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 university in st. louis was filled with personal

attacks between donald trump and hillary clinton. you bragged that you have sexually assaulted women. trump: this was locker room talk. im not proud of it. i apologized to my family and to the american people. mrs. clinton: it is not only about it is not only these questions that -- 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. i think it is very important for us to make clear to our children that our country really is great because we are good. a divided we have nation because of people like her. believe me, she has tremendous hate in her heart. when she said deplorables, she

meant it. when she said they are irredeemable, to me that might have been even worse. i did not think i would say this, but i am going to say it but i hate to say it. if i win, i am going to instruct my attorney general to get a special prosecutor to look into your situation, because there has never been so many lies, so much deception are there has never been anything like it. mrs. clinton: 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. for more analysis, let's bring our washington bureau chief, megan murphy, in st. louis. and politics and economics editor michael mckee is with us in new york. megan, you know every time we have a new debate the next morning we try to find the

substance and focus on the policies. when we put together that video clip, we had a hard time doing this. what was the debate about? megan: this was nasty, this was ugly, this was personal. there were times in the hall last night where people watching were gasping for breath at some of the comments that were coming out. since thed this ever release last friday night of the video, the recording of donald trump making these sexually aggressive, lewd comments about then filtered over. we saw this mastiff archer of senior republican figures, and senior democrat -- we saw this of seniorparture republican figures. they were going to go into bill clinton's history with women. we expected that. i do not think we appreciated

how much it was. in terms of donald trump, you cannot think there were that many viewers who tuned in last night and saw this as a positive, appealing message in terms of winning over voters. but in terms of his base, he hit the sweet spot last night. david: he needed to stop the bleeding. i think that was the consensus going in. do we have any sense whether he copper's that -- whether he accomplished that? megan: among people who really have the most vested in donald trump, there was a heavy, heavy push last night that, yes, he got encouragement from other people in the party that in general senior fee each -- supportiveres were and he needs to retain that enthusiasm and staunch the flow of blood. but wider than that, it appears it was another victory for

hillary clinton in the debate. we will see how it plays out today. alix: the beginning of the debate was very nasty, but we did get two points of substance. michael: normally it is the economy, stupid, right? but not last night because of -- as clinton went after trump for not paying federal income taxes, here is what they said. all, i payfirst of hundreds of millions of dollars in taxes. many of our friends took bigger deductions -- warren buffett deduction.ive d george soros took a massive deduction. michael: we do not know what warren buffett or george soros pay in taxes. evidence suggests they both do take big deductions.

warren buffett says he only pay 17% on his income. this is not resonating with the voters versus everything else discussed last night. how much is the republican establishment focusing on donald trump and the senate and house races? megan: they are incredibly alarmed and concerned, but we have seen unusual pattern so far this campaign. where republicans have been allowed to separate themselves from donald trump and from his rhetoric in very tight races. the video friday changes that dynamic. people are running for the exits to make sure they know the american people, in close senate and congress races, that they do not support his comments, his stance on women, and his vision. that is something unlike we have seen in political campaigns in decades and politics. you.: thank

to give us a view of last night's debate from the trunk cap, we are joined by david malpass, who supports mr. trump. he served in senior positions in the reagan and george h w bush administrations. welcome to the program, david. are a substantive person, interested in economics and how does donald trump get his campaign focused on the merits and away from these personal attacks? david: i think by putting out a lot of policies, which he has been doing. there could have been more last night talking about rose, but the contrast was -- talking about growth, but the contrast was still pretty clear. he pointed out that she has a big tax increase going on. under the surface, there was also this issue of corruption in washington, the special interests. one of the big parts of the trump campaign is to stop that, so he brought that out by talking about you have made $250

million just since you have been in office. why have you not contributed anything to your campaign? that was a way to focus on the amount and the magnitude of the corruption in washington. jon: the events of the weekend -- how difficult is it for you to come in on a program like this and continue to support donald trump? david: i hate the things that came out. i think we have to look at that but also look at actions and look at leadership. if youthe questions is, are president of the u.s., the chief executive of a gigantic government -- way too big -- and hundreds ofing people through your administration -- actually thousands of people to run the government. trump has a big track record of -- trump has a good track record of picking good people. is a good choice. where is still are clinton simply does not have that.

she is surrounded by people who are not strong. even barack obama, you have to look and say that a lot of the people maybe should not have been in those offices. an: if we were talking about company on the s&p 500 and this video was released of the ceo -- no matter how old it was, that ceo would be stepping down today. you have been at bear stearns. if this happened at bear stearns, the chief executive would be gone the next week. we are not talking about an s&p 500 company. we are talking about running for the biggest office in this country. surely you have a different view on that. david: right, but if you look at what is facing the u.s. in an election, it is one person versus another, so we have to start thinking about the contrasting vision. trump is talking about a vision where we have 4% growth, 25 million jobs, and i am continually surprised by the clinton campaign accepting the really slow growth that we have got. i do not know that you want to jump -- as you are making that

choice, you have to look at what kind of people they are going to have and what policies they are proposing. david: let's assume that mr. trump's policies are the right one for the country to get it going again. importantority is an part about getting those policies implemented. today for aficult president like donald trump to get congress and the american people to follow? david: obviously this is a big setback and there has to be a lot of work in order to build. thewe have not talked about disclosures that came out on friday about hillary clinton. the timing was interesting, the two going together, the one on trump overshadowing the one on clinton. wasif you read what she saying, it is an unacceptable vision of where the u.s. is. it is where public officials talk in one term whether they are public -- whether they that when they are in public, another when they are in private.

she has openly advocated "as for the u.s. that is what angela merkel has done in germany, and it has been a failure. it has caused this giant wave of change in europe as well as in the u.s. brexit is an example of where that policy would lead. i think we should be talking about that. we know a lot about the of hillary leader clinton, and that came out in the debate last night. david: it is so good to have you here today. he will be staying with us for a lot more talk. we go to alix steel now with stocks to watch. alix: we have futures in the u.s. slightly higher but a big negative in the market, and that his twitter, off by almost 8%. -- and that is twitter, off by almost 8%. twitter will have to rely on their live streaming strategy like the nfl to create some value. when all the rumor started, and

put it was trading at 15.75. is run outr premium of the market. we want to keep our ion deutsche bank, off by a half a percent. leaving, noan settlement yet with the doj. "the financial times" came out with a report an hour ago saying deutsche bank was given special treatment in the u.s. stress test it -- in the u.s. stress test. in asia, samsung down by 1.5%. it is halting its production of note 7 smartphones. the replacement phones are also said to be catching on fire. and -- verizon stopping at&t and verizon are stopping the sale of those phones. jon: coming up on the program, more on the challenges at deutsche bank.

later, a conversation you do not and exclusive conversation with governor kuroda of japan. this is bloomberg. ♪

jon: from new york city, this is bloomberg. i'm jonathan ferro. -- jonathan tice joins us. with its collision of stories, three of them, on the one hand, the debate where john cryan is with the negotiations of the department of justice. stake inboosting a deutsche bank. then this story on the margin, how deutsche bank may have been given preferential treatment by the ecb. walk us through all three.

that is indeed strange they were given a dispensation to both the sale, and especially give them a 40 basis points of capital. largely because it is very clear with the rules of the stress test what it can or can't do as what it can or can't do. -- what it can or cannot do. beyond that, the qatari is stepping in. how much of that story is about deutsche bank at the moment, and how much would that story make a difference with john cryan's cause? jonathan: the capital increase is on the cards print i do not know off the top of my head with their stake is, but that is what we saw at barclays during the crisis as well. it does give some confidence that you can -- until we know what the big number is with the doj, it is difficult to figure out how much

they need because clearly every estimate -- the the story stabilized on back of another story a couple weeks back. this is at a time when it was materially lower than the $14 million profit table by the doj. where are we with negotiations? as far as bloomberg understands, the negotiations continue. jonathan: i suspect the relief was misplaced. clearly the fact that there has not been anything -- it is not at the lower end. jonathan: jonathan tice, great to have you on the program. we were down almost four full percentage points in frankfurt. alix: i want to bring in david malpass. you have insight. what should deutsche bank be doing right now? is it an asset sale? is it going to the qatari government and asking for more money? is it raising debt?

europe's banking system is really having a hard time. growth is so slow that it is hard for them to make good on loans that they have made in the past. one of the critical things going on is the banking system nowadays is more mark to market than it was prior to the 2008 crisis. problems that deutsche bank has gotten into is putting things out of reach of and othero market, regulators saying it has to come back. if you are doing that, equity capital is lower. in order to move fast to shore up equity capital but also give more disclosure on things on their assets side. what assets do they actually have, and are they properly marked? .hat is the trouble in europe there are quite a few banks that are not fully disclosing that they have carried over losses that have been around for years and years and years.

that is what is coming out. david: this is such a confidence matter. they do not -- they do not want a run on the bank, as it were. can raising equity do that? it would dilute the equity holders. notd: it would, and i am sure they want to raise it in up with offering. what is also important here is the uncertainty about the u.s. fine. you have this crazy world where the department of justice, during an election cycle, can assess a $14 billion or 14 is way euro fine, which bigger than deutsche bank can afford. so what are you going to do about that? europe is going to come back at u.s. companies. so you almost enter this war of governments ofhe the two groups. i think it is dangerous. they need to stop it and find a way of limiting that damage.

