the senate's top democrats escalate party attacks on the fbi director after the clinton e-mail probe. polls tighten as the election looms. a hugely for central banks with policy announcement from the boj, fed, and boe. but could the biggest decision be from mark carney about his future? and crude come down. oil continues to fall after opec fails to agree on a deal with other major producers to restrict supply. polls tighten as the election looms.

a warm welcome to bloomberg daybreak europe, our flagship morning show. i'm anna edwards. yousef: i'm yousef. manus: i'm manus cranny into by. you have some honda news. anna: absolutely. we have some breaking news and we will get straight to that. we are getting numbers through honda, listing their operating profit outlook to ¥650 billion. as always, the japanese carmakers are focusing on the quarter they just reported and the forecast. in terms of those numbers coming through, then raising their full-year operating forecast 8.3% to ¥650 billion. that's the focus for markets this morning, but the big question is whether the yen, the strength of the yen, which is up by 15%, against the dollar this year -- how much is that going to weigh on the profits at this business, but not by enough to

stop that from raising their operating profit outlook. this is a company that has had record overseas production, so there's strength in the production numbers, but the yen was seen as something that could take the edge off. not so, and the company raised its operating profit outlook. that's what we are getting from the japanese auto sector this morning. yousef is here in london. i guess we need to talk about the dollar and where that leaves the fed conversation. yousef: absolutely. the weather was getting better here in london. this is what caught my attention, as we get ready for the fed meeting. what you are looking at is on speculation that the fed might move later. the fed may hold fire if the trade weighted measure of the u.s. dollar -- this is what

goldman sachs asset management said in their notes. this is the bloomberg u.s. financial conditions index, which tracks the overall level of financial stress. see negative readings since july indicating tighter financial conditions. then we also have that line in blue, the u.s. dollar spot index. goldmanlooking at 2.2%, sachs sticking with its call of a tightening in december. anna: fascinating. as a head towards the central bank meetings, it will be fascinating to see where the dollar is and how that changes the debate. also fascinating to look at this risk radar and see how futures are falling out of bed in the wake of the fbi revelations. manus: they are not. there is a bit of a lift for the msci. i think the abc/"washington post" poll, the

lead dissipating by 12%. despite that i think we have had the shutters in the shakes. up, the s&p futures indicated up .2%. we also have gold at 1200. if that dissipation of the lead really plays out over these next 10 days, money going back into gold, rippling through the market, a safe haven bid. of course if you think of the week we have, we're set for a fairly volatile -- oil, today, $48.50, the opec split, there's a shock. saysecretary-general non-opec nations are ending the

discussion without commitment. i think this is what it is. they say the conversations have gone on for far too long. the probability of a rate hike has dropped below 70%. anna: my love of work knows no bounds, thank you. let's have a look at what we are hearing from sony. going into these numbers, the focus was on quake recovery, it seems they are cutting operating profit to ¥270 billion from y300 billion. a contrasting tune of various japanese names. sony's forecast for the second half on the yen against the dollar, begin against the euro of 113. a clear reference to what has happened with the yen. ook ¥33 billion on battery operation transfer. taking an impairment charge,

looking for any other clues as to what's moving the numbers. latestove on with the bloomberg first word news. the senate democratic leaders say fbi director james comey may have broken the law by disclosing the investigation into the e-mails. the letter escalated three days of attacks from clinton allies. the latest polls have tightened with one tracking poll showing 7% of supporters are less likely to support her. oil is continuing to fall after opec ailed to -- failed to restrict supply. twoopec countries ended days of talks saying internal divisions had invented a broader agreement.

prime minister matteo renzi has vowed italy will rebuild the homes and churches destroyed in the country's latest earthquake. the tremor on sunday was a magnitude 6.6, of the most powerful recorded in italy since 1918. there have been no reports of d eath. two former goldman sachs employees are planning to start a hedge fund that seeks profit from macroeconomic trends by analyzing the data, according to a person with knowledge of the matter. william howe will be the chief investment officer. they will look to start trading in january with between 100 million dollars in $209 of capital. governorank of england is said to be leaning towards sustained, according to the financial times. iss reporting that carney likely to make statements this week to end speculation about his future. yesterday the u.k. business

secretary asked him to stay in his post, saying he had done a tremendous job. has claimedrajoy her second term as prime minister of spain. he won by 170 votes on saturday. this ends a 10 month political impasse that his minority government struggled over to impose its power. global news, 24 hours a day, powered by over 2600 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top . i have rosalind chin, this is bloomberg. let's get into these equity markets -- shery ahn, two different stories, looking at the levels, they are talking about dollar-yen and corporate in japan are not on board with

