seeing, and i guess the backdrop is also that we are quite constructive on overall valuation levels -- that said, within markets, we think that defensives that have benefited not just from the search for yield, but also that low volatility in earnings, defenses, health care, utility, telecom, those are looking less interesting, and others that are little more exposed to the continuation of a moderate level of economic growth are certainly the sectors we are focusing on. cyclical, industrial, financial. i think that will be an area we will be keen looking at. even technology, which i think certainly has an attractive growth. if you look at the relative valuations, many of those do look quite attractive. that is an area we are looking at.

that is what we think has an opportunity for increased yields. i think dividend growth is an important factor in how we are looking at it. across the european region, clearly we have got to be caucus cognizant of the political uncertainty. we think the expectations for economic growth are quite subdued. in many instances we think the bar is set quite well, to the -- quite low, to the extent that we when yourtunities -- look at the contribution european companies are making in terms of earnings to the global indices, it is quite low relative to u.s. companies. we think that is an opportunity, there's a bit of catch-up. clearly we have to get past the uncertainty as well. guy: great to hear from you. thank you for dropping in. the executive vice president and cio from franklin templeton, equities. up next, we will talk about

twitter. two toracters but just crush shares. what a no from google means for twitter. this is bloomberg. ♪

guy: 8:41. let's talk about the markets in london. in some ways we are in a holding pattern. nevertheless, there are some sectors that are on the move. ironically -- fittingly -- it is

the travel sector that's on the move. easyjet is trading down 7% this morning, another leg lower as the company feels the extraordinary effects of the terrorism story and brexit story. this is just the financials we are seeing. we have yet to see the fundamental fact. ryanair following suit, down by 2.14%. let's get more details with the bloomberg business flash and juliette saly. juliette: guy, thank you. futures a surged in tokyo on news that lenovo might be merging. shares traded at the highest and nine months. a person with with knowledge of the matter said lenovo would take a majority stake in the venture, although they are both discussing it. credit suisse has agreed to pay $90 million to settle claims that it didn't adequately disclose -- the u.s. banking regulators says more than $1 billion were

re-labeled in the fourth quarter of 2011, which generally generates higher. credit suisse admits wrongdoing. to pay anditted $80,000 penalty for allegedly pressuring employees to misrepresent the asset. missedpizza hut estimates in the third quarter. the ceo says sales in china are down because of anti-western sentiment after an international court rejected claims in the south china sea. they still plan to complete the spinoff by the end of the month. and that is your bloomberg business flash. caroline? caroline: thank you. let's talk about tech. twitter is falling significantly after-hours, down more than 11%. we know the reason swirling around this company -- will it

bought? it be will it be a jewel that is polished by salesforce, which also fell yesterday on the back of potential speculation that it could be a buyer? it looks like certain companies won't; notably, google. it seems as though the parent company, alphabet, has said it is not interested in this particular company. this is being recorded by "recode." we have yet to hear from the likes of salesforce, but disney is out. remember, a lot of these companies hire bankers to assess whether they should get into this stock as the ceo gets out. guy: if others are not interested, why should individual investors be looking at the stock? it does make you wonder about the long-term story and whether it can be monetized, with bankers running the numbers can make them stack up. interesting stuff in terms of what's happening. tech is alive today.

samsung is front and center as well. caroline: yeah, it certainly is. it will be interesting, our previous guest saying it is time for some modernization. this really is a company that looks as though it's going to be pushed by investors. elliott asset management seems to be driving this company, the new man at the helm might be looking for modernization. guy: let's talk about what's happening with our soul bureau chief. peter, what are the chances of success? >> pretty good. the -- the call is trying to make the company -- the conglomerate i should say -- more transparent and increase shareholder value. at the same time, the son of the chairman, who was bedridden right now and in the hospital,

likely to be the heir apparent, is looking to modernize the company, the conglomerate, to make it more open, address some of the criticism from its government. this proposal may be one way to do that. caroline: peter, it's coming at a time where they are being held back by the recent launch of phones, the note 7, i'm not allowed to have one or even turn it on. it seems as though that seems to still be clouding the horizon. >> well, we will see. the same song third quarter come out tomorrow and we will see how it is impacted them. as to the public image, that is definitely hurting the company. as to whether or not some of ande reported smoke, fire, whether it's the note 7, it's not clear.