otherwise it is mutually assured destruction across the atlantic. david: david malpass, thank you for being with us today. continuingrn to the shock of the british pound. this is bloomberg. ♪

jon: from new york city, this is bloomberg. is the rbcnow capital markets senior currency analyst. last week happened in a big way. i want to go inside the bloomberg, and i am looking at the 10-year breakeven rates. what we are seeing with that

blowout, essentially the bond market pricing in a significant way. we start to see the negative effects of that appreciating pound bleeding into other asset classes? .co we have not started to see the full effects, but the markets tell you it is coming. it is not much to extrapolate. we are going to see some inflation in the coming year as it passes through to the real economy. narrative is building up in london that they will sit through this. when does it become a problem? england fornk of several years missed its inflation target year after year, and at the time mervyn king was forced to continually write letters to the chancellor, and yet they still lived through it and did not raise rates. that was the right call. the problem now is, what will

this mean for the u.k.,? this is not 1992. very different conditions right now. jon: the cyclical story is that it seems to be ok, but there is a structural story, a massive current account deficit that somehow needs to be funded. the question for the fx market now is that if you look at the collapsing cable we have had, a much more of an adjustment to we need to see to adjust the structural issues? elsa: there is a problem. we found not just in the u.k. but in other countries that the economies are a lot less sensitive to the exchange rate that they were in the past in the export sector. so we are seeing export volumes not go up as much as you might expect. it takes a profit margin boost rather than a volume boost. looking at the experiences of other countries within appreciating currency, usually it is appreciating bond markets because on the back of it, jiving the weaker currency is

lower interest rates. the story and the u.k. looks different. if i am a foreign investor and i have a depreciating currency and i take the fx risk, the offset i need is an appreciating asset. the bond market, if this continues, how quickly does it become a snowball rolling toward the exit and investors begin to dump u.k. assets? elsa: we can see investors hedging their fx risk. ftse, it isat the one of the biggest beneficiaries of sterling weakness. investors do not need to -- the best trade at the moment is hedged u.k. equities. jon: what is the most bullish cost of cable right now? all i can think of is bearish, bearish, bearish. elsa: some people are pointing to positioning saying it is crowded, but i am not sure it is as crowded as people make out. septemberfew weeks in

-- i think this move has caught people by surprise. we have had a call of 1.15 for cable for 2017. we made that call before the referendum, saying that in the event of a vote to leave, this will be our call and we are sticking by that. jon: i have to say, over the weekend -- big debate, u.k. media. said it was a petulant teenager. heat inat got a lot of the market as well. the gloves came off last night in the debate, but did the debate help either candidate? that conversation coming next. this is bloomberg. ♪

jonathan: this is bloomberg, i'm jonathan ferro. 61 points on the dow.

the ftse marches higher. the story on the fx market. it is a weaker pound through much of the session. closed. treasury market up. alix: here is what you need to know. twitter shares down over 8%. potential bidders were said to have lost interest over the weekend to buy the company. alsoche bank shares falling over the weekend. reported thepaper ceo was unable to reach an agreement in washington. the second presidential debate was filled with personal attacks between donald trump and hillary

clinton. mr. trump: i hate to say this, but if i win, i'm going to instruct my attorney general to get a special prosecutor to look into your situation because there has never been so many lies, so much deception, there has never been anything like it. people have been, their lives have been destroyed for doing 1/5 of what you have done and it is a disgrace and you want to be ashamed of yourself. clinton: everything he just said is absolutely false, but i'm not surprised. it is awfully good that someone with the temperament of donald trump is not in charge of the law of our country. mr. trump: because you would be in jail. david: for more on that debate, we turn to al hunt in washington. today, have you ever seen anything like that?

start right with your discussion about prosecuting hillary clinton. does the president have that authority? al: the president could order that special counsel of sorts, it would not be an independent counsel. but this is like third, fourth world countries. you jail your opponents. that is not what we do in america. i thought it was one of the darkest nights i have ever seen in american politics last night. i went to a great place ballgame -- playoff baseball game yesterday. he was on the ropes going into last night. his campaign was just about to totally disintegrate. , butid not knock him out he is in such bad shape after that video that he needed to use a football cliché, a hail mary pass, and he sure did not get that. david: what happens to other republicans? a number of people said they are

no longer endorsing him. some said they would not vote for him. is he going to stop that process? al: it has been so huge now. already over the weekend. , heportman, kelly ayotte may have stemmed it some last every but they are there john mccain is not going to turn around tomorrow and say, after watching the debate, i'm back with donald trump. the problem that it causes for those republicans is the notion that just focusing on those senate and house races makes a lot of sense to many republicans , but they can also pay a price. on saturday, a republican crowd ed in nevada senator who withdrew his support. it is a risky proposition.

30% of those voters are fervent trump supporters and for a republican to say i'm not with trump is risky. david: what does that due to the odds of the senate turning back to democrat? what are the pundits telling us? al: i think the odds are 52%, 53%. i'm making that up, david. there is a better chance the democrats will hold a small majority in the senate. there are seven senate seats in the tossup category. i think it is clear that the democrats will pick up a couple. of the other seven they have to win, they have to win three or four of them and at this stage, that seems more probable because the national campaign remains in such disarray. schism between the republican congressional senate, house, establishment and

the donald trump campaign. david: what difference does it make if the democrats come up with 53 votes? you have the 60 votes needed to have cloture. does it make that much of a practical difference? al: huge difference, you set the agenda, you are closer to 60, you can confirm people, judges and the like, and the other thing is that if you are in the minority, it means the majority have the power to initiate investigations and embarrassing inquiries. which already will take place in the house, which almost certainly will take -- remain in gop hands. the difference between 49 and 51 is huge. if you are a democrat or republican, you would like to get to 60, but that will not happen. david: do we think we saw last night with donald trump plans to do for the last month of campaigning or did he want to get this behind him? al: i think this is vintage donald trump. taxes lastde and

night, there really is not much of a substantive agenda. the agenda seems to be to end nafta and slapped tariffs on china. you what i know he will not be a will to do that. , he has thing on taxes been a little bit more specific, but not much. if you lower the corporate rate to 15%, most of the hedge fund and private equity people will be taking the 15% rate. i don't think if you walk through his deepest policy thoughts you get your ankles wet. going to appeal to the angry populist base. even the video will shake not very many of those people, but that is maybe 41% of the electorate and he needs at least 45% to win. the u.s. election and

central-bank are two of the biggest risks over the next three months more markets. defendedankers monetary policy over the weekend. the bank of japan governor stood behind continued easing and delayed the boj may hitting the 2% inflation target. he spoke with francine lacqua in an exclusive interview. expecthe one hand, we economic growth through next year. partly because of big fiscal stimulus. of that fiscal stimulus would be felt next year. this year, maybe growth rate around 1%. next year, growth rate around 1.5%. something like that. >> inflation will grow with it?

isin that sense, the economy going to accelerate growth. how about inflation? prices andoil because of we can inflation expectations -- weakened inflation expectations, the current inflation is around zero or negative. it may take slightly more months to reach the 2% inflation rate. to carefully study all of the relevant statistics before we review the focus. we may change, we may not change. at this stage, one thing is quite sure.

economic growth is likely to accelerate next year. >> but you seem to suggest that inflation may take a little bit longer. >> maybe. already the latest focus made a few months ago indicated couldhe inflation rate approach 2% in the next fiscal year. uncertainty.t there could be downside risks. , one thing is quite clear, that is economic growth is likely to accelerate in the next fiscal year. that we are quite sure of. on the other hand, the inflation rate, we expect the inflation rate to gradually accelerate

towards 2%. but when the 2% inflation rate is achieved, it is up to the next focus. japanthat was the bank of governor. you need higher inflation expectations and you keep howing back your timeline, do you raise that inflation expectation target? jonathan: april 2018, a very low prospect he steps down without ever hitting that inflation target. mario draghi could step down in 2019 without ever raising interest rates or getting to that inflation target. david: both seem to be very capable and very able. if they can't get it done, maybe no one can. jonathan: i think this tells you that it is more than monetary policy. these guys cannot get inflation up with rates and qe alone.

