francine: a gamble in vegas. trump refuses to say he will accept the election results as he clashes for third and final time with clinton. economists are ruling out e.c.b. action as expectation s of a christmas stimulus builds. nestle cuts its forecast. bre bring you an interview with the c.e.o. of the world's largest food company. we have a very busy show. we have a great show in fact line up for you today.

t is e.c.b. day. we'll talk about the e.c.b.'s options for tapering and then in just over an hour we will speak to pimco's andrew. this is a picture for the markets. overall there has been a little bit of movement on the back of the debates. mr. trump, donald trump refusing to say he will accept the election results if he loses. dollar advancing again. it all has to do with the e.c.b. you can see the stocks in europe pretty much subdued then i want to show you the mexican peso. this is important because it is a proxy for the chance that donald trump will win and you can see mexican peso down 0.4% after strengthening a touch. the currency has risen more than 4% this month.

there is a growing likelihood that trump will lose the coming elections. this is the trump effect. we're not only seeing those on pesos but also on the australian dollar bets. his is the mexican peso in white anything below the line means more short and above means more long positions. let's get straight to bloomberg first word news. nejra: economists project draghi is unlikely to enact stimulus. they see the december decision s most likely for additional stimulus or quantitative easing. you can follow the e.c.b. decision and news conference here on bloomberg. francine: philip hammond says it

is a high priority for brexit negotiations. there are other possibilities to explore. >> i think they are also realistic and are looking at other options beyond passporting to protect their interests and we are ago with closely with the industry and all the options, protection of london's natural service businesses. francine: the c.e.o. of barclays has acknowledged that banks will have to change and adapt in the face of brexit. >> we have made a lot of progress this year getting out of those non-core businesses and in 17 we'll reduce what we exhibit to be $1.6 billion noncore costs this year. once that closes out then i think we'll have the cost ratio

we seek as a bank and the profitability we seek. francine: brazil's central bank has cut its benchmark interest rates for the first time in four years. they cautioned the extent and pace over the easing cycle will depend on further progress on economic reforms and inflation. it is a turning point for the bank which had to hold the rate at a 10-year high as the country plunged into its deepest recession. i'm nejra cehic. this is bloomberg. francine? francine: donald trump has refused to say whether he will accept the results in the election. he said he will reveal his position at the time of the vote. >> i will look at it at the time. i'm not looking at anything now. i'll look at it at the time.

i think the voters are going to see through it. we'll find out on november 8. i will tell you at the time. i will keep you in suspense. francine: his democratic opponent hillary clinton said she was horrified that a major party nominee would -- >> every time donald thinks things are not going in his direction, he claims whatever it is is rigged against him. this is how donald thinks. it is funny but really troubling. that is not the way our democracy works. francine: for more on that let's head to las vegas where megan murphy is standing by. trump's vagueness on accepting the results is grabbing headlines. i find it a little crazy. i've never seen this in american democracy before. what else did the candidates talk about though? >> this is an event -- that will be the sound bite getting repeated that he will keep us in

suspense whether he accepts election results. i think this is the most substantive of the three debates we have had. they talked about foreign policy judicial tion and policy issues including abortion. it was a tense debate. it was also revealing. we saw donald trump come out and be quite disciplined and on message and then get riled by hillary clinton and talk about things that his campaign would prefer he not talk about, allegations of sexual misconduct against women and him saying freely he will poem not accept the results of this election. it is extraordinary times. francine: it is really extraordinary times. he is behind in the polls. who won on the night? >> everything every instant poll is showing hillary clinton won.

what she had to do is not make some kind of mistake. she did very well tonight. she was personable. she was angry to a point. he was emotional. she was coming back on him on certain things about women and stance on policy issues. i think her campaign will be very pleased with that on his side he did a good job on jobs and the economy and showing the stark differences and tax reform and how they are going to jump-start jobs growth in america but i think his campaign will be displeased on the most pivotal moments of the night that he will come out being the sound bite that people remember and take away thinking is this one is who we want to be leading this nation? she did get the better of him on the central election question which people feel is so fundamental to american democracy. francine: thank you so much. let's welcome sara, chief

economist for europe at standard chartered. what happens at the u.s. elections november 8 will have repercussions on the mexican peso and also in europe. does it make a difference for immediate trade and what is your vision at the moment? >> it certainly makes a difference who wins the election but i think the overarching theme that affects the global economy is one of more opposition to trade deals and anti-globalizeation sentiment and to be frank we're hearing that from both candidates. although i think we would probably expect a donald trump hesitancy could put up more trade barriers, we have to recognize some of the big trade deals that we have been hoping from from the u.s. and europe are probably running into difficulty. francine: you're right. you traded also with ttip and

hillary clinton came up saying she is against this. have youled the impact on europe and growth and currency? >> i think there is likely to be an impact on currency. they would poem will an impact on growth. most directly through confidence factors. so we know this in the past looking at the euro crisis. the economy has struggled when confidence and sentiment has been hit hard. i think that would be the most immediate thing to look out for when we see the results of the presidential election. clearly hillary clinton is running the campaign as a continuation essentially of the current incumbent. we would not expect too much change there. of course the president is very constrained in what they can do. i think they have to be careful of assuming it is going to to be

wholesale sale changes in policies. probably the most immediate focus for a lot of investors is actually what's happening to the fed and interest rates in the u.s. rather than necessarily expecting any huge policy changes to emerge from the u.s. election. francine: thank you so much. stay with us. stay with surveillance. plenty coming up. no one expects fraction the e.c.b. today but anticipation for q.e. ex-tension in december is building. are those expectations justified? we talked to e.c.b. former director for market operations and then this lady is not returning. theresa smay expected to tell leaders there will be no u-turn on brexit and trump takes a gamble in vegas. meanscuss what the debate if for race. this is bloomberg. ♪

francine: this is bloomberg "surveillance." i'm francine lacqua here in london. let's get to the bloomberg business flash. here is nejra cehic. nejra: nestle cut its full-year forecast. they said revenue will rise out 3.5% on an organic basis but sales growth ame came in below analyst estimates. we will be speaking with their c.e.o. at 10:30 u.k. time. russia's third quarter revenue rose 4.5%. sales broadly in line with estimates. company does not report third quarter earnings.

lufftansa shares have soared this morning after it raised its profit forecast. fuel costs fell. intel spiked to overturn a record 1.06 billion euro european antitrust fine has received a boot. the company's appeal should be reviewed by a lower court. the case could have ramifications for a growing list of disputes involving other u.s. tech giants. a final ruling is expected in six months. francine? trey: thank you so much. it is decision day at the e.c.b. anticipation is building that mario draghi will delay any extension of the q.e. program to december.

is that justified? thank you so much for coming on. you really have unique insight that is extremely useful on e.c.b. day. no one or virtually no one predicts any significant move from the e.c.b. today but our expectations of the extension or stimulus being extendeded into december justified? >> yes, i think this is definitely the case. december will be the time when the projections for 19 will be published and on the other hand nothing dramatic has happened in the economy or the financial side to justify an announcement of the action today. however draghi will have an expectation management problem that because last time he said committees are supposed to work on how to change the program and

if he doesn't say anything today, that may be seen as a disappointment for the market he would dn't think want to disappoint the market. he will be asked and he will have to say something. he could say oh, yes, the committees are working very hard, very good, very well, we will see what they come up with in december or he could say something a little more specific about what the committees are doing. francine: do you think that the e.c.b. needs to do more to reach their inflation target and what can they do, actually? >> welling i think draghi and many members of the governing council have said that the projections of inflation will eventually maybe in 19 get back to 2% or close to 2%. depends on the extension of the monetary easing. and i think this is a clear

indication that they are thinking of prolonging the program beyond march. by the way, it would make no sense to review the program in december if it is to be ended in march. so i think indeed the view at the e.c.b. and the sthrue the market has at the e.c.b. is that they will prolong the program. of course it carries some problems with it because of what they can buy if they prolong the program. francine: the problem, this is something i guess it is a lot more here the ethic. you alluded to it. at some point this may become counterproductive. that actually the negatives outweigh the positives. are there any limits to how much debt the e.c.b. can buy before these risks are very apparent? >> well, my sense is that the beyond y be looking

bonds in its purchase program. i have no inside information, but if i was at the e.c.b., i would think ok, why do we have to insist so much on bonds? there are other assets that we could buy to compliment our program that would reduce the negativefect on insisting too much on bonds. equities possibly in the form of exchange credit funds and bank loans. francine: what is the chance actually that the e.c.b. starts with equities? would you give it a 30% chance? 50% chance that this ends up happening? >> it is not a high probability. i guess that many will be afraid of the fact that equities as we know are very, very volatile. on the other hand, i think that the negatives of insisting too much beyond the mere quantitative -- that bonds are

