i'm jonathan farrell alongside avid and alix. in the f.x. market, here's the story for you. eight days of yen weakness. dollar yen, 1.03. and 10-year yield back up to 170. al i can: here's what you need to know. we are one day away from a key appointment for the fed, the september jobs report. ahead of that, we'll get the weekly readings on jobless claims in 90 minutes. deutsche bank indicted to conceal the italian lenders' losses, and dozens of others on its own books, according to an audit commissioned by germany's regulator. separately, the c.e.o. is expected to attend the i.m.f. meetings in washington this week. and the british chancellor, fill i am happen owned, is coming to wall street to say

he's determined to safeguard the city of london as concerns mount that leaving the e.u. could prompt businesses to move out of britain. david: coming up, mr. hammond will speak to bloomberg at 10:00 a.m. eastern time. ahead of that, we'll be live with i.m.f. managing director christine lagarde as the i.m.f. annual conference begins in washingtonment both conversations will be on bloomberg television and bloomberg radio. before that kicks off, our special guest in just a few minutes' time, the allianz chief economic advisor, as well as our bloomberg view columnist. we're going to turn to our lead story, and that is the state of the u.s. economy as we look forward to jobs numbers tomorrow. yesterday, the september nonmanufacturing numbers came out, and they surprised just about everyone, moving up from 51.4 to 57.1. this was the biggest monthly jump in the history of the measurement. our economics editor, mike mckee, joins us now. how much do the numbers tell us

about what we might expect tomorrow on the jobs? mike: want a whole lot. here's the interesting thing so far that we are seeing. if you look at a chart of actual release values versus what the ploorg survey median is for jobs over the last five years, what you see is, in the last two years, we've seen remarkably stable forecasts, but very volatile job creation. so it's really hard to tell what the input into people's forecasts will translate into, because the jobs numbers have been all over the map. and we did get that big jump in the i.s.m. services number. we also saw a better than expected, when you look at the tea leaves, a better than expected manufacturing i.s.m. number, but a couple of other indicators, like the a.d.p. report we got this week and the consumer confidence numbers about jobs hard to get, that's always seen as a leading indicator, those were weaker. going into the report, we don't have a good idea of where we are going to end up. people may be guessing. they're guessing 172 for total payrolls, an unemployment rate

that's unchanged at 4.9%, and the all-important wages number, that could go up to 2.6%. alix: what's the probability that august will be revived and september will even be revived down the road? mike: the august number was pretty dismal at just 155, and then we've seen in the past, difficulty seasonally adjusting to the pointed where you can get 100,000 jobs added. that could have been 255. remember how disappointed wall street was when we got that weak number? if it comes out revised, you're going to have a lot of people changing their bets later this year for the fed. david: that's mike mckee, and we thank him for joining us today. we want to bring in the chief economic advisor at allianz and a bloomberg view columnist. mohammed, numbers yesterday were impressive, but let's put up a chart of where they've been. you see it goes all the over the place. you see at the very end, that's the big up tick, the record up tick, but it actually was

higher. what does that tell us about the state of the economy in the united states and its growth? >> it tells you that notwithstanding nothing volatility, this is quite a tepid economy. it's a 2% economy plus or minus. some months will be better, some months will be worse. but basically we are neither at liftoff nor are we going through a recession. it's a helped economy. i agree with mike, the most important number is wage growth. if we don't get wage growth ing up to .3% or 2.% year-on-year or above, that's going to be really bad news. but our expectation is wage growth will pick up. jonathan: david was in the meeting, and he said look at the rate of change. i looked at that data and looked elsewhere, high-frequency data, incredibly volatile. if you're at the fed, what on earth do you too when things look like this? mohammed: well, that tells you you shouldn't be overly data dependent. part of the sprob we've been overed dependent, and

therefore, the fed has been giving conflicting signals to the market. i think you need a vision of where this economy is going, and this is a tepid economy, and then you need to look at the consequences of monetary policy. alix: mike mentioned wages, but the unemployment rate has been 4.9% for months. is there a point where the fed is going to be pressured to act, even if inflation hasn't moved that much higher? >> yes, and look at the participation rate. that's going to tell us how much slack, this notion of are people come back into the labor market or not. so if you get an unemployment rate coming down because the participation rate isn't telling thaw people are coming back in, that is a signal to others that there isn't as much slack in the labor market as they think there is. jonathan: what do low rates mean for elsewhere, and this third part of the mandate, you've got the labor market, price stability, and then financial 125b89. the vice chair of stanley fisher speaking yesterday, and here's a quote.

it's about ultralow interest tes, and i'll quote him -- jonathan: what is mrs. fischer looking at where you yourself have talked about the financial stability risks? mohammed: the numbers i look at suggest that you've got two phenomenons going on. one is people taking too much risk, and he does mention people reaching for yield, and the other one is that the integrity of the financial system is under pressure. providers of long-term financial services simply cannot provide these services to the population. why is that of concern? because people may start to self-ensure, that's bad news for the economy.

the key thing, jonathan, if i may, about the speech was the act nonlment by yet another central banker that they cannot remain the only game in town, that they need help from other agencies that have much better uited tools. david: put yourself in the fed's position at this point, or janet yellen's position. tepid growth, but at the same time risks in asset overvaluation, maybe misallocation. what do you do either to make better or at least not make it worse? mohamed: first i would invert the message. i would stop the focus on where is the next rate hike. is it november? is it december? i would say something that most people are starting to recognize. one, this will be a very shallow path, the shallowest path. two, it will be stop-go, very irregular. and three, as the vice chair said, it will end. the end point is going to be much lower than where it's been

in the past. just trust these messages over and over again and get the market off this obsession as to when the next rate hike. alix: i won't ask that, but longer term, we're still looking at 2.9% for the longer term, a neutral rate. does that have to come down? mohamed: yes, it will. alix: to what, six, seven, five? mohamed: i expect the terminal value is somewhere between 2% and 2.5%. so we are going to see the fed continuously lower it. it's been doing that. it's been continuously lowering it. and we are going to have a destination point that's very low in historical terms. alix: lots more to discuss when we come back. let's get an update outside the business world. emma: there's a mass exodus taking place in the southeastern u.s. today. almost two million people living along the coast have been urged to evacuate their homes before hurricane matthew

arrives. the hurricane is taking aim at florida, georgia, and the carolinas. it's expected to be near the florida coast tonight. the hurricane has been downgraded to category three, but if it still has winds of about 115 miles an hour, it killed at least 16 people in the caribbean. more tough talk about the u.s. from the philippines. the president's top diplomat says that they're seeking an independent foreign policy because "america has failed us." the philippines' foreign secretary says the u.s. has treated the country as "little brown brothers, not canal of true independence and freedom." in baseball, a three-run homer in the ninth inning gave the san francisco giants a 3-0 win over the new york mets in the national league wild card game. madison bumgarner purchased a four-hit shutout for the giants. next up for san francisco, the chicago cubs. global news 24 hours a day, powered by more than 2600 journalists and analyst in more than 120 countries.

this is bloomberg. alix? alix: futures here in the u.s. slightly negative, but one big loser you have to pay attention to is twitter. this is due to a last night that fwoog he will is declining to make a bid and that apple and disney will also not be making bids. that leaves the potential suitor to be salesforce dodd. citi says the top price would be $28 a share and also says that sales force would have significant constraints for three-plus years if it bought twitter, so those m&a-fueled rally for twitter really petering out this morning. want to take a look over in sandashe take a look at samsung, hit another record high today. its market cap, $215 billion. this is why. elliot management is urging samsung to split into holding and operating companies. that stock getting a boost from that today. on the flip side over in the u.k., easy jet not having an easy day. lowest price since january of

2013, annual profit falling for the first time in seven years. you got the low pound and a travel slump due to terror. it now sees full-year profit down by about 28% year-on-year. jonathan: sterling gets whacked, i can't believe we played the mets game and did not get mohamed's view on that match. we're going to do that later. coming up on this program, it's hammond. the u.k. chancellor makes his way to new york today to meet with top bank executives, hoping to keep their business in london. one of those stocks in new york is right here. catch a special interview with chancellor hammond in just a few hours at 10:00 a.m. eastern time. from new york, this is bloomberg. ♪

alix: british chancellor phillip hammond has come to new york to meet with u.s. banks to reassure them that brexit is nothing to fear. with us now with more from london is simon kennedy. ok, we heard from prime minister may over the weekend. the market took that as reinforcing a hard brexit. what can phillip hammond do today to reassure the banks? simon: this idea that they're going to strike to strike the best deal and he realizes the importance of london to the british banking system, and the international banking system, and hopefully calm some of those nerves that have built this week, partly because of what theresa may said and partly because of what her team has been telling bloomberg, that the finance won't necessarily have that priority in this brexit talk that some in the industry have asked for. alix: will the banks believe them? simon: it remains to be seen.