--res of twitter shanking shrinking in the premarket. down almost 9 full percentage points. where are the buyers? they might be all gone. details next. ♪

>> this is "bloomberg daybreak." state owned oil company, petrobras, ceo. is bloomberg, i'm david westin. twitter takeover or no interest? the stock was up on rumors of a

possible takeover. shares have come full circle lost bidders apparently interest. for the very latest, let's bring in the managing editor of global m&a at bloomberg. why did all the bidders go away? >> there are different reasons and it depends on which companies we are talking about. company withs the most interest in buying twitter. investors were not happy with the idea of this company spending $15 billion or $20 billion. any deal was going to need a lot of stock because salesforce is not sitting on a ton of cash. they have maybe $1 billion in cash on the books, so there would have to be a big -- a lot of stock on the component and their investors were not happy about it. disney thought they could be the hidden one who would sneak in

and maybe make an offer and surprise everybody else. they were really angry that their name got out there and it feels like they walked away because they were so peeved, so annoyed that the name was in the mix. with google, it was never really clear they were all that interested. they had hired a bank to take a look, but they never really were as engaged or is interested as what we had picked up on from sales force. alix: it feels like salesforce's front offer -- front and center in the rumor mill bid. rumors, cank to the a deal actually get done? jeff: my feeling is that a year from now, twitter is going to be owned by somebody else, it just might not happen in october 2016. it might happen next month or in six months. eventually, someone is going to buy twitter. we reported saturday that the sales, somebody said it is on life support, but sunday, we had

the u.s. presidential debate and it was the most tweeted debate ever. part of thebecome dna of big news, weather we are talking about a debate or a super bowl or an nfl game or whatever. it seems like the people running it are not able to find a way to make it profitable. eventually, it will make its way into someone hands who will be able to make it profitable. jonathan: what will twitter have --rned from the process oval over the last couple of weeks? jeff: i don't think they learned anything new. they are going to have to find a strategy that works, whether it is lining up with the nfl and life events and activities. they are going to have to find growth. it is hard for someone, especially if you are salesforce, a $20 billion deal

is hard to do with a company that is not making money and is not growing. twitter is going to have to find a way for more growth. david: you mentioned the nfl. there is a bloomberg report that mentioned that the strategy for twitter is to go to live streaming much more. i don't get it. they are known for 140 characters, immediately in the moment. the nfl deal is expensive. there are a lot of other people doing that. jeff: then you are competing with cbs, abc, nbc, espn. i'm not sure how that works either. eventually, they are going to have to be aligned with salesforce, disney, or google. google is a master at learning from how people, what they are looking at, what they are sending via e-mail or looking at online. i would imagine someone is going to figure out a way to use twitter and see that as a way to understand the consumer,

understand the mindset that is out there, what kind of stock someone wants to buy, what kind of car, what kind of soap they want to buy. not mastered that yet, but somebody is going to how toong and figure out take control of this and make money from this data. jonathan: jeff, great to have you with us. the stock getting battered in the premarket right now. the is the story on markets. let's get you up to speed with the bloomberg business flash. : samsung tries to move past a crisis over exploding smartphone batteries. the company is temporarily halting production of the high-end note 7 phones. noble group has agreed to sell the u.s. energy unit for $800 million, plus working capital.

the deal largely completes the drive to raise $2 billion. energy solutions include the payment of working capital. the deal is expected to close in december. u.s. and european equities are in for a bumpy ride into the end of the year according to goldman sachs. the bank says political risk exacerbated by a weak economy in europe and high stock prices in the u.s. make those markets vulnerable to declines in the next three months. 600s&p 500 and the stoxx could drop by december. this is bloomberg. david: thanks so much. next, it is the biggest company in brazil and it is in the middle of one of the biggest corporate scandals in the world. the ceo of petrobras will tell us why his company is the victim and not the perpetrator and why investors should invest in his

company. this is bloomberg. ♪

alix: it is in the center of a scandal, petrobras, brazil's state owned oil company was involved in car wash, the scandal that begin with a money-laundering investigation in 2014 expanded into corruption allegations. i spoke to the company's new ceo, pedro parente, about his new fuel policy, if he will be marketto sell fuel below prices or if he is free to set his own profit-making policy. possible thatery there will be a pricing policy announced soon. this pricing policy, we will set

that we will practice a policy in which we will have parity with international prices to the margin, which is the normal way to work. prices have competitive according to market share. it implies that prices can go up or go down according to the market. you are right, we will not change the frequency in which we change prices, but we will define what will be this frequency. alix: would you ever go below parity again? pedro: we will never go below international parity prices again. alix: what kind of assurances have you gotten from the president that you will not be the arm to help control inflation in brazil? pedro: when he invited me, we had very good discussions. he wanted me to personalize the company. part of the process is to have freedom, to set prices according

to the company interest, that is the way it works. it was no problem for him to accept that it was very good for me to see that i would have all the conditions to do what is needed in petrobras. alix: that was pedro parente, the petrobras ceo. i asked him about his and production plans and this is what is truly fascinating. capital expenditures have been cut by $80 billion. they are trying to reduce until 2021. twotal expenditure the last years was $24 billion. at the same time, they are growing production in terms of oil, looking at growth of 2.8 million barrels per day. how do you grow production if you are cutting capex? that is a huge question i posed to the ceo. he says his breakeven costs are $40 per barrel.

that is how much it costs him to take oil out of the ground. this is part of that story. these are listing costs from petrobras. they are $9.60 per barrel of oil . just a few years ago, they were almost double at around $15 per barrel. that is a huge decline and he thinks a lot of that is actually sticky, renegotiating a lot of cost and pushing the breakeven further down to $35 per barrel. most analysts put deepwater breakeven's down and brazil is the largest deepwater oil producer in the world. jonathan: this really catches the story rob petrobras in the bond market. -- around petrobras in the bond market. this is price. let me show you the effective yield right now, how the yield shakes up. we have had a pretty big rally.

aroundures the story commodities in the bond market so well for me, the euphoria that even this company got away with. big question was, at these rates with this kind of debt rally, are you going to refinance? they say, no, we are ok, we don't need the money. there you go. jonathan: much more on that story later on. coming up, what came up in last night's debate. did the debate help either candidate? in new york, futures on the front foot as we kick off another trading week. of 68 points on the dow. on the s&p0 points 500. ♪

jonathan: this is "bloomberg

daybreak." i'm jonathan ferro with david westin and alix steel. futures on a front foot. the dow up 9 points. london trades higher for another session. the fx market, more sterling weakness. yields push higher on german government debt. alix: sterling grinding lower, gilt declining for a fifth straight day. prime minister may will take a hard stand in british negotiations -- brexit negotiations. twitter is down 11% after top bidders lose interest. the second presidential debate at washington university in st. louis filled with personal attacks between donald trump and hillary clinton. >> you brag you have sexually assaulted women. that atp: i did not say

all, i don't think you understood what was said. this is locker room talk. i'm not proud of it, i apologized to my family, to the american people. mrs. clinton: it is not only this video that raises questions about his fitness to be president because he has also targeted immigrants, african-americans, latinos, people with disabilities, pows, muslims, and so many others. so, this is who donald trump is and i think it is very important for us to make clear to our reallyn that are country is great because we are good. mr. trump: we have a divided nation because people like her -- and believe me, she has tremendous hate in her heart -- when she said deplorables, she meant it and when she said he redeemable, they are irredeemable, you did not mention that -- when she said they argue redeemable, that might have been even worse.

i did not think i would say this, but i'm going to and i hate to say it, but if i win, i'm going to instruct my attorney general to get a special prosecutor to look into your situation because there has never been so many lies, so much deception, there has never been anything like it. mrs. trump: it is awfully good that someone with the temperament of donald trump is not in charge of the law in our country. because he would be in jail. david: for more analysis, let's bring in our bloomberg team. megan murphy is in st. louis. economics editor mike mckee is with us. it strikes me going into this, the whole question was trying to persuade the persuadable, not appealing to the base. when you hear that sort of exchange, are they persuading anybody in the middle? don't know if there is anyone left in the middle to be frank with you. going into the debate, we expected it to be quite ugly and

it did not disappoint or do anything different. it was very nasty, the real goal that donald trump had for himself was to really stave off total collapse of his campaign over a 48 hours when we have seen droves of republicans desert him in the wake of these lewd comments captured from 2005. he really needs to give some kind of signal that he is ready to actually carry this over into november. that is why we saw him really go for a message that was aimed andrely at that base squarely re-galvanizing enthusiasm among some of those supporters and basically saying i am who i am, i'm not going to change, this is the person im and these are the tactics i'm going to use. david: whether you are a republican or a democrat, i wonder what the debate will do to voter turnout and what happens if people are just turned off by the entire process and stay home? who does that benefit? megan: that is a great point.

i think particular to hillary clinton, while there is consensus that maybe she won the debate and it was close, there was disappointment among her supporters that she did not really close the deal on him, she did not deliver a hammer thosen women in light of comments. people thought she may have done more to persuade some of the women who may be on the fence, particularly women in florida, ohio, pennsylvania, to come to her campaign. that is one of the things she is going to have to focus on. turnout ino get the the latino community, the african-american community, she is very much in the lead, this campaign is definitely hurts to lose, but you are right to saying that turnout is an issue. it promises to be a tremendously nasty last month. only did donald trump have to sidestep those comments on friday, he had to do with allegations that he paid no taxes for 20 years. how was he able to deflect that?

