francine: chinese growth holds steady as credit expansion finances a real estate rebound. saudi arabia said to have proposed rates for its bond sale at a spread higher than his neighbors. an italian company is looking to sell a stake in altastrata. we speak to its ceo. this is "surveillance. we have a great show lined up for you. we bring you an exclusive with the atlantia ceo.

controlled by the benetton valley is looking to sell a stake in its company. then we talk brexit with the former lord mayor of london. then in an hour, we bring you a conversation on monetary policy with the bundesbank board member andreas dombret. let's check on the data because we have quite a lot going on. this is the picture overall. on the back of what the china gdp brought to the forefront. it is a touch of caution when you look at the financial markets. as china's economic data was in line with expectations but at the same time provided few positives for investors. crude at 50/79 -- and crude281

at 50.79. this is monetary conditions. anything above 100 indicates expansion. this is also an economy that has been widely controlled by the government. you can see that since 2011 we have seen that bump in the beginning of last year and then it is teetering o-- petering off a touch. starting on china, economic growth remained stable in the thir quarter. gdp rose 6% from a year earlier. that all but ensures the government's full year target will be hit. china's holdings of u.s. treasuries fell to the lowest level since november 2012. the second largest economy draws down as foreign reserves.

$1.19 trillion in bonds, notes and bills in august, down over $33 billion. that is the biggest drop since 2013. saudi arabia is said to have revealed to investors how much it is willing to pay on his debut international bonsall. -- bond sale. kingdom is selling dollar-denominated bonds and 5, 10 and 30 year maturities. into globaling markets in an effort to cut a $90 billion shortfall. francine: now, china's data shows more signs of stabilization with gdp and retail sales matching forecasts

and industrial production a little below. let's bring in enduaa curran. what do you make of the figures? enda: it is mission accomplished in one sense. their headline for gdp is smack in the middle of their target range. but i think going forward, there are significant problems that need to be resolved and china. at the same time we are seeing china having to manage a property bubble in the nation's biggest cities. is sure, headline growth holding up we are seeing progress and consumption but that is not enough. so, china needs to balance how it can rain in credit and debt and the housing sector without choking off the rest of the economy. so much forank you the update on the chinese economy. for more on china's gdp we are joined by a global market strategist at j.p. morgan. always a pleasure to have you in

studio. the markets are taking the focus on china and the fed. they have been somewhat forgotten about china. is this a good reminder of the risks out there? a good reminder of the general sentiment, how far we have come since february when there was a concern about the data. numbers, the headline levels provided by the official authorities. we take that for what it is. looking at some of those retail sales numbers, fixed asset investment, they are showing us officials there are prioritizing growth, trying to get money moving around in the economy. they are really trying to promote this growth in this new china rebalancing face. francine: as a market strategist, you need to take a bet on whether you believe that the authorities will be with it in an orderly way. think they are

definitely prioritizing growth in the short-term, pumping out as much money as they can, offering cheaper rates to operations and individuals to buy properties and invest. isn't the long-term, it something that will transition china for the 5, 10, 15 year growth plan? francine: what is the one thing that markets will be looking for. we have the presidential election. the final debate this evening. tomorrow is the ecb, and the central banks. is there one thing that you are concerned will change the tack for markets? nandin: the ecb language should be very interesting. some of theee language about what they're are going to do after march, 2017. will it be tapering? but there are some limited options remaining for the ecb to do. that is what we are looking at in terms of the big movers. francine: the fed is a done deal, december hike? as far as we concern,

we place that as a december rate hike on the table. probably going to happen. but they have been telling this -- telegraphing this for so long. i think markets are able to absorb the change in policy in the u.s. francine: how do you play china? ini: we like health care, technology, education, consumer focused and much higher earnings expectations compared to old china industrial production and stocks which have much lower earnings expectations. francine: thank you so much for now. also on some of the other central banks, including boe and of course, mark carney. stay with "surveillance." first up, we speak to the ceo of the benetton controlled company. he wants to reduce his company's dependence on italy. time while it

looks to seal a deal with veri zon. and brexit in the city. we are moving to ireland. that was a message from the currency market operator this morning. we discussed brexit with lord levenne and former lloyd's of london chairman. this is bloomberg. ♪

francine: this is bloomberg "surveillance." now let's get straight to the bloomberg business flash. reneaulte

chairman is put on track to become the first executive to head three different carmakers at the same time. as nissan is taking a 34% stake in mitsubishi. a spokeswoman called the report speculation, declining to comment further. four yearsed its forecast after it made an unexpected profit. it predicted its operating margin should be at 6% this year. at the same time, it said that third quarter earnings rose to 25 million euros. third has reported quarter profits that topped estimates. after a large scale hack was disclosed last month that could threaten the purchase of the company's web assets by verizon. the profit was 20 cents a share. shares were higher in extended trading. that is the bloomberg business flash.

francine: thank you. chatting that i did not catch the end. we saved the best for last. that is how the u.s. president talked of renzi. our next guest is the ceo of atlantia. the benetton family are the controlling owners of the 15 roadion euro toll operator. thank you for joining us. you are here and london to come up with an investor plan -- you are unveiling it to investors. you want to boost profit outside italy. castelluci: it is an acceleration. in 2008.00% italian

since that we pushed into latin america, america, india and poland and now we are gdp driven. it is more or less 25%. now we want to accelerate. we want to accelerate globalization. francine: are you worried about seeing as too italian? elluci: italian business is recovering quite well. but we believe that in order to be competitive, we need to be very global, more global than now. the low rates we see today are strong tailwinds for this kind of diversification. francine: talk to me about to you plan to expand your you have taken stakes in nice and venice airports? thecastelluci: we won

competition for privatization of this important airport. venice, it is a totally different issue. it is more financial investment for the time being. in the future, we will see what happens. what is behind and after? more of the same. more assets, global gdp driven assets. outside of italy in order to be more diversified. lower th cost of capital. eand we believe that our financial flexibility, which is quite strong, will help us be successful. francine: when you say, let's see what happens in venice, if the owners would like to sell a further stake, which you be interested in becoming the controlling shareholder in the venice airport? mr. castelluci: our job is to manage well assets. for the time being, those assets are well managed by the current shareholders.

so there is no need for our intervention. francine: but if anyone? -- if and when? mr. castelluci: why not? francine: talk to me about other assets you would be looking up it mr. castelluci: i cannot name one by one because normally our arerac -- transactions more private transactions. it is not easy to disclose before. we are still interested in the regions of developed countries, where the gap between custom debt and custom equities vary. for the first time in recent history, it a very compelling area because custom debt is very low, even for long durations. and return on equity is still very high. this is why this transaction has been very profitable for us. even if the come petition was very strong. francine: do you worry that the ecb may have to raise rates? you talk about a financial

transaction which i think is linked to what central banks do. mr. castelluci: i do believe that rates will remain low for long. francine: which makes your life easier? mr. castelluci: which makes our life easier for longer. this is why this process of diversification will have tailwinds for a while. francine: how much you plan to raise with the sale of a minority stake in the italian highway unit? mr. castelluci: absolutely. operator intoll europe. there is a lot of demand. italy's recovering quite well and we do believe that this is the right timing to let stakeors to take as more in that assets. of course, we are not planning to sell control. we will remain at around 85%. but we do believe it is the right time to turn capital into -- and accelerate

diversification. francine: how much do you value -- mr. castelluci: the market will tell you. what i can tell you -- the value in some of the parts around 60 million. francine: and that would be fair? mr. castelluci: what is fair will be the markets say. not myself. francine: very diplomatic. what do you see in the markets that you think the markets are understanding or that ceo's are worried about? there is still in general, but spend aan apathy to lot of money. a lot of people are sitting on cash. mr. castelluci: we are not sitting on cash. but do have a huge financial flexibility. our leverage is very low compared with-- our concessions are very long. it means that we have a strong debt capacity. we can use to turn capital and increase in accelerate diversification. francine: does the referendum in

italy play any role in your strategy? mr. castelluci: no. francine: do you worry about political turmoil? mr. castelluci: when you talk about politics, there are always some turmoils. toome say that there is much emphasis on italian referendum, on the international markets, probably because there has been not enough attention on brexit issue before. so there is an over reaction right now. of course, the italian referenda will be important but will not i mean, important as, andrnational -- and people markets are saying. francine: do you worry about the banks? every day we get asked, what is going on with italian banks. is castelluci: what going on with italian banks is more or less one in other countries banks or is still now with other german banks, for

example. so, it is a problem but there is no problem that cannot be solved. size of the problem, is a size that is compatible with a solution. this is my view. francine: what a great pleasure. you will have to come back. good luck with your investor day in london. up next, janet yellen and mark carney, have they change their tune on inflation targets? we will talk central-bank policy up next. this is bloomberg. ♪

francine: this is bloomberg "surveillance." on friday janet yellen said that allowing the u.s. economy to run might boost the economy. have central banks change their tune or is it business as usual? for a look ahead to tomorrow's ecb rate decision, let's bring back the chief strategist at j.p. morgan. we were talking about what will drive markets and you mentioned the echb. do we need to have the question of when they start tapering answered yet? i: we have saying that we are going to do whatever it takes. it might be more of a question of what is next in terms of monetary policy. are they going to change the capital key ratios?