if you talk to the banks here, one of the issues is two fronts. one, they send a lot of information into downing street when they meet with theresa may, and they have a lot of analysis, about the report out just this week on the importance, as they see it, of the banking industry to the british economy. but there's also questions about how important phillip hammond is, and more importantly, how important treasury is. they used to rely on treasury to kind of -- that conduit into government, but now you've got a trade chief. you've got a foreign secretary, all of whom were pro-brexit. and there's a question about should they be talking to them as well. as somebody said, the government is keeping it close to the chest, so they're saying things that should pacify the banks about how they realize they're important, but not much comes out in the form of a strategy ahead of those talks, which are now set to begin by april. david: is not it a tough brief for mr. hammond? his boss, theresa may, has gone out publicly and said something. how can he come in and say

don't pay attention? we're going to do something else privately? simon: in fairness to theresa may, she's not come out and said anything publicly on the banks. she's also spoken about getting the best deal. but you read between the lines of what theresa may has said, and it's very clear she's focusing on immigration as her priority and cutting back on that, rather than the single market. that opens up, too, if the single market is in question, then so is the passport and their ability to sell services and raise funds easily on the continent. and secondly, talking about immigration, then that's raising concerns just because of the reliance of the city on a huge amount of foreign talent. jonathan: great to have you with us. i want to continue this conversation and bring in allianz's chief economic adviser and bloomberg's new columnist, of course, mohamed. there's a conflict in the u.k. right now, this message, and then the chancellor goes on tour and says don't worry about it, we're still open for business. do you buy that? mohamed: first, i wouldn't like

to be him, because i would have to explain three things. i would explain the notion of hard brexit. i would have to explain his prime minister's comments about the ruthless international elite and the harm they create. and i would have to explain the creditism of the bank of england. this is all coming from a country that has benefited from globalization and a government that owes a lot to the bank of england, because had the bank of england not acted in the aftermath of brexit, theresa may would have inherited a big mess. so i would hate to be the chancellor right now. he's going to have a very hard job explaining what his prime minister just said. jonathan: help me understand something right now. is this a question of prime minister may going after the independence of the central bank, and is she threatening that by the comment she made in the last week, or is this more about a government acknowledging the risks of low rates and what it's actually done, wealth, inequality, etc.? which one is it? mom mohamed: it's certainly the

second, that they are appealing to a much broader base in the united kingdom, and part of that is to say inequality is an issue and part is to point to the bank of england as having contributed to inequality. as to what that means, i don't think that changes the bank of england's policies in the short term, but it is part of a much bigger phenomenon, and that is growing political pressure on central bank and the risk that these institutions that have been central to economic growth, at least we've had some, that these institutions are going to start losing their operational autonomy, and that should be a concern to all of us. dade: it's not just bank, it's also trade, for example. world trade, international trade growth is shrinking, reducing. put this in a larger context in the western economies. where are we headed? mohamed: where we're headed is towards greater political interference into economic management. so we are starting to put in place a major tenets of

economic growth. economic globalization is one. financial globalization is another. and i have no problem with that discussion, but imagine that you're in a plane and suddenly people are telling you, we are going to change the engines in mid flight. how would you feel about this? it's not clear that you can change these engines while maintaining a smooth flight, and that's a concern. and that's why you're seeing people starting to worry. and the i.m.f.'s warning is quite striking. the i.m.f. is not a political institution, and yet the i.m.f. said political risk is one of the major misplaces in the global economy. alix: at the end of the day, is the biggest risk actual that will we do get that fiscal stimulus? you do actually see growth pick up and you do see inflation pick up? mohamed: i think the biggest risk is you don't get the stimulus or structural reforms, but you get the reaction against trade and you get the populist reaction against

physical intimidation. for me, that's the biggest risk, you don't actually transition to a better growth model. you just weaken the economisting growth model further. that is the risk that i don't think the markets have focused on, and it's understandable, because it's very difficult to quantify. economic nz chief advisor. we'll also have a conversation on the british economy after brexit, coming to you at 10:00 a.m. eastern. also coming up, while mr. mmond travels to new york, more troubles arise for his bank. details next. ♪

alix: deutsche bank c.e.o. is

scheduled to travel to washington this week as the lender has been facing a fine from the d.o.j. and an indictment for colluding with an italian bank. bloomberg view columnist is still with us. you look at deutsche bank's stock, and their market cap is $16 billion, $2 billion over the projected d.o.j. fine. describe how big of a risk this is to the global institution financial stability. mohamed: it is not a lehman moment. it is not a situation that ends up causing a sudden stop to the global economy in which growth and trade collapses. why? fist, the banking system, particularly in the united states, is stronger. second, deutsche bank actually has liquidity and has access to the e.c.b. but it is a warning, it is a warning that european banks are still under pressure. it is a warning that if we're not careful, that is going to create an extra head wind to european growth, and it is a warning that deutsche bank

eeds a new business model. david: put two things together, one is price to book ratio, which is abysmal, and this apparently misreporting, misaccounting for these loans. is there a danger that a growing question will arise whether we really know what the bank is? mohamed: i think that is reflected in valuation, i think this uncertainty, especially the uncertainty around the level three assets is causing people to price in a very high risk premium in the banking sector. and you see that, and i think hopefully that's going to push for more transparency. now, it's not a problem for the united states as much as it's a problem for europe, and it shows thaw europe has been well behind the u.s. in strengthening its banking system. jonathan: you've talked about how the volatility has transferred to other banks because of the hybrid securities like convertible

bonds. can you walk us through why that is? mohamed: for anybody that has a kid and goes on a trip, they know the difference between traveling and getting there, right? getting there, the kid is happy. traveling, you ask, are we there yet, are we there yet? other securities have the advantage that when u a problem at the end of the day, they transform it, so they less contractual claim on banks. but in the process, in the journey to this destination, in the process, they create enormous instability in the capital structure. why? because the equity people are going to be diluted, and they don't like that. so suddenly the whole capital structure is in play. so what we've learned is they're great when you get to the destination, but the journey itself is very unsettling. alix: i'm trying to understand the systemic risk. take a look at this chart. this is a historical spread, the correlation between bloomberg's high yield corporate bond index. yes, the correlation is negative, but it's much less

negative than it was. the concern is, if you're a high yield guy, you get squeezed out. do you have to go sell other assets and perpetuate a bigger selloff? mohamed: that is a concern. anybody knows if you're managing an open vehicle, you have two problems. one is u to reallocate how you're exposed, but two, you have to prepare for out flows, and that accelerates the fact you end up selling good names in order to raise liquidity. i remember being with you in january and february and we got very close to that point in january and february. jonathan: great to have you with us. from brexit to the u.s. elections, we talk political risk. ♪

al i can: this is "bloomberg go" o. wall street, 12:30 p.m. in london. here's what you need to know at this hour. british chancellor phillip hammond is coming to wall street. he will tell executives he's

determined to safeguard the city of london as concerns mount that leaving the e.u. could prompt banks to move jobs and operations out of britain. and join us at 10:00 a.m. eastern when mr. hammond sits our or an interview with editor. doip bank is charged with conceal losses, mismark transactions and dozens of others on its own banks, according to an audit commissioned by germany. and twitter shares down more than 15%. technology news website recode is reporting goggle does not currently plan to make a bid for twitter, and that is what you need to know at this hour. jonathan: thank you very much, alix. it's a very typical day, very quiet. futures marginally softer, equities weaker in london. the ftse retraces some of the moves we saw earlier towards an all-time high. we are lower by .2%. the price in the f.x. market, some yen weakness for eight straight sessions.

the longest streak since july 2014. we trade with a 103 handle. in a commodity market, w.t.i. retreats, 49.717 how we trade. goldman sachs saying 55 if we get there, that's what we saw, because they get back to work. in the bond market, it's been a weak week for treasuries. yields pushing higher am we traded around 84 basis points. so far this week, the bond bears getting a little bit of love. alix: a little bit of love. they've been calling for a bond bubble burst for decades. this is the real question in the markets over the next eight weeks. are markets ignoring election risk? this top panel is the clinton-trump spread. this bottom panel is the v.i.x. and the move index. the blue line is the v.i.x., yellow line is the move index. that details volatility in the treasury market. and these blue and yellow lines are the five-year moving average. so, yes, recently you have seen a clinton gain in the polls as the clinton-trump spread

continues to rise, but it has flat lined. let's remember, a lot of the polls are down to 50-50 at this point, but that is not reflected in any kind of real market action. look at the v.i.x. look at the move index, well below that five-year average. are markets too complacent? jonathan: thank you very much. i want to look at premarket. a headline coming across that wal-mart has reaffirmed its full-year 2017 forecast. wal-mart sees full-year 2018 capital investments around about $11 billion. full year, 2019, e.p.s. growth of about 5%. here's the stock market for you. we trade higher by about .9%. david: jets thank you ahead of retail sales numbers coming out next week. it's basically good news for wal-mart, if they can stay steady. we're going to come back to the voluntarily at this timity and politics that alix just talked about. this is our morning must read. it's all about uncertainty in the markets. mohamed el-erian wrote in his

latest bloomberg view column that the largest uncertainty is political. central banks have been the most affected, and the third big risk is that the economics of protracted low growth are becoming more unpredictable. mohamed is still with us now. we're also joined by steven englander from citi's new york offices, global head of f.x. strategy. welcome aboard. let me start with mohamed. let's talk about exactly what alix just showed us on the charts. whatever is going on with u.s. elections and the polls, there's very low volatility. and we can even show f.x. as a practical matter. are the markets right? mohamed: the markets are saying don't worry for now, a, political volatility is hard to price, but b, more importantly, markets have been conditioned that if all goes up, central banks will come in and repress it. that's the history of the last four years. you know what? it has worked really well.

markets are predicted and not preempting. i think that's wrong. i think we're going to see the f.x. market. it will be interesting to see what steve thinks of that. and that central banks are going to become less effective, either because they're unable to repress volatility in the case of the bank of england or less willing in the case of the fed. jonathan: it's been a snooze fest, the tightest trading range on a quarterly basis. beeve on record. so his question, when does it pick up in the f.x. market, never mind everywhere else? >> i think that there's an unwillingness to prehedge or preposition before the election. i think in part because the outcomes are so binary, that if you take the wrong side, you're going lose a decent amount of money, even if they're relatively low. what i think most investors are doing, taking a lesson from, you know, the brexit referendum, what most investors

are doing is saying we don't have to be the first one on the trade, we can be the second one, and if the s&p is going to move 5% to 10% so we miss the first 1% or 2%, i think they're just waiting to see what the outcome is. i think in general, there's also this suspicion that they don't know the model, the underlying model that's going to guide asset markets in the event of -- certainly in the event of a trump outcome. so they're a little bit reluctant, again, to put big bets, not knowing which way and how far markets are going to move. jonathan: not put on big bets, but if i'm conditioned to believe that it rolls back over, i'm also conditioned and incentivized to build up leverage. mohamed: and that's what happened. that goes back to the earlier discussion, how much is building up in the financial system. interesting to listen to steve, because for me, the main lesson of bricts was be careful because if you were an f.x. trader, you have seen th