mike: well, right now, it is a question of does anybody really care? the trump campaign has minimized the whole issue and we got into a little bit of an argument last night when hillary clinton tried to take on donald trump and he came right back at her. i pay hundreds of millions of dollars in taxes. many of her friends took bigger deductions, warren buffett took a massive deduction, soros took a massive deduction. many of the people giving her all this money that she could do many more commercials than me took massive deductions. mike: the fight continued when they got into their tax plans. accusedlf wrong when he clinton of trying to raise taxes on everybody. it is only the upper income taxpayers who would pay more. clinton failing to take account that trump's plan has been

scored as a major loss. but the question is was anybody listening to the detail last night given everything else that was going on? we got not much on the economy. david: going back to the persuadables. donald trump's base might like the fact that he does not pay taxes. but the person in ohio, how are they going to react to the notion that this man did not pay taxes? mike: it seems like people are divided. people are upset and people say that is what you should do, you should take advantage of every opportunity you have in the tax code. it is what warren buffett and george soros do. they don't pay with their fair share would be according to a lot of people. it is kind of a wash at this point and doesn't seem to be something changing everybody's mind among the persuadables. david: here is our politics and economics editor and megan murphy, who has been up all

night. the big political news over the weekend was the trump video from "access hollywood." one of the possible consequences is fundraising. with us now is someone who knows that subject better than anyone. the finance chairman of the republican governors association , who has worked on every republican presidential campaign for four decades. presidentat, he was of marriott hotels and northwest airlines. he joins us over the phone. thank you for being here. tell me about what is going on with fundraising right now for mr. trump and the other republican candidates. fred: there is no question about it, hillary clinton will have a huge advantage in finances over donald trump. this has been that way for some time and it will continue and probably even get more of a gap as we go forward. people who give a lot of money, raise a lot of money, many of

them are disheartened and some of them are pulling back and not doing what they are usually doing. it is going to be increasingly difficult for donald trump to raise the necessary capital to compete. nevertheless, when you look at this, despite his -- being outspent and despite these horrible, horrible tapes that have come out, he is still reasonably close in the polls. he has been able to without a lot of television advertising that the funding provides hang in. i don't know how much longer that can happen, but he is going to have a difficult time going forward raising money. david: what does this do for the republican party? foryou calling and asking money for mr. trump or are you focusing on the down ballot candidates? fred: from the beginning, i've been focusing on down ballot candidates. i'm focused entirely on the

fore and the races governor. i've not been a participant in the trump campaign and don't anticipate being such. but i do think that my participation is not that great. i think other people are taking a wait and see attitude to see if he can pull himself out of the whole he has done for himself. david: if you seen this tape affect your efforts for the down ballot races? fred: it hasn't. you talk to people and what i tell people is i say, look, we chance ofs than 50/50 winning the presidency. that is obvious through the polls and through the media and through the disgusting nature of the tapes. but we can protect ourselves by putting up a barrier to all of the foolish things that might be done on the left by supporting these congressional races and,

more importantly, let's increase the number governors that we have. we have 32 republican governors. we have 12 races this year. let's support that. people are giving to those down ballot races. david: fred, thanks a much for being with us today. the finance chairman for the republican governors association. now, what is making headlines outside the business worldemm? iraq american forces in are preparing for their most significant role in the war-torn nation in years. the aim is to root out islamic state fighters in mosul. the u.s. now has about 6000 soldiers in iraq after the 2011 withdrawal when they were almost none. helicopters taking food and medicine to devastated southwestern haiti after an

assault by hurricane matthew. desperation is growing in remote areas where help has not arrived. power is out, water and food are scarce, and gunmen have hijacked aid convoys. the 2016 nobel prize in economics was awarded for contributions to contract theory. the announcement was made earlier today. the academy said the new theoretical tools created by the men are valuable to the understanding of real life contracts and understanding. andal news 24 hours per day more than 120 countries. jonathan: the nobel prize for economics is like the super bowl. coming up on this program, the pound falling for a third day in a row. the biggest stumble since the brexit boat. could it bring more risk than good? twitter down 11%.

we will get into that soap opera later in the program. from new york city, this is bloomberg. ♪

alix: u.s. equity futures up slightly this morning, but twitter dragging down now down 12%. no sales force, no google, no disney in terms of buying twitter. salesforce got a revolt from some shareholders. top investors threatened to sell shares if they made a bid. salesforce has limited cash compared to other bidders. that share price was where the rally started for twitter when rumors of a takeover started. mylan, theok at

company will pay the government $465 million to resolve medicaid at the penn -- epipen overcharges and this would resolve rebate liability claims. the company did not admit any wrongdoing. mylan had to cut its full-year awnings -- earnings forecast. elon musk tweeting that tesla and solar city will not read -- need to raise funds in the fourth quarter or the first quarter of 2017. morgan stanley and goldman downgraded tesla shares last week. rounding it out armor -- are merck and bristol-myers. merck's cancer drug did better than bristol-myers' cancer drug at the end of the day. death risk.e bristol-myers' drug failed in advanced trials. that cancer drug war paying out

-- playing out in the premarket. jonathan: the u.k. rate market continues to reprice inflation and the bank of england expectation. is the j.p.ow morgan asset management global market strategist. bear with me. i've got a new desk and a new bloomberg terminal set up. i'm looking at the 10-year breakeven rates. the spread between the nominal breakoutnflation, that , what does that tell you? what is the story? >> a couple things, a bit of it on -- a bit of uncertainty. investors being a bit more nervous about what is traditionally a global safe haven asset. with that comes a hiring of inflation expectation. that is what we are seeing in the market. jonathan: if i'm a foreign investor, i'm saying, i don't want the fx risk right now.

foreign ownership of this market hit an all-time high. are we starting to see foreign ownership don't assets in an aggressive way? >> you have the ftse 100 sourcing about 75% of its revenues abroad. income market, you do have to be careful. duration risk is very high. they are long dated compared to government bonds across the world. alix: when you have a backup on the yield curve in the u.k., does that spread to other areas? >> investors have to be white about this -- wise about this. we think the short-term effects fall through. in terms of credit ratings or sustainability for the u.k. and the gilt market, we think it is contained within the u.k. economy. so mr. corona cannot say, thank you for steepening my yield curve at the end of the day? jonathan: whether the sterling depreciation collapsed, it cuts

him -- keeps them from cutting rates at the end of the day. >> i think he is focused on the u.k. economy. we do think there will be one rate cut at the end of the year, toward the beginning of next year. the bank of england is using these different approaches, lowering capital requirements, buying investment-grade bonds, trying to attack the problem not just from the simple cutting of rates, but these multifaceted ways to attack monetary policy. david: on the other hand, the assets are cheaper. if i'm paying in dollars or other currency. say, let me by a foreign exchange asset and hedge ? or does it make a difference? >> i think there are still opportunities to buy u.k. assets is a global investor and hedge a bit of that, but the valuations on the ftse 100 is looking better compared to the smaller cap options in the u.k.

when you translate back and have more competitive exports, we think pharma, miners, tobacco are sourcing revenues abroad in the u.k. jonathan: it is companies going shopping. isl hill over in london potentially a takeover target. it is a canadian company going after them. are we going to see much more of that activity? companies go chopping? >> i think we will see a bit of that. i think we should because it's about thinking it will cause an m&a boom. got to something we've pay attention to in this very uncertain time going into brexit negotiations next year. alix: that was my next question. all the data points have held up. what you import is going to get more expensive, what do you think the inflection point will be? >> when we have the certainty of article 50 being invoked in

march of next year, after the brexit vote happened, we had some pretty bad data. august, we saw a bounceback and that is what markets are living on. when the negotiations begin and the u.k. writes out the financial services, that is when you were going to say this is real and this is happening and we don't know what the trade negotiations will entail. jonathan: to wrap this up, after last weekend's conservative meeting, is it hard brexit? >> hard brexit is very binary. we have theresa may being strong about what she is willing to give up. a lot of the labour party issues , those things are going to be a tough one for her to negotiate out of, but i think we are going to see a softening of economic data next year. we will wait for the gdp numbers for this quarter to see what is the hard-hit, not just the pma -- pmi and servi -- survey

numbers. jonathan: next up on this program, we look ahead to third-quarter earnings which kick off today. the season could be a good one. details are next. ♪

alix: this is bloomberg, i'm alix steel. we get u.s. elections and we get earning season in the u.s. take a look at where we are and where we are expected to go. that is the year on year growth for 2016. that is 13% growth from where we are now. can we actually get there? back with us now is the j.p. morgan asset management global market strategist. do the two lines converge? >> i think it is going to be

tough for them to converge quickly. keep reason being there are two macro forces supporting u.s. earnings. those are the higher oil price, much better for oil companies the need to make revenues, as well as a more stable or at least range around u.s. dollar. very much on the top line level. higher revenue for oil companies and a bit better u.s. dollar story for companies this year. alix: goldman sees a 2% drop in u.s. stocks due to political risks. do you feel like that will start to be reflected in earnings and pre-announcements and forecasts? >> it is tough because earnings numbers should be good on a fundamental basis. alix: far low. low, but all these exhaustion us risks will affect. tests andne a lot of

there is really no key trend we can find in terms of what stocks and sectors should do better. smartms of fundamentals, investors are taking that into consideration and should not base too much investing on the political risk and focus on the fundamentals. david: we have been hearing about this turnaround year on year because of oil and the weakened dollar, why has it taken this long? recently, we did not see a stabilization in the oil price. we got a good meeting of opec, where some kind of negotiation was met with some kind of production cut. we have seen a bounce in oil prices more recently. february come you saw the low numbers. remembering that these earnings results are from the quarter, it will take time to get the plus 10, plus 12 expectations on paper. index, we can get high single digits. over the course of 2017. alix: thank you very much.

