anna: the pound plunges as much as 6.1%, which traders say is accelerated by computer initiated trade orders. is trading hawkish this week. and capital raising questions. deutsche bank is said to be holding informal talks about his options in the face of mounting legal bills. welcome to "bloomberg markets: middle east -- welcome to "countdown."

i'm anna edwards. manus: and i'm manus cranny. algorithms abound in the market, smashed down 6% at its worst point today, but that is nothing. on the brexit day, we dropped by over 8%. we dropped by 6% and saw it come back to a decline of 1%, standard deviation. there they are. this is one standard deviation, two standard deviations. has dropped by approximately one and a half standard deviations. goldman sachs says there has been a big psychological break. that break of 120 changes the dynamic. on one platform, it traded down to 113.78. hollandether francois

had something to do with it during a very low volume period of trading, that is something to consider. let's start the risk radar around the pound and show you how we are recovering. the pound was selling against a number of currencies, not just the dollar. we have recovered a bit, that we are still down 1.5% against the u.s. dollar into down by 1% against the euro. we have seen is essential move, or the great british selloff. manus: the break even, this is the crux of the matter. the precipitous drop in sterling has driven the break evens. let's have a look at the risk radar because it is jobs day in the usa. we have the longest rally on the dollar in five months. we are waiting for the payrolls. the probability of a hike in december is 64%.

anna: it is edging up, isn't it? the gold price is rising. we are not farley from that number. the ftse feature is in thei as ere as well because we have seen this great british selloff in the pound. u.k. equities have a substantial dollar earnings base. manus: let's get out to david ingles, who has the first word news. a very good day to you, david. david: an interesting day. let's start things off of deutsche bank, which is holding informal talks with security firms, exploring options, including raising capital, should mounting legal bills require it. sale, aslude a share the disposal, an -- asset

disposal, and more. meanwhile, the imf managing director says the sooner deutsche reaches a settlement, the better. bloomberg television was told a bad settlement is always better than a good trial. >> the settlement would certainly be welcome because they could deliver some certainty as to what weight the bank will have to carry, and whether it matches with this provision or not. so, the sooner the better. david: china's foreign exchange reserve declined more than expected in december. s shrank says the stock by $3.17 trillion. now, to japan. the country needs a double dose of monetary and fiscal easing.

abe's prime minister advisors says this limits the effectiveness of the boj's eas ing, and is the biggest reason the inflation has not risen to the target of 2%. hurricane matthew is set to be the strongest form hitting the u.s. since 2005. four storm with winds of 130 miles per hour is expected to make landfall in causing as much as $50 billion in economic loss. global news 24 hours a day, powered by 2600 journalists and analysts in more than 120 countries around the world. you can find more stories on the bloomberg at top . i'm david ingles, and this is bloomberg. manus: david, thank you very much. it is jobs day.

sterling is moving. what is happening in asia? what are the repercussions of this move in sterling? good day to you. reporter: good day to you. it does not take much to unsettle investors. we already had that trepidation ahead of the u.s. jobs report, and then that slash crash that came through. ahead of the major market open in asia, we have had a sense of sellers moving in. the pound drop has actually made what could have been a boring day in little bit more spiced up, but we have seen weakness as well. we have also seen money moving into the yen. so, japanese equities, they were on a four day winning streak, but they end the day in the red. australia also closes lower. except for i should say, the energy producers, which have

been doing quite well. and new zealand is finishing pretty negative. in hong kong, the hang seng has snapped four days of gains as well. china, of course, on monday will have a lot to play catch-up to. it has been closed all week due to of course, the holiday. just having a look at some of the movers. we have been watching samsung, coming through with a little bit of an expected quarterly profit of .8%. then, can see the energy producers doing quite well. but the holdings in tokyo are down about 5%. this is after the restructuring plan was unveiled. anna: it has been an event filled day and it is only 6:07. manus: the pound got smashed. it plunged by as much as 6%, the biggest decline since the day

the brexit referendum was announced. anna: it is a move traders say was exacerbated by computer initiated sell orders. this pointed to a "financial times" article that cited francois hollande. manus: he told the paper there must be a threat, a risk, a price. otherwise, we will be in a negotiation that cannot end well. we are now joined by the head of the u.k. investment office. if it was the hollande comment, whatever it was, this flash crash down 6% opens a new quarter in sterling. do you sell the rallies? >> one thing i would say, if you want to sell on the rally, you