are they going to buy more risk assets in investment grade space? francine: in the last two to three weeks, the conversation has changed. there is much more central bank bashing. i think about william hague -- will it change the way central bankers think? nandini: there is a little bit of a regime shift where inflation is picking up. you're seeing closer to that 2% target. on the side, you have got change in policy. bank of japan saying, we have done enough to q.e. we are going into riskier assets. those are the next steps that are closer to the end of it, putting more pressure on other parts of the political space to do fiscal stimulus. we have got a lot of elections. a lot of political action across the world this year. and next year in europe.

it will help us identify which candidates are looking forward to ending austerity in europe, spending more and infrastructure projects. for a long time now especially in europe and our region, it's been mostly a consumption-based growth story. francine: what have you learned about brexit? it seems like there is conflict in the government. and beo is looking -- the boe is looking for inflation. nandini: that is always a good thing. we have seen from the most recent inflation data the pound devaluation was not a huge contributor. most of that fall has been this month. keeping that in mind, we expect a bit bigger inflation next month. but regardless, mark carney is focusing on getting through brexit while making sure banks and consumers have access to funding. necessarily see a rate hike mandated this year but that

is still on the table. the bankrate cut for of england. that is something they can do next year if the data looks pretty bad going forward. francine: thank you so much. she sticks with us. and we will be talking a little bit about saudi and a huge bond sale. we are waiting labor figures out of the u.k. and what it tells us about the post brexit economy. this is the picture for the markets. they are little bit of subdued. we have ok figures out of china. gdp 6.7%. what people have been wearing about chinese debt for a while but it seems to be coming to the forefront more. this is bloomberg. ♪

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♪ francine: this is "bloomberg surveillance." let's get straight to the first

word news. >> china's economic growth remained stable, gdp rose six or 7% from the year-earlier matching an estimate of economists are made by bloomberg. that all but ensures the government's growth target will be hit and tasty way for a policy switch to reigning in financial risk. china's holdings of u.s. treasuries fell to the lowest level since november 2012, the world's second-largest economy draws down its foreign reserve to prop up the u.n., the biggest foreign holder of u.s. government debt have 1.1 $9 trillion in bonds, notes, and bills in august, down over $33 billion. the biggest drop since 2013 according to the u.s. treasury department data and previous figures compiled by bloomberg. local news 24 hours a day powered by more than 2600 journalists in more than 120 countries. this is bloomberg. francine: u.k. jobs data, we want to know whether brexit will trigger an exit of banks from

london. we are getting jobless claims, they are pretty much -- jobless claims changed, 700 have had to 3.2 we were expecting. in line with expectations. we have a little bit better wage weekly earnings, exciting bonuses, 2.3% for the month of august. most of these numbers are from august. august,month of unemployment rate 4.9%, unemployment change three-month on three-month one of six. let's get some thoughts. -- 106. let's get some thoughts. if you put it with the pound. drop on the back of this data, we have not had an impact at all on brexit. >> the sense of the reading is

that most of these are fairly similar to the previous months because we have not had a massive change from a legally or politically since the referendum result. i would expect to see a dramatic change in when article 50 is invoked next year and companies have to scale back hiring, perhaps lower some of the ku increases and that is when the labor market report should be shaky. that is dependent on the negotiations. lessll see a slow drift of jobs added each month and perhaps a spike in unemployment but the employment situation at 4.9% is good for the u.k. that now we are expecting anything marginal should really shock some of the data indicators. for the moment, the labor market in the case is one of the strongest assets of the economy why it is most sensitive to a shock like brexit next year. francine: we saw this huge move in the pound over the last three weeks, we'll we see similar moves in the guild. >> the moves have not been as

drastic as the pound but quite a big spike compared to the peers in japan, europe, and the u.s. the pound is falling, uncertainty about the uk's place in the global space, will the government be as credible as we are thed most important inflation expectations repricing with stronger inflation this month and expect a stronger inflation next month, you have to have bond yields factor that in for longer-term data bonds. francine: do you need to say whether the negotiations will turn ugly, whether immigration is something that the u.k. government will hold onto or do you wait and see? can we take an educated guess or uneducated guess? >> usually have president for things like this but we do not, to play the market in terms of negotiation will be tricky. you have to hedge away some risk with being actively managed in terms of pound and u.k. equity exposure but really it will be figuring out how to track day by

day and month by month negotiations and try to play out some larger labor or immigration issues in terms of which stocks or which banks which will be difficult to play. francine: thank you for that. saudi arabia has set price gadgets for its debut in the international bond market according to people familiar with the market, the post rates for 5, 10, 30 year bonds. how have they positioned on prices and what do they hope to raise from this? >> good morning. happy saudi arabian bond day to you. a lot of people in the capital markets are excited about this issue. we got guidance yesterday from the book runners and today we should see the bonds priced maybe around lunchtime in london. that will be a big you for the markets. the guidance we have seen so far is for 160 basis points over equivalent u.s. treasuries for the five-year trash.

that is a little bit of a premium from what we were expecting as recently as last week. people were looking at something more like 153 basis points. saudi arabia potentially hanging up for the privilege of issuing this mecca bond deal. year, 30f the other 10 year, the guidance is inside his spreads we were talking about last week. some people may be disappointed and some may have expecting -- been expecting a little more of the yield pickup. francine: how far could this go in bridging their 50% spending deficit? >> we are expecting more than $10 billion from this issue. they will probably bring as much as the market can bear. the interesting thing is and the reason everyone is watching this issue is because saudi arabia needs to cap external financing to help plug its budget deficit.

their banks used to be big buyers of saudi arabian debt, that is much more difficult for them to do given some of the liquidity pressures they are currently under and the fact that they are raising provisions to make up for bad loans. saudi arabia needs to be able to tap the international debt market and this is a test case for it. the syndicate bankers working on this deal, the book runners want to see it executed as perfectly as possible. francine: thank you so much. we will be keeping an eye on this and bringing you anything new. i wanted to show you a quick chart on how saudi arabia compares in terms of the bond of rise higher. -- price higher. stay with surveillance. operatory market threatening to take its business to ireland is the u.k. does not ensure access to the european market. we will show you brexit impact on the city of london with the former lloyd's of london chairman and in the next hour, about the state of

european banking. then we speak -- he will tell us why the u.k. is heading for a hard brexit. this is bloomberg. ♪

♪ francine: this is "bloomberg surveillance." stocks flat in europe. >> debt in china, what a wonderful function, china's holdings of u.s. treasury fell to the lowest level since november 2012, the world's second-biggest economy drawing down its foreign reserve to prop

up the world's biggest foreign holder of u.s. foreign debt, have $1.19 trillion in bonds, notes, and bills in august, down 33% in just 33.7 billion. international equity investors giving up on japan after dumping their tokyo stock holdings for four of the last five months, foreigners on track for the biggest annual exodus since 1987. this is a chart going back to 1983. we are talking about inflation, may central banks can overshoot inflation targets. we are nowhere near inflation targets. japan, u.k., and u.s., the top two are the u.s. and u.k. at 1% of their official gauge, well below the 2% level. markets are rebalancing with oil and natural gas the best place.

anglo american higher. when gore up by a mere 235%. mere 235%. up a francine: a currency market operator -- executives weighing their options and a concern that theresa may will not favor the city of london in her brexit plans, the u.k. financial services sector account for almost 12% of economic output and more than one million jobs. either levine is the former chairman of lloyd's of london. he joins us for an excuse of clever station -- exclusive conversation. your initial thoughts. we have not caught up since the brexit. what have we learned in the last three weeks, that negotiations will be messy, that they are uncoordinated, and the city of london is likely to suffer? >> we have been here before, in 1999i was lord mayor and at that

time it was at the attraction of the euro. be inory was we will not the euro, the london, the u.k. come out of business. what happened? they did not happen that way. ,f you look at the scene today the size of the financial services industry in london is so big, to try to replicate that elsewhere in london is not going to happen. there will be areas that it will be attacked. if anybody was to gain from this, much more likely to be new york than in the european center. the london is pretty resilient and it has a good reputation of getting things text. -- fixed. francine: do you believe this current government wants to preserve the interest of the city of london? >> the current government, and i work for the government, i have never seen a government be so unable to get its act together. of course they want to preserve it, why would not they? there is so much infighting, it

will sort itself out. howcine: and how long -- in long and how much damage can be done to the city of london? >> there will be some damage but also resilient. they are not government owned and they will do their own thing to make sure they survive. it will not be transferred out. to talk about,t and somebody mentioned this to me yesterday which is interesting. , thee talking about the eu eu has a population of about 500 million. but the u.k. for a very long chairmanshipthe and the chief executive, not a huge international organization which is the commonwealth, 2.5 billion people, indian, one of the fastest-growing economies in the world, we are in their. within the commonwealth, you have these other organizations like nafta.