-- to buy, are there. 30% would be my guess. francine: at what point do we need to hear draghi talking about tapering? do you think he will give us something today or is it way too soon to talk about it? >> i think he is not going to say anything about tapering other than -- well, yes at a certain point of time in the future we will have to think about it. i think all of the messages they have sent are not for reducing the size of the program, neither for increasing the size of the program. my expectation is that they will keep it at 80 billion but they could change the way they do it. francine: for how long? how long are you expecting q.e. to -- >> it would seem natural they go until the end of 2017. prolonging it by nine months which would require to make

changes to the program and extending it to asset classes which would not be something unprecedented. they started with bonds and added silver and corporate bonds and then international bonds i think it would be continuing on a trend of adding asset classes to their purchases. francine: thank you so much. former e.c.b. director of general market operations from brussels. this is our great bloomberg chart. we absolutely need to watch out or that rate decision. you can see expectation. this is the october survey and previous expectations of taper talk have gone down. at 12:45 p.m., the press conference starts at 1:30.

up next, there will be no u turn on brexit. theresa may intends to deliver that message at brussels. we break down that story next. this is bloomberg. ♪

francine: this is bloomberg "surveillance". i'm francine lacqua here in london. we were talking about the e.c.b. and talking about mario draghi and the fact he may keep the markets in suspense. we were talking with francisco and at some point he said we will have to talk about tapering.

this is what the picture for euro is. it is confusing because if you look at asset managers, they don't think the euro will go at the same level as some of the leveraged funds will. what main message are you expecting from draghi today? >> we think there may be a chance that he will signal some tweaks to the program, essentially to allow more flexibility to allow more scopes to address the supply problem essentially. francine: much more aggressive? is he going to reach that 2% inflation target? >> that is the target. frappingly it doesn't look like it is going to happen any time soon. even his latest comments suggest we're looking at 2018, 2019 and even then we're still substantially below 2%. close to but the 2% target seems

to have shifted to 1.6% or 1.7%. still very low. about tapering he will say at some point they will have to taper. the program is not going to last indefinitely. but tapering is not going to happen any time soon economic data suggests it will be far too early that talk about tapering over the immediate time horizon. francine: thank you for that. up next, trump takes a gamble in vegas refusing to say if he will respect the election results. this is bloomberg. ♪

francine: this is bloomberg "surveillance." i'm francine lacqua here in london. let's get to the first word news. here is nejra cehic. nejra: mario draghi is unlikely

to address fresh stimulus measures at today's meeting even though growth remains feeble. they do see december as the time most likely. the bank's q.e. program is currently scheduled to end in march. you can follow the decision and news conference here on bloomberg. philip chancellor --mond said the retention of there are other opportunities to explore. >> i think they are also realistic and are looking at other options beyond passporting to protect their interests and we are obviously working closely with the industry and looking at all the options for future protection of london's natural services business. nejra: the c.e.o. of barclays

acknowledged that banks will have to change and adapt in the face of brexit. barclays continues to make progress in cost savings. >> we have made a lot of progress this year in getting out of those noncore businesses and in 2017 mbingts we'll reduce what we expect to be a $1.6 billion noncore costs this year. once that really closes out then i think we'll have the cost to income ratio we seek as a bank and the profitability we seek. francine: the president of the philippines has sent his clearest message yet that he is willing to turn his back on america. he said it is springtime in the relationship between the two nations. earlier he told hundreds in beijing that it is time to say goodbye to the u.s. global news powered by 2600 journalists and analysts. i'm nejra cehic. this is bloomberg. francine? francine: thank you so much.

the third and final u.s. presidential debate wrapped up a few hours ago in las vegas. trump and clinton sparred on issues like the supreme court. he refused to say whether he would accept the results of next month's elections. >> i will look at it at the time. i'm not looking at anything now. i'll look at it at the time. i think the voters are seeing through it. we'll find out on november 8. i will tell you at the time. i'll keep you in suspense. >> every time donald thinks things are not going in his direction, he claims whatever it is is rigged against him. this is how donald thinks. it is funny but also really troubling. that is not the way our democracy works. >> one of my first acts will be to get all of the drug lords, we have some bad, bad people in this country that have to go out. we're going to get them out and secure the border an once the border is secured at later daye date we'll make a determination

as to the rest. we have some bad hombres here and we have to get them out. >> my plan is based on growing the economy, giving the middle class families many more opportunities. i want us to have the biggest jobs program since world war ii. >> i just left some representatives of india. they are growing at 8%. china is 7%. after them it is a catastrophically low number. we are growing, our last report came out and it is around the 1% level and i think it is going down. francine: for more on last night's debate lens bring in morris reid. he was a senior staff i had a during former president bill clinton's administration. he has had no sleep because he has been watching the debate and been on various channels. what have we learned from the debate? it is going from the bizarre to

the subliminal. >> he will not go off the stage. whether this man wins or loses he is not leaving the stage. he will be a political force going forward. i think that is a good thing. francine: why? >> because it is good to have competition in politics. it holds politicians accountable. he has tapped into something and it has revolutionized in a lot of ways. this guy has done things very unique, with the media, talking directly to the voters. he has had a net positive impact. ultimately he has to concede because in america we do those things. francine: you don't think actually he is influenced some policies of hillary clinton including being against trade and ttip and things like that? >> i think he has had impact on trade. he has put those pockets of zites front and center.

they would not have been there. the second thing i think we learned is this is going to come down to five or six states. if i was donald trump i would pour all of my resources into those five or six states. francine: i can't believe him saying i don't know whether i will accept the election or not. you usually have this in very troublesome political emerging markets. i've never seen in this a western democracy. >> i hope he will address that and if he loses he will step off gracefully. maybe he was caught up in the moment. ultimately he is an american and a patriot. he will step aside if he loses. francine: do you think it will swing voters? if you think about it. >> that message was to his red meat core audience. ultimately he will pivel pivot and try to get to the heart to reel issues, the economy in these five or six states.

i said this could be very close. i think this is a plus or minus three. it is going to come down to turnout. i would focus my energy on those five or six states. hillary clinton, what she needs to do, first of all she is peaking at the right time. we always say it is a marathon. francine: she won the debate? >> to me, it was a draw. he did what needed to do, get his footing and rebalance and focus on on the sprint, the last 18 days. she did what she needed to do. she didn't need a knockout. she is peaking at the right time. her voters are getting excite at the right time. people are paying attention to her message at the right time. i believe she has run a smart race. she did what sh needed to do. come out and reinforce the message and that sheas likable person. francine: do you think they are both focusing on those five or six states? >> no. it is a different math for both of them.

donald trump needs highway and florida to win and arizona. -- ohio and florida and arizona. hillary clinton doesn't necessarily need florida. but i think she needs ohio. looks like she is a little bit behind and will throw her energies there. it is a different equation. there are five or six states in play. francine: there is a likelihood that more tapes or scandals or more something will come out. is that looking more like sflip >> absolutely. you have people saying there is a lot of juicy tidbits on the apprentice. those tapes there. there will be more things to drop. those will be interesting tidbits. i don't believe unless there is a real bombshell that either one will sway the voters. the real question is those five or six states are the people going to get to the polls and will they break your way? it looks like in the polls, they are breaking towards hillary but

if people feel like she has already won, they may not get to the polls. we know dommed trump's voters are passionate and will go to the polls. ultimately hillary clinton should win. that is the conventional wisdom. this is not a conventional year. francine: thanks. as always. of course we'll bring the show to new york par this november 8 u.s. election. we're hearing from the brexit secretary speaking at the u.k. parliament. he is saying they are seeking a smooth and orderly exit from the e.u. and said having london as a hub is in the e.u.'s interests. all options according to the secretary of brexit, mr. david davis saying all options are open. when asked about a transitional deal, they would try and reach out to try to find something in

play. they are trying to maintain financial stability during the brecks pit. if you think about what happens over the last couple of weeks, you different ministries. rumors they are not talking to each other. mr. davers saying they will do all that is necessary to maintain stability. coming up, including first forward guidance from frankfurt. today's expectations at the e.c.b. meeting are low. then b.h.p. billiton is making women a priority. the miner wants to add 21,000 women to its workforce by 2025 d cut their forecast after the's nine month rose at the lowest pace in a decade. we'll look over the numbers with nestle's c.e.o.. this is bloomberg. ♪

francine: this is bloomberg "surveillance." i'm francine lacqua in london. markets are trading pretty much flat this morning. let's go to mark barton. >> the pess reached a six-week high against the dollar. the peso has been viewed as a proxy for donald trump's chances becoming president. the poll standings is red line. the yellow lines the first second and third debates. meanwhile the mexican peso has risen. his recent struggle to be a boon for peso bulls, the currency is up more than 7%.