might not have momentum in your favor. we saw this with the swiss franc of 2015.anuary it was pretty hard to sell the on the official first few days. on the other hand, sterling is still well below where we were a few hours ago. sentiment is still weak. unlike that event, breaking the peg in the euro-swiss. it will be another two and a half years before we get any kind of resolution, and people know this. on a technical basis, you might want to be careful in selling after such a big move. anna: there does same to be something fundamental driving this. we have ended substantially lower than where we started before this flash crash, but

what worries you more, the state of the u.k. economy and brexit, or the use of machines in trading to such a degree? move markets, can but when computers are involved, they can do quite a bit. i am not going to go into a apocalyptic computer research. this is going to disrupt the g-7 . when they talk about excessive volatility. anna: yes, one of my colleagues wrote in. perhaps some oversight will come out of this. manus: as we discussed yesterday, at what point does the sterling pain become political pain? before this, the chancellor hammond spoke about the low

level on the pound. >> we don't target one exchange rate level. we have a free exchange rate and the market will make its judgment on the appropriate level of sterling on any given time. history tells us those judgments can move fairly significantly on fairly small provocations. self-denying ordinances for chancellors is we don't speculate on what are the appropriate exchange rates of sterling. >> but you don't seem unhappy about the current level. it is not unusual for a chancellor to protest that it is too high or too low. >> the market decides the appropriate value and we are committed to a free market exchange rate system. anna: philip hammond did not want to comment too directly.

what is your call? how weak can the pound get, and during what time frame? 1.25, thatd up at has been a hit overnight. at the same time, going back to what philip hammond said, will there be a political -- going back to 1992, and what happened afterwards. when will this become unpopular, it will have to come down to inflation at the end of the day. manus: one of the charts we were looking at was the ftse 100 the 350, a0 and the ftse trifecta of records we have not 1990's.ce the we don't know this is in a new channel, but it has changed the conversation, hasn't it? >> the ftse 100, a lot of people

just say it is a commodity index. however, if you go further down gets down toet down tit the unique than amex. -- it gets down to the unique dynamics. manus: it has risen by 24 basis points, the highest since 2014. >> that is anticipating it will be passed on. if the u.k. is an open economy, like in sweden and switzerland, we can see manufacturers that don't want to pass that on to consumers. however, it is not a free lunch either. so, they will have to absorb the higher import costs in their margin. that will not be a positive story for the stocks. we have to be very careful who is hedged and who can absorb it better. anna: who is in the market and invest.

as you mentioned, lunch, we have a trading update not long ago. people have been feeling the pressure already from the weakness in the pound, in terms of the import costs. prices can be quite sticky. geoffrey yu, thank you. manus: we look at industrial production for the month of august at 9:30. anna: at 1:30, the much-anticipated u.s. non pharm payrolls. the function on the bloomberg, whis pay . tell me how you say that. manus: and in the evening, we get the u.s. fed vice chair speaking at the institute of international finance meeting in washington. stay with bloomberg because we have a lot coming up from the imf.

this includes. anna: the bank of italy governor during the programming at 9:40. then, 20 minutes later, we will be speaking to sergio ermotti. then, we are speaking to the eu commissioner. manus: a lot is going on. let's tell you what is coming up on "countdown." goldman sachs downgrades the electric carmaker, adding to the woes of the ceo, elon musk. anna: the german lender will be holding informal talks and raising capital. will the biggest ipo since glencore yield to expectations? we take a closer look. this is bloomberg. ♪

manus: yes, it has indeed.

it is just after lunch, 18 minutes after 1:00. nervous, 23,821 for the hang seng. let's get the business flash with david ingles. david: thanks, manus. let's start with samsung. the company had better than expected third-quarter earnings. the impact of the note 7 recall was limited. samsung did not specify the financial impact of the recall of its flagship smartphone, but analysts are estimating it is between $1 billion and $2 billion. if the post merger earlier this year, but it was rejected according to a person with knowledge of the matter. had it gone through, it would've

been the biggest bank merger in europe since the financial crisis. the dutch finance ministry also declined to comment. rio tinto says mongolia will not receive any dividend. that is the world's second-biggest mining company. he completed a $5.3 billion underground expansion. this will be one of the top five world, andes in the currently owned by the mongolian government. so, we did not receive any dividends. it is a long-term project. to build the underground, of the valueis 80% of the project. it will take us five years to build the infrastructure and seven to nine years to finish it. to pay some dividends, you have to be profitable. until we get to a finished

state, which is clearly 10 years down the road, we will not pay dividends to anybody. is losing somek of his biggest wall street cheerleaders at a critical time. a similar move was completed by morgan stanley. pressure.dergoing he is said to be looking to raise as much as $2 billion in a new round of financing. snapchat has begun preparing, filing for an official public offering in the first quarter of next year. that is according to people familiar with what is going on. the company recently changed its name to snap inc. this could depend on the health of the chinese economy and the outcome of the u.s. presidential election. that is your bloomberg business flash. anna: david, thank you.