if we can leverage that, we are not trying to work in an organization like the eu for those people who had it our expert -- head it are expecting -- we have in the queen, the chairman committee the director general in london. are strongraders with the commonwealth, what do you propose you do, make a stronger? >> yes. francine: that is a given, isn't it? >> has anybody said it or try to do it. francine: a lot of people for brexit say they do not care about europe because we have a commonwealth and we will draw them. >> we do care. we want to have the best possible relationship weekend in europe. and we have sitting on our doorstep was something we actually set up in the commonwealth.

i know it has been mentioned before but who is getting on with it and doing it? if you think about it, the opportunity is bigger. francine: let's say that i am a canadian business and i want to -- appear and reinforce ties set up here and reinforce ties, who do i go to in the government? >> the department of international trade with one of the chief brexit years in charge. -- francine: is he not too distracted getting us out of europe? >> he has to get his act together. francine: if you increase ties to the commonwealth, how much can i make up for, if we lose to access to the single market with the eu, would it make up half of that lost productivity? >> all i can tell you is this, the population in the eu is 500 million, the total population of the commonwealth is about 2.5 billion. there is plenty of room there. it is a fast-growing area. francine: what will london

become? are you concerned that financial companies blues passporting rights? >> they may do but we have been here before. francine: at the time it was not having, this is losing. i do not know if it is comparable to when the euro was formed, is it? >> these companies are very innovative and very flexible. they have to be or they would not succeed. they will find a way to work in the future which will be different from what it was before. do i welcome it, no, but it is there now. these companies will not sit around saying a gear, what will we do, they will find their way through it. dear,ing -- saying oh what will we do, they will find their way through it. francine: there is a sentiment that foreigners are not welcome in this country, yesterday, the scottish national party was asking that the eu workers need

test plan guarantees of their status in the u.k., do you think that is right? >> 300,000 french living in london, it is one of the largest french cities in the world, why the you think they want to come here? they do feel welcome here and like living here. francine: breakfast -- brexit has not change anything? 6no -- >> no. ist is heaven on the ground not a lot and people are not stupid, they will not throw out the people who are bringing us the prosperity. francine: why is this government not giving them guarantees? >> you have to ask the politicians, i do not think the politicians have their act together. i do not think you brexit people have a plan for what would happen. if you asked some of the arch brexit people if they thought they would win, they did not. francine: does that make you angry? >> yes but we have to get on

with it. francine: thank you so much. we will take a break and come back to talk about brexit in parliament after theresa may is set to face questions and a chancellor hammond is grilled by mps. this is bloomberg. ♪

♪ francine: this is "bloomberg surveillance." let's get to the business flash. it puts him on track to become the first executive to head three different carmakers at the same time. the move comes as nissan is taking a 34% stake in the busy. -- mitsubishi. solano has raised its four-year forecast after it made an unexpected profit. the online clothing retailer predicted operating margin should be as much as 6% this year. at the same time, its said

third-quarter earnings before interest and tax rose to 25 million euros. yahoo! has reported third-quarter profit that topped estimates, this rare bit of good news comes after a large-scale attack of user data --hack -- hack of user data last month. profit was $.20 a share, topping analyst average projection of $.14, shares higher in extended trading. intel has given a disappointing forecast for sales in the current quarter, signaling lackluster year in demand for personal computers, service, and the jets the run of the world's largest semiconductor maker backed off an annual forecast for double-digit revenue growth and server chips for data centers and corporate networks, its most profitable business, shares fell more than 5% in extended trading. that is the bloomberg business flash. francine: thank you. peter levene, the former lloyd's still withhairman is

us, we were talking about the impacts of brexit may or may not have on the city of london. you think this will have an effect on the city of london, what would be new city of london look like five years from now? peter: not terribly different from today because the people are here, the institutions are here, the business is here, the experience is here. it is not just the financial institutions, it is the lawyers, the accountants, and the thing is set up to do this, can you duplicate it on this scale, no and people do not want to. it does require the government to get its act together and put in place an environment where people can work and live in the circumstances. francine: are you not concerned that if you lose the possibility of attracting terran -- talent and putting foreigners on a list, we have had mixed messages. francine: -- peter: we have to get real. these institutions are not run by the government, they are run by very innovative and very successful businesses and they

will steer their way through it as they do through other difficulties. it will come together. i just hope the government makes the met -- makes it easier for people to work in the new environment, in the brexit environment. francine: what is the one thing you would do if you were in charge, you give a message from the market, saying this is our plan going forward, do you need to give a message to your own cabinet of not messing about? >> first of all, the government, the cabinet, the prime minister have to determine that the city of london, they know full well is a huge asset to the u.k. at a huge money earner. the largest industry in the country. francine: why haven't we had that yet? peter: i do not know, you have to ask the politicians, it is not a very difficult message to put across and say the right things, do not say the wrong things and try and get everybody on your team pulling in the same direction. brexit is a fact, we have to get

on with it, it is there, get on with it and make the best of it. francine: what i am struggling to understand -- i understand there is infighting among the conservative party, but why would you give a message almost like you are punishing the city of london because income inequality that has been the effect of brexit? >> there is no point in giving the message. francine: you agree that is the message we got. peter: we got a confused message. francine: fair. peter: the people have spoken and they want to get out of the european union. fine. that's what we will do now. we will make that happen. we will make sure the best assets we have and the financial services industry in the u.k. is not just london. which has been the top of the leak, stays there. what do we have to do to ensure that happens is make sure we put in the conditions that help. francine: will you watch the

presidential debate tonight in the u.s.? peter: if we have a problem, they have bigger problems. francine: do you think you will get through? a chance trump will win? >> no. i rely on my older son who is in new york and there at the moment, he said to me, there is no chance. francine: great to have you in the studio, please come back very soon. peter levene. we continue in the next hour, tom keene joins me from new york. this is bloomberg. ♪

♪ francine: growth hold steady's credit expansion finances, real

estate rebound and infrastructure spending, is it time to deliver? we will speak with the executive board member of going to bundesbank, the men in charge of financial supervision. get ready or the final debate between donald trump and hillary clinton. that is this evening. this is "bloomberg surveillance." a most interesting day because people want to talk about the debate and we have the latest bloomberg poll. did you see that? you clearly to hillary clinton, expanding her lead 47% to 38% for donald trump. tom: i like to quote from zz top, it will be extraordinary and wildly unpredictable what we will see. the polls are noted today. francine: let's get straight to the bloomberg first word news.

going -- ifump is donald trump will win the white house come he needs an historic comeback according to the latest bloomberg national poll, he leads -- hillary clinton leads. the poll taken after a leak video prompted a series of women to come forward and saying donald trump made unwanted sexual advances. the support among men and the less educated has gotten weaker. they square off tonight in the third and final presidential debate, chris wallace of fox news to moderate in las vegas. among the topics, immigration, the economy, and the supreme court. he will ask questions on a topic almost certain to result in fireworks, fitness to be president. with mark halperin and john heilemann will host a special before the debate with begins at 8:30 p.m. eastern. china's economy grew at a stable rate in the third quarter, gdp was up 6.7% from a year ago. that match the medium production

of economists surveyed by bloomberg and is in the middle of the chinese government's goal. it opens a window for policymakers to deliver on promises to rein in excessive credit and soaring property prices. german chancellor angela merkel warns not to expect any miracles when she meets with the russian president today in berlin. putin will be there for a summit on a truce in eastern ukraine, a most certain that the fighting in syria will also come up. germany, the u.s., and the u.k. are considering sanctions over russia's bombing. for the first time in 17 months, the world did not set a heat record, still the u.s. government data shows that it was the second hottest september on record. scientists say the weather phenomenon el niño faded in june and that is part of the recent the world was not hot as it could have been last month. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries.