morgan asset management global market strategist. good to see you. just about an hour from the open, shares plunging on the fact that a deal may not happen for twitter. take a look at this mover. that is oil, right around the high of a session. the russian state news agency saying that russia may join a possible opec decision on a cut. we have opec and russia meeting on the sides of a meat energy meeting in istanbul. this is front and center. this is bloomberg. ♪ . .

jonathan: from new york city, i am jonathan ferro. this is bloomberg. the open about an hour ago. futures positive. european equities near session

highs. the story of the fx market is a weaker pound story. j.p. morgan this morning slashing the sterling forecast. closed todaymarket because of columbus day. alix: they are closed. we are working. donald trump and hillary clinton combined charges about past scandals with sober discussion of substantive topics last night. twitter shares down more than 10% premarket. were makingdders offers to buy the company. the governor gave the clearest signal yet the bank of japan may postpone achieving its target 18 to 2018. we will have much more on this when we bring you our exclusive interview with governor kuroda. the question of the day is how you hedge political risk and the

u.s. election. typically, you think of gold. i have charted one-month gold volatility and the clinton/trump spread. they have a negative correlation. the idea is as clinton gains in the polls, gold volatility winds up following. is there an asymmetric risk to attract presidency? joining us is the metals strategist. take us through the gold upside we might see for a trump win versus a downside for a clinton win? >> if you have a trump win, we are looking at making up the losses we have seen the last two weeks. the bigger issue then becomes what the fed does in december and whether we are going to get a dovish or hawkish hike. alix: what is the upside

potential for gold? what is the upside potential as we get to the election? >> $1400 is possible. there is a lot of volatility potentially. think clinton is gaining a little bit. the uncertainty of not knowing what happens if trump would win should help gold stabilize. alix: i do have breaking news i want to bring to our viewers. i mentioned earlier about russia joining a deal. putin is saying russia is ready to freeze or cut oil output and he hopes opec agrees on limits in november and is ready to join oil output limit decisions. the decision does rest with the

big state producer. putin weighing in is a big deal. russia is producing around $11 million -- 11 million barrels a day. jonathan: the saudis doing the same thing. this is critical because heading into the meeting, the story was the russians may join opec. was we heard after algiers bring much nothing from the russians. clearly an indicator they are ready to join the party. doubts remain as to whether opec can cement the agreement. david: if you go back six months, we did not think the iranians for russians were in. now they say they may play. alix: i heard earlier this morning, iraq says they will raise production next year. i seem to be an outlier. if you do have higher oil prices, what does that mean for inflation? take a look at this chart. it deals with 10-year u.s. rate

evens. it has rallied in last few weeks. the blue line is the gold price. this does not make sense to me. what is going on? is areink the question you going to get a fat hiking faster than inflation or a fed hiking at a slower pace than inflation? and had a terrible year because the fed said they would hike, inflation will pick up at some stage. we just trust it will happen. right now, you have similar concerns. doing allmarket is right but you do not know how fast the next rate hikes will come. that is why it is important that he will get a dovish or hawkish hike. viewed hike reinforces the you need inflation higher for

further rate hikes. i think gold could do quite well. the answers you don't have holding it back. alix: give me the range for gold. aroundrange this year is 40-50 upside. where we are now, i think there is a relatively steady floor in the market. for 2017, you continue to see inflation hiccup at a quicker pace -- pick up at a quicker pace so you have gold rising further above 1500. alix: thanks so much, michael widmer. we do have it around the highs of the session. taking a look at the russian headlines. david: twitter is not near a high. it is in the news again this morning. stock is down with 13% after news late last week all the likely bidders for the company have pulled out. the question is, what is next for twitter?

we turn to jeff mccracken. he is joining us from london. and knows all about immediate. jeff, what happened? the price went up for the stock to know the interest has gone away in the price has come down again. >> i think if you were going to point a finger and blame somebody, you would want to blame investors. whether you are investors in salesforce, disney, or google, mainly the investors in salesforce. the idea of spending $20 billion to buy twitter was not appealing to any of them. twitter loses money. in some ways, it is dangerous because there's not a lot of growth. in terms of the content of twitter, there is a lot of despicable things people say on twitter that scares people away. you need somebody who knows how to manage that and accumulate the data and learn from it. i don't think the biggest holders in salesforce working on that kind of deal.

for disney, they suck twitter place to put -- they saw twitter is a place to put out streaming. i think they were upset their name got out. david: how much does this dam or twitter as a potential candidate for acquisition when a company has been passed over by so many other companies? does it make it more difficult? would they be better off not asking the question to begin with? theywould say a month ago, said a year from now twitter is probably going to be acquired by somebody. but they need another couple quarters to get things straightened out, to find growth, to find out whether the deals they have cut with the nfl will work. that will be the right time, sometime in the second or third quarter of 2017. it is never positive when you get passed on by some new people. it would not surprise me if they are required, whether disney, google, or facebook.

their name to document this time that they could make a lot of sense because they know the social network quite well. david: paul, put yourself in jack dorsey's shoes. he has been there are year running the company again. there were high hopes for him. how does he run this company in a way so that he does not have to merge or it is a better price? >> he has two companies. that might be part of the problem. twitter is back where it was before the process started. how do i reengage is growth and advertising revenue growth? that is the big issue for the company. i have about 320 million monthly users. in the world of social media where facebook has 1.7 billion users, it is not that relevant. they need to figure out a way that will make it easier for new users to get onto twitter to engage to grow the user base.

they need to fix this business and reengage to grow the user base to make themselves more relevant to advertisers. jonathan: when you start exploring a self process, what does it say about the desire of management to do the things you said they have got to do? >> it is a problem for morale. can you think about technology companies, the real value is in the people. intellectual technology of the company. if you put yourself up for sale and say you do not have an internal fixed to grow the company, it is difficult to make it attract and retain talent at the company. david: i'm going to be even harsher than jonathan was. is this yahoo!? >> if it does not sell itself in the next three to five years, it could become yahoo!. it does show you how quickly things turn over. three years ago, it was the next hot thing and here we are saying, is it the next yahoo!? let's give it more time.

the sales process was not something they were trying. this happened because salesforce put a call in. keyboard at twitter was not sure it was the right time -- people at twitter were not sure it was the right time. i'm willing to give them time to see if they can get a deal done in the next nine months. even yahoo! found a buyer. great to have you with us on the program. two markets we go. putin says russia is ready to freeze or cut oil output. coming up, we speak with a norwegian petroleum energy minister. from new york city, this is bloomberg. ♪

norwegianng up, petroleum and energy minister. in washington over the weekend, central bankers vetted as corona stood behind easing and gave his outlook for growth. he spoke in an exclusive interview this weekend. >> on one hand, we expect the exce economic growth will accelerate, partly because of the big fiscal stimulus package the government decided and the impact of the fiscal stimulus would be felt next year. this year, maybe growth around

1%. 1.5%,xt year, around something like that. >> and inflation will grow with it? >> yeah. in essence, the economy is likely to accelerate growth -- in that sense, the economy is likely to accelerate growth. how about inflation? because of some of the weaker inflation expectations, the currently inflation is around zero or negative. months to reach 2% inflation rates. carefully study statistics before

.e review the focus we maintain. we may not change. one thing is quite sure. growth is likely to accelerate next year. >> you seem to suggest inflation may take longer. >> maybe. forecast ae latest few months ago indicated the ,nflation rate could reach approach 2% in the next fiscal year. uncertainty.great there could be downside risk i am told. one thing is, quite clear. that is economic growth is likely next fiscal year. that is quite sure.

on the other hand, inflation rate, we expect the inflation rate to gradually accelerate to 2%. when this isbut to the nextup forecast. alix: that was the bank of japan governor speaking with francine lacqua. you sat down with him for third or three minutes. when you walked away, the chattering the market is the boj admonition. after leaving him, would you say the same thing? >> he is confident the measures he put in place will work. he has done quite a lot. in february, he wanted negative growth. now is focusing on a two-pronged attack. he's trying to overshoot inflation. this is only a problem because it has impacted the mindset of

expectations of inflation. it does not change inflation. and the capping of the 10-year yield. our conversations focusing on whether he foresees a point or he tries to keep the yield at 0% but it goes negative, so he has to sell which would effectively be tapering. he talked about the market rumors saying he does not see a situation in the near term where he has to taper and sell. jonathan: you have set down with governor kuroda multiple times. he came into the bank of japan in 2013 saying he would do what it takes. he is passingense the torch to the government? x absolutely. this you can see with central bankers around the world. if you speak to him, he says this will work. but when you announced negative rates in tramway, he said this

would work and it did not. he says this time it is different. you look at what he can do and the challenges of japan. it is clear there is a demographic as structural problem so there is only so much you can do -- he can do. he hopes the population of japan believes in him and therefore gets up the future inflation expectations. the only way to do that is to be searching this will work. if you lose credibility three times, it may be counterproductive. alix: his term is up in 2018. did you get a sense he will stay on or a successor will have the same commitment? >> i spoke to a confident central banker. i asked him five times about inflation. he kept telling me i'm confident this is working, this will work. governort seem like a

ready to step down. it was not something he was going to contemplate. however, this is also a master of communication. when we left each other at the end of the 33-minute interview, he was clear saying i will continue to community with the markets. but let's think about what happened in january and february. he went to his parliament and said we will not think about negative rates. five days later, that surprised the market. he is certainly a master of two location. sense on there any your part that there is frustration with the minister and need to do more? means ifculturally there was frustration, he would not show it on camera. there is a kind of ballet. abe a hear from mr. month ago about the stimulus package that included stimulus from governor kuroda.