every day. manus: everyday a different combination. anna: now, it is jobs day in the u.s. and investors will be focusing on the non pharm payrolls number, which comes out at 1:30 u.k. time. how will that impact the great rate debate? reporter: plus, 172,000 jobs. that is what the bloomberg medium forecasts on friday when we have the september non ph arm payrolls. lubricant intelligence predicts a number a little bit higher, 190,000. look for an upward revision to that number. this is something that has happened over the last several years. and all of this will help guide the fed's thought on a rate hike later this year. we have a chance of 50% priced in for december and a oene in fo

ur chance by november. we saw a rise of 2.6% on the year from 2.4%. the work week is projected to increase to 44.4 hours. the unemployment rate is atecasted to stay the same 4.9%. it has been sticky for the last 13 years. that could mean the economy is close to full employment. the september jobs report comes out friday, 8:30 a.m. new york time. ubss: geoffrey yu is with management. we have listened to a lot of the numbers coming in there, number after number. it is all about the wages. the fed is overly data dependent. 2.6% about the wages and

seems to be where the market is focused. are you focused on the wages? >> in the context of where inflation should build, yes. but if you are focused on wages, shouldn't we be talking high numbers as well? the unemployment rate is close to, or even slightly below. we keep talking about whether the concept makes sense of not, but that is for another debate. be,it is as tight as it can why aren't we seeing more inflation. even the u.k. could make a similar argument as well. yes, we focus on wages, and what part of the income scale is enjoying wage growth. and then the important thing, if you can have 10% to 15% wage growth. the fed will not be in a position to hike rates. it is not just about wages, is

it growing as fast as a relative to employment, and what is being done with it. 172,000, what is the have to be to really change the conversation around the fed, in any direction? >> i would say, in any other year, up. but in this year, i don't think it will move ahead of november. moving into december, if it confirms we are on track, around 175,000 to 200,000, able just push up expectations for december, which is what we expect as well. manus: where are we? the dollar is on longest winning streak. what next? is there a step chance in the yield curve in the u.s.? >> i think that will much more outlook fore fed

2017 and 2018. if we look at what has happened to terminal rates, they have been dragged down, outlook for 2017 and james bullard is not helping things either. you could conceivably have a december hike, but then the fed saying, where will terminal rates be? i don't think it will do the dollar any favors. i don't think that will do yield any favors. we have to see what kind of hike there will be. we have two kinds. the hawkish hike, or the dovish hike. there, we would have won this e this year, and the maybe two next year. anna: risk is so high and relatively and hedging are so low. people are unwilling to take any risk with this election. what do you think? >> the facts matter, and we are

seeing this in our business as well. if you go around the bigger risks, you will always find them. anna: geoffrey yu stays with us. manus: up next, deutsche bank is reportedly exploring a cash call. we discuss. ♪

anna: welcome back, everybody. in london, which means another addition of "daybreak" is available on your bloomberg, and on your mobile. let's take a look at the stories making into today's edition. i don't even need to look to my right hand side to see what the story will be about. it is all about the pound, manus. manus: a toxic combination. the dollars during dropped by 6%, 1.5 standard deviations. saw on near that 8% we

the morning after breakfast. it was a move that traders say was exacerbated by computer initiated sell orders. what did you read this morning? stop the bots. anna: that is one person's analysis. one of our colleagues is talking about adding some insight. theher story on "daybreak," news around deutsche bank. it is holding informal talks, talking about exploring options, should mounting legal bills require it. a spokeswoman for deutsche bank declined to comment. manus: i think what is interesting here, if we think back to last september, john cryan declined he would raise capital. how much capital would john cryan and deutsche bank need to raise? that is an excerpt ital inextrio

raise? linked. doesn't this come down to some sort of elliptical conversation, in terms of the boj and what they will do. finally, daybreak focuses on saudi ramco. the biggest oil company is planning to sell shares in the entire business, and not just in the refining and distribution operations. manus: i want to bring a little bit of breaking news. the proposed deal, the unsolicited deal, it looks like delta lloyd is rejecting the takeover proposition. this is in the dutch insurance sector. the delta lloyd rejection. we will get more on that, including the reasoning. the terms are not acceptable, so the basis of the deal is not acceptable at the moment. anna: let's talk a little bit more about the pound. we have a couple to show you.