this is bloomberg. tom: thank you. let me get the data, a little under the weather today as you can hear. futures flat, yield comes in over the last 24 hours with the euro. i like me and her income it seems to be what we are doing, in search of policy, information, and news. a jumble this morning, the two year yield was at 0.78, pretty much -- maybe a little bit lower, dollar index cannot get much going and deutsche bank has put together a number of days of better share price. francine: i like the effect you caution touch of evident in financial markets after we had some economic data providing the few positives for investors ahead of the third and final u.s. presidential debate. stocks lack of accrued 51 and we are hoping to get pricing for

the saudi first international bond. i can finally afford to send some straps to tom. tom: this is a great chart from the bloomberg, one measure of inflation. i was thinking of this chart, listening to stanley fischer the pceer day, the fed looks at corp. which is below where it should be. this is the cleveland media and, very famous -- median, very famous within economics -- economist and it shows a rise up , the great moderation up to the beginning of the financial crisis which is the little circle. if you extrapolate out the with of the move in inflation we are there right now. we have curved up and back on trent to break out to a newer and higher inflation regime. i am not predicting that, i am saying that one measure of core e shows a than cpi cor

rising inflation and we see that in the united states service sector, inflation, above this level at 3.2%. francine: it is a good chart and i pick something for china. i want to show gdp, we had the recorder gdp -- the third quarter gdp. china gdp year on year, the blue line and this is why i put the yellow line, hillary put the yellow line for me at 100, china financial conditions, monetary condition index, i am charting me to. -- the two. anything below 100 means there is a slight tightening and monetary conditions in china. policy has begun to shift away from stimulus and towards controlling financial risk. this is something we need to look out for in china and this

bloomberg monetary condition index a weighted average of interest rates, loan growth, and the effective exchange rate shows a marginal tightening over the summer. tom: a good chart. let me get another take on that, the basic idea of do we trust 6.7% data? this is a core issue in china, we have had a number of guests over the years that say this is the best we got, a lot of other people saying, be honest, it is a fiction. where they, we know currency is, let's review chinese currency, it plays into the beijing mix of modern economics going back to 2005 and the idea of a fixed currency and that historic moment in the summer of 25 -- 2005. francine: the 6.7 percent for china, even if you do not 100% trusted, if you say grow that come it could grow 4% but unlikely that they would benchmark it at 6.7% if it is flat. tom: the headline on the latest

weakness in remember the is that we -- remember the, is that we are back to where we were in 2010, an interesting sport to watch, it is something you can actually measure versus some of the immeasurables of china. francine: tom, i am excited about this interview next. we need to try to figure out what the market is heating, what the benchmarking is here we need to focus os. we need to focus on the mood around the world. he is responsible for banking and financial supervision's in the market. great to have you on the program in london. we will touch on the banks and a couple of minutes. in terms of the industry as a whole but what is the mood out there in terms of, if you are a policy maker, a newsmaker, we do

not get horrible news but nothing to feel good about ourselves? >> the mood has been much better. from the point of the banks because many things are coming together. we are having a brexit, we are in negotiations and we will have very low profitability in the european banking sector at least. we have quite -- we have volatility in the bank stock. we have had a pressure on the banks, the stress tests for example of the european banking association and the ecb. a lot of things are coming. which take a lot of management time and attention. francine: every time, especially true when you speak to u.s. investors, they say they do not understand european banks, the business model, white it is

taken this long. how do you answer to those criticisms? has to make up their own mind and we are not advising anybody how to think about any bank but since 2008 the capital positions of the european banks have much been strengthened. we have come all the way up from liquidity much better , lots of things have been done which are much better. nevertheless, at some point it seems as if the global financial markets have given up a little bit, the stock markets on the european banks that have quite a bit to do with the level of profitability in the banking market, where there is high competition and the profitability is not as strong as in other markets. from a solvency point of view, a liquidity point of view, many things are much better. the structure of supervision has

changed quite dramatically. 4, we only are finishing the second year of our new supervisory regime. we are at the beginning of things but working on it. tom: i like casey at the beginning of things, beginning in 1957 the buddhist banks, there has been generational help meelp -- shifts, where your bank stands on a presumed -- on european banking? you advocate mergers and acquisition within nations and borders or can there be cross national mergers within europe? >> a very good question like the first one. first of all, i do not think it is really the job of central banks, supervisor, to advise on mergers and acquisitions, it is the market. it has to decide.

it is the consumers and clients who have to vote in a way with their business. having said that, as a supervisor, i do have very strong interest in a sustainable profitability of the banking sector which means that you need to make your cost of equity, earn your cost of equity and depending on your risk profile, in addition to that, especially if you look to germany where the economy is growing reasonably well, you would expect in times theirhat banks earned cost of equity because they need to do that in order to reserve for worst times which at some point will come. what i am trying to say is, what we do not advise on mergers and acquisitions, we are interested in sustainable, reasonable profitability. that is not 25%, that is profitable, not necessarily sustainable, but it means we care and that consolidation should not the a taboo -- be a

taboo. if they included consolidating, that would be wrong but on the other hand it means that if the banks are too weak, going to go together will not make a healthy bank, in mathematics at work, two times negative becomes positive, they are not in the banking world. tom: you enjoyed a vice chairmanship at the bank of america before you entered bundesbank. around 2010, what was the biggest surprise when you came on board? there is a mystery to it, the gnomes of zürich except it is not zürich, it is germany. what was the biggest surprise when you shifted from commercial banking to the great and mysterious bundesbank? >> i am the first ever from the private sector having been supervised myself to join the board of the bundesbank. now i am the longest standing member with 6.5 years in my term.

i can tell you, in the bank of america, there was quite some br christine and there's some bureaucracy here. i came on the first of may, monday the third of may of 2010 and on that very weekend, we had the first package for greece. i have been living through the entire euro crisis as it is called, nothing to do with the currency. i can tell you that many people work much harder than you look from the outside within the bundesbank. there is a very national feel that we, among supervisors and central bankers, meet very often. a very close corporation among ourselves -- cooperation among ourselves and i enjoy my time. meeting at the london headquarters. in the next hour, with deutsche

bank, we are thrilled to bring you alan ruskin, what a good time to catch up with them. -- with him. from london, new york, this is bloomberg. ♪

♪ francine: tom keene is in new york. i have picked out something for you in honor of our guest, our morning must-read. this is a speech from september. it feels like a long time ago. he said the whole sector has to shrink, talking about the banking sector because the systematic, this is the quote comes the systematic clean up an inevitable after the bursting of the financial bubble is not finished. we are back with andrea's jump

that -- we're talking about the banking sector and how international investors do not understand these things that europe has done but there is a clear overhang. people are concerned about deutsche bank, they assume there is a problem that will permeate all the rest of the industry. what do you say to that? >> i will not talk about an individual institution, i never did and i will not start. francine: is there something in germany, without naming names, that paints the european sector -- taints the european sector? >> this is something for the investors to decide. francine: do you think that we could have done more in the wake of the financial crisis to clean up some of the european banks? >> i am not sure whether that is the right question because you

can always do more but that is not the issue. i think what you want to ask me, is am i happy with what we have achieved. which imo more or less there -- which i am more or less. you are always more ambitious than what you achieved but we are not finished yet. we have to continue on the and we will do so. francine: i know it is difficult if you are a regulator because you have to be very careful about what you said but if you had a magic wand and today could take something in the banking sector -- fix something in the banking sector in europe, what would it be? the regulatoryh uncertainty which is still hanging over the banking sector. francine: what is the one thing that people misunderstand about europe? talking about the u.s. and asian investors, i know you do not want to speak about the markets but do you speak to investors in general to reassure them that

europe has a handle on it? >> it is not my job to reassure or be advising investors. i would like to present the facts and they are somewhat different from perception. i said earlier in the show that i feel sometimes that the equity markets may seem to have given up on european banks stocks but that will not stay forever. when profitability returns and when it is clear with the regulatory certainty means, then investors will come back and come back in a very, very clear differentiated way and this is a special situation which you should not see as the new normal. tom: as a student of europe and germany, do you see a generational shift and germany over the dynamics of the economy, over savings, over investing, over banking, is

there a generational shift we will see in the next five or 10 years? >> i would not necessarily say a generational shift but i see that in germany there is a high willingness to adapt to new situations. and things are changing, clearly things are changing and the german government, the german authorities, the german investors, the german customers of the bank's, they are clearly changing and that makes the banks change and other aspects of life. there is a big acceptance that things are moving in that you need to be on top of that. tom: thank you. we will continue in london. let me look at the data. to year yield in a little bit. -- two year yield in a little

bit. this is bloomberg. ♪

♪ tom: i'm new york and london, francine lacqua in london with a special guest. you are a u.s. citizen and it was good to here you will be voting here in the united states which i find remarkable. help me with the german response and the european response to the isolationism, the tone of mr.

trump. there seems to be an ancient american view that the oceans will protect us. it has been reiterated and rehab the size in this campaign -- re-emphasized in this campaign, how responsive is germany to the town -- tone. >> i have dual citizenship. i tend to vote in elections if i have a chance. and nota private issue the job of the central bank or to comment on u.s. politics but i can tell you that protectionism, regardless of who is making comments about protectionism, and rogue a list from which site it comes is never something good for the economy. tom: the reunification of germany was a landmark issue for all of our lifetimes and part of that was the strength and interesting calculus of nato. what will you perceive to be the future of nato given an ever

stronger germany? >> i cannot imagine germany without nato. francine: that is fair and that is the feeling among a lot of european leaders. it was something that matteo renzi was talking about yesterday in the white house. we will talk about brexit next and up next we speak with the director, this is the take on the markets. subdued after the gdp in china. saudi arabia selling the international bond, we are expecting news shortly. this is bloomberg. ♪

♪ surveillance. from london and new york. i am tom keene in new york. let's get to the first word news. >> hillary clinton and donald

trump will be in las vegas tonight for the third and final presidential debate. a new poll from bloomberg politics shows that donald trump could use a big win, the poll has clinton ahead 47% to 30 at present in a four-way matchup. trump has been losing support among men and less educated. our comfort and john heilemann will host a special -- mark halperin and john heilemann will host a special at acorn 30 eastern time. -- at 8:30 eastern time. donald trump proposing term limits for congress, house members for six years and senators for 12 years which would require a constitutional amendment. -- the russian president will be in berlin for four-way talks on a cease-fire in eastern ukraine. that is overshadowed the civil war in syria, germany, the u.s., and u.k. considering whether to impose more sanctions on russia.