market move on your enormously just after that. so steve, insofar as the risk of binear absolutely right, why is the market not more balanced at this point? steven: i think they're taking a wrong lesson from brexit, which is that if you follow it on a meant by minute basis, like most market participants would, you have time to make money, even as the polls were coming out and the market was moving slower than the polls. i think there's a sense that why take the up front risk? and you can see what the outcome is, and then gauge how much risk you want to put on, it doesn't make entire sense, because it looks like you're getting something for nothing. i think the risk is everybody pulls the trigger at the same time when they see what the result is. for now, i think that they're sitting back and saying, look, rather than take the risk of a

significant loss and what's not a very good year for many, let's just wait and see if there's some opportunity there. alix: there's a narrative in the market that no matter where we go in the election, it's going to be dollar positive. you're going to have a stronger dollar versus e.m. on a trump win, and you're going to have a stronger dollar versus the yen on a clinton win. where do you stand on that kind of binary outcome? steven: well, it's interesting. we took this poll, and even the people in the poll who were trump supporters thought it would sell off and the s&p would sell off. so i think it makes sense that given the range of outcomes, under a trump win, some of which could be very positive if he is able to put on the tax regime he's talking about and repatriate u.s. funds abroad and if he lays off the trade thing, but there's also a sign

that says things could be very negative, very negative for emerging markets. actually with that disruption in the supply chain, it would be negative for the u.s. economy and u.s. markets. i think the binary outcome is there, but there's a difference between saying buy dollars on the terrible outcome and buy dollars against the yen and the euro if it's more a benign type of outcome. david: you referred to brexit and possible parallels to the united states. you've written recently in the "financial times" about some of the dangers of the anti-establishment movement, that it may be underestimated by the polls and then by the market. what are the risks there? mohamed: the risks are large. we saw this in the case of brexit and other elections around europe. we see it in the case in the united states where there's support for what i think would be very damaging tariffs on china and on mexico. i go back to the notion, it's not easy to change your engines of economic growth when newer mid flight.

so expert opinion has consistently underestimated the influence of anti-steakment, and what we've learned is they don't need to get to government. they actually can influence government. what i think we heard from theresa may last night was an attempt to secure the base and undermine as it tons to reposition the conservative party. jonathan: we've learned you do what you want to do and what you say to someone doing a poll is completely different. you sat with so many can hes, fund managers. what would you be telling them to do ahead of this election, to understand, really gauge the likelihood, the potential of either candidate winning? mohamed: the probabilities are probably more balanced than you think. don't try to be ultrasmart, but rather, build resilience and agility. i think the case is to have more cash than normal and wait.

wait for things to occur. but most people right now, eing fully allocated to a high beta exposure, what they're going to find is they have actually taken sides, and the side that they have taken is not only a continuation of the past, but actually that higher economic growth is going to validate asset prices, and that's a big bet. david: let's ask you the same question. what is the right strategy? are people correct to say i can be in or position themselves differently? steven: look, it works in brexit that you didn't have to have the trade on the day before, the short sterling trade. the question is, does it work all the time? you know that it can't work all the time t. violates the laws of thermal dynamics. the risk is everybody tries to come in at the same time so that there's just this big rush to be the second one into the

theaters. you know, to be the first one out. i would look at some of the asset markets, where it's low. and buy a little protection. i wouldn't do, you know, obviously because the results are binary, if it fws the other way, you're going to lose the premium. but i think the risk is high enough and the costs of hedging is low enough that it's worth buying a little bit of protection on these outcomes. alix: gentlemen, thank you so much, mohamed, steven in the flesh. thank you so very much. we do want to get you updated on two stocks on the move this morning. the first is wal-mart. i do reaffirm its 2017 forecast, did pop on the news, now down almost 2%. the forecast did trail estimates. the company is also spending a lot of money on remodeling and e-commerce. $11 billion in 2017, $11

billion in 2018. while it slows new store openings as well. that stock getting hit. and twitter, the lows of the premarket, down over 17%. that recode report saying that google will not make a bid for the company, as well as apple and disney t. leaves the only bidder potentially as salesforce.com. the premium seems to be eroding from that stock. jonathan: a little bit of a reality check for twitter. up next, we keep the conversation on political risk. could the u.s. presidential election cause a brexit-like reaction to financial markets? details next. ♪

jonathan: here, greenroom,

coming up at 9:30, i.m.f. managing director christine lagarde joins tom keene and francine lacqua. david: it's 33 days now to go before the election, and we still aren't seeing much market reaction. we've just been talking with mohamed el-erian, particularly volatility. is it just possible the markets are being too complacent, and are there particular risks with this presidential election in relying on the polls to predict the results? bloomberg news has the warning of a brexit-like shock. we're joined by our political reporter to take us through this. steve, is there a danger of a brexit-like shock? steve: i think everybody's done trying to predict what donald trump will do and how the voters will respond to what donald trump does. we've seen for more than a year now, this unpredictability with donald trump. let's preface everything with

that. the difference between our election and the brexit vote is, that was a national referendum. that was a majority of people who voted, and the result was brexit. n the u.s., we have an electoral college. it's based on state-by-state elections. trump's electoral path to the presidency is much more different than clinton's. he has to win -- there's a couple of different scenarios in which he can do it, so it's possible. but three states he cannot lose are ohio, florida, and north carolina. if he loses any one of those three states, there's no path to the presidency. so he's up in the polls in ohio. that's scaring some people. but in in florida he's behind, in north carolina he's behind, and even then he's still got to win other states. and so sure, you can look at national polls to see what the mood of the country is like, but that really is not a good indicator. david: there's a bloomberg poll that came out that was pretty

close. steve: others have shown clinton up five or six or seven. david: i think there's another underlying notion. it's still polling. and in an anti-establishment, is it possible that you're not getting accurate results out of the polls? steve: polls are really good at showing the swing of undecided voters and kind of where -- what they're feeling in any given snapshot in time? my colleague and i, we've been doing this reporting about building the voter pile from the bottom up the way that campaigns look at this. they say, ok, where's our base, and how do we build from there? when you look at the way the electorates are made up in these states, the democratic game we swaw barack obama is all about turning out these unreliable sort of voters, trying to get more millennials and minority voters to the polls. to answer your question, what we can't measure very well is this donald trump vote that

doesn't really exit yet. we're not sure where it comes from. the primaries were different, though. i mean, it was more unpredictable, but that was a republican electorate. it was a republican primary, and he only needed like 30% to win these states. it's going to be much harder in the general. david: you're on your way to st. louis. how much more difficult is donald trump's job now because mike pence did such a good job? steve: i think the bar has been raised. i think people saw what a republican can do defending donald trump's policies on the national stage in a way that people found more favorable to the way donald trump did in the first debate, and i think that this debate in particular is going to be a format that is not particularly suited to donald trump's strength, the town hall format. he'll be addressing people from the audience directly. and we'll see how he does. david: thanks so much. that's our political reporter. coming up, it's jobs day tomorrow here in the united states. could a big job surprise put november on the table for a rate hike? we discuss that next.

this is bloomberg. ♪

david: just about 90 minutes from now, we're going to bring you a very special interview with i.m.f. director christine lagarde. francine lacqua will conduct the interview with tom keene. give us a sneak peek. what are you going to be looking for? francine: what we're looking for, we're going to ask her about elections, asking christine lagarde about globalization, about brexit, about whether she thinks the u.k. is now closed for business. there have been concerning issues with theresa may, talking about a possible lift, where she would listen foreigners in the u.k. but really, what we understand is the i.m.f. is worried about deutsche bank. only yesterday the i.m.f. once again urging deutsche bank to take steps to reassure investors. what we really want to ask her is, first of all, will we see an economic recovery? will with beenough to spur

banks? does it make a lot of these european bank business models work? i want to ask her specifically about deutsche bank, how she would fix it, and whether we will get reassurances from both sides on deutsche bank, but also the d.o.j. that they're nearing a settlement. david: it's surprising to me that deutsche bank is that high up the list. does that tell us that maybe the problems are worse than we understand? francine: well, i don't know if it's that or that they want to make sure this is dealt with in a way that doesn't speak investors. i think, david, when you look at the troubles of the world, there's, you know, real concerns out there, and then there's just concerns that actually affect the european banking system, which means that it's much more difficult also for the e.c.b. to transmit their monetary mechanism. so i don't know if it's that the troubles are much more worrying than the markets think or just that, you want to make sure they're fixed so they don't translate to the real question. jonathan: francine lack with a trying to keep tom keene under control. good luck.

[laughter] jonathan: coming up, christine lagarde joins francine lacqua and tom keene. in the next hour, we will get the reading on weekly initial jobless claims. 172, that's the number for tomorrow. the forecast for a month of payrolls, versus the previous month of 151. oining us now is the bloomberg intelligence chief u.s. economist. does this one matter for the fed, or is it just another series in a whole lot of payrolls we've seen the kind that just moves things around a little bit? >> this is more one in a series that matters for the fed, because i don't think november rate increases are realistic at this point. and a cautious fed that definitely wants to go by year end, will wait to have the benefit of another retail sales report and another jobs report before pulling the trigger, given how soft the rebound is in the second half. so most economists looking for stronger second half growth than first half, but we've

started the second half off with relatively limited momentum. alix: if we do get a job like the may number, what's a number that puts the hike off the table? >> sure, so, you know, again, november i don't think is happening, but if we see the payroll trend sliding below 100,000 per month, that's going to put real question marks around the december meeting. now, you mentioned may. if we see a swoon and a boom, then really it's a moving average that really matters. now, while i mentioned this was one in a sequence for the december fomc meeting, this is really the last jobs report that voters will be digesting ahead of the election. we have one more, just days ahead of the election, but this is really going to be the one that is the focal point in the next two presidential debates, and as voters assess the health of the economy when the fed leveraged it. david: let me ask the flip

side. for the hawks, and we tend to hear more hawkish tone coming out of the fed right now, what sorts of numbers, not just jobs, but also wages, would give them new ammunition for a december hike? >> again, i think if you're 150 or better -- david: really? that low? >> that tells them things are moving in the right direction. mind you, these hawks wanted to go at the september meeting, so they don't need to see further improvement, just more of the same to continue to foment those concerns. alix: going to the election, is it actual this will jobs number is not about the fed, it's about the election? it doesn't feel like we have the urgency with the fed and jobs like we normally do this week. carl: absolutely. the focus, again, september to me was not a very close call, so this means the last jobs report, this jobs report, the fed is looking at the underlying trend, not looking for that one last data point to make up their minds. this is going to provide the fodder for donald trump and hillary clinton as they discuss the fate of the economy and the

economy has been an important determining factor in most of the recent presidential elections, going back to ronald reagan in 1980, closing out the debates, are you better off now than four years ago? this jobs report will help one candidate or the other make that case. alix: really important distinction as we go to the next 24 hours. carl, thank you very much. bloomberg intelligence chief u.s. economist. we have a great set of guests lined up for tomorrow, including bill gross, and rick reeder. you don't want to miss it. this is bloomberg. ♪