in fact, this is the move into the session. manus: it is down 6%. this is the risk radar. i think the big issue in the market will be this. the pound dropped to 6% and on one exchange, it dropped to 1.13. how many margin calls have been there and how many stop losses have been revoked? there has been a great deal of arbitration over what traits des stand in the market? er,a: yes, that pound is weak but not as weak as it was. the dollar index is there for you, up by .2%. of course, it is jobs day in the usa. on any other day, we would be talking more about that, but events in asia and the pound have changed that. $1250 they say you

will see an opportunity. we can see gold tumbling, but the etf, the actually buying of bullion, that is rising. and on ftse futures, we have a new record. will that relationship hold? anna: down the pound goes and of the stocks go. deutsche bank is holding informal talks to raise capital and dispose of assets, should mounting legal bills require it. anna: meanwhile, christine lagarde says of the sinner deutsche bank reaches a settlement, the better. >> a settlement would certainly be welcome because it would deliver some certainty as to what weight the bank will have to carry, and whether it is within its provision or not. so, the sooner the better.

anna: we are now joined by caroline hyde in frankfurt. ceo john cryan said in september that he does not plan to raise capital. what do you make of these reports today? caroline: interesting, everything still must be on the table because deutsche bank only set aside about $6 billion for any of the legal repercussions coming from the united states, from the mortgage-backed security allegation. we already know that $14 billion was the first particular number thrown out there by thae boj. certainly, they have got to be assessing the market. one option is indeed, looking to raising more money and capital. that is certainly putting out there, having discussions with other security firms. that is no surprise. but there are other options on the table. maybe they would sell off other units.

the question is, will deutsche bank remain a universal bank with retail, investment bank, and asset management. but unsurprisingly, you are never going to talk down your share price before you really want to. he does that just depresses your share price. depresses that just your share price. manus: the question is, how strong is the share price expected to be? it is all about cornerstone investors, if they go for a capital raising. caroline: you have the likes of blackrock, another big older. some understand that investors have been approached, new ones and old ones, but they are trying to gather enough demand out there. remember, some legal 5percussions here, $ billion euros is a liquid go to the market for. so, they would have to get the

backing, but we do understand there are tentative negotiations going on to make sure demand would be there. it was reported thatis lo if the u.s. fine was monumental and pushed deutsche bank into a crisis, they would be there to buy up some of its shares. so, a sign of support coming from germany for the lending banks. but will they get a number from the doj? john cryan is in washington. will he talk to the department of justice today. ? then, there are concerns in russia related to money laundering as well. anna: thank you very much, caroline. she is the in frankfurt, watching that story. geoffrey yu is still with us in teh studio. -- in the studio. when you look at the threats hanging over the european banking sector, the late rate

environment forces things a little more quickly. but really, there is a big political question here. for deutsche bank, it is the doj and the fine. but more broadly, the threat of legal action in the sector, that is something we have not moved on from. >> many of our clients are asking about this. it is a little bit of a value trap. this is not just in equities under certain parts of the capital structure as well. exacerbatesst things. the conversations our clients are having, if push comes to shove, not just their names being mentioned, but will this have implications for the banking establishment?

italy is making the necessary injections into its own sector. germany will set an example here, but now they are the center of a crisis here. they will be many questions for the european council. manus: when you talk about bank valuations, they could look compelling, of course, something of .26 looks compelling. but should we go to this mode where yield curves aren't steepening? dividends could be in the sector, they are not going to rise anytime since, e they?t >> this brings us to the story about tapering from the ecb. and what we saw is, in hindsight, and it is always about hindsight now, how is symmetrically the markets are positioned. theyone is looking at "lower for longer" method.

nobody is even mentioning a normalization process. nobody ever suggested that ecb will grind to a hault, but out of 100 headlines suggesting they are going to do more, just one headline is looking at potential policy options for an exit. god knows how long down the line. anna: you could wait to determine that headline as more of a commentary. but anyway, we believe that there and talk more about the european economy in a bit but in terms of the banking sector and exposure to it, we talked about that overnight. the dutch government rejected a deal over the summer, apparently, doe does merging in the sector make sense to you? >> we still, i think, need to look at it on a country basis. al level,sectororal

this is a problem within an imperfect monetary union. the high yield curve will be determined by other factors. the ecb is trying to accommodate what is going on in the southern europe right now and that will not help things in the profit level. manus: we are looking at numbers from the bank of america. $91 billion over the past four weeks. what we have got for you here is the return on the stoxx 50, and this is the return on high-yield, they'v diverging the most since 2010. ecb is not stopping stimulus. does that potentially change going into 2017 for you at ubs? >> there should be some convergence, but is it going to be a symmetric convergence?

