-- politics get personal as 30 rough minutes define the bank yet.ton rematch. for deute the bank continues negotiations with the u.s. department of justice after reports john cryan left d.c. without an agreement. governor kuroda signals the bank of japan may not change its inflation goal until 2018. tom keene is in the ark. we had an interesting weekend. we had an interesting debate. markets definitely seem to be on the move. tom: i love the "game of thrones" allusion on twitter. it was extraordinary. i have never seen anything like it. one woman said, you are watching the debate with the door closed and the volume down and your hand on the off of the remote control in case the kids walked in the room. unfortunately, at the moment, it was funny, but it was not funny last night. francine: it is funny until the markets get a hold of it. here is taylor riggs with more

on sunday's debate. taylor: hillary clinton and donald trump were in the ring again at washington university in st. louis for the second presidential debate of 2016, and the gloves came off almost immediately. trump reeling from last week's release from a 2005 tape in which the republican nominee discussed women in degrading terms. clinton'sto make bill 1990's scandals part of the conversation. he also discussed hillary clinton's use of an e-mail server while secretary of state. mr. trump: people, their lives have been destroyed for doing 1/5 of what you have done, and you ought to be ashamed of yourself. mrs. clinton: everything he just said is absolutely false, but i am not surprised. it is awfully good that someone with the temperament of donald trump is not in charge of the law in our country. mr. trump: because you would be in jail. moderator: secretary clinton?

debate,prior to the trump appeared with a trio of women who previously accused bill clinton of sexual misconduct. helicopters are carrying food and medicine to southwestern haiti nearly a week after an assault by hurricane matthew, but desperation is growing in cutoff areas where health -- health has not arrived. power is out. food and water are scarce. there are words that gunman have hijacked six convoys. preparingorces are for the most significant role in iraq in years as troops prepare for an attack on the city of muscle. -- mosul. u.s. special forces are already taking part in rates of the surrounding area. in iraq. 6000 troops after the 2011 withdrawal, there were almost none. president hollande has said he

has not decided whether he will meet with vladimir putin in paris six days from now. the longest says russian action in syria is unacceptable, and the people of aleppo are suffering were crimes that will be the subject of an internal investigation. global news powered by more than 2600 journalists in more than 120 countries. i am taylor riggs. this is bloomberg. tom: this is commodities right now. through the data -- all of this off mexican peso and the debate reaction. today.o is a big story a quiet story. oil churning near its 50 level. 14.18 off of the weakness last week. two year yield was at 0.85. we come in two basis points over the last several days. sterling was at 1.23 when i walked in the door. go back to the peso chart. francine hassett. 18.94 is a new, big, stronger

peso off the festivities of the weekend. francine: it certainly is. i know you were going to talk about peso, but i did want to have it just in case. at the moment, the biggest proxy for how you trade the u.s. presidential election. a little bit subdued. i want to look at deutsche bank. , it john cryan was in d.c. was unclear if he was meeting with the doj, we still do not have anything on that fine. uped index, you can see, 0.70. this is dollar/peso, a debate indicator. are going, mexican peso? it is the adjacency and export dynamics. the red line indicates a trump surge coming out of the middle of the summer. we roll over the first debate, the blue circle, the next debate last night, and we went down this morning. that is a stronger peso.

the devils are in the chart, francine. im: francine: -- francine: had a mexican peso chart. you have stolen my thunder. it is right you are showing mexican peso. i see inflation in japan. this is the japan 10 year zero coupon inflation swap. we spoke to governor kuroda. the first circle over there, right on my right, is when abe unveiled the fiscal stimulus. the second is when the bond buying program is extended. since we had negative rates, this is going back. i imagine if you look at the forward slots for the u.s., it would be a similar picture. tom: this is important. peso, the question is, do we get back to this? do we get back to this big middle ground? mark mobius will join us in the next hour. getting back to that is a big deal this morning, the idea of

dropping back to it. francine? to benchmark.y it is similar to your chart. we have mexican peso here. -- we charted against the popularity of donald trump. you can see that clearly it is correlated to mr. trump, how he is doing in the polls. a clear impact on the mexican peso. tom: i would emphasize for the global audience, what we are doing in the u.s. is aggregating the polls. we really will not see that for a day or two. kevin cirilli does not need a cold --to know what need a poll to know what happened. he is torn has from st. louis. the end of the debate, they did not shake hands. but the body language on that debate, the end of the with the microphones off, is totally different than the first

debate. how uncomfortable was it? kevin: this is one of the nastiest debate in american history. we will be talking about this for decades to come. i put this question to top aides in trump's political orbit. the word they used to describe the clinton campaign was "rattled." when i put this to the clinton surrogates in the spin room, they reiterated clinton's claims they feel donald trump is unfit to be president and his performance in st. louis was an illustration of that. tom: kevin, over the weekend, we saw a republican party shaken to its foundations. i put out a photo of the gentleman who explained to richard nixon he needed to resign. help me with the washington republican leadership this morning. mr. mcconnell, mr. ryan, and the others -- how do they move or work is to mark -- move forward?