it is lawmakers say the u.k. must get its own house in order when it comes to corruption. according to parliaments international development committee, there is a lack of transparency in britain's overseas territories such as the british virgin islands. governmentsays the has been unable to persuade tax havens to help prevent money laundering. global news 24 hours a day, powered by more than 2600 and analysts in more than 120 countries. this is bloomberg. francine: thank you. we got a little bit of news in terms of u.k. labor markets participation in the u.k. and a little bit of wage growth. overall, the labor market in the u.k. losing momentum, a sign on growing pressure on household incomes as inflation picks up and this is on the back of brexit. a lot of figures for the month of august. left it back to our special guest, from the georgia

bundesbank. brexit, i livet in london, i talk about it almost every hour on air with tom keene, i am confused about what brexit will mean, are you wiser in frack for -- frankfurt? andreas: we have to wait, the longer we wait, the longer the time of uncertainty will be and that is not good. francine: what are we hearing from the u.k. government? it does not seem they have a plan unless you think what theresa may, what -- which is very hard-line, they do not care if they have access to single market were not? andreas: i will not speculate or interpret the prime minister but i am taking what i hear on face value because i do not have any other way of doing it. from what i hear, i hear that there will be a hard brexit. seem to: that is how we

understand, which means they want to preserve immigration and it means the consequences of that, they lose access to single market, how is the bundesbank dealing with it, do they worry about it, are they ready to talk about it openly? andreas: first of all, i should say that before june 23, our without havingd, coordinated with the bank of england, what the bank of england had thought would happen -- and what the ecb thought would happen. i do not know any economist that i would not have predicted the same thing, for the bank of england came up with. looking back, we do not have much data since then, looking back, you have the feeling that the economic consequences are not as bad as we at the bundesbank had thought. think, it is a political and not necessarily only an economic issue, especially from a european union point of view.

these negotiations will be political negotiations. it is not necessarily something highlydebate but politically charged and we do not know the outcome and i will not speculate. we will have an outcome i see at the end of the day i see the european union and the united kingdom and the market prepared for a brexit and we will see what will come out of it. i do not necessarily see at all financial stability risk because i think whatever the outcome will be, those products will be provided somewhere, somehow and we will not have a shortage of financial products. we have to wait for the european union in the united kingdom to negotiate in good faith and there should be no cherry picking from the united kingdom and note the response which is overly negative. there should be a very fair negotiation, recognizing that we will be living next to each other and that there is a high

interdependence between the european union and the united kingdom. we have to find a reasonable solution. moments of the great interdependence is the collapse in world trade on a growth basis, the rate of change, world trade is most distressing. bring up the chart, anthony, the 10 year moving average of mine export-import global trade and we are basically back to the growth rate of the late 80's -- 1980's. a stunning collapse in the growth rate of world trade. optimalo value is most for your germany. for that matter, the european union to keep germany and export juggernaut? where euro needs to migrate to to benefit all of europe? >> i appreciate your question but as i mentioned earlier, i am right now together with one of my other colleagues, the longest standing member of the board of

the bundesbank and one of the reason is i do not comment on interest rates or the exchange rate and i will keep to that point. francine: do not speculate, how to be a central bank or, you may end up in the job. tom: one of the great triumphs, seriously, helmut kohl, to see a quotean union, we have a later in the show, there is a real feeling of a need for a european union. right now, that glue is a 1.16,ed currency, came at i do not want you to give me a point estimate on euro but how can you use the tool of the euro to benefit europe as a giant of trade? >> you have a very good point there. when things get tougher, and we talked about this at the beginning of your show, that things have become somewhat tougher. you have three ways to take in

europe, you can go for total integration, financial integration. which means you can take a big jump and you can also centralize fiscal policy pretty much like we already have a centralized monetary policy. then you do not have the conflicts we are having now. at the end of the day, you go to a european finance minister, etc. and a european budget. that is the strongest integration you can do. secondly, you can go to the sidelines and wait and see and say things are tougher and i will withhold from any other steps. the third approach would be you go step-by-step into more integration without this big league but in a conscious way. for example, originally proposed by commissioner hill from the united kingdom, this idea of a -- the union in capital markets, that is from my point of view

such an interesting idea, to go another integration step without going all the way to full integration because that would be a big constitutional challenge, something even parliament and governments could not decide for themselves. something where you have to have a big preparation time so whether -- rather than standing on the sidelines and not being able to do this big jump, you should go step-by-step. or example, by following the capital markets, and as i am in london, the capital markets union without the capital markets in the united kingdom is somewhat of a challenge. it was never meant to be done simply for the united kingdom, it was meant to be done for the european union but we need to leave the door open for the united kingdom. whatever happens to do this together and create, integrate capital markets across those 28

states if that is something the united kingdom wants. francine: they are the driving force, we hear that from member states, in certain ways, there is a thinking that europeans can consolidate because the brits were more difficult negotiations but how much will you miss them when it comes to the banking union? because they were good at reform, very good at understanding the market because of the richness of the city of london? >> i cannot confirm the brits were difficult and negotiations, from a german point of view, i will miss them very much and i always felt very close to the british position. francine: do you think london risks losing jobs to frank for because of rank -- frank for because of brexit -- frankfort because of brexit? >> i do not the dominance of what it will change but drops are moving. that is not -- my mandate is not to be a promoter of the city of

fort or any other city, it is my job at that we do not have a decrease in standards, one country in competition with andher, we need to move have the same standards everywhere and things will flow as they will float. francine: thank you for joining us from the bundesbank. later today, we talked to the dell chairman and ceo, michael dell, he joins erik schatzker live from the world congress in austin, texas at 1:00 p.m. in new york. this is bloomberg. ♪

♪ i am francine lacqua in london and tom keene is in new york.

this is days after reports that he has been cold shouldered, on the wrong side of the cabinet risk and close to resigning. all because he is not back a hard exit. i am so confused. there is a lot of confusion. i have international markets, saying -- people saying the chancellor is the only grown-up in the room but he is being pulled to shreds within his own party. what is the truth? phillip: the majority of the conservative party was pro-remain. a well organized section of the party that was for brexit and they are now in the brexit ministries. if we can call it that. this leaking of cabinet papers, the briefing against one side against another has a long tradition. if you go back to john majors. francine: it is ugly. phillip: something damaging to the cause but the real issue at

hand is donald tusk and david davis have agreed that there is not a distinction between soft brexit and hard brexit. it is either hard brexit or stay in. all the attempts that have been made to stay have certain sectors in the european market or the customs union, they do not stand up on reflection. it looks to me like we are heading for hard brexit. francine: do we not need a politically class in charge that has a plan and is very decided and inclusive for everyone, including the chancellor who is well respected by the international markets? phillip: what we have is essentially ideology facing reality and the reality is that all the costs of brexit look -- fairly enormous, 2% to 4% of u.k. gdp. if you compound that over the

years, it comes to an enormous number which will have a massive impact domestically on the u.k. economy. the prime minister realizes, the prime minister wants something quite reasonable, control of migration and not being subject to the european courts of justice. before people say that that is fundamentally against the four pillars, germany and france have a seven-year moratorium for accepting workers from the new countries that joined the eu in the east. we could go back to three movements of labor, not three movements of people and a prime minister used to be home secretary and is well aware of the terrorist and security threats and that is her prime concern. i think this can be met with a more flexible euro. if europe was flexible on movement, why not, europe has not delivered on free movement to capital. francine: you have the swiss

example, they had a referendum saying immigration, the eu said that will not happen. it takes two to tango. the u.k. can make demands as long as the party will say i will be flexible. at the moment we see no flexibility. phillip: i think europe will change. the euro has been a disaster and it?as been, do we maintain and france, the majority for brexit is much higher than the british boat -- vote. europe is not stable and it will change over time and the minimal british ask is not beyond the pale which is migration. you have an old elite in power that has been threatened domestically on all sides, by right and left. i doubt they will be in power for that much longer, they are holding to a political judgment that is is europe and it cannot

change. reality says something else. goldman sachs suggested breakup of the eu was made five times more likely by brexit. i think it is still up for grabs. tom: you have done a lot of work in theology. tell me what the new theology will be of conservatives in the united kingdom. as an outsider, i was amazed by the birmingham meetings. what will be the new post-brexit theology to conservatives? phillip: i think we are in a completely new situation. what has governed the world since the time of thatcher and reagan is extreme economic and social liberalism. for many years, we have set economic growth is in the interest of everybody. everyone will benefit but we now know that is not true. if you look at a graph from the world bank, it showed from 1988

to 2008, the working class in the developed western world and a lower middle-class have not benefited from globalization. when theresa may in birmingham said globalization needs to work for everybody and we need a new economic order, she broke with what people like to call neoliberalism, the first mainstream conservative to do that. create, notg to protectionism, but if globalization does not work there has to be an alternative that is not protectionism. what you will see develop i think in the u.k. is a form of conservative that is likely to be adopted across the developed world. the only option to defend the mainstream against people like donald trump. and all the extremists that nobody wants. what is happening in britain is conservatives and that's conservatism is innovating that will create a new model of markets that breaks monopolies.