the biggest gain among its major peers, first line is the first debate. what a wonderful chart that is. euro positioning by leveraged funds and assets managers. leveraged shorts by leverage funds and asset management is the top line. we have got the blue sideline the euro. we have the white line is the institutional and leveraged of course have gone short. the euro is the blue line as well. the divergeance is the most in a decade reflecting a lack of consensus on the outlook. this is a function which shows essentially the biggest companies on the stoxx 600 by market capitalization. this is the market capitalization of all of these companies by weighting nestle is

the biggest company. nine month revenue rose at the eakest pace. lufthansa raised its care yore forecast, the three-month prediction of an earlier decline. bookings beat expectation and a drop in fuel costs. francine: the e.c.b., the consensus is that the central bank will hold off on more action for now. caroline hyde is in frankfurt. caroline? caroline: i'm joined by european economist in germany. give us a sense today like the weather, we're not expecting any

changes? >> no, i think it will be a rather boring meeting. not much of an announcement. maybe a hint where they are thinking within the governing council is leaning towards. i think december is when it will get interesting. crare line: there is going to be a barrage of questions whether there will be quantitative easing or tapering. are you expecting any sort of tapering? >> no, we don't. we expect them to continue buying at their current pace beyond march next year. until the end of 2017 though they may change the pace of purchases at some point. i don't think he wants to address that issue at this press conference because the governing council has made up its mind. i think the majority wants to continue at the current pace to continue the stance.

>> are they going to be tweaking the way they buy the bonds? >> i think they have to. 80 billion, you will run out of bonds to buy at some point. we don't know exactly when when. march already, it is going to be tough. you have to tweak some of the parameters. we think in the end, moving away from the capital key will be part of the solution. which is problematic to some extent in this country here, people who viewed it as problematic. still some work to get there. >> how can you make it palatable for germans. the capital qiao buy in line with the economic size. what will they do? you can buy more of italy? >> you could simply say that we continue to buy according to the -- but if the central bank should not find enough bonds, it may shift back that amount to the e.c.b. which will redistribute it among the other central banks.

from a purely economic point of view, you could argue germany needs higher rates. it is in their interest. understand the kind of fear that moving away from the capital key might blur the lines of fiscal policy and monetary policy further. this is where the debate will have to proceed. draghi seemed to say it is not due to us that the banks are having profitability issues. we have not affected their net margin but now they seem to be admitting it is hitting that margin. do you think they understand they need get the yield curve to shift higher? >> yeah, they were stress soffering most of the public speakers at least that at some point it will hurt banks' profitability. if we had not argumented the

comm would have done very poorly. that is probably true but a very flat yield curve eventually will hurt banks. it is clear there has to be at some point a change otherwise the transmission through the nking sector will -- because bappings a profitability issue. caroline: no stallworths today francine but maybe december is where they are betting for further quantitative easing. to extend it as much as nine months. francine: it is time for today's morning -- and we sat down with barclays' c.e.o. in singapore. she asked him if he sees deutsche bank surviving its current problems? >> i think the banks are tremendously highly capitalized now. i think the banks have very high levels of liquidity responding to a very positive move by the

regulators to make sure the banking industry was safe and sound. i would say that across all the major banks. there is a challenge of profitability that some banks face and i think we have to recognize they have a safe financial system over the long run. banks need to cover their cost s of capital. >> deutsche will survive? >> deutsche will survive. >> there are suggestions for uropean banks, there should be megabank as part of the consolidation. >> i don't like the view on that. we like barclays' strategy where it is. we like being regulated by the bank of englan. we think there is a lot of transparency and dialogue between ourselves and the regulars. we love serving our customers across the united states kingdom. we have 24 million consumers in the united kingdom. we love being a global investment bank. we think we have an investment bank and a corporate bank which

has great reads and client bases and we like the hand that we have. >> the biggest risk that the banking world faces now, from brexit and the presidential election in the u.s. and the slowdown in china. maled what would that mean for you? >> i think the biggest risk now is a disengagement of a monetary policy where the united states starts to raise rates and you accommodative policy information japan. how that disengagement will affect the financial markets and we have had three mini crashes in the most liquid marks the last couple of years. qued the u.s. treasury in 2014. we had what happened with the swiss franc a year or so ago and then this treasury mini crash the other day. i think we do as an industry need to look at how much capital is actual behind the trading of the most liquid markets.

is there a gap risk of correction risk in the most liquid rates and currency markets that we have not faced before. francine: b.h.p. billiton has add new goal for 2025 21,000, yes, said it correct lirks 21,000 more women to its workforce. we'll tell you about the miner's new initiative next. this is bloomberg. ♪

francine: this is bloomberg "surveillance." i'm francine lacqua in london. b.h.p. billiton is looking to change the gender balance in the mining industry which is dominated by men currently. 18% of its workforce is made up of women. they want to increase that to 50% by 2025. i'm obsessed with this story. it is 25,000 women that they want in seven years in mining industry. run me through that. >> it is extraordinaryly ambitious. mining is a pretty unconstructed industry should we say. it is an australian-based

company. it is hard to credit. it is -- it shows ambition but to be fairs, he said in his statement this is an estimation. francine: the problem is the training. we do a lot of work here, understanding quotas. first of all you need to attract women to a certain industry. australia not seen it is a most equally friendly place on earth in terms of rankings. also why? is it pressure from shareholders or investors? >> mining has a problem here in a study that found even by the standards of companies which are not great, most companies had about 15% of directors as women. mining as little as 10. until recently there were some very large miners, not b.h.p. billiton, but some you had no

women members. it is hard for companies to find enough people. by doing this, hopefully it is going to attract -- have a much bigger pool of people to draw on. francine: i know the insurance industry has -- i am skeptical. hugely skeptical partly because i'm a woman. how do you get 25,000 women to apply? do you get rid of men? >> i think that is the question that people will be asking. if you're an employee, you're going to be interested in that answer francine: what happens to me? >> it can only be done by aggressively targeting women candidates and bringing them into the company. francine: the story of the decade. we'll have more on that. ♪

>> the final fight. trump refuses to say he will

accept a loss if he clashes. easy be accessed today. could taper talk surprise markets? and emerging markets taking advice from nestle. e.m. growth slows. bocaeak to the ceo, paul -- paul bulcke. we have a pack's day. >> and that is interesting because what you heard last night, that is the sigh of relief last night that americans are glad the debates are over. but the fact that we are trading on the ecb this morning and not on the election debate is interesting. fundamentals,t going forward.

thecine: let's get to bloomberg first word news. taylor: we start with the election. it was an extraordinary statement from the campaign with a number of them. the republicans comment came last night in the third and toal debate as he responded a question from the moderator, chris wallace. chris wallace: are you saying you are not prepared -- >> i will to at the time and i will keep you in suspense. hillary clinton: let me respond. that is horrifying. every time donald thinks things aren't going in his direction he thinks things are rigged against him. taylor: donald trump's running mate signaled that he would not challenge the -- result. >> will except the will of the

people. but i think donald trump will win. i see tremendous momentum across the country. poll, 52%cording to a say that clinton won the debate. a typhoon has battered the philippines. 150 miles per hour wind. people forced to leave their homes. and large areas of the main island were flooded. at least four people have been killed. , vladimir putin was hit with blunt language over syria. merkel says he bears the responsibility for the inhumane onslaught. and theresa may will tell eu leaders there will be no turning back from brexit.