kevin: it will be fascinating to see how that plays out. during thatmp tower memorable display, to say the least. i have been covering his campaign for more than a year. over the weekend stands out as perhaps the most memorable of the campaign moments. so there is a clear, clear separation between the trump campaign and the republican party. there was many calls that governor pence would actually lead the top of the ticket. hearing inside of his political orbit as well as from the rnc officials indicates that trump and mike pence will continue onward, but they are embattled. this is a republican party without a leader. this is a republican party at a crossroads. this is a republican party that is now in a significant place of danger of keeping control of the senate, heading into the elections. francine: are there more tapes? are there more tapes? i know it is the million-dollar question and we do not know. but if this is an outtake, i do

not know if there is -- how much of a crossroads there is between tapes like this being leaked out and what his vice president will do, vice presidential candidate. the trump campaign is in full on nuclear mode. just hours before the start of the presidential debate, we saw him appearing with several of the women who have accused bill clinton of lewd conduct, to say the least. this is a campaign that has had its back up against the wall. they are coming out swinging. they are essentially saying, bring it on. they are pushing back hard against all criticism not only from the democrats, but also from within their own party. they are under no -- they are not making any questions, if you will, that they are soldiering onward and soldiering onward, quite frankly, alone. francine: thank you. go get some sleep.

actually, we need you in the next hour. then get some sleep. coming up next, the bank of japan. about, we were talking negative rates, the 10 year yield, and inflation. will he have to change the inflation forecast? this is bloomberg. ♪

francine: i am printing not quite in london with tom keene in the york. let's get straight to the bloomberg business flash. taylor: another blow for samsung electronics as it tries to move to the crisis over exploding smartphone batteries. a person familiar with the matter says the company is temporarily halting production on its note 7 from as wireless

companies in the u.s. have stopped selling the note seven after reports that replacement devices were overheating and bursting into flames. investmentloy's company is increasing its stake in vivendi to more than 20% as the billionaire titans his grip over the -- tightens his grip over the media company. it has double voting rights attached to the shares it is acquiring. francine: thank you so much, taylor riggs. let's turn to japan. coronadown with rookie at the imf annual meeting in washington, d.c. he said the boj will continue easing in the coming months. kuroda: the market tapering -- tapering, as you know is a way monetary policy

from a way of reducing, step-by-step, the amount of asset purchase. but as i said, we do not -- [laughter] in 10 to exit from expansionary monetary policy at this stage. we will continue, or even strengthen our monetary easing in the coming months and years. and for the time being, as i said, ¥18 trillion of this would continue. it could, of course, beyond -- go beyond that, or go less. the most important is to achieve the eu -- achieve the cost control. that is the most important, because by achieving the

canopriate level, we maintain and even strengthen -- stimulating impact over monetary policy. francine: that was governor haruhiko kuroda. we get more from an investment management chief investment officer. great to have you on the program. what i was try to figure out and asking governor kuroda, they are jgb's.jbb's -- if this start selling, that would be considered tapering. that is what the market is trying to test. >> that is right. that is clearly the expectation to ensure there is this positive slope to the yield curve. hirelks about wanting to inflation. the textbook says that is what

you need to get people to spend more. people with fixed assets -- often they put up savings rate instead of spending more. japan's policy focus is not going to work. governor kuroda, i asked him several times, is this the one? he has been tweaking. james: the entire policy agenda -- they have been buying equities strongly, and yet the equity market is down, not up. it is clear simply throwing money at challenges, when there are deep-seated underlying no pelletc problems, for accepting inward migration -- inflation is up 16%, but the population that works is down 14% over the last decade. no surprise there is, in effect, no economic growth. i suspect very little impact on the growth for the next decade. see any indication that any central bank has

successfully -- is successfully reflating? james: i see signs consumers are beginning to spend more money in europe. i certainly see strength in the u.s. economy. and i worry less about the inflation observable in the u.s. economy. jobs numbers, relative economic strength, it , this year andme next year. that is reliable economic growth. observing at the moment as secular stagflation rather than a future recession. companiesat backdrop, have continued with strong returns to shareholders. tom: i want to look at japanese yen. i call this the kuroda chart. it is good to see mr. kuroda with ms. blackwell -- ms. lacqua. yen cannotion is the

break through the little blue line at the bottom, the 100 level. as i look at this, it is real simple. to go down and tests that area of the market? -- are we going to go down and tests that area of the market? james: driving the yen, i would observations. non-japanese investors have been selling japanese assets. we should have seen the yen falling. however, what we have seen a significant repatriation of the yen by domestic players. in this environment, we want to have more yen. i do not think mr. kuroda's policies are going to reduce the pressure. it, the morepush the yen is going to be purchased by his own people. francine: why? testing? james: absolutely not. this is a logical response been

a climate of poor interest rates were you are up in your savings bigger nestng a egg, because you are worried about how you are going to pay for the next 20 years. francine: coming up, we hear from the swiss national bank president. we spoke about going further into negative rates, swiss franc as well. ♪

francine: i am francine lacqua in london.

tom keene is in new york. we are talking energy, speaking on the future of the energy business here in london. joining us is the ceo of enel. think of for joining us. we want to talk about utilization, the future of energy, and investing in europe. israll, the central banks -- it more difficult for you to do financing in a qe environment? add think if you can something, it is may be easier. money is available. the issue is projects and what to do with them. francine: you are talking about digitization. did that change the name of the game for a lot of utilities? francesco:uin -- this division is changing in a big way. that is because it is being digitized. grid -- thed to the

grid is behaving a different way, and it is great. mean yourdoes that valued differently? is this like the year 2000 caps off saying, we are actually a tech company? francesco: we are becoming a big platform for many things, not only energy. there is a lot of additional value. francine: tom and i were covering the imf world bank meeting. it was clear there was a concern about who you speak to in europe, and that europe has been through such turmoil that it is difficult for an american investor to say, i want to have $500 million in europe. francesco: europe needs to unify the energy markets. complex.e are too we need to make ourselves more understandable from outside. tom: i look at your company's share performance. you have a very large dividend of 4%, which by u.s. standards is substantial. is your dividend to high?