byp returns need to go up 7%. i don't think it will be that simple because people are chasing that yield. we exited high yield three months ago, even with the ecb in gauging, we just did not see the added compensation. we are still holding to that view right now. without growth, it is just a nonstarter. anna: geoffrey yu, thank you. coming up. manus: tesla trouble. goldman sachs downgrades the electric carmaker, adding to the woes of elon musk. anna: will the biggest european meetglencore, expectations. taking a closer look. manus: and sterling suffers a flash crash. what is behind the move?

we investigate. this is bloomberg. ♪

anna: welcome back, everybody. 1:45 ine in london and new york. it looks like futures are down by .3%. the european market though, going in two directions based on the sterling trade and what happened to the pound overnight. let's get to the bloomberg business flash with david ingles. david: samsung has posted better than expected third-quarter earnings as demand for displays limited the impact of the note 7 recall. samsung did not specify the impact of the recall over the flagship smartphone. analysts are looking at estimates between $1 billion and $2 billion. elon musk is losing some of his

biggest cheerleaders in wall street at a critical time. morgan stanley also made a similar move. goldman's decision comes with pressure to rally investors. he could be looking to rally as much as $2 billion in a new round of fundraising. snapchat has begun looking for a public offering and is aiming for the first part of next year. that is according to people familiar with the matter. the company recently changed its name to snap inc. a good list as soon as march, depending on equity market volatility, the health of china's economy, and the outcome of the u.s. presidential election. that is your bloomberg business flash. manus: david, thank you. rwe's green energy business is priced at 36 euros a share. the ipo is today and that is at

the top and. -- at the top end. anna: joining us now to to discuss is the european utilities analyst. run us through the logic, then. what is the reason then, for doing this ipo rwe. >> basically, rwe is having a tough time because they are convinced that power plants are due to be closed at some point. at the same time, there is a lot of nuclear liability because it will have to shut down the nuclear reactors at some point. to fund that, it will use ipo energy, and at the same time, it will allow the company to use some of that money to perhaps, spend on other growth areas. manus: we had uniper last month. here we are with rwe, doing the same. how does it differ?

had we look at it, in terms of a comparison? -- how do we look at it, in terms of a comparison? >> they could be described as a capital increase for rwe. eon,niper and eon, for ipo's are half of the company. but for eon, it is more of a strategic slip, where rwe will keep most of the overhang right now. anna: where should we expect energy shares to trade with that in mind? >> the shares rose 10% on the day of the listing. they closed above the guided ipo range. so, if you think the same will happen with energy, it will probably be at 36 euros per share. manus: i am just thinking of ipo

, in terms of where it could go globally. have $532 billion worth of ipo's to date. europe is number three at 10%. what does this do for the market? does this open up an appetite for the marketplace? >> for my sector, it definitely does because the bond yields are so low at the moment. investors are looking for yields. utility stocks have made this a defensive sector. that is why there is such a strong interest in energy. there is a high dividend payout ratio, it is quite a defensive stop with network and renewables business, which don't fluctuate with commodities much. anna: thank you very much, elchin. analyst, intelligence

elchin mammadov. manus: we will be speaking with the energy ceo from the frankfurt stock exchange. that is at 8:45. anna: mongolia will not receive any dividend for 10 years. that, as the world's second-biggest mining company prioritizes completing a $5.3 billion underground expansion. manus: which, at its peak, will be at one of the top five copper mines in the world. it is partly owned by the mongolian government. >> we are not delivering any dividend to anybody. that thisnot forget is a long-term project. to build the underground, remember, it is 80% of the value of the project. it will take five years to build

the infrastructure and seven to nine years to wrap it up. so, to pay some dividends, you need to be profitable. and until we get to a steadys -- and until we get to a study state, which is five to 10 years down the road, we will not pay dividends to anybody. anna: let's bring a few of these energy related things together. geoffrey yu is still with us on set. i want to ask you first about this rwe ipo of innogy, the biggest since glencore in 2011. this puts into context the size of innogy, and compares it to eon and the others. energy is going to be a very big player in terms of utilities across europe and this is all new energy, isn't it? >> and our clients are looking for new sectors to invest in,

which are not correlated with everything else. they are not really cyclical and will deliver ratios that can be maintained. that is something private wealth investors really enjoy. it is about looking at longer-term themes and longer-term investments. theme right now. they are looking to do some ipo's, for example. if you can capture such thematic is,s, of course, the risk as i just mentioned, so many stocks right now looking at light bonds. there yesterday, we heard was this backlash, this almost prodigious line of a backlash against proxies, in terms of volatility. then, who should the backlash be directed against?