will be no second referendum on leaving the european union. today, she attends her first eu summit as prime minister. global news, 24 hours a day. powered by our more than 2600 journalists and analysts, in more than 120 countries. i am taylor riggs. this is bloomberg. thank you. let's get you set up for trading today. and we areb day trading exactly as you would expect when a major bank is making an announcement -- nothing is happening. the euro is what it is all about and little change. the second board, the same thing. except for oil, not much going on. in tin.row it is trading at a record high. does that mean sardines are more expensive?

here's what i chose. markets are fairly quiet but european stocks are trading. at 50.99. michael: i want to show you something interesting. while we are talking about central banks trying to keep stimulus going, -- notes that there is a self tightening underway around the world. 10-yearook at the major note deals, they are all very close to the moving average. the british guilt 10 year moved up significantly. but even the japanese have crossed the moving day average. only the germans are just below that. markets tighten.

which is what central banks are trying to do. that may be mario draghi's goal today. francine: this is what i have. i did a more simple chart, although it has a lot of lines. managersasically asset are long euro. this is the chart that shows that. so the divergence between the two groups, i think that i'm is what mario draghi can do. both bindings of both groups, the red line is acquisitions. with get more on the ecb michael krautzberger. and also with andrew bosomworth.

roomn't know how much more mario draghi has. how long are we expecting this program to go on for? andrew: they have imposed a rule upon themselves that they can only buy up to 33% and it is a self-imposed rule. influence is a strong . i don't think they will relent on that one. and there are technical limits to how much they can buy. and as far as how much stimulus they need to achieve their goal, on that front, i think we look taking9-month extension it through september or december next year. and i would say --

francine: so it is clear that there is market expectations. in we are expecting that december but actually, much further? i don't think we will see anything today but i think the decision will be taken parallel to the uptick in the 2019 and forecast for then we will see. how the economy develops through 2017. whether that means the program gets tapered or extended into 2018. francine: michael krautzberger, it is there a point -- there is so much debt that the ecb is buying that there are more negatives than positives? we are relatively far away from that point. percentageing in the with the u.k. government debt or

what they are holding in japan. i would argue in percentage terms, we are quite a bit away. but there is a limit on how negative the deposit rate should go before it becomes counterproductive. there is a limit -- in poor countries. i don't think we are there in terms of the percentage of what the government can hold. michael m.: here's talking about the short end and i'm wondering about the long end of the yield curve, itself. with theecb try to do bank of japan wants to do? steepen the yield curve in europe? can they make that work? michael k.: i think it was a bit of regime shift. there was a while when it was just about easing. now you can't go to

negative on the front end. basically, with the policies they are facing, they are at the end of the curve. i think they want to anchor it. ecb could europe, the go a bit steeper. it is flat because the ecb rules. the rates are below the deposit rates. and you already talked about the potential changes. those changes could take away some of the frustrations with the flattening. i think that would be positively seen by the market and positively seen by the ecb and the players at the long and like

pension funds and insurance players. michael m.: what does the ecb do to try to do that given the constraints on germany? how quickly do they need to do if they want to steepen the curve? andrew: if they want to steepen the bone curve, the thing they need to do is buy security, government bond securities below the facility rate. when they start doing that, they will become the marginal price setter for those. so the market will treat the securities at whatever rate they buy them at. so if they come in and buy -- at -80 at it is basis points, that is where they trade. even if they leave the rate unchanged, by relaxing the rule about only purchasing bonds at or above the facility rate, that is equivalent to a rate cut. we will see a widening in the

basis between the cash bond and the curve. bosomworth,drew michael krautzberger, both are staying with us. crosses this evening. then we hear from mario draghi in his news conference. this is bloomberg. ♪

michael m.: i am michael mckee in new york. we are going to talk about last night's political debate in las vegas. megan murphy is still there.

i am amazed that you are still functioning. that was something to talk about this morning. trump, a major party candidate, saying he might not accept the results of the election. that is the headline today. megan: certainly, no question. that was the moment that everyone was waiting for, to see what he would say to the theme he has built up the past 10 days -- this is a rigged election and calling into question the legitimacy of the electoral progress. he said he would keep us in suspense and he didn't want to comment on where he would be on this until he actually saw the results. it's something that worries people. it's something that analysts and hillary clinton herself said it was horrifying, to think that a we have told say

see. michael m.: it seems like donald trump is in his own little island on this. mike pence and even his campaign manager tried to walk back that comment afterwards. megan: he has been trying to get this message straight for a few weeks. he has had some surrogates like rudy giuliani come out and say that there is voter fraud. on one hand, trump is talking about liberal media bias and bias in a way that isn't the typical hacking of an election, but last night he did not move away from this at all. and saying that as a presidential candidate you will wait to see if you accept the vote, particularly by a candidate nationally is trailing, it will be difficult to close a 10 point gap simply by writing the election. does he swing voters

that way? ,illary clinton wins the debate but does the sometimes crazy talk that we heard from trump yesterday solidify his base? or alienate others? megan: it was an interesting debate in the fact that it was far more substantive. was christ winner wallace, the moderator. he kept a firm handle on the debate. lengthy discussions on foreign policy, immigration, abortion, the supreme court. some issues that really divide the electorate right now and we haven't delved into in previous debates. he was a master hands last night. donald trump needed to have such a compelling performance last night in order to shrink the gap. he did well in certain areas but

he made a gaffe in defending his position on women and allegations that have come out since the leakage of that tape, he made aggressive comments about women. calls intoit question the validity of the fundamental american democracy. one vote for every person. i'm not sure how that will go over. we don't see that polling well with the majority of the electorate. trumpne: what if donald actually focuses on the five or six key states, kenn can he gain ground? megan: we see him drafting away in some of the states. we see texas and even being in play. that is a crazy thought when you look at this election, that a republican mike lose texas. he needs to win votes. when you're polling at 40% and

with your gaffe with women at 20% and he is losing men and less educated voters, his core base of support, he needs to gain somewhere. and there will have to be an event in this campaign that changes the tide. or on the flipside, it could be that the polling is wrong and what the trump campaign has said all along about a large group of voters out there who haven't yet identified with trump that they will on november 8, that is what they are counting on. michael m.: megan murphy, i hope you get some sleep. stay with bloomberg for all of the latest on the headlines. watch "with all due respect" 5:00 p.m. in new york. this is bloomberg. ♪

francine: this is "bloomberg surveillance." let's focus on the fed, we're back with michael krautzberger and andrew bosomworth. bankers are talking that inflation targets and they have to overshoot because it is better than what we have at the moment. are they actually rethinking their inflation targets? the discussion on the inflation target is coming out as the jackson hole conference,

and it is directed at what central banks are going to do when the next decision hits. because they are starting off this business cycle with not much ammunition in terms of their ability. they can hike rates but they can't cut them much further. so they are thinking about what they can do if the next recession hits. and that is where they talk about increasing the inflation target. i have might else on the efficacy, because central banks are already struggling to reach 2%. 24%,ubling the target of should the markets believe they're going to be successful in achieving 4% when they can't get to 2%? i'm not sure it is an easy solution. francine: what did we learn from the fed? it seems when we talk about the economy heating up and janet yellen the cool about it, is

there a concern that she will let the economy overheat, just to make sure that there is enough growth than risking a possible recession if she has to hike to quickly next year? andrew: that is essentially the signal coming out from janet yellen and other fed speakers. i agree with that. and there are good reasons for that. is the cumulative lack of the price increase over the recent years, which they have scope to make up for. and also, there is uncertainty inflationtly where really starts to materialize. we have seen the unemployment rate in japan fall and fall and fall and there is no inflation coming through. and i think this phenomena, things are taking place in the u.s. labor market that suggests

the narrow is falling down there. so i think they are pretty relaxed in terms of waiting. our inflation dynamics different in the u.s. and europe and japan? they are all doing the same policies but only in the u.s. are people talking about the central bank falling behind the curve. there are slight differences. europe has a lot less flexibility and therefore, it is a lot higher. into other parts of the economy, as well. look at how long it takes to wind up and wind down. the companies with the bankruptcy laws in europe makes a more complicated process relative to the u.s. i think the whole thing about letting the economy run hot or the asymmetry of