are you distribute them too much cash flow to shareholders? francesco: it depends from a point of view. for us, i think the right evident. we are not highest-division company in the european area today. actually, we are in the middle of the pack. but what we do -- we increase the robustness of our cash flow ratio, so we have a lot of cash flow at the same level of a beta -- ebita. the growth is an endless question. we do not think we are disturbing too much dividends at the moment when compared to others in your. -- in europe. tom: this is the shares in euros. the basic idea is regression. i am doing this on the bloomberg right here at the desk. i am concerned about the total return over a good 15 or 20 years.

clearly, you are turning it around, coming off the lows of 2013. how are you going to advance the share price? i think it is a combination of growth and robustness of cash flow. successs been the major of these companies for too long, and i think it is time to turn to something more concrete. make it more cash generation rich, and use that cash for growing. that is the bet. it depends on the opportunities of growth we are able to find around the world. that is why we are betting on digital transportation -- transformation. thank you so much. coming up, we speak about emerging markets and the fed. ♪

tom: new york city was focused at midtown. i walked across mr. trump's

emporium in midtown. a stir.ere, creating there is midtown new york, mr. trump midtown new york. i am tom keene. francine lacqua is in london. now we go to first would news. taylor: hillary clinton and donald trump had their second debate as night. last week'sg from release of a taped in which he was discussing women include terms offered another apology behavior. is not only: it women and not only this video that raises questions about his fitness to be president. he has also targeted immigrants, african-americans, latinos, people with disabilities, pows, muslims, and so many others.

this is who donald trump is. the question for us, the question our country must answer, is this is not who we are. mark c.: prior to the debate, trump made an appearance on facebook of the women that accused him of sexual misconduct. the national weather center says are matthew's winds diminishing along the coast. last night, matthew was still packing winds of 70 miles per hour. matthew has killed at least 17 people in the u.s., nearly half of them in north carolina. or for an outreach this week for theresa may. the conservative party leader is listing denmark and the netherlands today. thatcomes after concerned

alienating eu risks partners. u.k. businesses have adopted since theous outlook brexit's. that is according to the chamber of commerce. the u.k.lls on government to take steps to boost confidence. global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. francine: thank you so much. i sat down with bank of japan governor at the annual meeting in d.c.. boj maythe do boj delay hitting their target. >> the economy is actually

accelerating growth. how about inflation tackle you the goals of inflation expectations, the current rate of inflation is around zero or slight negative. in may take flight unity more months to reach the 2% inflation rate. we have to carefully study we relevant statistics for review the focus. changechange, we may not . at this stage, one thing is quite sure. economic growth is likely to accelerate next year. in alet's bring

strategist. thank you so much for joining us. them on tried to push what is the comfort level on the yen. when do they intervene? >> i picked the market is looking at the 90-95 level. definitely, previous actions suggest that is the comfort level. francine: the comfort level of them intervening? it is unclear if at the end of the date it will actually work. dollar- looking at yen at 95. rate differentials is a key reason why they had not been

the yen.ead th rate francine: does it make the job easier? i think a stronger u.s. economy is good news for everybody and therefore, i would be very hopeful. the i look where we are at interdependencies. help the whole did our data sterling, the japanese economics, right now? >> i'm expecting to get to a rate of $1.15 to the pound. caused a problem we have for ourselves with the brexit vote. in this current environment, it hasard to see why anyone this planned.

tom: let me go to the bloomberg now. this is sterling, not cable. this is trade weighted in the united kingdom. over on the left side, the 10 year in the early 1990's. strength.th sterling circle down below 1-10e interpolation of sterling on a weighted basis. what would be the ramifications if we get there? , there are a lot of effects where we would see inflation. we have seen a number of deals .hich have come through definitely, i think, inflation, we have seen it priced in an

rates have really ramped up since october. i think that will be one of the key implications. francine: this is what we paid for the morning must-read. francine: the problem is you can either explain it as a hard or soft brexit. you protect immigration or you protect the city of london. for the moment, they have given the implication that they would rather protect the city of london. fair? is true. that i think people have missed the point of understanding what the challenge is. it is what happens involving the rules and regulations.

as soon as there is a rule change, we have to decide, do we do anything? the tariff barriers.r francine: what is your forecast? if we look at a hard brexit, which basically means not having or giving up number shipped to the access to the single market, what's that mean for the pound? >> i think we are looking at $.2 -- below one dollar $1.20. if you look at referendum results, you can see, they are overwhelmingly for brexit. tom: james, one for one, does

currency depreciation mean higher inflation for the european kingdom? >> not necessarily. the can be passed on to consumer. it is not to any extent connected to the degree of currency devaluation we have experienced. tom: to be clear, you can have a one off depreciation and basically the good of the economy can move forward? >> i worry in the near terms that the currency will deliver a worse, not better inflation. as we know, we have 10 year yields over 1%. how much further will that go? that is the real concern.