the incident on the southwest flight this morning, while the owner said the passenger -- while the passenger had said it was the note 7, the new one, no one has been able to independently verify it. but this is hurting their image. it's going to cost them at least a billion dollars, by some estimates but more importantly, the impact will be whether people will want to buy samsung phones in the future. peter, thank you very much indeed. thank you very much. up next, we need to talk about what's happening with mark county. will the bank of england governor stick around until 2021? he has fewer than 90 days to decide. that story, next. this is bloomberg. ♪

guy: 8:50 in london. welcome back. south africa's rand is undervalued, with fluctuations in the currency partly driven by political turmoil, this according to the reserve bank governor. bloomberg, he said the south african central bank did not move in sync with the fed and increase m&a activity also have an intact. >> if you watch what the fed is doing, we are clear that we do

not move pound for pound with the said. -- with the fed. we have highlighted this throughout the period, that the exchange of the rand is a significant leap to the inflation. speaking to bloomberg. are let's bring in our reporter. what are some of the factors if they are not the ones they normally are that are weighing on the rand? governor saidhe was that the m&a deals coming into the country will impact the rent significantly and we know one of those deals is involving ab inbev acquiring sab miller in south africa. of course that could result of the influence of about 100 billion rand for a deal that is estimated at around $104 billion, possibly resulting in the world's biggest deal.

but of course we also know that uncertainty from the fed is weigh,ing that could as well as the political certainty surrounding the finance and mr. on whether or not he could be called in by the police or even arrested. guy: great stuff. thank you very much indeed. the situation in south africa, ever interesting. let's turn to what's happening in the united kingdom. the carney countdown. fewer than 90 days left before the governor cost self-imposed deadline to decide if he wants to serve his will eight year term. remember, he decided he was not going to do that, and he may opt to leave in 2018 as originally planned. will brexit to be a deciding factor or could there be another job on the horizon? are reporter joins us. he was originally here for a shortened period. it was originally going to be

five, but there's a possibility of eight. that would sway him either way, given what is happening with the brexit? >> at the end of the day, this is a personal decision for him. it's what his ambitions are. does he want to have a really interesting job, and there's a lot going on right now, and having him would be a benefit, with a sense of stability during the brexit process, or does he want to move onto something else? people talk about his political ambitions. nothing he has really talked about. guy: for other jobs, may be in washington? >> there other opportunities available in 2021, which would be a very nice fit, because if you were to stay for the full term he would be leaving the bank of england and go to christine lagarde. some people are thinking that might be an interesting process. what about his own reaction to some of the politics in his role at the bank of england, being in front of

select committees? is there something in it he enjoys, or is it an aggravation? >> well, he certainly seems to thrive on it to a certain extent. he doesn't really get too riled. we occasionally see him get feisty, but he's defending his policies so he should be. i don't think that's a huge part of it. i thought we made it past that for a lot of the time, although we now have theresa may starting to weigh in. guy: let's talk about politics. monetary policy has been a critical factor for the direction of the u.k. economy since mark carney arrived. nevertheless, there seems to be a sense -- maybe the emphasis is going to shift the fiscal. the bank would react to that tacit arrangement, and maybe the interest out of that is

when it changes we will see monetary policy changing. is there a sense that the bank will take more of a backseat, and that would encourage them to look elsewhere? >> i don't think so. it wouldn't really be a backseat; they just announced a huge amount of stimulus that has to be completed, or at least it has to be closed. guy: it's now execution. that may be less exciting. >> i don't know, it can be interesting. qe has been pretty exciting. yes, fiscal policy would be a think he isrankly i doing a little hokey about this. guy: we will even on that note. lucy meakin. caroline: let's bring it back to easyjet, because the cfo is speaking.

it's on the stoxx 600 and saying aat sales -- they see likelihood of less disruption in the fiscal 2017, all this coming from the cfo. speaking on a conference call. the stock was hit today, profit falling for the first time since 2009. guy: let's talk about washington. we were just discussing the possible ambitions of mark carney. christine lagarde is firmly in place until 2021. we have plenty of imf coverage coming up for you. we have the latest herself, christine lagarde, the imf managing director, coming up later on. we will also be speaking to philip hammond. an interesting piece about what he will do, the u.k. chancellor of the exchequer. both of those interviews coming up today, conversations that you are really not going to want to miss. philip hammond with a

lot of his plate. stay with liver television. "the pulse" is coming up next. i will be joining jon ferro on the radio. this is bloomberg. ♪

francine: deutsche bank's troubles. we take you through the latest with germany's biggest lender. brexit downdraft. easyjet shares tumble. the airliner faces headwinds coming weaker pound post-brexit. the fight to flach. a ruling is expected on whether fracking 10 resume and u.k. five years after -- can resume in u.k. five years after fracking stopped. ♪ francine: a warm welcome to "the pulse."