monetary policy, that is the huge ability of banks to tighten policy versus what they can do on the easing side. don't have to be too concerned about the economy getting a little bit warmer. right, andrew bosomworth, thank you so much. michael krautzberger stays the hour. u.k. just hearing from the brexit sector that david davis is speaking and parliament. and last week we had the spat tesco. unilever and so we will be asking paul bulcke about what that means for prices of goods. this is bloomberg. ♪

michael m.: good morning. tom michael mckee in for keene this morning. let's get the bloomberg first

word news from taylor riggs. taylor: donald trump has underscored his contention that the election is rigged against him. at the debate in las vegas, he accept to say you would the election results if he loses. hillary clinton called the comment horrifying. they squared off on another issue, the economy. >> i am going to create tremendous jobs. 1%,re bringing gdp from which is what it is now, from 1% of two 4%, and i actually think we can go higher. i think we can go from 5%-6%. we have a tremendous machine. we will have created a tremendous economic machine, once again. hillary clinton: his whole plan is to cut taxes to give the biggest tax break ever to the wealthy and corporations, adding

$20 trillion to our debt and causing the kind of dislocation that we have seen before. truly will be trickle down economics on steroids. the plan i have will produce greater opportunities. the plan he has will possibly lead to another great recession. taylor: a poll found that clinton won the debate, , 39% for trump. with national security officials -- south korea says that north korea's latest missile test firing appears to have failed. that comes a week after another north korea missile exploded after lunch. the philippine president says it is time to say goodbye to the u.s. he says the philippine foreign

policy will now be her towards china. he says there will be "no more american interference." global news, 24 hours a day. powered by our more than 2600 journalists and analysts, in more than 120 countries. i am taylor riggs. this is bloomberg. thank you. full-year cut the revenue forecast citing growth slowing. they say revenue will rise by 3.5%. sales growth came in below analyst estimates. but we are pleased to say we are now speaking to the ceo from switzerland, paul bulcke. you have such a huge operation that you are almost a barometer of world growth. are you more concerned about the health of world growth now than you were six months ago? paul: good morning. growth -- it is a low

deflation environment with low stayial prices that longer. that is what is reflected in our figures. but we are growing in volume. and that is what we have privileged in the low pricing environment. we are on the higher end of the industry. and that is what matters. the global environment is low growth for quite a while. we see is picking up very slowly and pricing will also pick up slowly. slower than we thought. we are seeing deflation in europe and north america. are you concerned that you will have to increase prices in the u.k.? we had the hugely focused spat between tesco and the maker of marmite -- will we have to do

the same? because of higher inflation here? sell -- inoduce and the u.k., 95% is produced locally. and if we have cocoa and coffee and so on. we will have to absorb part of that. pricing will be needed. all means that using and relationships with our trade partners like we always do. francine: of course. does that mean you could increase prices? or does it mean you would take part of the head for nestle and the hit to consumers? paul: i think it will be a combination. we have increase prices in with inflationary

pressures in russia. it is always wise to do it very locally, because it is a local local trading partners and local competition. edible it will be done balanced overtime. so that is how we do it. michael m.: is there a global cannotogy that says you -- oures enough consumers so used to low prices that your pricing power has disappeared? no, we are not in the pricing business. deflationary environment, yes indeed, like europe and some parts of the united states, it is a deflationary environment. demand, low material prices because of the demand.

and we have seen margin tailwind there. so -- i want to have value for the consumer. there is no price low enough to -- i don'tr exist want to get into that spiral. theael m.: with lowering forecast for sales growth this year, what do you do to make it up to investors who will be disappointed in the progress? paul: well, that has to be seen. given the figures. there is quality behind the figures. first of all, it is the lengths and volume. volume is what sticks afterwards. it is growth-based. two categories. more emerging markets. it is affected by the low pricing. the low pricing is not because

we can't. it is because there is no need for it in the time being. so we see that picking up a little bit. you look to any kinds of acquisitions to acquire sales growth if you can't grow it organically? look, i wouldn't go for acquiring businesses just for growth, per se. , their acquire acquisitions that are meaningful to our strategy and abilities of competing. that is what we have always done. we are reading gauging like where he brought in our ice cream business. so we look at these but these are long-term decisions. to be a strategic

justification argument. not short-term. francine: the chocolate business was one of the less worst performers -- was one of the worst performers in the last nine months. what's going on? we are disengaging from certain brands and focusing on more specific brands like kit kat. i think there is a bit of resetting. i want to have more ambitions there. francine: thank you so much, that was paul bulcke for the nestle ceo. we are back in the studio with michael krautzberger. speak to such a big ceo , what wasge company your main take away? michael k.: you always have a lot of top-down economic

forecasts from private institutions. we havernatively one-on-one meetings with big companies like nestle. and i think it is good to cross check your expectations with what you are hearing from the global companies. what is interesting was that are economic forecasts driven by emerging markets. but it is basically, watch that space. what i would have found more interesting is the fact that he is disappointing is how low the pricing is staying. maybe core inflation does not have so much potential to pick up. and that has indications for the ecb as to when they can start tapering. michael m.: are we seeing global deflation continuing on the scale that he was talking about? or with oil prices going up do

enabling companies trying to close the margin? michael k.: for the inflation market, you are completely right. inflation markets have been pricing a really depressing scenario for quite a while. so the bounce in oil prices is quite welcome. and who see headline inflation in europe towards 1.5%. but the key question for the ecb they must not take that much comfort from the bouncing headline if it is driven by oil. the key question is, how much of that will leak into core prices. i think we are probably a bit more skeptical than the ecb. what you just heard maybe confirms that the oil crisis will stay more sluggish. michael m.: we will be back with

michael krautzberger. we are looking to continue this conversation. we talked about flat yield curves. moynihan sitting down with erik schatzker today for an exclusive interview. this is bloomberg. ♪

michael mckee is in new york and you are watching "bloomberg surveillance." vladimir putin has hinted at the an extension of the aleppo cease-fire. this after angela merkel and the french president confronted him with blunt language about the

situation in syria. still with us is michael krautzberger and john frager is with us. we're talking about a cease-fire. withtions of how to deal syria is getting worse and worse. i think we saw that last night. pretty difficult to overstate how bad relations are right now between russia and europe. what happened in the last cease-fire around aleppo with the bombing of the u.n. convoy, which the u.s. says russia may be guilty of war crimes, that made a bad situation even worse. merkel and obama see that as a complete breakdown in trust. things are pretty bleak. francine: how bleak?

in the sense that we had the theation in the ukraine and west didn't intervene, are we talking about a possible conquest? john: russian media has been talking up that as part of putin's attempt to win the propaganda war and keep his own meaning with the electorate. onei think right now, no believes there is a chance of an outright conflict. bad ashink things are as they were at the depth of the you can crisis. hillary clinton is leading in the polls and she is very environment -- very vehement that she has been the target of hacking. michael m.: the news conference with angela merkel and the french president seemed

reminiscent of monty python. i didn't they go beyond that if relations are so bad? because i think the eu is fairly divided on the matter. there are some people saying that the u.k. is still in the eu. on the need to widen sanctions to take into account what has happened in syria. but then you have the italians thesee very skeptical and are people who say that the sanctions we have placed should lapse. so the eu is divided and that makes it hard if they cannot get a unanimous majority on a council. night'sm.: in last presidential debate, donald trump struggled as that was going on but hillary clinton suggested that she would go with -- go beyond where president obama has been in terms of

sanctions. so how is the dynamic going to change after the election? it is difficult to speculate right now. but i would draw your attention to an interesting story that came out a few days ago. russia's that the u.k. units -- the bank in the u.k. unit has suspended bank accounts. now i think would you possibly could see their is the early turninggs of the west putin's tactics on him. he has used hacking and cyber attacks and all of that. and i think the russia today example is interesting. perhaps after the election we see more of that coming from the u.s. and the eu. attempts to beat putin at his own game. but i think it is quite fair to assume that if hillary clinton does win the election, there is no love lost between her and putin.