overall, what is the one thing you need to know to change the forecast for prime minister theresa may? >> there will be concessions when it comes to the finance industry. but it's really interesting is received rate markets completely priced. threat.seen almost a i think she has to come right now and save the bank of england cannot be touched. thank you so much. will continue in the next hour with the dynamics of this columbus day in the united

states. how they fold into the greater economy. this is bloomberg.

tom: good morning, everyone, bloomberg surveillance in london. francine lacqua. she is back in london. i am in new york. a busy monday. let's get to the bloomberg business flash. noble group has agreed .o sell u.s. energy group the embattled comedies recorder says the cell includes the

repayment of working capital and an additional 200 billion dollars. the deal is expected to close in december. is here in that interview with their own francine lacqua. >> you have to distinguish between exchange rates for negative rates at a creative channel. whether the exchange rate channel is working. francine: would you become double going even further into negative territory? >> jordan is in washington at tipping the meetings of the international monetary fund and the world bank. that is the business flash. francine: thank you so much. the very latest on the swiss national bank. we have a number, a very interesting imf.

i caught up with thomas jordan. i'm not sure to what extent negative rates are having an impact on banks in europe. are they an excuse? a little bit what brexit is? the fundamental problem is be in a little overbearing europe. the this as well as do not make sense to investors. >> they certainly don't. we cannot expect the central bank doing anything other than keeping the market guessing. the commercial banks will play the banks quite horribly. francine: i do invested in the european bank? >> no, not the moment. true.s that troo

.e are invested i worry that the negative anderest rate in eurol condemning the rate of commercial bankers to a hostile environment. we still have a mess because, after all, they do not flatten the balances. we have several significant entities borrowing, including the bank of italy. we have not only dynamic tensions, but also from the central bank. that will lead to some serious bad news at another existential crisis of the euro, in my view. tom: right now, tracy alloway joins us from the gulf states. a phrase that we heard a lot last night. i think we all understand the

gulf states. mrs. clinton and mr. trump brought it up a number of times. two starkly different views. one mr.he states react trump says they are not doing enough, and critically, they're the ones that need to go after isis? >> there is a body of commentary ae that would agree with the sentiment of taking an less than their fair share of immigrants. subjects here. terrorism is a concern for the ruling family. there is a need to balance the interests of security with the needs of the immigration force. tom: within that is the idea of the gulf states. is saudi arabia a gulf state jack are they a part of what they were talking about last

night? or are they so dominant, they are separate? >> in terms of oil? but not in terms of oil, regional politics. is saudi arabia a goal state or are they separate? >> i think it is fair to say of athe u.s. but has something special relationship with saudi arabia. it is to be able whether that is on the verge of morphing into something else. certainly, when people like donald trump, hillary clinton, to some extent, talk about unrest in the middle east, saudi arabia could be on the list. the tension is there. francine: of a talking of saudi arabia, the saudis are saying the oil recovery could see $60

by the end of the year. to figurelly trying out what the agreement means for the market. >> that's exactly right. you and tom have covered this very well. there is a lot of optimism deal. on this opec freeze happens if we had some curb in production. there is a lot of interest in this topic at the world energy conference happening now in its simple. we know we won't get details on the exact cut until the november vienna.meeting in investors are reading the tea as to as for any clues whether this comes to fruition this week. tom: thank you so much.

it is the annual derby coming around for columbus day. award. a more obscure heart on contract law and economics as it dovetails into economics and law. analysis.cure these are not names that many people, even in economics, will be familiar with. this is bloomberg. ♪

♪ tomfrancine: this is bloomberg surveillance. we are both back from the imf world bank meetings in washington, d.c. dough should bank it -- deutsche bank executives have failed to reach an agreement. a person familiar to the matter

has told bloomberg that negotiations with the doj are continuing. let's talk to the finance .inister when we came in this morning and the stock price was down, to put three -- 2.3%, tetris about the fears. >> the scene of a potentially difficult week. there were discussions over the settlement and they did not come to fruition, as we understand. the longer they face the uncertainty, the bigger the issue becomes for investors. they really want clarity now on how much this figure will shift. tom: doing know what it will shift to? i thought the mistry over the weekend with the idea of where point a is and where point b is. do we know? we have seen in other cases, this could take weeks, months.

there is not much visibility in the process as you would expect. what you do have is the .enchmark from what we understand, the s is what thest final number came to. that is what we have for now. francine: what is one thing that would change your mind about european financials? >> i am worrying we are seeing an escalation of aggressions by global regulators. we are not getting a flattening. if i were them, i would worry about customers, rather than sales. i would be thinking, how many of my customers will walk away because they don't want to be with me anymore. that is the underpinning. any day.ces will move i wonder what will happen is customer start to go. tom: thank you so much.