it should be central banks, t th at the end of the day. >> we will not be able to answer that for about 10 years time. if we get situations where equities start trading like bonds, not only in terms of price action, but also in the response to market events, then we have a proper response. anna: looking at the energy story, in terms of commodity currency exposure, you had an interesting trade around the norwegian krona, which you decided to close out. tell me about that story. obviously, the economy in norway is improving a little bit. >> norway, they really want to move away from this one. there is a stronger domestic demand story. the monetary policy projections,

it is the one country where inflation has been at or above target. and it was bad inflation, imported inflation. we are happy to let the currency strengthen and focus on the domestic and demand side of things. now, it has run quite a bit because when you allow the currency to decrease some inflation figures, you invalidate your own argument. manus: we had a big note from goldman sachs this morning. pessure.nder >> what i want in gold, we are range. at a1275 manus: etf has risen for the fifth straight week. >> is that enough of a reason to purchase gold on a sustainable

basis? is that really picking up materially to generate sustainable prices? we are not there yet. anna: tell me about your em fx strategy. 's."t is called the four "r we are funding that out of the swedish radar. we have got the brazilian radar, and quite a valuations gap opening up over the last few quarters. >> these currencies are no less exposed if we actually do get a massive dollar rally, which could expose the debt situation. these are high-yielding currencies. anna: is this the new brexit? >> i am not ready to coin new acronyms yet. anna: geoffrey yu, thank you so

much. conversation related to politics and computer science. we will talk the pound. that is next. anna: this is bloomberg. ♪

are manus: flash crash. -- asunge crashes as must much as 6.1% against the dollar. jobs date in the usa with a fed officials sounding hawkish this week, how will today's figure affect the rate debate? deutsche bank is said to be having informal talks about its options in the face of mounting legal bills. anna: a very warm welcome to

countdown. good: another piece of news for germany. industrial output rises by 2.5%. the market estimated 1% building on the consensus that europe -- -- is movinging towards a much improved position. what does that do for the ecb? anna: we have seen a flash crash. it has been dubbed by many traders in the london pound. some algorithms calling it a fat finger. the, some comments from president of france. all of that coming together to mean that the pound went weaker by more than 6% against the dollar. manus: it is the great british pound selloff.

we will take anyone's clever line on counter. how does this rank? it is a flash crash or a fat finger or a real trade? this is brexit day. we dropped by over 8%, breaking the boundaries of a standard deviation. approximately we have moved one and a half standard deviations. seen a majore not amount of liquidity go through on this trait. the question now is the stop losses, the arbitration of the stop losses and the arbitration a the market -- when you see dramatic plunge like that who has been washed out? and the interesting dynamic of where we go to next. some say 105. anna: we saw pound weakness across the board. we sell these big losses coming

through. they were coverage. the 6% was earlier on. now we are down 1.3% against of the dollar and 1.0% against the euro. the board in these big markets. and the other risk it radar -- there are a lot of other topics to talk about. manus: today is jobs day. we have the longest rally on the dollar in five months. we have been up for five days in a row. 64%. master, fisher, brainerd speaking today. goldman sachs is think there is an opportunity to buy gold if it dips below 250. the lower the pound goes, the higher the equities seem to go.

manus: but geoffrey yu just said that correlation -- you need to be a little bit more particular about that. anna: it is really stock specific. it is a really competitive market. manus: here are the bond markets. what happens next in terms of the fed will impact your 10 year government bond yields. get to zero? that is my question. they could have talked about tapering but no one is saying they will taper. anna: here is david ingles with the bloomberg business first word news. david: start things off with deutsche bank said to be holding informal talks with security firms to explore options including raising capital to cover legal bills. they say that senior advisers of top wall street firms are

speaking to representatives of the german lender including regarding a share sale and asset dealing. unidentified people familiar with the issue but deutsche bank failed to comment. imf says the sooner deutsche bank reaches a settlement with the department the better. said a badagarde settlement is always better than --. >> it would deliver some weight thes to what bank will have to carry. the sooner the better. david: china's foreign exchange reserves declined to a five-year low in september on speculation that the pbo see central-bank was selling dollars to support the currency. the pbo see said the stockpile

shrank. japan, the country needs a double dose of monetary and fiscal stimulus including future easing.er this was a from one of the prime minister's fiscal advisors. reason is inflation has not risen to the central banks to present goal. -- 2% goal. matthew in the us is said to be the costly list to the country -- to be the costliest to the country since 2010. is -- it is threatening to knock out power to julia people. it is expected to make landfall near cape canaveral and track along the atlantic coast racking up as much as $50 billion in economic losses. global news 24 hours a day