♪ jon: from new york city, i'm

down enderle aside david westin and alix steel -- futures marginally negative. market, dollar-yen, and dollar-yen weakness for an eighth straight session. yield, 1.70. alix: we are one day away for the key data point for the fed, the september jobs report. plus, walmart's earnings forecast for the next fiscal year trailing estimates as they plan investments to improve its e-commerce give abilities. and philip hammond is coming to wall street to tell executives he is going to safeguard the city of london as concerns mount that leaving the eu could prompt

banks to move operations out of britain. david: we want to go into depth about mr. hammond's visit to new york. we are joined by simon kennedy and michael moore. simon, let's start with you about what is on the agenda for mr. hammond. what is he want to accomplish? simon: he wants to appease the banks little. the words will not be calmed this week. theresa may in the administration are looking at banks and giving them priority in the upcoming brings it talks brexithe coming spac talks. they won't get the priority in this negotiation. has been. merkel

speaking in germany and making it clear that it is either or. user about the immigration in, or you do not. is that a big problem for the banks, simon? simon: in an ideal world, there brexit. no breaks it -- the priority for her is immigration and the one thing merkel is yourom cannot have your cake and eat it. rely the immigration to kill their stock and payroll. alix: michael, moving to your

sweet spot. wells fargo looking for contingency plans and morgan stanley is not. i spoke to the ceo about brexit. and the are trade-offs source of talent were our folks want to work and where businesses are. the obvious candidates, frankfurt, paris, places we are looking hard at. we are not in decision mode. we have enough time and have operations in madrid, paris, frankfurt. , milan across all of europe we are already there. it is a matter of how you move the resources. alix: wells fargo looking more seriously. where do banks can out? , it goesas forwarding business by business and banks have to look at what they can do in each business and where they can do it from. big things banks want

is more time, some kind of transitional agreement so they are not on this two-year timeframe. but based on our reporting, it does not sound like that will be a big priority for the u.k. either. it is a couple of hits of the banks. jon: i am in the gallery looking at what is happening. straight after brexit, the ceo of the major banks went to the chancellor, now it is the chancellor going to them. i wonder if things have shifted in the last six months to the extent that just may be the banks are looking at the situation saying, why should we wait for them, we need to sort ourselves out? now the chancellor has two chases ceos saying, everything will be ok. the chancellor, it is a case it he is in washington, this is his first visit to the u.s. since he placed osborne. osborne.he replaced

it sends a message from him that he hopes that they can hold tight and he will speak today about the best deal for business, and also recognizing the importance of the city. alix: michael, you are a bank ceo. who do you believe? theresa may or philip hammond? how difficult is it doing business in the u.k.? michael: they are trying to thread a needle that you are not priority number one, but you are still important to us as an industry. i think banks are going to do a lot of scenario planning and have something ready for every outcome because you cannot rely on passporting coming through. you are going to move to a scenario where they are ready to move people even before a trigger if they need to. jon: michael moore, great to have you with us together with

brexit editor simon kennedy. up big conversation coming later, u.k. kam chancellor, philip hammond, will be sitting down with john nichols late during his trip. the big question, what is a hard brexit? let's get an update on what is happening outside the world of business. >> but the third time in three years, the u.s. national security agency is under fire for the way it handled government secrets. -- he told investigators he took him documents and digital files containing highly classified data. two years ago, another booze allen contractor coming alan snowden -- edward snowden, fled the u.s.. people in china are pleased with their country's rising global power, but concerned about foreign entanglements.

those of the conclusions conducted by the pew research center. the survey finds that 52% of chinese hold a favorable view of the u.s. many others are worried about america's influence. hurricane matthew thing described as the $15 billion threat on his way to florida. almost 2 million people in florida, georgia, and the carolinas have been urged to evacuate their homes. the hurricane has winds of up to 150 miles per hour and could be in the florida coast tonight. analysts say it could cost between $5 billion and $15 billion in damage and may lead one million people without power. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. i'm emma chandra alix:. thank you. check out the map on the terminal. this is hurricane matthew. this is storm nicole as well, both in the same area. here is the trajectory of matthew moving through the south

carolina sentient make landfall in the carolinas on saturday. if the trajectory continues, these blue areas are oil vessels. if the trajectory goes up to the knee -- if these are the trajectories, these of the vessel storing the crude and our storages -- a potential risk if the storm does damage. while prices over the last five days have moved higher for a bunch of reasons, but a hurricane disrupting. and another individual stock moves, take a look at deutsche bank. we are seeing a reversal and the stock. it is relatively flat on the day. the company is indicted for , treating loans and derivatives to shield them from

the books. initially, shares had rallied wouldhe german government hold onto the gains. twitter continues to get pummeled. off by 17%. apple, disney, google, a no go when it comes to buying twitter. leaves salesforce -- it salesforce at its only option. jon: thank you. coming up in the next hour, a special interview with tom sandal. later, an interview with christine lagarde. from new york city, this is bloomberg. ♪

♪ jon: from new york city, we are one hour and 18 minutes from the open. it futures are negative. down by almost five points on the s&p. afterse a little softer five days of gain. at 103%.ess -- trading a important conversation with special guest, bloomberg's erik schatzker. i am here with tom sandell, a part-time activist and value investor that runs sandell asset management. bob evans is a company that runs

restaurants on the one hand, and makes more or less, frozen food on the other hand. that is the issue. you believe those two should be separate companies? tom: that is correct, erik. assets,e a lot of great a restaurant business that they are working on turning around. trying to turn around sales takes time. it has been three years, which i think is a fair amount of time without any result in terms of salesizing or improving at the restaurant. they also have a very bible packaged food business, and this is the interesting thing about bob evans -- if they were to separate the packaged food

business, we would expect that thanvans is worth 15% more it is today. erik: the reason you and i are talking is because, it is than three years and it is time to raise the ane. getain what it would do to the company to break up? tom: shareholders can raise forr voice, and either vote purely toal which is separate the packaged food business that frankly has no synergy with the restaurant. this is something that the ceo .as stated publicly so people might be

wondering, you get other shareholders onside, but it is not binding. it does not force management's hand. tom: that is correct. what you are looking for is for shareholders to have a voice in this case as to whether they would like to see a company trading at a for multiple of earnings versus -- the stock is down 34% over the past three years. it has underperformed the restaurant by 41%. also, underperformed the package food peers by 94% for the last two years. i am going to raise a couple of alternatives. when i persuade management to rebrand the company as a frozen food business?

you, yourself in a september 12 press release said there are no package food analyst following bob evans. if you got the package food it, maybe cover you'll get the higher multiples you are after. tom: that is obviously the case. no matter how you look at it, ceogood thing is that the claims that he would be willing to consider to adopt our plan. not moving and has not been moving. there are people wondering why don't you do what you did back in 2014? you won for seats on the board by wagering a proxy contest.

one underweight and other proxy contest? tom: that is a possibility. anything is possible here. company is worth significantly more than where it is today. madeso feel that we have headway but the management team, and they may be leaning in the right direction with us as well. erik: i want to bring in another topic. if you want to talk about opportunities, we were speaking backstage, and you said you moved to london because you see one of the greatest opportunities for investors in brexit. explain. tom: the situation in the u.k. right now is interesting with brexit. brexit is going to slow down growth in the u.k. for companies to continue growing, they will have to do

transactions. opportunities m&a , and there is not a way to go, you have to buy revenues. you cannot create revenues. are claiminghe fed a lot of liquidity and pumping up the markets overall. we would expect not this to continue forever, and they are very much -- what is your mac pro case within the next three years? tom: recession and the next three years. erik: recession is not good for investors. are you beginning to build dry powder now to take advantage of the situation? what is the strategy? tom: our strategy is capital preservation as a firm. that is a great way to preserve

capital with limited market volatility. erik: market neutral, really? go ahead. tom: you have to buy revenues to grow. erik: because the economy is a sluggish as it is in monetary policy is not producing the kinds of results that many central bankers hope for? tom: exactly. erik: talk to me about the kinds of things you anticipate. you go to london in your want to start doing what? tom: i did not move my firm to london. we have had an office in london for 20 years. erik: it is more about tom being in london? tom: spending more time in london. erik: most of your positions are in u.s.-based companies. what percentage of your portfolio do you think will be in british or european companies

because of the brexit opportunities? locally, so it could be the majority is in japan possibly. it could be anywhere. erik: bring it back to bob evans -- you have a $50 million position. why are you pouring so much into a $50 million position? [laughter] tom: that is a great question. i will tell you what, it is one of the most overlooked situations right now in this industry. it is probably also the right they are veryt hopeful that management will do the right thing. what they are asking for is for shareholders to have a voice, a separation on the package food business, which would trade at a very high multiple.