a little more on the nobel prize winner. this is the of secure area of contract law and has to do with the firm. the two words are principal and agent. we talk about it as if we know what we are talking about. there is a point that it had to begin. it started in the 1980's. i'm call this may be the most obscure nobel prize in years. francine: maybe it is exactly what the world needs since we don't know exactly where we are headed. tom: absolutely. coming up, mark mobius. ♪

tom: this morning, the devil is in the details. a fragile pound-sterling signals

for name must signal a hard exit. .n this hour, mark mobius they have a devil of a time adapting to janet yellen. this morning, a stronger mexican peso. secretary clinton perhaps takes not, the debate. everyone is off but meet and francine lacqua. it is an odd holiday in america. everyone is off, but the markets open. we will do it full scale anyways. you take away from the debate last night. francine: you know, christopher columbus was actually from my hometown in italy. my overall take is that, when you look at the pound, we need to look at how the pound keeps on getting hammered. the sterling falling for a third

time today. because it is folly to quickly, it may confuse markets, and it is getting painful. right now to first word news. mark c.: hillary clinton -- taylor: hillary clinton was in link again for the second debate of 2016. the gloves came off almost immediately. the trump campaign manager from the release of a 2005 tape in which the nominee discussed lewd terms.o another target for trump, hillary clinton's use of a private server as secretary of state. eight is a disgrace. honestly, you must be ashamed of yourself.

mrs. clinton. everything he just said is absolutely false. i'm not surprised. taylor: prior to the debate, trump made an appearance, broadcast live on facebook, of a trio of women who previously accused bill clinton of misconduct. growing in cut off areas where help is not yet arrived. power is out, food and water are reports ofthere are gun convoys. france also lined -- france will hold on -- french president lande says action in syria is unacceptable.

global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries.

bloomberg, ifhe we could, the mexican peso. there is the chart it the trend of. this is the movement here. trump is doing everything good. then, debate one, debate two as well. we are staying with a stronger pesto this morning. wisdom down from megan murphy. good morning. i look at the debate debris, and everything really don't know where to begin. last night,here what with the observation as the debate ended? very: i think it was

different when the debate started. that is for one reason. donald trump actually managed to write the carnage that we saw in the first 30 minutes of the debate. there were many people in the reallyncluding myself, did not think we would see the end of the debate. it was so nasty, so personal. it went from his sexually aggressive comments to talk about the clintons pass, and a real, true, personal, almost physical, philly in the room. that being said, the next hour was different. we moved on to substantive policy topics and covered significant ground. at the end of the night, the takeaway was she could not put him away for the night. kerry end up to himself right into today. tom: this was the tweet of the night. i kept looking at a gets feed

looking for her tweets that are brilliant. this is from "wall street journal." megan: only one week prior, on syria, that was really shocking moment.

we will be watching to gauge the reaction of this following the video on friday. the second thing we are watching is the continued sort of movement from establishment republicans away from donald trump. people s say they will not support him. we are watching paul ryan today. he is still considering his position, despite the performance last night. you call it what you will, but he did not give up his entire campaign. francine: unlike pence, you say he was less than impressed by this latest controversy. will he remade loyal? i know that is what we are trying to figure out. at the moment, it seems he is loyal. megan: we should not underplay how personally they were from the

comments about women. first, that isan how he describes himself. we expect to hear from him this morning. it was very strange last night, the note about the vice presidential candidate. again, did he do and not to stem the tide? the last 48 hours have been unbelievable to anyone who has that in politics. we'll have to see whether they can regain any sort of momentum. expecting, i we know it is difficult to answer, any more tapes on the donald trump side or even from hillary clinton? megan: donald trump

talked about that last day in a very passive way. they were literally drowned out by this controversy surrounding mr. trump, who has been unable to get any headway. tom: professor feldman on the law that we witnessed last night. functioninges

democracies from failed once es?gled -- failed on tom: there is the legal ballet of last night. how does a market pro like you fold in what we observed last night? >> i think we fold it and if we think it is a potential outcome. we always have potential outcomes and probabilities. you look at the problem really 75%ow and is probably about . most market makers would put it at a 75 percent probability that mrs. clinton wins the election. toht now, it is unpleasant listen to, by don't think the markets will discount this substantially.

as you pointed out, we are seeing that in the trading of the mexican peso. tom: if we look at the mexican peso, why are we not looking at the canadian dollar? bring it up, if you would. this is canada with the rally of another trudeau. down we go, up we go. then, this recent, massive weakness in canada, and we turn again. when does the canadian dollar, like the mexican peso be a proxy for the election? >> i think it is about immigration. if there is any immigration, i think, the talk is that it may be from the u.s. up to canada for this election. tom: thrilled to have you with us today. from london, new york, this is bloomberg surveillance. he is executive chairman and, of mobius for years, mark

on the emerging markets. mark mobius on the view of clinton-truck. good morning. ♪

francine: this is bloomberg surveillance. i'm francine lacqua in london. fresh back from the imf world bank meetings. that is where i sat down with governor.f japan we were talking about the boj, the fact that they will continue easing in coming months and years. here he is. exit at not intend to this stage. we will continue, or even strengthened the monetary easing

in coming months. for the time being, as they said, they will continue. francine: that was governor kuroda speaking to me over the weekend. back with bob cinch. mark, nice to have you come on. we want to talk about globalization. first of all, i have to ask you take on japan. what i was trying to discuss at was the fact that he wants to cap the 10 year yields. curveappens if the yield goes below 10%? if he starts to sell, that would be seen as tapering. >> exactly. i think they are up against the wall. everything they have tried is not working.

a lot of other central banks are against the wall as well. we are in a situation where it , but thefor markets same time, the risk is tremendous. francine: it is tremendous, and they can actually spend a lot of money for not doing much. >> continuing to do what they are doing which creates a y unusual situation. francine: i want to take you to my chart. this is the japanese 10 year on inflation. the circles there, on the left of the screen, if you are a viewer, on my right, is when play.ics first came into the third circle is when they go into negative rates. is actually more of a worldwide problem compounded in japan?