a couple of hours after the new package was unveiled, the markets were disappointed because it was not enough structural reform. a lot of the detail was already preannounced. one thing is clear. when you speak to governor inoda, he is very careful being perceived as a team with mr. abe. i asked him about something larry summers was floating. if you keep the yen from strengthening, it is buying foreign bonds. reminded meoda politely three times this was against the law in japan. i tried to get him to say what if this was not part of the treasury but done through monetary policy. he says the law is the law. they seem to be 18 at the moment. -- they seem to be a team at the moment. david: thank you. now we turn to emma chandra for a bloomberg business flash. emma: another blow to samsung

electronics as it tries to move past the crisis of exploding batteries. a person familiar with the matter says the company is halting production of the high-end note 7 phones as wireless companies in the u.s. and australia have stopped selling them. noble group has agreed to sell its u.s. energy unit for $800 million plus working capital, saying the deal will raise $2 billion. the commodity traders is the sale of the energysolutions includes the repayment of working capital estimated at an additional $248 million. the deal is excited to close in december. duke energy has agreed to sell brazilian assets to the chinese corporation. price, $1.2 billion. proceeds will be used to reduce duke energy holding company debt.

it is also negotiating to sell remaining holdings in central and south america. the company previously said the purchase of piedmont would accelerate the shift away from coal. david: thanks very much. it has been all the talk, how interbank london offerings have gone. we will look at libor. this is bloomberg. ♪

david: this is bloomberg. i am david westin. danny is joining us to go head-to-head with alix steel. danny, you go first. >> i have a way to play the fed. if nothing else, it is a good indicator of sentiment. in the white, i have inflows for etf from black rock called

the quality etf. it looks at companies with the etf from blackbest earnings mo. this is the most inflows this etf has ever had over a four-day span, about 300 million. this is a good way to play the fed. in orange, i have the fed funds futures rate. you get the idea this is spiking with fed bets. you have wells fargo who says these kind of quality stocks are best for the fed because they are not a sensitive to rate hikes and play really well with where we are in the business cycle. this is one to keep an eye on as we get to the december meeting. alix: that is pretty good. i'm going nerdy. we are talking about libor. these are prime money market outflows week by week. you have new rules coming into effect friday. it means money has become now is the prime market funds causing the libor to rise.

last week, we saw the record outflows, down 19% week on week. you have seen about $110 billion less prime money market funds and now below $500 billion for the first time ever. this is a huge shift in the market. after friday, will it sustain or stabilize? the banks are feeling it whether or not they tighten. david: danny, i love your chart but i'm going with alix. i love libor. jonathan: i'm going with alix as well. in the next hour, to the oil market. ♪

♪ jonathan: good morning. this is "bloomberg daybreak."

countdown to the market open in new york. this is how features set up, positive of 96 on the dow. equities in your midst session highs -- equities in europe missed session highs. alix: as we count you down to the opening bell, let's get you the latest on our top story. it is the second presidential debate filled with personal attacks from both sides. here are some highlights from clinton versus truck, round two. >> you bragged you have sexually assaulted women. do you understand that? donald trump: i did not say that. this was locker room talk. not proud of it. i apologized to my family. i apologized to the american people. hillary clinton: it is not only this 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 many others. so this is who donald trump is, and i think it is very important for us to make clear to our isldren that our country great because we are good. donald trump: we have a divided nation because of people like her. believe me, she has tremendous hate in her heart. when she said deplorables, she meant it. , to she said irredeemables me, that might have been even worse. i did not think i would say this, but i'm going to say it. and i hate to say it. but if i win, i'm going to instruct my attorney general to get a special prosecutor to look into your situation because there has never been so many lies, so much deception.

there has never been anything like it. hillary clinton: it is awfully good someone with the temperament of donald trump is not in charge of the law in our country. donald trump: because you would be in jail. david: reaction to this extraordinary debate is coming from all over. earlier, we spoke with david malpass. he served in senior positions in the reagan and bush administrations. >> i think there could have been more last night talking about growth. but the contrast was clear. he talked about cutting taxes and pointed out she has a big tax increase going on. i think under the surface, there was also this issue of corruption in washington, the special interests. one of the big parts of the trump campaign is to stop that. he brought that out by talking about you made $250 million just since you have been in office, and why haven't you contributed anything to your campaign?

that was a way to focus on the amount and magnitude of the corruption in washington. jonathan: the events of the weekend, how difficult does it make it for you to come on a program like this and continue to support donald trump? i haten't like at all -- the things that came out. i think we have to look at that. could also look at actions and leadership. one of the questions is if you are president, you are the chief executive of a gigantic government and you are picking andns, hundreds of people, through your administration thousands of people to run the government. trump has a very good track record of picking good people, so that is one of the things that matters to me as far as making choices. mike pence was a good choice. hillary clinton does not have that. she is surrounded a people who are not strong. even barack obama, you have to

say a lot of the people may be should not have been in those offices. jonathan: if we were talking about a company on the s&p 500 and this video was released of the c.e.o., that c.e.o. would be stepping down today. he would have pressure from the board to leave. if this happened at bear stearns, the chief executive would be gone the next week. we are talking about running for office, the biggest office in this country. surely you have a different view on that. >> right. but if you look at what is facing the u.s. in an election, it is one person versus another. we have to start thinking about the contrast envision -- in vision. trump is talking about 20 million jobs. i'm continually surprised by the clinton campaign accepting the really slow growth we have got. i don't know you want to jump. as you are making that choice, you have got to look at what kind of people they will have and what policies they are proposing.

david: that was david malpass. we also spoke with the finance chairman for the republican governors association. he has worked on every republican campaign over four decades. he told us about fund-raising troubles ahead for trump. she will have a huge advantage over donald trump. it will continue and probably get more of a gap as we go forward. ,eople who give a lot of money many of them are disheartened and some of them are pulling back and not doing what they usually do. it is going to be increasingly difficult for donald trump to raise the necessary capital to compete. nevertheless when you look at of hisspired -- in spite horrible tapes that have come out, he is still reasonably

close in the polls. he has been able, without a lot of television advertising, to hang in. i don't know how much longer that can happen. but he is going to have a difficult time going forward raising money. david: have you seen this tape effect your efforts for the down ballot people? >> it has not. have atell people is we less than 50-50 chance of winning the presidency. that is obvious in the polls and from the media and the disgusting nature of these tapes. but we can protect ourselves by putting up a barrier to all of the foolish things that might be done on the left are supporting these congressional races. more importantly, let's increase the number of governors. we now have 32 republican governors. we have 12 races this year. let's support that.

people respond to that and are giving to those down ballot races. david: that was fred malek. we have more news related to oil. saudi arabia will start on investor meetings. we are getting more details about sovereign debt they may sell maturity bonds. may sell senior, unsecured dollar benchmark bonds. we are getting details on the banks involved for it is quite a list. also bank of china, deutsche bank and goldman. .organ stanley we do not hear bank of america. david: a couple weeks ago, we concerned about the new statute from congress. them from issuing bonds. it does not look like it has slowed them one bit. jonathan: you wonder what shape

this takes. it could be around the $10 billion mark. up andr how that stacks how big the offering is. you are clearly trying to build a curve. i wonder what the demand looks like for this issue. alix: they wanted $5 billion. payment with $9 billion -- they went with $9 billion. jonathan: commodities in focus. in a couple minutes, we will catch up with the norwegian petroleum and energy minister. here is in the chandra. --here is emma chandra. emma: the navy says two missiles were fired in the direction of a destroyer in the persian gulf. the missile fire comes after a ballistic missile launched from yemen targeted a saudi airbase near mecca. it was the deepest strike into the kingdom yet.

german officials say a man suspected of planning a jihadist attack in germany was turned in by fellow syrians. police say the refugee was arrested this morning after a week and ben hunt. he managed to escape the rate on saturday. a syrian went to the police department and urged authorities to arrest him. the lobby group is using its on theervice to call u.k. government to improve confidence. .lobal news 24 hours a day i am in the chandra. this is bloomberg. alix: this is how we are shaping up 20 minutes into the session. indices arejor coming off a bad week last week

now we are seeing a little move to the upside. individual names to keep in mind. twitter one of the biggest losers of the day now down over 12%. sales force over by 3%. the idea is shareholders revolted in terms of the potential deal to buy twitter so that potential deal falling through. salesforce did not have the kind of cash of other bidders. also keeping an eye on mylan. a $465 million deal with the government will resolve potential rebate liability claims but it did have to lower the full-year forecast trade the big mover over the last half hour has been oil. now up over 1%. we heard from vladimir putin saying he would be on board with a russian freeze or cut. it would prefer a freeze but also would consider a cat. 11.1an is producing

million barrels of oil a day in october. that is a record straight we will be discussing this throughout the show. we will be speaking with the norwegian petroleum energy minister in moments about the potential opec and russian deal, when it could mean for oil prices. this is bloomberg. ♪

jonathan: i am jonathan ferro. this is bloomberg. we are counting down to the open in new york. features up 97 -- futures up 97 on the dow. crude up 1.5%. alix: it was the news of the morning in the last hour.