selling asnies are 15 times. erik: there in lies the opportunity. you for coming in at talking to us about bob evans about the brexit opportunity. back to you. , commentinge bank in a e-mail statement concerning news. deutsche bank has reached an agreement with works council on germany to cut 1000 jobs in addition to the 3000 announced back in june. bank 4000 jobsche cuts in germany. jobsrmation that the 1000 -- has reached an agreement. deutsche bank stock up nine tens of 1%. how much can a c get that down

by? from new york city, this is bloomberg. ♪

♪ jon: from new york city, this is bloomberg cared i'm jonathan ferro. more problems for dr. blank -- more problems for deutsche bank and john cryan. they had been indicted for colluding with italian bank. seller bring in vernon from rome. looks like the deal is just one of many potentially. walk us through it. >> what is interesting is we they were trying to do things to cover up lawsuits and got help from deutsche bank. what happened was that the investigation of this one deal involving field is bank in the ,orld, this bank in siena turned up a lot of other deals

that were similar in one crucial way. it was not because they were covering up deals, it was the way that deutsche bank itself was accounting for these deals. there were more than 100 deals and all that were similar to the one. restate they had to where that deutsche bank was lending money without putting the loans into their balance sheet. jon: the big question that has to be asked, a quarter of their value, how do you value the bank? you are a reporter looking at a balance sheet a deutsche bank trying to work out what is on it? problem is that for the ceo, john cryan? started with their justice department asking for $14 billion. on the balance sheet, it is the unknown on what is hidden.

with a doing complex deals that shareholders don't know about? if they were doing dozens of these, what else is hidden? resolved that unknown. jon: fantastic to have you with us. vernon silver joining us out of rome. alix: in the market, we have crude rising above $50 a barrel for the first time since after brexit, since june 24. a huge move just in the last week. you have a storm coming up on the east coast. and big move for oil. next, jobless claims numbers coming out. we will break down the numbers. this is bloomberg. ♪

♪ jon: this is "bloomberg ." i'm jonathan ferro joining you from new york city. dow futures off by 34 points. switch up the board, the headline, crude grew since june.

a half of 1% on the session and 10 year yield inching higher by one basis point 24 hours away from payrolls. we trade on 171 on a u.s. 10 year as we await initial jobless claims. 240 9000, lower than estimated and lower than the week before. this continues to highlight the fact that weekly job numbers continue to come in stronger than estimated and poses a difficulty for the fed. how long do they have until the are forced to go because the job market is improving? the take away, initial jobless claims coming in 249,000. jon: having they've been going lower, lower, and lower. ? i keep asking that question.

payrolls has been solid. what you need you is a 151,002 sustain the employment growth anyway. david: there is nothing that is and away outlier here -- there is nothing that is an outlier here. alix: if you take a look at market reaction, yields are back up in terms of the two-year? . want to talk about jobs, jobs, jobs. on how.s. job numbers strong is the labor market and what will it tell us if the fed will raise rates early --later this year, sorry. 2% economy plus or minus. some months will be better, some worse. we are neither at liftoff or

going towards a recession. the most important number to look at tomorrow is weight growth. if we don't get wage growth going up 6% year on year or above, that will be bad news. my expectation is that wage growth will pick up. jon: look at the rate of change in these numbers. high-frequency data, incredibly volatile. if you are at the fed, what on earth do you do when things look like this? >> you should not be overly data-dependent. giving this to the fed and the fed has been getting conflicting signals to the market. this is a tepid economy. you have to look at the consequences of monetary policy. are front and center, but the unemployment rate has been 4.9% for months.

is there a point that the fed will be pressure to act even if inflation has not moved higher? >> yes. look at the participation rate. this notion of how people are coming back to the labor market are not. if you have unemployment coming down because the participation rate is looming, that is a signal to yellen and the others that there is not as much slack in the labor market. jon: what do low rate mean for us? you got the labor market, price stability, and financial stability. here is a quote for ultralow interest rate. it may hurt financial stability by cosan investors to reach for yield. datevidence to data -- to to notable risk

to financial stability stemming from ultralow interest rates. with vice chair fisher is looking for. the numbers i look at suggest you have two phenomenons going on -- one, people taking too much risk. he does mention people reaching for yield. and the other one of the integrity of the financial system is under pressure. providers of financial services cannot provide the services to the population. why is that a concern? because people may start to self-insure. that would be bad news for the economy. by anotherge meant central banker that they cannot remain the only game in town and they need help from other agencies that have tools for the tasks at hand. david: that was chief economic advisor and a bloomberg view

columnist. bill gross, alan krueger and rick rieder tomorrow. alix: the jobs number front and center tomorrow, but it is wages that will steal the spotlight. let's dig deeper into inflation. blackrockarty and joins us. what is that core inflation number that gets the fed to hike and what gets us there? martin: i think that the number that the fed are looking for are quite a few metrics. you have cpi, pce. they will not focus on that solely they will look at inflation in aggregate. , which inning at 2.3% think is ample ammunition for them to hike. theis running lower given

divergence between medical care inflation and cpi and pce that gives them ample room to wait. the important thing for the fed to focus on his inflation expectations. probably not current reports in the data. the importance of inflation expectations is what determines real yields. that is probably the primary ingredient when we are talking about financial conditions. , theowest real yields are more accommodative -- alix: i have a chart with those expectations really are. blue line is the median cpi. is the fed'sne five-year breakeven inflation rate. over the next five years, we are expecting 5% inflation below the median range. what kind of deflationary effects is the market expecting?

martin: you're looking at the market implied levels of expectation. if we were to extend that curve out, the picture does not change that much. there are technical dynamics that play, and some of them are driven by policy where we have had this environment where global, central banks ever made accommodative by cutting interest rates to zero into negative territory and purchasing a tremendous amount of assets in nominal and real rates across the curve, which has created this global grab pushing nominal yields down and compressing the term premium and taking it to streaming negative levels along the nominal yield curve. that is created an environment for people have questioned owning inflation insurance and pushed long levels of inflation expectations down. i don't think it is necessarily correct and i think it is an

opportunity for investors to take advantage of as the inflation data appears to be normalizing against the backdrop where fed officials have talked about the part of rate hikes been incredibly low. they refer to it as a process of novelization. data,digging into the commodity prices stabilized speeds through two core goods. what is the relationship between core goods and overall inflation? martin: that is a good question. we look at inflation in a variety of ways. we look at the services and goods component. in the developed world, core services tend to be what drives the bus in terms of the overall inflation move. what we have had so far in recovery is core services gradually improving and core de-inflationng a impulse.

what we have seen over the last in to 12 months is a pause the dollar strength we saw in 2014 and 2015. anotherovement in e.m. global economies that are probably going to eliminate the disinflation there he impulse that core goods have had. are not looking for core goods to provide a positive influence, we just expect a drag that they have imposed on metrics. alix: nonetheless, don't be so complacent when it comes to inflation, a take away with martin hegarty. are want to speak to a money manager that says a recent equity rally is slow quality. where she is find the best returns next. this is bloomberg. ♪

♪ alix: this is "bloomberg ." i'm alix steel in the green room. at 9:30 eastern, christine lagarde joined tom keene and francine lacqua. emma: walmart has forecast earnings for the next fiscal year that trail some estimates. the world's largest retailer will spend more to renovate stores and increase its e-commerce capabilities. walmart has had better-than-expected growth in its u.s. stores this year, but

the chain wants to improve its online operations so they can better compete with amazon.com. it is another blow to samsung in its galaxy notes seven smartphone. it is blamed for smoke that led to the evacuation of a southwest airlines flight in kentucky. u.s. regulators are investigating. samsung said replacing note 7s last month for batteries that would blow up and overheat. a british company one a battle over fracking in the u.k.. fracking moreto than for natural gas wells. the u.k. has not imposed the fracking ban after a number of earthquakes. this is bloomberg. jon: thank you. want to get enough it on the markets. interesting news. equities moves, boring.

let's switch up the board. a stronger dollar story. the real story is a weaker pound. 1%. a 10th of 8/10 of 1%. crude, $50.ghlight, alix: u.s. stockpiles down for the first time since january. push you have a potential opec cut. david: we are going to talk about asset management. we get news that janus capital would merge with henderson group. we learned they are cutting its fees. he explained that he would make money with the new low fees. >> we do make it up on volume and experience has been since

2012, we took the price down from nine dollars to seven dollars. the fund went from $30 billion to $80 billion. there is a seismic shift which is the new fiduciary role that will move trillions in motion over the next five years. as the money comes in, we want to make sure that we capture our fair share. david: what does this tell us about the challenges are active versus passive investing? is scale increasing to succeed in the us and management business? of -- to the ceo focusing on institutional clients and she joins us from geneva. boutique asseta manager. how do you succeed in this environment where you are faced with huge alternatives, many of which are passive? managementse asset

with a risk managed approach. touse an active stand diminish the risk. it makes a lot of sense when there is a lot of market stress to offer some equity solution that has less volatility than the index and even more and a period where the index has been very strong and has a lot of momentum, which could at one point -- david: what are you exactly offering? what is your investment strategy that will be the markets? fiona: so, we have equity strategists based on a risk managed profile. lower risk. we have alternative solutions. i would say that today, our clients are worried that the interest rates are quite low. go tore happy to

something that is less correlated to bond, which is the alternative. jon: i want to talk about the industry in more depth. janus.on acquired the story seems to be you need to get bigger in the space. the other leg of the story is if you are big and have scale, you are going to drive down fees and crush the competition. it feels like a price war has emerged in your space. what does it mean for you? fiona: i think that it means there is really no polarization. on one side, you have a huge, big asset managers. that is not where we will be able to compete. the volume they have is not the same as ours. for asset management to survive, they will have to be different

and be small and nimble enough to adapt all the time very -- all the time. i am in the middle and will find it more difficult. david: take us into some of your theories as you face the marketplace. -- u.s. market versus dollar, would you think about u.s. dollar as a currency going forward? and finally, inflation-adjusted bonds? all, we see af lot of market stress. how do we head this market stress? volatility. having a long position makes sense because it is a hedge against something going wrong. thinkms of inflation, we

that the trend is going up, meaning the -- meaning we are going more into a normalized space. we are not in a deflation state. the trend is going more positive. we are in a more normalized situation which could read -- which could lead to a rate hike. david: what about emerging markets versus developed markets? fiona: emerging markets is an opportunity. they are much less expensive than developed markets. if you compare the financial state of the emerging market this year to where they were in 2013, they are much more sound in terms of deficit.