powered by our 2600 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg on top . i am david in place. let us go to juliette saly on the details on the eventful session in asia. thanks to your currency. the flash crash in the british pound which happened about an hour before markets like japan and korea opened. we already had australia and new zealand opened when that occurred and that rattled investment settlement. wheelset had trepidation before reports.jobs asian investors have taken some money off the table. the yen and the dollar have risen and gold has risen as well. the nikkei is napping four sessions of gains closing by two thirds of 1%. korea is having a negative

session down 1%. and if we had not seen the record high come through from samsung, you would have seen thans in seoul even worse that. the hang seng is off by 0.5%. some of the energy players that had been doing quite well earlier this week. four sessions had of gains. snapping that winning streak. weakness across asia. china will have a lot to play catch up to when it reopens after the holiday on monday. and having a quick look at currencies, we are seeing the korean won weekend against the dollar, down 0.4%. later tonight,. great market roundup. let us get more on the pound plunge. it fell as much as 6.1%. biggest decline

since brexit day referendum was announced and it was a move that traders say was exacerbated by computer orders. anna: and the french president is saying that the u.k. must suffer the consequences of leaving the european union. -- he said that there must be a price otherwise we will be in negotiations that cannot go well. manus: we are joined by paul jackson. what a day. move we arekind of talking about which is brexit day. these are standard deviations. one and a half standard deviations is what we have moved on today. if it is a flash crash, what ever is, it has shifted our gear of thinking on sterling. hast is surprising that it taken this long after the brexit vote. things have kind of settled down.

may torequired theresa say that they would be posting the article 50 letter before the end of march to get the markets thinking about it again is a mystery. we have a big current account deficit which is a threat to the currency. -- changingding your trading relationship with your biggest trading partner and wheres the sort of shock the chickens come home to roost. it is not surprising that sterling keeps going down. just how hard the brexit will fall is concerning investors. we were listening to philip he said heterday and has never been in a negotiation where the opening position and of being the finishing position. time.e got to wait a long i was looking at some comments from angela merkel yesterday who said that access to the sold

market. to tell you the truth, i think the u.k. government still does not know what it will be asking or so it will be difficult to imagine how the negotiations will end because we do not know the starting point and that is the problem for the markets. what the markets do not know, they will make up is what i say. vacuum, this uncertainty, it is unlikely to be a constructive environment for the pound. today we had a big move and it may well be that we had a washing out of some of the downside. against the dollar will be around 120 and we see that today. manus: some are saying that the bbb,property values -- 4021. this is the breakeven's.

in the united kingdom. as you can see, we are ratcheting higher on those. what does that do to the guilt story?- the gilt >> it makes it more difficult. in the immediate aftermath of the brexit boat, we had a big downward move in gilt yields. we had a big drop in a sterling and a big rally in the ftse 100. my mind is0 to taking into account all of the good news from the weakness of sterling but does not seem to be paying much attention to the potential weakness of the domestic economy. and as the negotiations start, as investment levels in the weaekkeno we can -- do than the ftse 100 weakens but

there will also be a rising risk premium. as the process gets underway. as we have flash crashes in sterling. that can only increase the risk premium in gilts. we started to see that in the last month. is there something wrong with the use of computers in trading? do you think we need more oversight? we talk about flash crashes intermittently and then we forget about them. manus: we get traumatized. anna: and then wake up the next day as if it never happened. is there something that needs to be done? >> i don't think so. ,he more we meddle with that become.t it will

the market cannot function without these programs and there are bound to be errors from time to time. unfortunately, that has always been the case whether we had computers or not. anna: we used to have fat fingers. manus: i have had many a fat finger in my time. the worst time was on the nikkei. these are the markets. the ftse is up this morning. not seena of record since 1999. do we question that now? do you pause for breath or take money off the table? do you expect more of an exodus of capital from the u.k.? >> the move over the last few months from a u.k. investment perspective has been fantastic. not had more than a 10%

move since brexit was announced. that sounds brilliant. but from the perspective of the rest of the world, you have lost money in u.k. at eddie's in that timeframe because sterling is down around 50%. it is a weakness of sterling pushing the ftse higher. i think maybe now we will start to focus a bit more on the negatives these sorts of moves in sterling are bound to be unsettling to the market. in the short-term, it may be worth taking money off the table but the market is not expensive. anna: thank you, paul jackson. manus: building momentum. u.s. jobless claims hover at a four decade low ahead of the nonfarm payroll number. we are checking in on those u.k. futures. we are up by 0.3%. the ftse 100. anna: we will talk more about