>> it is a global problem. japan is leading the way for other central banks to follow the same kind of policy, which is not working. also, what is so magic about 2% inflation? why is this such a great number. francine: a mandate. does not makehat sense, when you get down to it. we are in a situation where central banks are now driving the economy, driving markets, where they should not be. tom: mark mobius, you have a lot to do with invention. you invented the blue-chip purchase and expanded to other countries. you have a new view on globalization. here is my view. bring it up, if you would. this may be my chart of the year. aggregated.d trade

we are back on the 10 year moving average back to where we were in 1989, a 10 year, decade-long moving average. what happened to globalization? what is the new globalization? i think the new globalization is towards more and more protectionism. it means that a lot of emerging market countries will be impacted negatively. also, investment follows trade. of course, if investment is not there, it is not good for everyone. i would say, this is a very worrying trend. the buy mobius is on side. you are telling people what to do. how do fold, in the case of the u.s., net exports into your calculus? was think the export sector one that was focused early on on d obama administration. it has actually been a benefit economy,s. particularly with agriculture

and energy. those are two areas where pricing is coming down. of: very quickly, the idea trade dynamics, is that their problem or our problem ch? >> i think it is a little bit of everyone's problem. we think the dollar is going a little higher. as that takes place, we will see further pressure on trade on the u.s. side. and stabilize. we could have another hit to u.s. comparatives -- competitiveness. as we lookcome back at foreign markets and foreign exchange. a columbiak with university professor. he is really an interesting guy. he was picked to him of japan

and mr. kuroda. worldwide, this is bloomberg hearing ♪

word.h, my there it is. it is gorgeous. francine: it's gorgeous. the pound falling, though. that means, a week picture in currency traders lines of what london will become. tom: there it is, a beautiful london. let's get to the morning must-read.

this is for francine. we get up, if you would, right now. this is from "the financial times." tom: francine, discuss. francine: i have heard that a lot, tom. we work interviewing a lot of newsmakers who were saying the a hard brexit, meeting, severing ties with the eu on immigration, could we new york. is that true jet go there is no other city like london. >> i would agree with that. i think a lot of this will move towards the east.

francine: singapore? >> china, in particular. china has this shank i connect with hong kong. this could become very, very day, bigger than new york. people have to start looking at the possibility of a lot of this business moving to china. tom: within these dynamics, what is your call on pound-sterling. >> initially we thought the pound with stabilize around 130. that is before the prime minister injured into the picture and changed the dialogue quite substantially. i'm not sure what the objective is. we note the u.k. is already leaving. i think she unnecessarily upped the ante on this process and created a lot of tension. of time inent a lot london. did you have to believe in london moving forward?

>> she has made the belief a lot more difficult. i think we will see a lot more companies looking at alternatives. tom: mark mobius, argued optimist on the future of -- are you an optimist on the future of london? will still bedon here, but, because of brexit or not, there would be a move into asia. tom: a wonderful mix here. today, we willio speak to james steel. we will find out, and get an update. this is bloomberg. ♪

francine: this is "bloomberg surveillance." i am francine lacqua in london. -- having two

espressos after the weekend we had. that's get to first word news. taylor: hillary clinton donald trump had their second presidential debate last night at washington university in st. louis. acrimony was in the air. trump, reeling from last week's 05 tape in a 20 which he referred to women integrating terms offered an apology. hillary clinton: it is not only women and his video that raises questions about his fitness to be our president. because he has also targeted immigrants, african-americans, latinos, people with disabilities, p.o.w.'s, muslims, and so many others. so this is who donald trump is. the question for us, the question our country must answer

is, this is not who we are. to the debate, trump made an appearance broadcast live on facebook with a trio of women who previously accused bill clinton of sexual misconduct. matthew's winds are diminishing along the north carolina coast. it was still packing winds of 75 miles per hour. life-threatening floods will continue over the pushes of eastern north carolina, that received record rain. matthew has killed at least 17 people in the u.s., nearly half of them in north carolina. for foreign outreach theresa may this week. she visits the netherlands today after local concerns that the government's focus on immigration controls in at least the eu risks alienating international partners. she is trying to build understanding out of this

month's eu summit out of brussels, which will be her first. oliver hart and thing hallstrom -- and thing hallstrom -- and holmstroem awarded the nobel prize in economics. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries, i am taylor riggs. this is bloomberg. francine? tom? tom: thanks so much. it is an economics that all of us knows, the idea of my toy policy. holmstroem and bengt -- this is about the micro-foundations, the

microeconomics of everything we do every day pretty it is a different world. >> it is a whole different world. macroeconomics is based on micro . it takes a buildup of micro to get to macro. i think that also this maybe suggests the fate of the world in the economic theory right now, that the macro world is really struggling with the whole foundation and how the economies are operating. part of this is the idea of contract theory principle in agent, and that goes to central banks where janet yellen really cannot control her story as a principle of the macro economic debate. talked aboutve this before. i think central banks are struggling against limitations of what they can achieve all over the world, and the more they interfere with markets, with this process, the more imbalances they create. we are seeing that in japan, where they do not know if they are trying to talk about the

quantity in the system, the level of interest rates. the d -- the more deeply you get involved, the more consequences there are. should why the fed start normalizing rates and let the economies operate in a normal tom: manner. tom:francine: -- in a normal manner. tom: mark mobius is with you in london, francine. francine: we are back with mark and bob sinchen, in new york. is, whether they have taken the idea that the fed is hiking -- or that they will be surprised if they do so in 18 months. mark: if you look at the 10-year history, there is absolutely no correlation between interest rates and the markets. emerging markets, at least.