some countries are much more sound than they used to be. china, although the growth has been going down seems to have stabilized. we see opportunities in emerging markets. the first leg of the rally was more of a bear market rally. they believe that now the growth will be more cautious. plan to favor consumer staples, consumer cyclicals and things like that. countries which are not too too hurt if not there is an interest rate increase in the u.s. jon: fantastic to have you with us. fion frick. coming up, our investors hedging against some of the most political risks out there and we will show you in battle of the charts. the open, about 40 minutes away. equities creeping higher in europe.

from new york, this is bloomberg. ♪

♪ jon: from new york, this is "bloomberg ." i'm jonathan ferro. time for battle of the charts. he was very disappointed and bitter -- she was disappointed in bitter because she lost yesterday. my chart shows the expected fed tightening of the next year divided by the expected ted fighting --fed tightening over the next 10 years. over the next five years, investors think 5% will be done over the next five years. this is the perfect picture of what one and done looks like. 2008 to to go back to

see a ratio this high were fed tightening is effectively this frontloaded. this goes to show that, you know, maybe it will believe you if you will tighten this year. alix: i am out of here. i want to look at the moving event of the day. dollar-yen, another reason why dollar-yen perhaps in moving higher. this blue line, dollar-yen, the white line is the two-year. take a look at what happened just in the last few months. 111 basisential is points in the two-year yield is up by two basis points since july. a huge jump in that has really drag the dollar higher. you can see the correlation, a one for one. is it sustainable?

that is another explanation as to why we're seeing that a move. david: wonderful chart. alix -- capturingng that one and done story. david: can be hurt alix's feelings two days in a row? i do like the one and done chart. jon: coming up next on an interviewo>" with christine lagarde at 9:30 eastern time. futures as we approach the open and just 24 hours away from payrolls' friday. the dax now unchanged. the story in the fx market is of that year,june

that is when the cable rate was that low pretty yet 9/10 of 1%. dollar-yen, eight days of gain. the u.s. 10 year creeping higher by two basis points. as we count you down to the open and just 34 minutes away, here is the stock to watch -- , not everybody wants to take to twitter. from new york, this is bloomberg. ♪

jon: from new york city, welcome

to bloomberg go on this thursday, october 6. 30 minutes away from the open. a turnaround in the last hour. futures almost unchanged on the session. equities creeping into positive territory in europe. in the other asset classes, the cable rate breaks down to a 1985 low. and crude goes to $50 a barrel for the first time since june 24. alix: we are one day way from a key data point for the fed, the september jobs report. ahead of that, we saw jobless claims falling by 5000 last week. forart's earnings forecast the next fiscal year trails estimates as the big-box retailer plans investment to out itsbuilding e-commerce capability. the british chancellor is coming to wall street. he will tell executives he is determined to safeguard the city of london as concerns mount that leaving the eu could prompt banks to move jobs out of

britain. jonathan: a little bit later, chancellor hammond will be speaking with john micklethwait here at our bloomberg headquarters in new york. easternat 10:00 a.m. time in new york. that will be on bloomberg tv, bloomberg radio, and bloomberg.com. we will also have christine lagarde live from the imf headquarters in washington at their annual imf world bank meeting. that conversation just 29 minutes away. is the story of the week out of the united kingdom. prime minister may saying we're the party for you, and at the same time, without actually saying it, leaving out the key economic theme, for instance, how they will protect the city and protect the financial industry. whose job is it to clean that up? it is the chancellor's. love, expressing no great

theresa may, for the bank of england either. he has a difficult job right now. alix: if you're a big u.s. bank that operates there, what do you do? i am strict whether two opposing views. wells fargo is making some contingency plans or at least reaching out. i spoke with the ceo of morgan stanley, and he says brexit is a top 10 risk, not a top three risk, and we will still do business here we have global offices all over europe and will be ok. david: there are reports that the banks have sat down with theresa may's administration saying there is a big problem, and she says it is not my top priority. jonathan: there was the idea that a hard brexit could be on the horizon, so you do this for you sell sterling and you keep selling it. .9%, a level we have not been at since 1985.

if you wanted volatility in this market, this is what -- where you are getting it in fx right now. this is the most bearish trade in the fx market. david: the more the sterling goes down, the more the ftse goes up. jonathan: yes. alix: and talk about volatility. my theme of the day has been, where is the volatility? not in the fx market as much, not in the treasury market, and not in equities either. the question being, are we underpricing potential risk? the risk no longer seems to be short-term. risk it now is the elections, and that is not yet priced into the market. jonathan: a look at crude for you. alix: is it going to hold? nah. at $55.: we stall that is when the drillers get back to work. if you are a u.s. oil

producer and you can produce it for $25 a barrel, you are putting on those hedges and selling oil, protecting those margins. soid: they have gotten efficient, getting that price down so low. alix: down 30%. the other part is technology and efficiency. david: now an update on news outside the business world. let's get bloomberg's first word news. emma: how long can humans live? we have topped out at age 115, according to a new study in the journal of nature. the numbers based on trends in survival since 1900. not all scientists agree there is a natural barrier to the human lifespan. the oldest person on record live to age 120 two and died almost two decades ago. for the third time in three years, the u.s. national security agency is under fire for the way it handles government secrets. an nsa contractor has been arrested. he told investigators he took

home document and digital files with highly classified data. years ago, another contractor at the nsa, and words, fled the u.s. and revealed he doesn't government surveillance programs . hurricane matthew is a $15 billion threat heading for florida. 2 million people in florida, georgia, and the carolinas have been urged to evacuate their homes. winds of 115 miles per hour, and it could be near the floor again coast -- the florida coast tonight. it could cause up to $15 billion in damage. it may leave more than one million people without power. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i am emma chandra, this is bloomberg. alix: thank you. let's dig deeper into what hurricane matthew looks like. .his is on the terminal this is hurricane matthew. this is the trajectory.

about 250 miles off of palm , moving up now florida, and to the carolinas, should hit the keller right -- the carolinas by saturday. the blue dots are oil crude vessels. is, if you see the storm move appeared to washington, to new york, doesn't interrupt these crude oil tankers? what kind of disruption will that mean for the east coast? you also have about 33 million barrels of oil storage in areas like the bahamas. if that is deceptive, how does more oil flow into the east coast? following that closely over the next few days. we talked about the oil market. this is a five-day chart of oil, up about 5%. over $50. you have to imagine there are shorts in the market. opec potentially cutting production. and now you have a storm barreling to the united states. all of that pushing oil significantly higher. the story of the morning is

twitter. .own 16% a report said that apple, disney, and google will not be making a bid for twitter. google shares actually higher on that. potentially the only bidder is salesforce, up 2.5%. bid from salesforce would be $28 a share. david: turning to bonds now. it seems like southern bonds have been on the march upwards, but they have taken a turn over the last few weeks. this is the bloomberg sovereign bond index. and up, but it has come down now. is this part of a temporary shift or a larger recognition that the fed really will be raising its rates? i read jersey,is oppenheimer funds' fixed income strategist. to read welcome.

are people getting tired of these sovereigns? >> some people are getting tired of it. a big part is central-bank policy you have seen over the past couple weeks. the bank of japan in september said it might be shifting its not purchasees to long-term japanese government bonds. so those sold off. you have the same idea that something similar might happen in germany, as well. so you have these negative interest rates in 10-year government bonds that will become less appealing if central banks back off from their purchases. david: what are the markets pricing in at this point? they are assuming the fed will raise, but it will be gradual, and also assuming that bank of japan and bank of england are running out of ammunition. of central banks, the question is, what other easing policies can they do? the bank of japan and the european central bank are likely to maintain their current easing policy stances and continue

their government bond and corporate bond purchases in europe. etf's inbuying more their equity market. i think in the u.s., the market is pricing for about a 65% chance of one hike this year, as well.ike next year, that gradual take probably will not disrupt markets much, at least in the long-term. there will be some volatility when we place that in, which we have seen in the dollar today with the dollar rallying. that is because a modestly higher expectations of a fed hike. alix: we have job numbers tomorrow and get wages. say wages big up a little bit, how much deepening -- steepening will we see in the curve in the u.s., and what is the potential fallout in the markets? >> i am not sure you will see steepening the that is when long end treasuries underperform short end treasuries, so the yield is higher in 10-year

versus two-year. i think you will get a more parallel shift in the curve, primarily because you will have expectations that the fed is going to go ahead with a hike this year and maybe a hike next year. i am not sure that that --essarily stevens the curb stevens the curve a heck of a lot. the question is, what does the bank of japan do it the next policy meeting? not at the top if the front end sells off, is it a message to the fed, what are you doing? >> exactly. if you do see that tomorrow, a 10 or 15 basis point selloff in two-your notes and not much 10-your notes, that will look like a policy mistake. is that one hike a year is not a policy mistake but if markets start to price in two him a three hikes for 2017, i think you get that can a flattening. if the market says hey,

inflation is still not a problem and we not running ahead of the fed's target or any central-bank of the target and you will wind up seeing lower inflation in the out years, and that is what a flattening will tell you. alix: good stuff. thanks so much. coming up, u.k. chancellor philip hammond is in new york trying to ensure brexit is nothing to fear. we will discuss with the kbw global director of research, next. this is bloomberg. ♪

jonathan: from new york city, this is bloomberg . i am jonathan ferro. futures marginally negative. mr. hammond is coming to wall is nothingng brexit to fear. the u.k. chancellor is visiting wall street today to ensure some

u.s. banks about strength and he says he will ensure the city of london retains its position as the leading financial center. as his fred cannon, kbw global director of research. what does this mean for the big it matters als? >> lot. the chancellor should probably talk to his prime minister about reassuring these big banks, because they are already starting to move. we had a conference and europe a couple weeks ago, and this was a big deal. the issue of the hard brexit has a lot of people concerned, so the banks are already starting to set up companies in other jurisdictions and starting to think about moving folks. jonathan: from an industrial perspective, if you go to the likes of france, you will have different tax rates. frankfurt, they might say, i like living in london. my family likes it there. how much of a problem all you have? >> that is an issue everywhere. or example, ireland would love to have the jobs.