what we have done in the last 20 years is create monopolies and a world where small businesses and asset holding becomes an option for everybody, not just those at the top. francine: i wonder what the chinese role will be. we will take a break and come back to china. coming up in the next hour, china's growth remains steady but canst the same ability remain -- sustainability -- but can sustainability remain? then the legacy of former fed chair alan greenspan, what his influence can reveal about the fed's future. this is bloomberg. ♪

♪ tom: good morning, everyone. ' in london and i am tom keene in new york. -- francine lacqua in london and i am tom keene in your. saying there will be lackluster demand for computers, servers, and the chips that run them, the largest maker forecast sales that may miss estimates. that the reporter sales set records. the man has not come back. the international monetary fund and -- fun season economic

rebound in saudi arabia next year, the middle east she says the case of saudi austerity drive will probably ease in 2017 which would help the economy recover after a sharp slowdown this year. the slump in oil prices has prompted the saudi government to cut spending. the obama administration is proposing a sweeping package of consumer protection for airline passengers. travelers would get refunds when their backs arrive late and there would have to be more transparency on ticket purchases involving online travel sites. an airline lobbying group says regulations would be bad for passengers and the economy. that is your bloomberg business flash. .om: thank you how about the polling as we go to the debate tonight. up 12, up 11, trump takes the l.a. times been up seven. the bloomberg poll, i am proud of that, good math. clinton with a nine point lead, stunning. what is that math, 85% of

voters. plus or -3.1 percentage points. withirector of respublica us. help me with how the conservatives pick up the pieces after this election if we have president clinton. what would be your counsel on how a republican party restructures? phillip: it has to appeal to the base which trump did attract, the white working-class voters who have clearly lost out from manual and semiskilled and skilled workers who have lost out. that is an enormous working-class the republicans need to speak to. , thehave to get wise massive latino influx, these -- this is what has changed america dramatically. these people are predominately

catholic, they could resonate with republican voters. what has gone wrong with republicans is that they do not by the reagan model, the supply-side reforms of paul ryan , etc., they are neither here nor there and they have not delivered and the constituency, they need to unite indigenous working-class with a new immigrant class and create a new economic offer. what clinton will offer them will not work either. it will not deliver. francine: not even if she is advised correctly? phillip: she is a politician from the past in my opinion who has to cover for a new future, she is a creature of the 1980's and i do not see her being able to govern. and the go for welfare wall street model which is failing across the western world, not just in america. tom: this has been wonderful,

thank you, we greatly appreciated. coming up in our next hour, alan ruskin of deutsche bank, have been looking forward to catching up with him about currency, dynamics, on sterling. looking at the data today, i love the idea of a meandering market. i looked at the volatility charts, subdued, dampen volatility across asset classes. with a did today, we will not ask him about deutsche bank, i promise not to do that. it is beautiful in los angeles, dodgers win. this is bloomberg. ♪

tom: dead and alive. before a dead november and a

very alive december, said meeting. in this hour, alan ruskin of deutsche bank. viva las vegas. on the observation of data and on financial collapse, sebastian vallely on the one and only chairman. this is "bloomberg surveillance ," live from our world headquarters in new york. i am tom keene. with me, francine lacqua in london. he is me an update on the importance of the chancellor of the exchequer's testimony today. francine: there has been a lot of rumor, and it looks like there is political infighting within the conservative team. we speak to people at blackrock and they say he is considered the adult in the room. he is not considered pre-brexit by some, but he needs to be included.

some labor figures. tom: i'm sure taylor will get to that. "first word news," with taylor riggs. taylor: if donald trump wins the white house, he will need a historic comeback to do it. hillary clinton leads trump 47 to 38 in a four-way race. the poll was taken after series of women came forward saying he made unwanted sexual advances. his support among them and the less educated has become weaker. they square off tonight in the third and final presidential debate. chris wallace will moderate the event in las vegas. they will focus on immigration, the economy, and the supreme court. it is a most certain to result in fireworks, their fitness to be president. mark halperin and john heilemann will host a special before the

debate. china's economy grew at a stable rate in the third quarter. gdp was at 6.7% from a year ago. it is right in the middle of the chinese government's goal, opening the window for policymakers to deliver on andises to rein in credit property prices. angela merkel warns not to expect miracles when it comes to the meeting with vladimir and in berlin. he will be there for a four-way summit on a truce in eastern ukraine. it is almost certainly fighting in syria will come up or germany, the u.s., and the u.k. are considering sanctions. over the bombing of aleppo. government data shows it was the hottest -- the second hottest september on record. scientists say el niño faded in june, and that is part of the reason why the world was not as hot as it could have been last

month. global news 24 hours a day, powered by more than 2600 journalists and analysts in more i am taylorntries, riggs. this is bloomberg. the lets me enter through data right now. really not all that much going on, not that much dynamics in search of news. the euro at 1.10. onto the next screen, if you would. i noticed deutsche bank at the bottom. stability at the 12-euro level. the two-year yield was lower earlier. francine? francine: this is hunch -- this unch.h, i know we will get an update on everything with enda curran. it seems the markets are little bit uneasy about the fact that china is worrying that we have nymex, at 51.

and then labor, jobs data, 1.2284. tom: this is an inflation indicator. i --cleveland media cd i think it has a lot of mathematical integrity. here is a great moderation. down we go, nice and even. this is critical, francine. i am going to do this slowly to get the drawing right. this curve up is a log quadratic. it shows an acceleration upwards in inflation. to two standard deviations of this long-term trend. that is a big deal. stan fischer alluded to this in his speech on unemployment and rising price change. we are sort of getting there rapidly. francine: yeah, this is my chart. .ine shows china

10 minutes at the top of each hour. this is what i picked out. china gdp today, 6.7%. you were questioning some of the data, and that is something we need to keep at the back of our minds. china financial conditions -- this is the blue chart. it shifts away from stimulus, more toward controlling financial risk. let's go to enda curran. 6.7%. do we trust the numbers? enda: this is a great debate. on a headline basis, it is mission accomplished for the chinese government. they are comfortably on track to hit their growth target for a year. that thism is stabilization has come at a significant cost. the debt leverage story in china continues to get worse, and at the same time, policymakers are

dealing with a property bubble in their biggest cities. it looks like growth is on track for the longer term. that is where the hard work should be done. francine: what do we know about debt? i do not see anything that dramatically new over the last three months. same story, but they are suggesting it is getting worse. the imf put out a report warning about china debt levels. the window is closing quite quickly. by theged urgent action chinese government to get a grip on it. we see the private sector still outspending. that means the government will continue to chip in the stimulus to the economy. remains on the government to keep the economy on track. tom: anthony, bring up the chart on the chinese gdp. it is important to frame a

number of 6.7% versus euro. -- versus zero. that is a better look at it. i am sorry, it is still the global growth machine, isn't it? enda: 100%, tom. even though it is growing at 6.7% now, it is at a much bigger pace. stabilizing their economy is in the interest of global growth. going forward, if they do not deal with the overhang in debt, there may be a spillover effect to global trade. tom: enda curran, thank you so much. dominique i said to constantly, can you just get him on the set? alan ruskin writes brilliant holistic notes at deutsche bank. across currencies, touching on commodities and equities as well. he joins us today. i noticed the deutsche bank

dampened we are getting slower, particularly at sterling. are you set for a surprise within foreign-exchange, or do we need to get used to this meandering? alan: it is different across different currencies. i see volatility being dampened and continuing to dampen on the yen in particular. the euro, there is a lot of political risk coming up. we are set for the narrowest range we have had in the euro on an annual basis. think that will occur next year. we will have a wide range again. we should is that in. tom: bring up the chart. the blue line is parity. everybody was wrong on that. up we go. we have been in a zone of stability. we get a lot of mixed opinions on euro. alan: in the schema such a narrow range, it feels

-- in the scheme of such a narrow range, it feels aggressive, but we could be in the two-day trading range. we could get to 1.05 easily. francine: is everything going to hinge on the currency markets? yen, it look at the seems the fx market has been taking the brunt of the brutal moves. when does it move into fx? alan: it depends on what the type of shock is. to allwas nicely played of the kind of external vulnerabilities that the u.k. had. when you have financial services, it is a large proportion of the domestic economy, and it is also a large action of the external export sector side. metric,d is the best also a measure in which the central bank was playing with, was actually fostering weakness.