francine: but there has been a temper tantrum in the past. mark: exactly. you see cases where interest rates went up and the market went up with interest rates. i would say that we could be rates god if and when up. if they do go up, they will go i by a very small amount, and do not think it will be material. a lot of the emerging markets are dealing with 5%, 6% kind of interest rates, and therefore i am not that worried about it. francine: it is very clear that we have seen a rally in emerging-market stocks or equities. really beenot keeping up in terms of number and size per it why is that? the: basically because of latent fear that people have of markets generally. but it is changing. you can see more and more i feel's, gingerly in china, -- ipo's, see more and more

particularly in china. francine: how do you choose what countries are more investable? brazil does not look as good as mexico, obviously. what else do you like? brazil is quite interesting because they have been going through this reform process that looks very positive mexico looks good. and particularly india -- india looks very exciting with all the reforms coming in. tom: i look at the politics folded in here. how many basis points, how many percentage points of return do i pick up if i have courage to be in emerging markets versus being in developed country stocks over the next 10 years? mark: i would say you are .alking about 8% difference the emerging markets are now running at 4% average growth. many countries are doing much better than that, and usually the equities would be about double that growth rate. tom: and everybody watching

worldwide, just leaned forward -- just leaned forward when mark mobius said that. mi buying philippine stocks as a proxy because i cannot get it good yield coupon? robert: i think that is the case. the distortions are brought about by the central banks, by buying up so much government that they depress yields. we know they have pushed a lot of investors domestically into corporate bonds, into equities, and those who traditionally were buying domestic equities have to look into the emerging world as an area to find both yield and potential appreciation. i think a lot of this is a distortion in the core market and the central banks, and it keeps spreading. tom: we heard bob sinche talk about a dollar list here. coming up, how do you fold in the dollar? thedo the job -- how to dollar dynamics change if i am in the u.s.? mark: there is no question that recently a emerging-market

currencies got stronger against the u.s. dollar. if the dollar gets stronger against those currencies, that will be a negative against investors. i do not see it happening to any great extent. a lot of these emerging-market currencies are still at their very low points. francine: do you think the fed will allow a significant dollar rally? mark: i do not think so. regardless of who wins the election, that is going to have an impact. whoever gets in his going to be putting pressure on the fed with regards to dollar strength. , i want to put you on the spot, with great respect to your work with the templeton group. what would the late sir john this amazing about mess in america? he came out of tennessee, dirt poor. what would he think? mark: he would be quite

surprised and shocked. he was the kind of guy who would look at, here is an opportunity. he would say given the crazy situation we have now, chances are there is an opportunity that we should take advantage of. how do you model on donald trump's presidents a? you talk about dollar strength or not. i am not sure what you would model ahead of november 8. mark: whoever gets in will be focusing on u.s. position in trade, and the dollar strength is an important part of that. if trump gets in, he will be a negotiator. towill be flexible, willing negotiate something with regard to which country you are talking about, and i think clinton will probably have to find the same. francine: mark mobius, thank you so much, of templeton. robert sinche stays with us. coming up tomorrow, we speak with catherine mann.

we will be speaking to dr. mann about evaluations. this is bloomberg. ♪

francine: this is "bloomberg surveillance." look at the beautiful picture on capitol hill. tom and i were there over the weekend. we are back in our respective capital -- tom in new york, i am in london. it's good to the bloomberg business flash with taylor riggs. another blow for samsung electronics as it tries to move past the crisis of exploding smartphone batteries. the company is temporarily halting production over its note

7 phones. greece's finance minister is at odds with german counterpart wolfgang schauble. here is that here he is speaking with francine lacqua. >> i explained that i do not understand how he has this triangle where he believes the .rogram will work something has to give, and i think deep down he understand that. taylor: euro area finance ministers are reportedly likely to discuss recent debt issues in a second review of the greek program. at their last meeting of 2016 in december. that is your "bloomberg business flash." tom: what a great set of interviews you had over the weekend, saturday and sunday. francine: i was -- i am sad that

the finance minister of greece because -- we spoke about the immediate concerns for debt relief, about how the imf will join, but we had a bigger conversation about populism. it is very clear that populism the imfg, and globally world bank meetings are trying to defend it. he has a unique perspective because he is -- donald trump really represents populism. it was an interesting conversation. to storieset on about banks print deutsche bank executives have failed to reach an agreement on multimillion dollar penalties. a person familiar with the metal -- with the matter has said that negotiations with the boj are continuing. let's go to michael moore. we also have amherst pierpont

analyst rob cinch in new york. the market want to figure between the boj and deutsche bank. it soon, but it takes longer to negotiate with the boj, and it is taking us a long time to negotiate. michael: the doj is also in talks with barclays and credit squeeze, so it is not like deutsche bank is the only thing on their plate right now. there are a lot of details to iron out. the fact that that $14 billion number has been out there, the fact that the market is so focused on this number for deutsche bank really ups the scrutiny. francine: and the market is questioning whether they need to raise capital, cut costs are the problem is that we cannot even speculate, given indication of