will of the u.s. banks just move a lot of operations right back to new york. actualhere is the infrastructure to support the financial system, aside from london? >> nowhere. alix: you can look at freight for repairs, but at the end of the day, it does not exist -- you can look at frank urged or look at paris, but at the end of the day, does not exist. >> a lot of the staffing will probably have to come back to europe. david: assume there is a hard brexit, whatever that may mean. the banks relocate, whether it is new york, france, dublin, wherever. they're still in business making loans and making money. what is the effect? >> it is primarily a cost issue. it will cost a lot more to do business over there. you will see restraints on trading. london over the last 20 or has become a hub for trading globally. you are just throwing some sand

into the wheels of the financial system. jonathan: can you talk me through something that asset management people have addressed? euro clearing does not just happen within the european union . it happens outside of the eu here it is so why has london become this big flap ship -- flagship issue for euro clearing? is the eu basically going to pick out london and say that new york can do euro clearing? why won't london be able to do euro clearing? how what does it have to do with the financial infrastructure, with the exception of just punishing the united kingdom for voting to leave the eu? >> i think that is it, just sand in the system. in other words, euro clearing can be done anywhere. but in terms of from every jurisdiction, it just just throwing more sand in the system to slow things down. it is just the cost of doing business. jonathan: but it feels very

political, not like it has anything to do with operating within the european union. i wonder how they can discriminate against london and not do the same thing to new york. and in the city of london, could they somehow litigate the european union to come back at them and say, hang on m&a, you do not have to be in the eu to do euro clearing, so why discriminate? can they do that? >> i think they can. one of the brakes on the regulation of banks have been the u.k. they slowed some of the excessive regulation from what was coming out of brussels. i having brexit, they have to defend themselves. brussels is on its own to create some of these new regulations. david: so you throw sand on the system. how much? you follow the projected earnings. will this have an effect on profitability of the banks? the problem with banking and analysis is what i think of as

operational risks, and we do not have great disclosures in the banks, but we have taken at 5% of our earning estimates out of numbers. if you are brian moynihan and you want clarity, you pick up the phone, who do you call in the u.k. to ask questions about this? >> your political advisor. alix: that is it philip hammond that really has the final say? is it theresa may? there are so many officials involved that it is hard to get a single voice. >> that is europe. you cannot make one phone call with europe. you have to make a lot. alix: when you look at the banks that have the most exposure, who might those be? >> you can go to the city of london, it is jpmorgan, citi, goldman sachs, morgan stanley, bank of america. david: thanks so much, fred.

fred cannon, kbw global director of research. we're going to talk a little bit itst deutsche bank and troubles. at 10:00 a.m., john micklethwait sits down with u.k. chancellor philip hammond to talk about britain after brexit. this is jonathan. jonathan: this is jonathan. we are about 11 minutes away from the open. this is how we are trading -- europe is pretty much unchanged. the open is 11 minutes away. ♪

alix: this is bloomberg . i am alix steel. look at the terminal, a 15-day chart of deutsche bank. each from a with the potential announcement of a $14 billion fine, hitting record lows, and now they're off those lows. spoke with an investment

founder and ceo on what he believes the bank's plan should be when it comes to the doj. you are saying that john cryan should effectively raise his middle finger at the justice department and say, i will see you in court? really? >> yes. erik: why has every single ceo not taken that option? a u.s. ceo, you do not have that option? erik: is that what he is going to do? >> i think they are ready to litigate, which is why i think eventually, with the administration leaving in the next six days, it is in everybody's best interest. ofx: the kbw global director research -- realistic to litigate and walk away? >> they will have to deal with this. i think there will be a settlement at i things there is

a lot of opportunity in terms of deutsche bank itself getting some kind of regulatory relief in germany if there was a capital issue. none of this gets at the fundamental problem of deutsche bank, which is they do not make any money, very difficult for them to make any money in the future, and as a result, they cannot really raise capital, because nobody wants to but equity into a company that is numbing money. david: are they in a different position than the other big european banks, credit squeeze, hsbc him and others? they are having trouble making money, as well. >> they are. before this, they are trading at 30% of tangible book value, because they have the lowest roe. if you factor in negative interest rates, they go even lower. alix: the liquidity coverage ratio is still pretty solid. at what point do you think they will be to the desk or to the market and risk capital? >> the fact is that they cannot really do that. alix: they cannot say, hey, can you help me find an investor to raise capital? >> exactly.

our view is they can do that if it is absolutely necessary. however, there is not a balance sheet crisis going on and europe today. the fed is not putting new money into europe. the real problem is it is so difficult to raise equity because they do not raise money. david: is there a transparency issue? you talk about book value, and there is a report about deutsche loans isoblems booking derivative. $11 billion in loans -- does that raise questions in your might about whether we know the value? init is always a question banks. the real problem is not the state of accounting capital. it is the fact that the market cap to the assets is 100-to-one in deutsche bank, and that has investors spooked. essentially, there is a run on the equities of deutsche bank, not necessarily a run on the debt. alix: we're going to start

reporting season in the next week and a half for u.s. banks here do you feel banks can earn a risk-adjusted return of what they did in the last cycle. >> of course not. alix: have stocks related to express that view yet? >> in general, yes we are way below, but we were at 20% roe. 12% roe today. we are making our cause to capital, and banks overall are trading at above look value. in europe, they are making 7% or 8% return on equity. david: that return equity varies among the big banks, so which are the winners and which are the losers? in the u.s.? >> the problem we have is the big banks, citi and bank of america, continue to struggle to make it is in return. alix: and we can have a dog jpmorgan, and we will kick it off again with fred morgan. jonathan: next, an interview

with imf managing director christine lagarde, live from the meeting and washington, d.c. is about four minutes and 10 seconds away. futuresn points in the market. s&p 500 futures negative four points. interesting moves in the bond markets. german 10 year yields positive. much higher. the gilt market firing up. 10 year yields over here up three basis points, 1.73%. ♪

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potentially followed by two days of losses. in newning bell ringing york city. state of affairs and the other asset classes -- the cable rate, the june 1995 low. the bonds market, guild getting battered. isds, yields on the 10-year positive. in the u.s., 1.73% on the 10-year. fore through $50 a barrel the first time since june 24. let's see how we opened in new york, 25 seconds in. alix: slightly lower across the board or the nasdaq off by .2%, as well as the other equity indices. doubt is off by 26 points. read the story of the morning in the move is really coming from twitter, opening down by 20%, of course on the news that perhaps that google and

disney will not be bidding on that stock. of one-year. chart that circle is when the rumors gave out -- came out that google could be a buyer. joining us now for more on twitter is mike reagan. where do we stand now with twitter? >> it is quite ironic because twitter is the vehicle for so many m&a rumors. it has come full circle that now they are the focus. repo reporting yesterday that google was not interested. coming back later and saying disney was not interested. also saying that apple was not interested. that takes a lot of the population of the potential buyers off the table. obviously, salesforce is the other potential suitor. we look at the reaction in the salesforce stock, and analysts were negative on the potential salesforce by a twitter, and the stock fell pretty bad yesterday on the news in might be interested.

what amazes me with all this is how many different directions the potential suitors are coming for. i mean, there are so many different strategic reasons to acquire twitter. salesforce is looking at it as a customer relations tool. may be a vehicle to boost advertising or youtube viewership. twitter is to buy for the potential for what a big strategic acquire can do, they are very numerous. in the last 24 hours, we have seen all the potential suitors pretty much vanish. it is my guess that it will still be bought by someone, but the question is who. alix: and the price. jonathan: about two or three minutes into the session here. we are a little bit lower, down by .2 percent. let's head over to washington,

d.c., imf headquarters, where francine lacqua is sitting down with the imf managing director, christine like walk -- christine laquan. let's head over to francine and tom keene right now. tom: from the international monetary fund headquarters, their annual meeting always involves important discussion with christine lagarde. talking about brexit and the changes. debt. of still banking in the dynamics of global banking, particularly european banking. francine: cutting to the chase, first of all, welcoming christine lagarde of the imf. there is so much concern about deutsche bank. how much do you worry about it? >> deutsche bank is an

institution that is strongly interrelated with many of their banking institutions around the world. we believe that deutsche bank, like many other banks, has to look at the business model, which i am sure it does he goes it is in the process of selling assets here and there, has to positivityg-term given the lower about interest rates around the world and probably for longer than many fight itnd decide what wants to have and how it wants to strengthen its balance sheet. but it is not the the one in the banking landscape to have to do that job. we believe that many banks have to do a bit of introspection into how they want to be. i would mention something else which has been made quite obvious this week -- the digital banking is really hitting the radar screen in a big way.

look at the ing announcement, this will probably have more banks move in the direction of leveragingal code, the technology platform, and as a result, cutting costs. talk aboute often the business model of european banks. do you think institutions have to rush to find settlement on deutsche bank, and what happens if they don't? am a lawyer by a badound, and i think sentiment is always better than a good trial. we are not in a trial mode, clearly, in the case of deutsche bank. but a settlement with certainly be welcome, because it would delegate some certainty into what way the bank will have to carry and if it matches with its provision are not. early in the financial crisis, you stood up at the

council of foreign relations in washington and were in search of adults in the room. for european banking in general, what this is about is the courage and the will to clear bad loans, and performing loans. how can the imf assist italian banks, german banks, banks in general, to find the courage to finally write down the balance sheet? know, fore: well, you a long time, we have said that there be a real banking union within the euro area. there is a degree of banking union. efforts have been made. it is not completed. there is not a fiscal backstop that would actually support a significant effort in reforming and probably rightsizing the as they are probably planning to do. that is number one. step number two, we have to say things as we see them, and sometimes it is not welcome. but if we see significant