it is always nice when your currency trades are effectively going with the central bank. that is the way the markets tend to make the money most. when this brexit start hitting guilt -- start hitting gilt? likeve not seen anything what we have seen in pound. alan: this is not quite an emerging market yet. people have made analogies. francine: not yet. alan: the pound could just go into a freefall, as it were, and we could see rates pick up quite sharply given the inflation repercussion. it seems the bank of england takes a sanguine view, that we will take this inflation hit on the chin as a sort of one-off. i do not think the selloff in the gilt market will be too acute. tom: goldman sachs does not see

of ottoman sterling. bring up the chart. -- idea the red circle, gloomy. or 1620s back to 1848 or 1210. help me with sterling. when do they lose their complacency? alan: probably you have to have symbolic numbers like parity on the table. tom: they have to maintain their calm to parity? alan: i think they can remain on cable atthe low 1.05. some of the calm is a bit of a facade. what else can you do as a policymaker? they are in a tough bind. tom: exactly, they have to show a good face. alan: absolutely. a 1.05 sterling,

it will keep us employed for at least the next 90 days. this is a great treat. joining us next, sebastian. it is beautifully written. about alank greenspan. it is a greenspan that you and i do not know. good morning. ♪

francine: this is "bloomberg surveillance." i am francine lacqua and london. tom keene is in new york. let's get to the "bloomberg business flash." taylor: carlos ghosn may be a able to add another title to his portfolio.

the nikkei says he will be appointed chairman of mitsubishi. the japanese automaker has agreed to sell a 34% stake to nissan. in china, attempts to cool off the property market do not seem to be working. the value of new home sales there rose 61% in september from a year ago. 21 chinese cities have imposed restrictions and made it tougher to get a mortgage. is british labor market losing momentum. u.k. employers added 106,000 workers in the quarter that ended in august, well down from increases about 100,000 there -- 170,000 in august. it is enough to keep the jobless rate at an 11-year low, at 4.9%. tom: thanks so much. alan ruskin is with us from deutsche bank. transcripts of stanley fischer's lecture at the economic club of

new york, the imf's curve -- the ims curve -- something that you have been writing about recently. link in the balance sheet of the central banks into his discussion of low rates for longer. to me the distinction is, do we believe the balance sheets will ever shrink, or are we pricing in a permanence to these john norma's asset -- to these john usormous -- to these ginormo assets. alan: excellent question. i think it does some goofy things in general, and it is extreme. you can see debt being written off, treasury to central bank. japan would be the closest to eventually getting to that point. what we are seeing in europe as well as japan is the sort of tapering debate. can they actually get tapering? is the tapering a tightening?

to the balance sheet shrinkage story in general -- can we actually shrank the balance sheet -- can we actually shrink the balance sheet properly? the assets these guys are selling are just too vulnerable. tom: is the discussion about getting back to what we consider normal inflation-adjusted rates or nominal rates, or are you hearing from vice chairman fisher -- vice chairman fischer and chair yellen, the training of all of us to a new low rate of a permanence to disinflation? alan: i think they still think they can hit their target, their inflation target. what you're hearing in a general sense is the idea that running feweconomy hot poses immediate risks, so why not try it. in your attempt to really push inflation toward its target. there is still an active debate about whether the inflation

endeting is the be-all and all. in this cycle you see the central banks have a capacity to inflate asset prices, but they have very little capacity to actually really raise good prices. we are seeing again and again that goods prices are essentially determined in a more international context. for example -- francine: are you suggesting that the mandate should change to focus more on growth or maybe on jobs creation for central banks? focusthere should be more on acid inflation, and the balance sheet drivers behind the business cycle. that is a little bit of what you are seeing. it is a little tough to anchor onto. inflation targeting is great in so much as you have this one number out there that you go out and hit. it seems so simple, but it can get you into particular problems. an example people do not fight enough is germany.

is -- has extremely easy monetary policy for germany at the time. inflation is essentially being driven by external related invents -- by external related events. francine: when you were talking about the write-off of japanese debt, when do you think that will happen? alan: i do not think it will happen anytime soon. if you are dropping boatloads of cash into excess reserves, ultimately that is one way to go forward. it might come at a point where the market really does question fiscal sustainability, debt sustainability. for the moment we are taking a fairly optimistic view on that one. tom: one of the great issues is the distinction between domestic inflation and international goods inflation. let's bring the chart up again. forget about the circles right now. here is a good disinflation and

outright deflation, down below. up top is the killer domestic inflation, service sector inflation, at 3.2%. that goes country to country as the new globalization. the u.s. has a particular story there. it has a housing story, a particular story in terms of medical care and related services. tom: alan ruskin will continue with us. at 9:00 on radio, alan krueger is making a huge splash with his paper on the labor mystery of america. it is a perfect time before the debate to speak with alan krueger in the 9:00 hour. from london, from new york, for you, worldwide, this is bloomberg. ♪

tom: good morning, everyone. francine is in london. i am tom in new york. we are going to ask alan ruskin about politics right now. must-read"?"morning from "theervation washington post." mr. trump could still win. our poll says maybe not.

tom: this is that exogenous shot that markets always worry about. how do you play the quiet of these markets as we go to the first tuesday of november? alan: the markets are not all that complex. having gone through a few referendums -- the greek referendum and then the brexit story, i would not say that this market is that complacent. there is a modicum of uncertainty still out there, and if that is eroded, there will be a relief to the risk asset at that point. a huge greeting from mr. renzi goes to the referendum. alan: i think -- we will stumble and bumble our way through that when, really. in knows where it is going

terms of the last decade? i think the u.s. election is primary at this point in time, and there are two extremes there. as hillary win, and do the democrats capture the house and the senate? on -- i think are putting i think the iowa electronic market says there is a 20% of that. and then on the flip side, you have a donald trump surprise win. the senate is most interesting right now. we will move this dialogue forward. tonight, a special broadcast. nevada, 8:30 tonight. mark halperin and john heilemann, coverage from nevada. good morning. ♪

francine: this is "bloomberg surveillance." i am francine lacqua in new york. we had some flat news from china.

gdple are worried not about at 6.7%. but people are questioning the .umbers crude oil, 51. we have a little bit of concern about the filtering effects of brexit on the labor market as it has been cooling down. that's get to "bloomberg first word news." taylor: hillary clinton and donald trump will be in las vegas tonight for the third and final presidential debate. a new poll shows that trump could use a big win. the poor has clinton ahead 47 to 38 in a four-way matchup. losing among men and the less educated. mark halperin a john heilemann will host a special before tonight's debate. wantsile, trump says he -- the republican presidential

candidate is proposing term limits for congress. besays house members should limited to six years and senators should only be allowed to serve 12 years. that would require a constitutional amendment. more economic sanctions are hanging over russia today. in berlinp will be for talks about a cease-fire over ukraine. germany, the u.s., and the u.k. are considering whether to post more sanctions on russia for the bombing of aleppo. british lawmakers say the u.k. must get its own health in order when it comes to corruption. 'scording to parliament international development committee, there is a lack of lack of- there is a transparency in overseas territories like the virgin islands. global news 24 hours a day, powered by more than 2600 journalists and analysts in more i am taylorntries, riggs.

this is bloomberg. tom: it is a joy of "bloomberg surveillance" and over the years with bloomberg on the economy to speak with julian robertson and alan screen -- and alan greenspan. for a more authoritative view, and now his new book, absolutely knew."ular, "the men who sebastian mellaby with an easy-to-read writing. how did you write the book? i am amazed that you got john panicking about a greenspan speech. where do you get the detail from? knew john makin before he died. it took five years speaking to anybody will who had interacted with alan greenspan. tom: i am going to see if sebastian mellaby did his

homework. bring up the chart, if you would. arguably alan- greenspan's greatest call. there is the crash and productivity. of the surge in, and greenspan adapting to it. here's the money quote from the book. the greatest call the chairman ever made. years later, the chairman's productivity call was the high point. discuss this. where it wasis is time to tighten. the reason was that the labor market looks tight. inflation was coming through. but greenspan was suspicious of the productivity data, and he got the staff to disaggregate it so you can see what was going on in each sector. when he did that, he looked at the service sector in

particular, and the data was suggesting that productivity was falling. so greenspan said, how does productivity fall? he did not believe it. he made the call that the productivity numbers were wrong and he was able to keep it lower for longer, and we got this employment search. one thing it shows is that greenspan was fascinating because he came from a different generation of economists, trained in the 1940's and 1950's, more focused on understanding data inputs. not so much on the mathematical model. francine: we are getting breaking news on central banks in saudi arabia. we are keeping an eye on that. if we have breaking news, we will get back to saudi arabia. tom wants to talk about charts and productivity and alan greenspan. i was fascinated in this biography that you wrote -- alan greenspan is full of

contradictions. there was a real aura. president obama said it is not me, the most powerful man in the united states, but it is the chairman of the federal reserve. talk about what he was like. sebastian: one thing is that he was not against marriage. he did it twice, but he was single between the age of 27 and 71. that is a bit of an unusual combination. ed, gray of the besuit chairman. with red think of him leather seats and the chrome and then comes the intellectual story, where he goes from being a goldbug in his youth to being the personification of being , the guynti-bailout

who rescues the financial system over and over. at 1.i found his lectures that he gave under the auspices of iran -- -- of the eye of the ayn rand institute. i find this quote. he says, "the creation of a federal reserve is a historic disaster." the man who led the fed for 18.5 years thought it should not have been created. you cannot make this stuff up. francine: was it a matter of persuasion because of the fm mc -- because of the fomc, or was he just an introverted economist? alan: he was not -- just ann: he was not economist. he had a fantastic bedside manner with politicians. one of his rivals in the ford administration describes him as

going to see president ford. greenspan had a technique with ford p would say, "mr. president, this is an extraordinary complex problem." ford would look worried. greenspan would say, "extraordinarily complex." ford would look extremely worried. and then he could bring him down. i get olivia -- could alan greenspan, alan ruskin, be chairman today? alan: no. history is not judging him all that well. it isart you showed -- the beginning of a disaster, in a sense. the productivity increase, a lot of that was faked. that productivity is the story of an asset bubble generating a

lot of excess capacity. the central bank and the backside of that cycle is cutting rates and cutting rates, etc. and we had another bubble after that. tom: his minutia -- i have experienced this with the chairman before -- when michael mckee and i speak with him about the data. the fed today does not have any money like greenspan on board, do they? maybe bullard, maybe? detail, theg at the store near the detail -- no, i think you are probably right. -- the extraordinary detail -- no, i think you are probably right. tom: he owns the phrase "measured." he wanted gradual vectors of higher interest rate. does he regret measured? sebastian: he should, but he does not. he did not say that the gradual tightening in 2004, 2005, his last two years, was a mistake.