how do you play that in the markets? the market has been ignoring this, ignoring everything with geopolitics. michael k.: that is fair to say. you could argue if the oil price bounces, it reflects the uncertainty. geopoliticale turmoil in the mid east has a very direct impact. we have seen that in the popularity when we were at the height of the inflation last year. now that is coming down a bit. and it looks like her chances of getting the next chancellery are increasing. in terms of european fixed income, we really try to stay away from those focal points.

on -- i think portfolio management it is never wise to make your bets to political. francine: thank you so much. fraher and michael krautzberger. we will hear from mario draghi on his news conference. this is bloomberg. ♪

michael m.: i am michael mckee in new york. this is "bloomberg surveillance." time for the bloomberg business flash with taylor riggs. taylor: prosecutors in california have launched a criminal investigation into wells fargo. they want to find out if bankers used identity theft to open unauthorized accounts from 2011-2015. wells fargo says they are

cooperating. is upbeatrkeley seo on the progress they are making in the turnaround program. reaffirming his commitment to get rid of lower priority assets so they can boost returns. he spoke to bloomberg tv. >> we have made a lot of and in 2017 we will reduce a 1.6 alien noncore cost around 500 million year. once that closes out i think we will have the cost of income that we seek. taylor: they are selling down the african business and has pulled the investment company out of seven nations in asia. that is your bloomberg business flash. are hearing quickly that we o output is a little bit better than expected.

the fulll have forecast wrap up in 10 minutes but now, decision day at the ecb. the consensus is that the central bank will hold off for now. caroline hyde has more on what to watch. and still with us is michael krautzberger. i know a lot of the focus is what the ecb can buy next. caroline: exactly. in terms of policy, when that , no policy change is expected by any of the economists we have spoken to. but december is live. we are expecting more stimulus, $80 billion worth of on buying. and also the way the bond buying occurs, maybe below the deposit rate.

the current self inflicted limit germaney had means sovereign debt is currently eligible to buy. so clearly, there are issues overall. we wonder whether this will change the way they buy them. michael m.: that might depend on their forecast. will we see any change in their inflation outlook? come december. that is why december is live. most people think that when we get the forecast, they have to move on inflation because we are well below the 2% target. it might have in shop a little bit because of oil but not at the rate they need to see it. shocku have the brexit and you also have unemployment which is still a key issue.

starting to edge up in terms of share prices. so they could be changing the way they do it and steepening the yield curve. francine: what do you watch out for? michael k.: everyone says the decision will come in december. becausehe other side, everyone knows the options, i think the press conference will be interesting. you have to have a fine balance of postponing this to december but downplaying the tapering talk. francine: thank you so much. you can watch the news conference right here on bloomberg television. ♪

♪ francine: example in vegas -- a gamble in vegas.

economists are ruling out ecb actions. -- the breakthrough winners of this morning's season. good morning, this is "brilliant surveillance." i'm francine lacqua. michael mccain in london. ecb and the indications that draghi will -- >> it will be interesting to see how he dominates the news today. everyone has pivoted overnight from the debate to draghi. the debate did not change anyone's mine. ken mario? -- can mario? francine: let's get to the

bloomberg first word news. >> it was an extra ordinary statement in the campaign that has had a number of them. donald trump is refusing whether he will accept the election results if you loses. the republican's comments came at the third and final debate in vegas. >> are you saying you are not prepared to? mr. trump: i will keep you in suspense. ms. clinton: that is horrifying. every time donald things things are not going in his direction, he claims whatever is rigged against him. >> in an exclusive interview, trump's running mate said he would not challenge the results. clear in trump made it his first debate and i have made it clear that we will accept the will of the american people, but i think donald trump is going to win. we have a brand-new poll that has us up percentage point.

i see tremendous momentum across the country. >> according to a saying and then -- according to a poll, they said clinton win. battled -- hasas battered the philippines. more than 90 million people -- more than nine people were forced to lose their homes. four people were killed. in berlin, the leaders of germany and france hit vladimir putin with hard words for the war in syria. they called it an inhumane onslaught. global news 24 hours a day powered by 100 2600 journalists and analysts. this is bloomberg. set up for theu

trading day it is a day dominated by the ecb. the markets are doing what you would expect, nothing. a gain for equities including s&p futures. the euro what everyone is watching, the reaction or what mario draghi will say later this morning. you're watching oil crisis. the drop in u.s. supplies. i have tin in the market check. it seemed interesting this morning. francine: it is a shortage of supplies or maybe someone that uses more tin. this is a picture from my data check. its weakest level since july. i wanted to show you mexican

peso, 18.52. michael m.: let's take a look at what is going on in this bloomberg chart. see that while the ecb is downplaying talk of tapering, and the fed talking raising rates, very cautiously, the markets are moving up. a tightening as richard says. you look at the major market 10 year yield and they have all crossed their 200 day moving average. markets are pricing in tighter. the yield curve steepening around the world. this is a mexican peso climbing as much as 0.4. this is the popularity of donald trump. mexican peso, you can see has been rising a touch because the peso has been sensitive to the

republican candidate's fortune because he has proposed ending trade deals with mexico. debate the trump currency we need to watch for. michael m.: the peso may have sealed the election, but what about down ballot? megan murphy is in las vegas and has been covering the aftermath of the debate. the general consensus is donald trump it a bit better than he has in the past, but not well enough to save his own campaign. did you do well enough to say republican's down ballot in the majority in the senate and the house? megan: that is a question that investors are most looking at. it is not so much who will win the presidential election, but when they look down ballot, they coulds if hillary clinton tell the house. we look for to this trajectory.

it is a very different message on how she will be able to yourn if she does win if have a sin in your favor or a house in your favor. that is why people are focused on this. a split so far. keeping a marginal lead over an opponent. some of his messages about women or where he is going to take the country, starts deepening and tightening some of the races, that will make all the difference when we look down ballot. is, as m.: the question the race brought into hillary clinton goes into areas once that the republican strongholds like arizona, do we see the republicans in much greater danger of losing control of the senate? how closely is donald trump tied to these candidates?

megan: great question. arizona right there, we saw hillary and 10 in a poll in that stayed with a -- we saw hillary clinton in a poll in that state. we have seen her in states with republican strongholds. that is what people are looking trump's candidacy right now. when you see the gap he has among women and african-american voters and latino voters. what a lot of people in the republican establishment are saying is please modify your message. i don't think there will be too pleased with him coming out publicly last night saying he is going to wait and see if he will accuracy ishe valid. francine: the polls are quite

significant. hillary clinton has a 10 point lead. can donald trump win any of it back? next: we will see over the three weeks what message he will put out, and if he will try to win over republican women and double down his message unless educated voters. and make a renewed push toward men? toald trump's strategy is turn out as many white voters as he can. -- justthing though with the brexit vote, we have undercounted that people will boat for him and there is a wide portion of voters like in ohio and pennsylvania, who just have not made their support known. we going to see a pretty big gap on election day. francine: what happens from now until november seventh?

every going to see many more polls on a daily basis? more tapes to come out? what is the next item on the agenda? megan: i wish i knew, francine. i wish i knew if more tapes would come out, i am sure more polls will come out. they talk about an october surprise, maybe we will see a november surprise. donald trump has to get on message and stay on message. she is going to play it safe and cautious and that is what she has done most of the campaign. if the polls are right, she is headed toward a pretty big win. we have to be ready for pretty game changing event. we still don't know. [laughter] michael m.: makin murphy, we will continue to come back to you. coming up, we will speak to tina martin adams at wells fargo.

this is bloomberg. ♪ ♪

mckeel m.: i am michael in london with francine lacqua in new york. the ecb will announced its interest rate decision and mario draghi with his press conference at 8:30 eastern time and 1:30 in the european capital --financial capital of france for. financial capital of frankfurt. tina martin adams is from wells fargo and karsten is here with us.