'sounts and percentages of mpl in balance sheets, we have to say so here it we do that privately in our bilateral discussions, and we do that publicly aggregating numbers, because we never want to single out one particular institution versus the other. you will notice that in our global financial stability report, we hardly mention any names, but we talk in general about the banks. you see the imf doing that? francine: very diplomatic. ms. lagarde is far more diplomatic than we are. regulators are looking at consolidating banks. ms. lagarde: the findings of the if the economyen situation improves, as we hope it will, if policymakers make the right decision and move into action mode, there is still about 25% of the banking system

that is not going to be prosperous. so that calls for re-examination , the work any business leader has to do looking at his business. tom: this quote from the financial stability report, speaking to hsbc looking for low see of- the sovereign many life insurance companies and pension funds is threatened by a prolonged period of low interest rates. you provided leadership on this by saying it is about the duration and the chronic nature of low rates. how do negative rates going to this chronic sense of like a return? ms. lagarde: a call for re-examination of those two sectors, as well, the insurance sector and the pension fund sector. or for the life insurance sector. specifically in those countries

where a level of return is .rescribed by law in a country like japan, for instance, under the law, it is required to actually serve a particular level of return on those life insurance policies. so there is work to be done in those two sectors, as well. i think they know it. they are doing the work, probably a big quietly at the moment, but our duty is to say there is urgency about it. francine: do you feel like the central bank policy is coming to the end of the line, and how difficult is it for government to get out when we're so indebted? ms. lagarde: i want to call a little bit of caution on that massive number of $152 trillion, which is about 225% of global gdp. because about two-thirds of that is corporate debt, household debt, and one-third is sovereign debt. not all countries are in the

same position. some countries are heavily indebted, some of that debt is held by domestic holders, which is also particularly problematic . so we cannot just cry and say, oh, it is a huge debt -- no, we need to be country specific. but there is an issue of the debt burden, and there is an issue of what monetary policy can be conducted on its own, as has been the case for too long, which is the reason why we are calling for the three-pronged approach. they have to come together. ,om: the distinction is here because the debt can be sustained through certain growth. joe stiglitz has been very good on this. where is christine lagarde's level of a, growth? where is your new terminal value, if you will? ms. lagarde: my grandmother used

to say everything is better with butter. everything's better with growth. it has been to low for too long and benefiting too few. we are looking at the three-pronged approach using all levers in the toolbox, benefiting all, not the few. tom: we have got to ask about brexit and the effect on the sterling. francine: is the uk's still open for business after what we have been hearing this week? ms. lagarde: i think you have to ask the u.k. authorities, but it seems to be the determination to continue to do trade. i think the terms under which it will trade with europe some of her instance, it is not yet really certain what it will be. so we welcome the certainty about timing, but certainty about terms and conditions and it comes to financial passports for banks, when it comes to harmonization of norms --

tom: and outright plunge in sterling today. five dollars per pound in 1934 and down we go through the years. where inhad a point every dialogue, currency depreciation ends up being wealth destruction and not social unrest, but the debate shifts? could it be an even weaker level? ms. lagarde: i do not have a magic wand. i would simply observe that if the outcome of brexit is mild, rather than what we forecasted, the sterling is certainly taking a hit as a result of the situation. francine: does brexit and donald trump feed on the same fear? think thee: i is to country specific

and to complicated and settle to be dealt with like that. francine: a very diplomatic answer. expect itwe would christine lagarde, thank you so much. now back to michael mckee with bloomberg radio in new york. also david west, jonathan ferro, and alix steel. thank you. david: joining us now is a member of bloomberg intelligence here we just heard from christine lagarde. she said she was a lawyer, and she basically called on deutsche bank to settle. she said, as a lawyer, a bad settlement is better than a good trial. >> absolutely. deutsche bank is a systemically important institution, and the earlier that we reach some kind of certainty on this, the better

. because the way we look at it is through the prism of financial conditions. so far, we have not seen much of a deterioration because of that, but if we see a prolonged duration in financial conditions, that would be damaging to economic growth. in a conference yesterday and said, ok, three options, brexit, the fed, elections. what is the biggest risk questionnaire no one raised their hand on brexit or the fed. they all raised it on the u.s. election. is that at the heart of the next 6% weeks, the biggest uncertainty you see in the global economy -- over the next six or seven weeks? >> the elections will be a big deal, and whatever the outcome is, we will probably have some kind of an impact. it is really hard to say what kind of impact. obviously, there is a lot of uncertainty.

tomorrow's jobs report will probably provide some guidance on what we should expect. so it is going to be the last major report before the election. there will be another one, that people will need to digest some results of tomorrow's report. enough,arket is strong the probably favors the incumbent party. we will see. if the jobs report is good, that is probably good news. david: it all goes to overall economic growth. -- christinet lagarde was asked about growth, and she said it is not sufficient. she says the level of growth has to be shared. how important is that element of how it is distributed? to worlds referring economic growth overall, particularly in an -- in advanced economies, growth has

slowed. the u.s. economy is reflective of that. potential growth has slowed. in the most recent fomc meeting, we saw the downgrade. so that is really important for living standards and for the economy overall. jonathan: an interesting dynamic we discussed this morning is that this payroll support that is coming up is not so important for the fed that may be quite imported for the election race. typically, we're used to this -- payrolls them up, decent number, and the labor market truthers works sayinghe that things are not that good. how politicized will this labor market become over the next month? >> ok, so i think the labor ,eport is really key tomorrow because if it is good, just

sending more of the same, not necessarily a great number but something good, more of the same, that will probably favor the incumbent party. because it is all about the economy, after all, and people see the unemployment rate going down or moving up, inflation is so whyo life is good, change anything? i think it is very important, actually, for the election outcome. alix: we read those numbers tomorrow at 8:30. thank you so much for coming up, more on one of the big stock movers of the day, walmart down over 3.5%. details next. this is bloomberg. ♪

jonathan: welcome to new york go. down by about .5% on the dow. down marginally, by 19 points, on the nasdaq. let's check out some stock movers. >> big movers for the nasdaq, both in health care, a pharmaceuticals company with shares plunging, getting annihilated, on pace for the rest day ever in about 14 years after the drugmaker said they were going to stop the development of a key drug for a rare disease. apparently, more patients taking this drug were dying than on placebo, clearly not a good think it would have at least three downgrades them a but most analysts say it should not affect the company's other platforms. nonetheless, alnylam pharmaceuticals down about 60% on the year. i.t. medical after the iv therapies, and he said they are

buying pfizer's infusion unit for about $1 billion in cash and stocks him a which would help the company to compete more effectively, expand their residence on a global basis to black rock is the biggest shareholder of icu medical. up one of 20% on the year. alix: thanks so much. another stock we are watching today is walmart. shares are down in early trading as the khamenei forecast earnings for the next fiscal year that missed analyst estimates -- as the company forecast earnings for the next fiscal year that missed estimates. with us now is a bloomberg columnist. what was behind the mediocre forecast? >> they have been laying out for the past couple years that it will take time to come back to growth again. they have been investing and higher wages and fixing their store base. they have closed a bunch of stores. the big news is they will be

opening up as many stores as in the past. ,or the first time in years investors and analysts saying do not open so many stores, they're finally saying we will not open so many stores. alix: they did remodel of stores and e-commerce -- and the longer run, is that what investors want them to be doing? >> if you look in the next 10 years if they can do everything to say they will do, investors will like that. the question is, can walmart do what they say they are going to do, and will investors give them the fen/phen of patients -- the and thed of patience way as they do for amazon? step: the stock to get big down. saying they will spend money on e-commerce and employees, so do not expect growth. what is new today? >> the eps is not that different. it missed a little bit. that is why stock is down a tiny

bit and early morning trading compared to last a when it dropped 10%, the biggest plunge in years for walmart. for a lot of investors, this was kind of a big thing. it is interesting that they are pulling back on the store plans and capital expenditures, the long-term investors got kind of addicted to that. growthres a growth new equals revenue. so if they are not doing the stores, they wonder if it will grow that much. to e-commerce.us and analyst says that the company is facing struggles online, where it had an abyss of operating losses. it is an amazon story, but it is a huge pivot in a quickly pivoting internet world. >> last year, walmart only grew online sales by about 8%, about half of what the overall market was growing. walmart was supposed to be this big retailer out there who was going to take on amazon and was only growing at about half that. they made a huge acquisition of

jet.com. there is talks of them investing $1 billion in flip card in india. endill those online sales of catching up, and will it be enough to offset the cells or growth not coming from the store? david: thanks so much. , yuki gensler philip hammond joins john micklethwait during history to new york for a conversation on the british economy after brexit . here is a short taste of what is to come. >> we don't recognize the distinction between hard brexit and soft brexit. we want to get the right brexit, the one that works for britain and for the european union, as well. it has to be about mutual advantage, about mutually beneficial solutions. david: ok, just a short taste of the interview you will be hearing in its entirety at 10:00

eastern time on bloomberg markets. he says to miss a very carefully, making sure both are benefiting. u.k. and europe. he is a diplomat. saying itmr. hammond is not clear the ecb can require clearing to move. the ecb tried this a fee years ago, and response from the courts was you cannot move clearing exclusively to europe -- the ecb tried this a a few years ago. so i wonder if this becomes a legal issue, as opposed to a legal one. david: he is channeling you. jonathan: i doubt it. i imagine he has had this conversation. course,lly speaking, of they want to use the same kind of trump card in europe here it but legally speaking, if it is going to happen is i the european union anyway, why can't it happen in london? alix: he is also trying to spin some positive rhetoric over

brexit, saying there is a long-term economic benefit to brexit. the question is what he says versus the underlying reality on the ground. jonathan: the current governor doing a "good job." gilts at elong end are selling off. markets look a little something like this. as of the lower in the united states, down by .6%. comingrtant conversation next with the chancellor of the united kingdom, philip hammond, from bloomberg . thank you. ♪

vonnie: from new york, i'm vonnie quinn. welcome to bloomberg markets.

vonnie: we're going to take you from washington to berlin and cover stories out of wall street, portugal and the united kingdom. here's what we're watching. brexit concerns sparked selling in the british pound today. u.k. chancellor philip hammond is in the u.s. to try to reassure banks that britain is still open for business. our editor in chief sits down with hammond this hour. nejra: another shoe drops at deutsche bank. an audit shows the bankhead mismarked as many as 37 deals including colluding with -- colluding to conceal the italian vendors losses. vonnie: portugal secretary of state for treasury joins us this hour.