i show in the book that if you tell people on wall street the cost of r.o.e. on the short end will rise in a measured way, very slowly, they are going to borrow more short and more long, and the carry trade will go up. tom: we will come back. 's new effort,aby "the man who knew." francine: later today on bloomberg tv, michael dell joint erik schatzker from the world conference in austin, texas. this is bloomberg. ♪

francine: this is "bloomberg surveillance."

i am francine lacqua and london. tom keene is in new york. let's get to the "numbered business flash." taylor: intel is signaling there will be lackluster demand this quarter for computers and servers. forecast sales may missed estimates. -- forecast sales may miss estimates. demand has not come back. the obama administration is proposing a sweeping package of consumer protection for airline passengers. travelers would get refunds when their bags arrive late, and there would have to be more transparency on ticket purchases involving online travel sites. a lobbying group says regulations would be bad for passengers and the economy. that is your bloomberg business flash. thanks so much. the book is "the man who knew." sebastian mallaby is with us. alan ruskin is with us from

deutsche bank as well. your thoughts on brexit yak of you have such a heritage with your father, the diplomacy in europe, and with the united kingdom. out is sebastian mallaby? sebastian: when theresa may was first chosen as prime minister, she seems to be the grown up in the conservative party. , shen the last two weeks has come out as a harder edged, , anti-immigrant leader. implementing brexit without knowing how to do it. francine: y, sebastian? to uniteause she wants the party? is it because of miscalculation, or is it because she is new to the job and needs to learn? i compare her to angela merkel.

-- of the cautious tactically cautious, determined to stay in power for a long time, and willing to do things which do not make sense from a statesmanship point of view, just like angela merkel in the middle of the euro crisis -- she wanted to keep the euro together . theresa may is on the one hand saying -- francine: but this is different. this is worse. was dealing with damage on the eurozone area, but this is a prime minister, which does not seem to have at the moment the content of the market. this is conflicting with her own country. sebastian: the euro cohesion was going to break up. talk about market confidence -- look at the spreads that were there in 2012. it was mario draghi who saved the politicians themselves in 2012. tom: that goes right to the

point i want to make today. aworked with dr. issing number of times. a heated discussion in to buy a few years ago. here is my "morning must-read." he is not a german nationalist. he is open to the idea of a genuine united states of europe. has europe boxed themselves into a corner of disinflation, deflation, sub growth? sebastian: it harks to the point of gaining an incomplete monetary union before making decisions in terms of a fiscal union. now what you do, instead of a fiscal union, i think you do have some destabilizing, more sort of recessionary biases to the physical file c -- the

fiscal policy side of things. sebastian: the thing that unites the europe debate and brexit and u.s. politics now is this revolt against the expert, against the elites. that is what we are seeing. the central bankers used to be walking on water. in the last few days, they have been criticized by u.k. politicians. tom: sebastian mallaby, can you define european federalism? i cannot do it. i cannot get there. sebastian: nobody can. moving in the direction of deepening the union, having more fiscal -- the germans do not want that. the elites have led the european people on the path toward unification with europe without really knowing how they are going to get there. they have lost the confidence of the voters along the way, and that is a populist revolt that we have seen. francine: we are getting a bloomberg story saying that

german chancellor merkel's government is under strict instructions not to meet with u.k. diplomats. or they can meet but they need to politely refuse -- they are very british -- to grant u.k. favors and the wake of negotiations. howmuch do we know about hard these negotiations will be, and how much of a tough stance will the e.u. and germany take? sebastian: it will be extraordinarily hard. once the u.k. invokes article 52 trigger brexit negotiations, then the talks are supposed to -- once the u.k. invokes article 50 to trigger brexit negotiations, than the talks are supposed to begin. to get be difficult german leaders around the foreign-policy issues until after the french election in 2017, and there is a dutch election. i do nothing brexit talks will go anywhere for the first 12

months. not triggery article 50 at the back end of 2017? is the uncertainty a bigger risk than the actual trigger of article 50? sebastian: i don't think it is a bigger risk at all. theresa may should have delayed article 50. when she said she was going to trigger early, what happened? sterling fell. we got plenty of market reaction to the announcement going forward fast. it could not have been worse to delay it. tom: to get back to your book here. one of the great books on fed watch and greenspan watch was lawrence myers. there is a chapter in there that is extraordinary about the control chairman greenspan had institution.on his does he regret that control now? sebastian: i do not think he regrets that control. my view is that he should not

regret that control. the point about alan greenspan is that he did marry his economic expertise with tough political, machiavellian operating methods. you need that to control the fed, to lead the fed. think about janet yellen. she is being attacked from the left and the right as being too loose and too tight. tom: are we looking for evidence? alan: i think transparency, yes. but probably just as opaque. tom: to the two of you, thank you so much. alan ruskin with deutsche bank. sebastian mallaby, with a spectacular -- i cannot say enough about how readable "the man who knew" is. many a great view of the greenspans that are out there bank. in the 9:00 a.m. hour, alan krueger, doing a lot of really

good research on the mysteries of the new american labor economy. from london, from new york, this is bloomberg. ♪

everyone.morning,

francine lacqua and london. i am tom keene in new york. how about florida exchange -- how about foreign exchange? euro near 1.10. the yen stronger off the recent weakening. there is sterling at 1.23. francine lacqua is getting wealthier by the second. allison williams -- i think she spent more time here then in research at princeton in new york. morgan stanley -- bring up the chart. i think it is pretty straightforward, the idea of goldman sachs way outperforming morgan stanley off the lehman lows. what is the goldman sachs distinction versus the morgan stanley distinction? : they have obviously made some changes here they are not -- they are committing to their basic business model of

trading, banking. morgan stanley is different. they have made more of a shift toward wealth management, and they have made extensive cuts to their fixed income business or the most recent was a 25% cut at the end of last year. and despite that they have been able to hit their revenue target so far in the first half -- right now we have mr. gorman restructuring and recovering from to difficult cards he was handed. is that a safe statement? alison: everybody comes into the assesses the business at hand, things about the future might hold with regulation and changes in the environment, and what are the secular opportunities per james gorman really built up the wealth management business at merrill lynch. he has come over to morgan stanley and he has been focused on building that business there as well.

they like goldman sachs -- they, like goldman sachs, are very big in equities trading. they have deemphasized the fixed income trading business. francine: i have a chart pitting morgan stanley against most of the industry in the u.s. morgan stanley is out, tom. tom: there it is. ison is seeing these numbers for the first time. i like how they put expenses out in the headline. was higher than the estimate of $3.7 billion. alison: it is a different fic, a smaller one. a smaller revenue is within gorman's target. it comes down to about a billion a quarter.

isdoes look like expense higher, but revenue is a little higher. tom: very good. quickly, the stability of mr. gorman's tenure -- he has the trust of the board? : he is making progress. tom: morgan stanley, the return on equity, 8.70%. an important statistic. another statistic tonight -- will mr. trump be able to move the needle? clinton up 9%, just one poll, but there it is. they migrate to the debate, we markte to 8:30 with halperin and john heilemann, their balanced coverage of the debate. this is bloomberg. ♪

jonathan: a very warm welcome to

i ammberg daybreak." jonathan ferro alongside david westin and alix steel. future stable. 1% and thewn 2/10 of dax off almost 15 points. the cable rate digests the political turn in a stable labor market. yields unchanged on the u.s. 10 year. breaking moments ago, morgan stanley reporting third-quarter earnings that appeared to beat estimates. shares are hired 2/10 of 1% into the premarket. at 6.7 economy grew percent in the third quarter from a year earlier, in line with estimates. signs of stability could pave the way for china to deliver on some reform measures. the stage is set for the third and final presidential debate and a new bloomberg politics poll of likely