that when we come back. this is bloomberg. ♪

718 a.m. has just gone in london. autumn has arrived. people is under pressure. down 1.21%. let us take a look at hurricane matthew. it looks like this is the worst storm to have hit the u.s. since 2005 but it has been downgraded this morning. four it is a category storm. it is expected to make landfall overnight near cape canaveral and track along the atlantic coast. you can keep an eye on that. the death toll is expected to rise in haiti. manus: according to associated press, hurricane matthew has

weakened to a category three. what it could be one of the 10 costliest in u.s. history. it is one to keep an eye on. anna: let us get a bloomberg business flash. samsung has posted better-than-expected --rd-quarter earnings as operating income rose five and a half percent to $7 billion. caps on did not specify the financial impact of the recall of the flagship smartphone but analysts estimate it could be between 1 billion and two weekend dollars. lloyds of london has rejected a cash offer. the dutch insurer says the financial terms and conditions were not acceptable. it had offered 5.3 euros a share which is a 29% premium to the previous closing price.

a merger was proposed but rejected. through, it would've been the biggest bank merger in europe since the financial crisis. it says it never comments on rumors. elon musk is losing some of his biggest wall street cheerleaders at a critical time. elements tax has cut the rating following a similar move by morgan stanley. y'sy are two of the compan top underwriters. he is said to looking -- he is said to be looking to raise more than $2 million in a new round of fund raising. talk about theus elephant in the room. jobs day. paul jackson is here with us from job source. it is all about the wages. what is the most important thing

for you today? >> i think it is a mix. that still a jobs increase is important for them because they want to see that the labor market is still improving and there is momentum in the economy. but if we had a big move in the wages number, if we had a sustainable move above the 2.5 percent year on year game, i think the fed would be more comfortable in raising rates. anna: how comfortable in raising rates? do you think they will go in december? will but i have thought they would go for a while. this is a very slow hiking prices. usually they hike at about 20 basis points per month so this is excruciatingly slow. manus: what is next for the dollar? the dollar has risen for five straight days.

the dollar overall this year has dropped. this rally in the last five days has eased the pressure on the dollar. --t 42017 in your opinion let us say 25 basis point by christmas time -- what does that do for the dollar trade? >> i think the dollar goes up very slowly. there is not a big move from here. the big move is behind us. but given that the fed will be tightening through 2017, that may be a body us and other central banks will be on an easing bias. i think the dollar will move up gently, but nothing more than a 3%-5% move. anna: here is some breaking news in the energy sector. saysrench energy giant they are going to be selling

their specialty chemicals unit to carlisle, a private equity group, $3.2 billion. a big deal coming through. 11.9 times is unadjusted. a big deal coming through on the energy sector. it back to the question around the fed. in terms of the dollar and where fedoes, tie that in to the and its actions and the election . have you seen things paying out for the dollar in this scenario? one analyst i spoke to yesterday see the dollar going higher on both options. >> i kind of fit into that school as well. tightening,he fed the trend for the dollar is mildly upwards. a knee-jerk reaction at the idea of a donald trump presidency is

that, oh my goodness, that would weaken the dollar. but whenever there is a problem that emanates from the u.s., it tends to come from the dollar. the repatriation of money back to the u.s. it strengthens the dollar. the financial crisis started in the u.s. and a strengthened the dollar. people are talking about the idea that donald trump might do more spending and more tax cuts which could strengthen the economy. i do not know if i buy into that. let us talk about the repercussions of that in terms of equity exposure. we are seeing money move into the quality stocks. 300 billion dollars has gone into what they call quality stocks. the msci quality stocks.

that is a lot of money to go into that. is this folly? >> i think it is probably money chasing where the returns have been. over the last few years, the trade was out of the u.s. and into europe and japan. this year we have seen the reversal of that. the u.s. has become more popular. when it comes to things like quality or growth tax, all of those things i think of as being long-duration instruments. they thrivewhen it comes to thie quality or in an environment where bond yields are coming down. and if the fed starts to bonden, if that pushes yields consistently higher in the u.s., that sort of trade will unwind. anna: thank you, paul for your thoughts. paul jackson joining us. looking at the future is, it is showing that we will see a bit of a pickup in the ftse 100.

coming from the weakness of the pound. manus: top of the block. sterling debate, on the move. that is it. this is bloomberg. ♪

♪ guy: welcome to on the move. in london.a.m. we are counting you down to the european open. what an open it will be. i am alongside caroline hyde over in frankfurt. friday flash crash. falls as much as 6.1% against the dollar. will the ftse enter a bull market today? deutsche ban