behind russia will be willing to cut production -- we heard rush will be willing to cut or freeze production with opec. you saw oil prices spiking higher. further isto discuss a norway petroleum in energy minister. this was a surprise. what do you put the probability of a russia/opec freeze deal at now versus 40 hours ago? >> i think it is important to start by acknowledging the fact opec has been important for whenancing the oil market the oil market has been out of balance. time it is a little early to start celebrating an agreement. i think you have to wait and see if and how this kind of agreement materializes in the

market. i was going to say --go ahead. >> on the other hand, what is important to bear in mind is we already see signs in the market it is in the way of developing. if they reached the reduction ,greement from opec and russia we could see rapid improvement in market conditions. alix: how much would russia and opec need to cut for us to see stable prices? i will define stable as between $50 and $60 a barrel. >> i should not speculate on that. we have seen a significant increase in production from many of the opec countries since january. they are in a position now to

reduce their current production and still be producing more oil than at the beginning of this year. allow opecway should and their allies to discuss this and not get involved in suggesting how much they should cut. alix: let me ask you a different way. knowing the energy ministers you do, what is the probability we will see an actual implementation at the end of november? >> i should start by saying we have to give opec credit for market on manyed occasions before. let's face it. there are probably differences moreen the opec countries now than it has been when opec has been discussion these can -- discussing these kind of issues

earlier. the market, regardless of any deal. to an even if they get agreement, every time you add a member to a cartel, it gets that much more difficult to keep it together. when you get countries like russia and iran with very different interests, is it going to be almost impossible to keep it together? >> i'm not going to point towards any of the member states in opec or the allies of opec. but we have to acknowledge the fact the differences between the opec countries is probably larger today than it has been earlier. but still, they have made great progress. this could end up in an agreement that will materialize around christmas and the first quarter of next year. alix: if you look at your expectations for prices, some

analysts put the oversupply at one million barrels a day. you say nearly balanced. when you are modeling the oil price for norway, what is the average of the next three years? the oil price climbing to $60 a barrel in the next couple of years. that is a price where we can support that. a lot of activity on the continental shelf. oil and gas becomes increasingly important for the continent itself and will boost energy exports. i did not say the market is balanced. i said i have tried to market ise we see the about to become balanced. alix: the real question as we move toward rebalancing is what it means for north sea production. oil production has suffered from those will -- low oil prices.

there have only been two plans for development and operation submitted by old companies to norway authorities this year. how many more do you see this year and next year? >> i could but i probably should not. alix: do it. >> i am hoping for having at least two more after this in 2016. alix: what about for 2017? for 17 isions probably around the same number as this year, but we are truly hoping for a few big ones next year. numbers are important. but when it comes to oilfield and gas field developments, size matters. alix: so does who is selling and buying. they have been reports

will be looking to sell assets in the north sea. who will be the buyers? smaller companies more interested in short-term or bigger companies that can increase their market share in the north sea? market you have developments as we have seen in the last couple of years, you will also see increased activity when it comes to mergers and acquisitions. we see some of the super majors tend to want reduced engagement. committed toill help us develop energy resources. with the new capital coming to norway, private -- we see new capital coming to norway, private equity capital bankshares -- buying shares in

producing fields and companies. you will see more mergers and acquisitions. i think it is too early to point the ownership will look like on the continental shelf. there will be changes. there will be new players. there will be other players strengthening their position on the continental shelf. there always has been. there will be a mix of international companies and norwegian. alix: blackstone one of the firms looking into north sea developed. thanks very much. what is twitter through a party -- what if twitter threw a party and nobody came? twitter is down over 12% premarket. where does it go next? this is bloomberg. ♪

jonathan: this is bloomberg. i am jonathan ferro. one stock to watch in the premarket, twitter getting hammered this morning after potential bidders lost interest in making an offer for the company. stop down over 12%. jeff mccracken joins us now from london for more. what happened? >> how are you doing? in some ways, twitter has come full circle. if you go back to early september before the news was out that they were exploring a sale, they were down 30% from their highs. people were concerned about what was going to happen with the company. the news came out they were exploring a process because salesforce expressed interest. we broke that disney was around and that google hired a banker to look at it.

each time, shares went up. then stories cannot and said google is not going to make a bid and disney probably will not make a bed. over the weekend, we reported this is on life support in the market is concerned. frankly, they should be, that there's not a deal coming soon. my view is officially twitter will get sold. i just don't think it will happen soon. people will see what the next quarters look like and whether the deals with the nfl make progress in boosting the twitter audience and increasing revenue. david: when jack dorsey was brought back as c.e.o., there was a lot of speculation there would be real innovation. new products and technology. what have we seen so far? >> if you have asked me earlier -- you asked me earlier if it is the next yahoo!. the reality is there is not a lot he has been able to do. he has not had a lot of success growing the company.

people are ok with it not making money now. that is the norm in technology. d.c. a lot of companies that are not profitable but people see a future. i don't think people see a future. it has 350 million users which seems impressive but facebook has 1.5 billion users. it seems twitter has to grow. jeff mccracken, i apologize for david this morning previews brutal. twitter getting hammered in the premarket. dow, positive 11 on the s&p 500. from new york, this is bloomberg. ♪

♪ from new york city, this is "bloomberg daybreak." --ures are trading, up 1100

11 on the s&p 500. equities midsession highs. markets,the commodity $50.54 is how we are trading. crude in focus. russia ready to join the party. lifting risk as the market opens. 10 seconds into the open. alix: we had futures moving higher and indices moving higher as well. s&p was up 11 or 12 points. now it is up nine point. nasdaq up by five tens of 1%. oil moving higher as well. stocks, intraday deutsche bank on the upside 6/10 of 1% reversing earlier losses. minister saying deutsche bank and saw its issues in the u.s. and does not anticipate deutsche bank anticipating becoming a problem for the european union.

twitter just keeps getting ,ounded now down almost 13% down by 25% from last week. who wants to buy it? not google, disney, salesforce. the model is to fully formed for an apple or disney to buy it out. seasoninto the election over the next few weeks, something that has been popping up as the lack of volatility. where is it an will it pop back up? this white line if the clinton-trump spread. clinton is gaining in the polls and it has leveled out adjustment. volatilityl here is by acid class. blue line is the vix. purple line is the volatility for fx and the yellow line of the volatility of treasuries. volatility of treasuries has not

caught up in the made by a few days. you have had relatively low volatility below is moving average. the question is, in the next three weeks, will that volatility pick up? jonathan: let's bring in doug ramsey joining us from minneapolis. goldilocks volatility, not too low, not too high. what is the story? >> i agree with that. we have done statistical analysis that would bear that out. moderate volatility is best for the market. i think it will continue through the end of the year. we have proprietary work that identifies a couple of periods of volatility windows and we got through one in pretty good shape. it will be fairly smooth sailing for the stock market through year end and into early 2017. jonathan: these levels of

volatility action paint a picture of complacency. do you agree with that? doug: you know, i don't. -- will it till it he has been more moderate in the last couple of months. we have been focused on market action itself. what is interesting, and i think bullish for the short to intermediate term is this rotation away finally from the high dividend, the volatility stocks that have been leaders for 18 months. in the last two, three months, we have seen that break down. that has been our concern. we have observed that. the market could not go a whole lot higher led by this and telecom. now that the leadership has given way to tech and industrial, it is short-term bullish for the market. david: let me give you three

possible risk factors that may change your mind and what is the worst problem? u.s. election. fed rate hike. the spar >> i have to go with none of the three quite frankly. great britain has dealt with a huge drop in the pound. that was her expectation in the beginning. i don't think there will be a rate increase in december. i think it is pushed out to march 2017. the employment report took care of that. there will be plenty of reasons for janet yellen to take a pass that again. i think it is pushed up to 2017. from an economic perspective, i don't see a great distinction between the two candidates. you can get down into the mud and sling back and forth, but from an economic perspective, if they would even talk about economic plans, that would be a

help. i don't see one way or the other that swing in the stock market. alix: if we get out of the mud in politics, breaking news is brent is rising to a one-year high, 52, 90 5 -- $52.95. what does that do to your earnings forecast? for your outlook for 2017? for your inflation outlook? doug: we are still fairly sanguine on the inflation outlook. for inflation has picked up somewhat and it is running 2.5% plus or minus year on year and we are watching that pretty -- we're watching that pretty closely. crude is down. bounce to $50 or $60 putting a whole lot of life in the inflation numbers. no real concern as to

commodity-driven inflation for the next six to 12 months. david: do numbers make you more interested in the energy sector and you otherwise right be? doug: it is interesting. have taught that our work would have picked up on energies given the values i see, especially if you normalize earnings. we have record losses throughout the energy patch, but i think if you normalize earnings, the values are very interesting, but our work has not picked up. a capitalot had spending declined that has been commensurate with the price decline. so maybe that is what our quad work -- maybe that is why our quad work is picking up. you have nothing the magnitude of capital spending cuts that we would have expected given how much crude is down from its highs. david: doug, thank you for

joining us. that is done ramsey. jonathan: let's continue the conversation on the crude market. what energy congress taking place in istanbul. take a listen. >> we will be talking to them. it is moving in the right direction. i am not expecting anything soon. next couple of days. saudi minister over at the world energy congress in istanbul. $60 by year end, not unthinkable. for the oil market, they want to see the action match rhetoric. vladimir putin may join the party. david: it is a long way to go from here to there.