what he will do next until we have a number, right? there is a difference in the numbers you have to give away. michael: the number will ultimately determine what actions they need to take, how dramatic those actions need to be. if it is something in the $4 billion range, most analysts think the current litigation reserves can handle that and the bank and go along with its current plan. tom: the ether that michael moore works in -- let's go from that to robert sinche, dealing in the trenches of a major bank. how do the troops deal day to day with strategic executive upset, at any given bank? bob: i think it creates a level of uncertainty in terms of activity. people are less willing to take on good risks. they are less willing to create new opportunities in the marketplace, and i think it is a whole level of regulatory thereny that has not been

in the past. to some degree, that is healthy, but the cost this puts on financial firms in trying to operate their businesses are substantial. the amount of what we would call back-office resources relative to front-office resources in terms of creating business and transactions has really swelled and ballooned. that is kind of the hidden part of all of this, in addition to low interest rates, financial firms are facing extraordinary scrutiny. tom: the bonus structure is now delay, delay. if you go here, over to the bloomberg, bring it over here, if you would. the basic idea -- i am down here. 10 euros per share. my whole world changes if i am in the trenches on a given day. bob: absolutely. i have a lot of friends at bear stearns.

one of my early career stints was there. wealth, this is paper and that can get destroyed pretty quickly for people who have worked a long time, day in and day out. michael, what is john cryan's immediate problem? the share prices down -- it was down 3%, now down 1%. is there a concern that he will lose key talent? michael: i think that is definitely a concern. the european bank employees have lost $2 billion worth of wealth from the share price declines on deferred shares. that is why on cryan, every cent -- every message he sends out to employees, they focus on your business, on your clients, they give talking points for when clients ask about this. the big fear is that this turns into a big business problem, where they start to lose revenue

because clients are taking a step back. francine: michael moore, thank you so much for the brief. and robert sinche of amherst pierpont. this is the picture for deutsche bank as we head to the break. deutsche bank a little bit under pressure, losing 3% early on. now it is just moving 1%. the mexican peso is climbing to a stronger level. there is speculation that hillary clinton will prevail in the election. this is bloomberg. ♪

tom: good morning, everyone. 19, thatan peso under is a big deal. almost at 20. debate 1, debate 2, clearly that tilts and indicates toward mrs. clinton versus mr. trump. the euro, very importantly with sterling weakness, we also have euro weakness as well. francine? francine: the conversation has shifted. we were saying the pound is weaker -- people are saying the pound is twoo week. coming up shortly, it is "bloomberg daybreak: americas."

what do you have on the show, alix steel? alix: we have a new name, a new look, and we will be talking about what you just mentioned. if you look at the inflation spec patience, we will cover that throughout the show and highlight some more of your interview with mr. kuroda from over the weekend. plus, david malpass will be here. he is a trump surrogate. where he thinks trump will wind up going next. . will revert to my oil love we will be talking about an oil minister in norway. is with us from amherst pierpont. i look at the curves, the movement of the curve, the u.s. curve since the beginning of the year. we have curves steepening in the short end, and we have a flatter curve on the long end. single best chart, moving from the yellow line down to the white line.

-- it is adea flattening. what does a signal around this pivot point? bob: what it is telling us is tot the fed is moving closer beginning the normalization of rates again. the annual december move. at the same time, global forces are really pulling yields down around the world. tom: is it a demand for paper or a prediction of weak economic growth? bob: i think it is a demand for paper. i do not think it tells us much about economic growth. this is a global world where the ecb and the boj continue to take massive amounts of paper out of the global markets, and investors are looking around the world for safe assets. if you are in the foreign sector and you do think the fed -- one of the things the flat yield curve suggests is a stronger currency. we have seen that historically, curve tells us

about currency movements. the move down in long-term yields is really a global phenomenon. francine: bob, where do we find yields? you are saying that investors need to find assets which are safe. they also are looking for yields, and that will change when the fed raises rates. bob: it will, but as mark mobius said earlier, this is a tiny move we are looking at. i think investors continue to look at alternative assets. equities have been a big beneficiary. we continue to see modest increases in dividends. i think this asset allocation shift out of government bonds toward equities is something that is likely to continue as we go forward because that is where the yields actually are right now. francine: do you think fiscal spending is really coming? yes,i would like to say but i think that it is too easy

to rely on the central banks. we are starting to see -- i have argued for a while central banks are running on empty. i think we are starting to see the push back. that is one of the risks in this whole move of populism. do we continue to get pressure on central banks from the government authorities? we have seen the japanese get involved a little bit in boj policy. we have seen a very surprising comment on monetary by prime minister may, and i think we could see more of that in the u.s. also. tom: we will continue on radio. "bloomberg daybreak," coming up on bloomberg television in a moment. tomorrow, catherine mann of the oecd. this is bloomberg. ♪

jon: this is "bloomberg daybreak." rename alcome, as we flagship morning show in new york city per let's kick things off with the market check. side, are -- on the front the dow up four points. in the fx market, a weaker pound. 2154.26.y continues at alix: the sterling grinding lower, yields declining for a fifth straight day as prime minister may yet set to take a brexitance in negotiations. investors pull back from british assets per deutsche bank shares falling as people familiar with the matter say talks with the doj are continuing after ceo john cryan was reportedly unable to reach an agreement in washington. the second presidential debate in washington univty