and he for joining us. you are able to come over here because it is not going to be a big deal over there. we're not expecting mario draghi to do a whole lot. to open up the possibility of an extension of qe. he will have to tell us of what his committees are working on. michael m.: he is in the same sort of position that the fed is and when they don't have a press conference or new forecasts. we don't get their inflation forecasts till december. how do you think they are thinking about inflation is doing. we are looking at brent crude going up significantly. this set change the calculation? >> in september, the ecb was

more optimistic than the governing council. this will now confirm that inflation will pick up. recovering, not at a fast pace, but it is recovering. for the fill on track projections they had in september. michael m.: gina, the ceo of itsle was complaining deflationary environment, he cannot raise prices and that is hurting the growth prospects. is that true for -- is that true around the world? gina: it is true in the food space. energy is where we are seeing a little bit of a pickup. that is been the primary drag on many forms of inflation, but it is starting to pick up. you have a two speed inflation market right now. over 2017, you will see all categories inflating as opposed

to deflating. he will have more strength in the inflation indicators. do tone: what can ecb reach an inflation target? i was speaking to a general the market and they said -- and he said they may -- carsten: they are far from buying equities. what can they do? they can extend qe. they will have to balance. francine: it is not working. dr. have to find a plan b? carsten: the ecb has to change its indication. without qe, the situation would be much worse. the ecb will try to tell us that we are not in an normality right

now with slow growth. banks toty of central really affect inflation is much lower than it was in the past. francine: right. what is the one thing that the markets misunderstand? there was confusion on whether mario draghi needs to give some kind of indication on how long qe is here to stay. why won't he just say until the end of 2017. ? why is he sticking to the march target? carsten: the march target is because her is no agreement within the -- core country central banks are saying qe is not necessary because we are in low inflation and a low growth environment. policies that would have to address it. another part of the ecb is saying we need a more

accommodative stance beyond 2017, i mean, beyond march 2017. they have not made up there might be unanimous on extending qe. michael m.: let me ask about european stocks. we're talking about whether qe works. i am looking at the stoxx 600 over the past year and it has traded sideways. how much could traders care about the ecb doing more? gina: i think they care to some degree. with respect to tapering had been a big part of the market stalling over the last six or so weeks. i think there is some degree of concern that the ecb may start to take away the punch bowl, or stay in the punch bowl more. i don't think it is the primary driver, and that is what you are seeing in the primary market. the primary driver's growth. growth has been very slow.

is that the same story in the united states? gina: the fed is still important as well. what we have seen is valuations have moved sideways. earnings have moved sideways comes of the market has moved sideways. one of the other has to move. usually you get some support from the bed that pushes valuations higher. where you see stocks moving higher, that growth comes from the earnings stream. the fed is still important has to move very slowly estimates these off growth. incrementally less important. we are captivated by both politics and policy. until we get some move in either direction, it is unlikely stocks can move a whole lot. francine: gina martin adams of wells fargo. stay with bloomberg for all of the latest coverage. live.l bring you that

we will hear from ecb's president mario draghi at 8:30 a.m. this is bloomberg. ♪

♪ york.l: good morning, new we are going to get more london-like as the day goes on. i am michael mckee along with francine lacqua.

time for my morning's must-read. chris wallace got a lot of praise for the way he handled the debate, but there is one area criticism. it was his assertion that the obama stimulus caused the slowest recovery from our assessor he -- recovery from a recession ever. a lot of people taking criticism to that. krugman says the answer is that it was positive. countries that slashed spending and raised taxes had much deeper slumps than those that did not. we are back with gina martin adams of wells fargo and kirsten brezinski of ing. do you agree with his assessment of what happened in europe at the austerity policies pushed by the germans and the northern core in the eurozone made things worse? carsten: with hindsight, i would agree.

we had a dead crisis and a confidence crisis in the eurozone. government had to address high debt. how can you address high debt by austerity measures? shiftuld see the accommodating fiscal policy. michael: gina, we get a new president starting in january. is austerity dead in the united states? both candidates have a plan to stimulate spending. they're pretty divert interviews on pretty much everything, but they agree on spending money on some form of infrastructure. the one thing that the next president won't have is an incredibly, increasingly accommodative monetary body. policy andtightening that is a big difference between this president's initial stages

and that of obama. them slashing rates, expanding that portion of the stimulus package. they are very different environments. both candidates will at least than on infrastructure. numbers, in terms of $250 billion is what hillary clinton has said she will spent on infrastructure spending. you have the problems with the deficit, you are overburdening the u.s. where does she get the money from? gina: it is a part of her plan to increase taxes. there are offsets. generally, infrastructure spending is not going to come out of nowhere. you have to offset the spending by finding revenues for the federal government in order to spend money either now or at some point in the future. the idea is the spending will

ultimately amp up private sector growth. that is a big? you go. -- that is a big question mark. the sources are very different. michael: one of the other things that really bothered all the candidates last night, questions about regulation. coming up, a man who had to do with regulation all the time. bank of america chairman brian moynihan. he will sit down with erik schatzker at 12:45 in new york. this is bloomberg. ♪

♪ washington, d.c., district of columbia, the home to a new president come january. i'm francine the in london with michael mckee in new york.

we have to talk about d.c. in the presidential debate. let's get straight to the bloomberg first word news. >> donald trump has underscored his contention that the presidential election is rigged against him. the republican candidate refused to accept the nominee if he loses. they squared off on other issues including the economy. mr. trump: i am going to create tremendous jobs and we are bringing gdp from 1%. if she got in it would be less than zero. we are bringing it up to 4% and be can go higher than 4%. you can go to 5% or 6%. if we do, you don't have to bother asking your question. we would have created a tremendous economic machine once again. >ms. clinton: his hope is to cut

taxes to get the biggest tax break ever to the wealthy and corporations, adding $20 trillion to our debt and causing the kind of dislocation that we have seen before because it will be trickle-down economics on steroids. the plan i have will produce greater opportunity. jobslan he has no cost us and possibly lead to another great recession. poll, they found clinton won the debate. the elite troops advanced on mosul just outside the city. they were rated by airstrikes. the track -- the attack on mosul is in its fourth day. the u.s. will deploy a new missile defense system in south korea as soon as possible. that is according to secretary of state john kerry who spoke in washington after meeting with u.s. national security officials.

south korea says that north korea's latest missile test firing appeared to have failed coming less than a week after another missile exploded just after launch. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. michael: we are back with gina martin adams, and carsten brzeski. we want to talk gina about your equity outlook. you have been very positive. we are looking at an s&p trading 20 times earnings. we have all of this uncertainty we and have uncertainty about central banks. why do you think we will continue to see growth? gina: there is no reason to expect us not to grow. [laughter] we see growth really expanding faster, but we don't see growth contracting. economy muddling

along at this 2% growth rate. the one big swing factor in our forecast of 2017 is energy. oil prices have doubled from their bottom in february. that fact alone contributes a --stantial slaying in growth substantial swing alone in growth. as they start to bounce back, it produces growth. that is the area we are most optimistic about. michael: we are looking at the beaten up people making a comeback? gina: exactly. the groups that have benefited from low oil prices like consumer discretionary to a lesser extent, the consumer stable section, the groups that

saw a benefit, or everyone hidden. those of the groups that are most vulnerable going into 2017. we see this pretty clear shift towards later cycle industries related to the commodity complex and away from early cycle industries more dependent upon the domestic consumer for the growth prospect. get ane: gina, what if we dollar rally or dollar strength that put extra pressure on these earnings because the fed is starting to hike? gina: it depends on how fast the dollar rises. we have seen the dollar rally over the last that have sparked a lot of questions for how much this can constrain growth. so far, it has been meaningless for the price of oil. while prices are continuing to trade higher despite the dollar valley. some of this depends on how fast the dollar rallies. it also depends on where the dollar rally is coming from. much of it is coming from his comparison to the british pound. it is very specific to britain

in what is going on with exit. -- and was going on with brexit. most of it is coming from the pound. it is how broad-based the dollar rally is. if you see the dollar continued to spike higher go past those highs, our thesis can be a risk. francine: gina, what is your take on tech in terms of valuations. may been waiting for this tech bubble to burst. if you look at the industry, there are very few safe bets of a big name and everything else. gina: the trouble with tech is we tend to look at s&p 500 tech where valuations are very different than what you suggest. brought tech valuations -- broad tech valuations are very high. some of the smaller cap tech names got too high valuations.

large-cap tech coming to don't see that much. what we have done with tech is market weighted tech because he earnings environment is fairly supportive, but not incredibly robust. areas of tech we'd like our software and services. it is less dependent upon the cyclical environment where valuations are not extraordinarily. you have to be somewhat selective in tech right now. the other area we really like within tech is semi conductors where we don't see much evidence of valuation extremes. you talk about earnings recovering. it is early in the earnings season so far. only 70 companies have reported. earnings are up 5.2%.