if you go back three or four months and predicted russia would come along -- they have come a lot farther. alix: it is reflecting that only in the commodity market, but the fx market. i am looking at the canadian dollar as well right amount of those of the session. it has a reverberation effect. it winds up helping the oil denominated fx market. jonathan: their arsenic's in the -- there arsenic -- there are ics in the fx market. get complicated when opec when the russians to join the party as well? and russians are saying, of course he will join. alix: over 11 billion barrels a day. iraq says it will increase production next year as well.

if you don't need here to the rule is the big question. david: can you imagine someone iranian,ou will get an russian, and a saudi in the room. you talk about the negotiating in that room. jonathan: the iranians said they will get back to 4 billion -- 4 million barrels of oil today. alix: what number will they all be looking at when they agree to a cut? there is the official, unofficial, export number. i hate to use the term, but if the devil is in the detail, what numbers are you looking that? david: she is very excited. [laughter] coming up, brazil is in its worst recession in over a century. we will look at the current plan to turn the country around. this is bloomberg. ♪

♪ alix: this is "bloomberg daybreak." tomorrow, we will be joined by pimco's marquise oak. jonathan: from new york city, this is bloomberg. i am jonathan ferro. food at session highs. -- crude at session highs. nasdaq climbing by three quarters of 1%. let's get a with abigail doolittle. abigail: we are looking at tesla

shares. ceo elongher after musk tweeted that the company will not have to raise capital in the fourth quarter of this year and probably not the fourth quarter of next year. thatcomes in contradiction -- after the company said they may have to raise rates. of half avery big all million vehicles are more. ions pharmaceutical, slightly lower. face to interim data on the company's drug with biogen for , same wellslar fargo is likely to receive rapid approval from the fda and it should be a huge commercial a large commercial success for

opportunity for both iona's pharmaceutical and biology in. david: it is bloomberg markets. mark barton, what do we have to look or two -- what do we have look forward to? mark: this is the second most accurate forecast on the bloomberg. can't wait to hear what he has to say about the pace -- the dollar peso. sterling falling for a third consecutive day. follows to its lowest level since 1985. will be asking him how long -- how low does the pound go? european banks, from value trap devalue trade trying to buy. this is the industry that has been hammered on the stoxx 600 and he is telling us it is time to buy. can't wait to hear what he has to say. in light of that amerco 10's comments -- in light of vladimir

putin's comments on all, we will get over to istanbul. and here comments from the saudi energy minister who sees the price that the oil price recovering to $16 a barrel by the end of 2016. david: if you can't wait, and i cannot wait either. but as mark barton in london. we are 4-wood silica u.s. elections now. donald trump is struggling to stabilize his campaign as his running mate mike pence tries to kill talk that he is quitting the ticket. people look at the key thing to watch in the campaign next. this is bloomberg.

alix: we go to bloomberg's erik schatzker who is with henrique meirelles. erik: mr. minister, thank you

very much. expectations for brazil is very high. narrowing.e been all of these expectations are largely predicated on the passage of two key pieces of legislation, a cap on fiscal spending and also social security reform and pension reform. you and president are certain the spending cap will be passed this year, correct? henrique: yes. we had been talking to congressman on several occasions , etc., and at this moment, it is quite clear the importance of controlling the growth of public vote by and there was a a special commission, which was sure thate for making

they are recommending the approval or not. 33 voted in favor of recommending it. the honor i had speaking to the president, he was not so confident about social security reform. why is that? henrique: social security reform is more complex. think we are confident that the reform is going through very there are several points of what is thelike position for men -- what is a position that's what is the wages for men and for women. erik: i hope they are equal for men and women. how long until passage of the

bill? nd of 2017? henrique henrique: that is a good time. year, iftakes more one we take into consideration the history and how long it is going to take for that to be producing in effect, that is a reasonable period of time. erik: you spoke in washington and said the baseline scenario is one of honest recovery, but the private investment response may surprise on the upside. it is always wise for a minister of finance to be conservative when planning budgets. talk to us about this optimistic scenario. if the private sector steps up in a big way, what could growth look like in 2018? henrique: our basic scenario is 1.6% growth.

in theory, possible. is 2%.tic it erik: 2% for 2017? private economists are putting the risk of a recession in brazil at 50%. you chose told me that the pessimistic scenario for growth is 1.3%. what is the difference there? brazil is in a serious recession. probably the biggest in history in brazil. erik: deeper than the great depression? henrique: yes. i the end of the year, we will be there. there is no doubt about that, but for next year, the most showingtive forecast a

.5% growth. if they are not seeing some well maybeed progression, recession next year. the most optimistic, 2%. erik: let's assume for a moment that there is no rebound in commodity prices. no genetic recovery in the global economy. what is the long-term potential for gdp growth? henrique: at this point in time, it is around 2.5%. closer to 2.5%. the reason why we are already proposing reforms aiming at having the potential growth rate higher than that.

at some point, we had more than 4% of potential growth rate. i think we can increase in due time to higher levels again. erik: the billion you have put on the table currently entering the house in brazil to cap spending would do so in real terms for 10 years? how is that going to affect over the longer term, the very widely praised very popular program in brazil to alleviate poverty? henrique: it is not going to affect it. budget small part of the and the numbers. the idea with zero growth would mean that there would be a growth of the land to inflation, which means the purchase power is going to cap. become a permanent

part of brazilian fiscal policy, can you see it the the index to inflation -- or can you see it being scaled back? henrique: it is a more complex question. 4.5%. in due time, to have even that after down because inflation is much lower than what it is. erik: brazil has not had an investment grade credit rating since 2007. how long will it take to recover? henrique: i was one of the first brazilians who first that the news when brazil received the investment grade. time towardat that

the investment grade, or before when i wasn't in the private sector, was i do my job, the rating agency do their job. erik: thank you very much mr. minister. a pleasure to have you. he is a finance minister a brazil here with us in new york. david: for more on last night's bitter debate, returned to our colic in washington was covered a few presidential elections. you have covered quite a few elections. have you seen anything like a campaign like this? >> never seen a campaign like this or an evening like last night. it was mean, ugly, it was down and dirty. no, i have not seen anything like it, nor has anyone else. is willt question now that it unconventional

will surprises in november. david: could the nastiness of this exchange actually suppress voter turnout? >> that is the private strategy of the trump forces that if you have a really negative campaign traditionally it has driven down voter turnout. the higher the turnout, the better for clinton and democrats. there is an equal if not greater danger for the trump forces in that they drive down republican turned out -- turnout in the democrats-- and it get out the vote with their dislike for trump, they turnout in more sizable numbers. that worries the so-called down ballot republicans a lot. the senatorial and state office candidates. david: we talk about the senate,

the house is sure to be republican, is that there? >> 98%. the only thing that would prevent the gop from retaining control of the house if there is by 11f the content wins or 12 more points. as you mentioned earlier, the possibility of a lower turnout. i think that is highly unlikely. there are just a few competitive seats, david. there are very few places where democrats are positioned to win even in a way that election. david: another great journalist who has covered quite a few election said to me that every presidential election is a snapshot of the american people. if that is right, what is this campaign telling us about us? angry,re very polarized, alienated, frustrated. it grows out of a number of factors, suddenly the 2008 and

2009 downturn, the recession, a feeling that a lot of people have not recovered yet. that have been stagnating and it is a lot harder for middle-class, working-class people. there is that anger to begin with. and part of the blame lies within reasonable republican side with republican allocations who made all kinds of promises , you elect me, i will cut taxes, i will/spending -- i will slash spending. trump hasat donald been able to capitalize on. david: there you have it. think you very much, al. 28 -- we we are about are about 28 minutes into the session. 7/10 of 1% on the ftse. commodity market is brent crude it's a one-year high. we trade north of 50 on the bread contract.

-- brent contract. the bank of england comes into the market today buying in. the offer to cut the ratio is gauging how many --into the market. situation in the u.k. were they could not find enough slide for the long edge at least. fee through starting to bleed into other asset classes. that does it for daybreak today. bloomberg markets with vonnie quinn mark barton of the next. it is 3:00 p.m. in london and 10:00 p.m. in hong kong. i'm vonnie quinn. mark: i am mark barton. welcome to "bloomberg markets." ♪

vonnie: we are going to take you from st. louis to istanbul and cover story out of south africa and the united kingdom in the next hour. donald trump and hillary clinton traded salacious charges about past scandals discussing health care, defense, and trade in the second presidential debate. we will recap the personal attacks and the policies. up.: mexican peso moving the number two currency forecaster, the u.s. dollar is not buying whatever the outcome of the presidential election. he will get his outlook this hour. talks at theo energy congress in istanbul -- the energy conference in istanbul. about 30 minutes into the trading day in u