78% of companies are beating estimates. that is a high percentage. rbc see now a comeback -- are we seeing a come back for earnings? gina: it depends on your definition of a comeback. [laughter] we have been in an contraction. appear toquarter does be atrophic in earnings growth. --ce then, we have been got since then we have gotten incrementally better. looks like the third quarter will come in around flat, maybe up marginally. it would be a growth rate, but it is not a big comeback. we have to wait until 2017 when the comparisons are incredibly easy for the commodity complex. michael: carsten, let's bring you in.

said we will see the fed raise interest rates in the united states. will that help, heard, or does it really matter to companies? because they get their revenues from all over the world. we have this asymmetric monetary policy going on. carsten: i would rather argue hard metrics. when the fed starts hiking -- rest rate, we will not see many rate hikes. this low interest rate environment will remain. this environment will stay. michael: we will get more on the interest rate environment on the ecb later this morning as they make their decision. carton bresky -- carsten brzeski and gina martin adams with us. coming up on bloomberg surveillance radio, we will speak to jen's president.

2:00 p.m. in new york. this is bloomberg. ♪

♪ francine: this is "brilliant surveillance." look at that, pictures of the financial center. in the middle is the cheese grater. let's get to bloomberg business flash. >> prosecutors in california have launched a criminal investigation into wells fargo wanting to find out a bankers committed criminal identity theft by creating many of fraudulent accounts. the attorney general is demanding the names of employees who opened unauthorized accounts

from 2011 to 2015. nestle has cut its forecast after revenue in the first nine months rose at the slowest pace. the world's largest food company said sales will grow 3.5%. hurt byas been deflation across europe. nestle's ceo spoke on bloomberg surveillance. >> the global environment is slow growth. pricing is going to pick up very slowly. he is stepping down at nestle ceo at the end of the year. retail sales stagnated for a second month in a row. rising prices and warmer weather led to a drop in clothing sales. food was down, but that was offset by an increase in household goods.

a strong july still made it the best quarter of retail sales. after bloomberg -- this is bloomberg business flash. francine: let's keep the focus on the u.k. tom kennedy heads up our coverage. great to have you on the program. first of all, it is the first time the prime minister, theresa may, attendance in brussels with her counterparts. then we hear from the brexit secretary saying he is saying, the week sterling has the advantage, but he says he won't limit migrant access to the u.k.. >> i think he made highly skilled migrants. francine: that is not what he said. the idea that the brits

will be completely close -- closing the borders. they want those thinkers, scientists to be coming into the u.k. post brexit. whathey achieve that and system is still to be determined. francine: three weeks ago, something that the secretary said about putting internationals on a list, which was a little bit of name and shame and she had to quickly reverse on that because of public outcry. every going to see the debate shift as this goes on? simon: what theresa may has said is she wants to can control it. she has ruled out this australian-style point system that was popular in the campaign. she has ruled that out. you will see some kind of work permit system. the city of london, the corporation that runs the

finance industry sector, they want a regional business so they can bring in highly intelligent bankers into the city. germany has a similar system. the key one of questions is whether they will be importing any bankers at all. david davis said they will see what they can do to help the banks, but is there anything on the horizon that is going to convince the europeans to leave the passporting rights alone? simon: we talked to the bankers here, and may have given up hope that they -- sector by sector rights and would allow them to passporting. the british bankers association meeting in london and their ceo lobbying the government both for help through the brexit. but also a reduction in the corporate tax surcharge that was

landed on parts of the start of the year. the banks are lobbying for some time for special treatment. whether they will get it or not will be determined. michael: let's ask carsten brezinski. upe prices will be going because it will be a lot of bankers moving in? carsten: there is so much uncertainty. it is hard to come up with a base case assumption. frankfurt is hoping for bankers to come over. of banking done in london is done on e.u. passporting. this gives you an idea of how many jobs can disappear from the city. the entire banking industry is consolidating. when will we know?

does it take three years, five years, 10 years? we had a great story saying that the beneficial country, or city in this would be new york, not frankfurt. article 50 will be triggered before march of next year and then we have a period two more years according to the treaty in which the negotiations have to be finalized. if not, they might be extended. signedt get a treaty that brexit will become 2022.ive in it will take many more years. like simon said, that might be a possibility. i would stick to the 20% to 30% of business depending on e.u. passporting. be done by continental europe, not from new york. francine: what about pound, have

we found a floor tackle see the currency going up. were notose forecasts set in stone. goldman sachs said they have not reached a floor. michael: thanks to simon kennedy who heads up our brexit coverage. at 12:40, bloomberg's erik schatzker since down with bank of america ceo brian moynihan. what are you going to do with your london-based bankers? this is bloomberg. ♪

♪ michael: good morning, new york city. cloudy day. 64 degrees. going up to 70. a little rain in the forecast while we think francine making her feel like home. i'm tom mckie along with francine lacqua. as it is all about the euro, we would like to look at the u.s. political race as reflected in the mexican peso. he continues to weaken,

strengthen rather. it was way down at the debate suggesting people who trade the pace of think that hillary clinton is going to probably went through the election -- probably went through the in the election. francine: i don't feel at home anywhere. i in being chastised by all four corners of the u.k. coming up is david westin, jonathan ferro and alix steel. what will happen in terms of tapering and will they be able to expand qe. we will be front and center when it comes to the election speaking to peter navarro. an economic advisor along with wilbur ross who wrote the analysis of trump's economic plan. we will dig deeper into those details as well as 8:30 a.m., we get mario draghi's press conference.

wendell inflation hit that 2% threshold? what does that mean for bond buying? we will be all over that for the next three hours. francine: thank you so much alix steel. back to the ecb. we are here with gina martin adams and carsten. how many timekeeping mario draghi will be off about brexit? how many times will be off whether he is tapering or not? carsten: on brexit, one or two times. tapered, for five times. he will repeat what he said on brexit, increased uncertainty, far too early to tell what the economic impact will be. francine: what will be the economic impact? it has not played out? there is a false sense of security in the u.k.. will that hurt europe? carsten: the only chance we have

seen is the path of the impact has changed. the negotiations have not started. article 50 has not even been triggered. over the next two years, we know there will be a cloud of uncertainty hanging about the u.k. economy and above the eurozone. uncertainty means less investment. this impact will be a slower impact. ofwill see longer period growth both in the u.k., but in the eurozone. michael: gina, we have seen since the brexit vote, u.k. stocks rise. investorsint, do start pulling back because of the uncertainty? gina: a lot of the stock prices come to the currency. the impact of the brexit vote has been seen through the decline in currency and the count plummeting on a daily basis. -- and the pound plummeting on a daily basis. much of this depends on some

form of uncertainty creating a floor in the pound. going forward, does that floor ultimately lead to some form of economic growth, right? the pound falling should improve the outlook in six months to a year for export-based organizations in the u.k. can that overwhelm the deteriorating outlook for importers and consumers to have to --and consumers have to pay higher prices? that is the interplay going on. expectations will move higher for exporters. whether or not those expectations are satisfied will probably be -- seconds left as the ecb prepares to actively look at oil prices rising. said we have generally domestic stocks should continue to perform a lot better than both the european japanese shares.

the u.s. is our favorite market within developed markets around the world because growth prospects are better. michael: gina martin adams and carsten brzeski. go home and put her house on the market if the brexit people don't get passporting funded. [laughter] america" isaybreak: next. gina martin adams and carsten brzeski will moreover to the radio. stay with bloomberg for the latest ecb coverage. the decision left it across is time, 12:45w york london time and 8:30 four the mario draghi news conference.

jon: good morning and a warm

welcome to "bloomberg daybreak." the tone of the markets looks like this. futures positive throughout the morning so far. the dow at 35. day,is ecb mario draghi the euro a july low. in just about 45 minutes come of the european central bank will release its latest policy decision. the central bank is widely -- thed to hold on rates future of draghi's stimulus program. we will bring you the right decision at 7:45. theresa may attends her first european union summit as the u.k. prime minister later today. challenges.es other