shinzo abe. they didn't get the notes for mr. kuroda. shery: no, apparently they didn't. corporates have been very reluctant to spend more increased investment, and we are seeing that the spike in the japanese yen in the last session just hit the market, with the nikkei down .1%. right now the japanese yen is holding steady, but analysts say it would see more than global markets -- including the u.s. general election in the short-term. take a look across asia, they look pretty mixed. at least the regional benchmark index is gaining ground after falling to the lowest level in two weeks. the hang seng turned positive after declines earlier in the session, up .2% after falling to a low not seen since august. the shanghai composite fell .2%. we are hearing that authorities are's deking u -- are stepping

up, buying insurance products in hong kong, trying to stop them from moving money abroad. also we are seeing a political scandal going on, affecting the market sentiment. and in japan, it's not just about the corporates reporting results, i think more than 200 companies are reporting results today, but also the big news was that the country's three biggest shippers just announced today that they would be merging their container business. these three companies just gained on the news, they said they would create the world's fifth-largest box carrier. yousef: the race for the white house is tightening as the renewed fbi investigation into hillary clinton's e-mails weighs on her support. margaret taylor is following developments from washington. >> with just a little over a

week before the u.s. presidential election, democrats have decided to fight back directly against fbi director jim komi's announcement by notifying congress that there is a newly discovered e-mail that he will investigate it, that may be connected to hillary clinton's previous use of a private e-mail server. in a letter to the director, harry reid, the senate democratic leader, has informed the fbi director that he believes he may have violated the law by going public with such scant details of the investigations in a way that he says is sure to influence the election against clinton. this all comes as the fbi is poised to go through thousands of e-mails discovered on the laptop computer of anthony weiner, the estranged helpfd husband of one of clinton's aides. while they maintain there is no evidence of wrongdoing, it has obviously become political

fodder for republican donald trump to use in his campaign. trump hit clinton hard with the revelations about the investigation. hillary clinton initially but isd jim comey now allowing her surrogates in top campaign officials to criticize the fbi director well she returns to the issues and her attacks on donald trump. all of this happens and there is evidence that the polls are tightening in key battleground states. the question is will they tighten enough to make a difference to the outcome of the election . anna: that's the latest on politics, fascinating developments. joining us now with a look at the markets, the global market strategist at j.p. morgan asset management. great to see you, thank for joining us so early on a monday. fascinating developments. we saw a reaction during friday's session in the united states. asia not really falling out of bed as a result, despite the

fact that the polls do suggest we are seeing narrowing of clinton's lead. what does jpmorgan read? >> of course this will be something we are paying attention to until the election comes, but in terms of the markets, we have done the analysis, taken stock sectors, various kinds of companies, overlaid them with various regimes, whether it is democrat or republican, and there really isn't a distinct trend. all the data you will see is relevant regarding the economic backdrop. to trade completely just on this would be slightly of advised. yousef: so what does that mean for the way forward? you are saying it doesn't matter much, you aren't shifting asset allocation. does that mean we will see more of the same in terms of division and u.s. politics? >> if the base case remains that a clinton presidency you have democrats

and republicans which would give you deadlock, and there is nothing more that american markets with a couple with than the status quo, without much groundbreaking policy shifts. i'd say it is more about fundamentals and individual valuations. manus: good morning. i've got the dollar index for you. we're at aggressive new levels, 12 year highs in terms of the dollar index on a trade weighted basis. could this political shakeout we have on our hands, the fed will say they don't get involved, they don't think about politics, but they are going to be concerned about this rally in the dollar. >> of course. the big concern, even eight or nine months ago, was that conditions in the u.s. were too tight, and having them hike again would have been an additional tightness.

now having this unexpected, strong dollar strength, will really affect their thinking in december. we still think they will hike; they have been messaging it for quite some time. other macro conditions in the u.s. do seem favorable. the election is a headline grabber, but it is not necessarily a huge, fundamental shift or will cause macro changes, which we believe still have a couple years of juice. not trading around this, wever wins doesn't make much difference to big picture questions, but when clinton -- c learly, we had some issues around open nordisk on friday, to do with their outlook, already suffering price pressures. this is really showing the link between the polling of clinton, when she does well, it does badly.

there are individual stocks you can pick out. what are your thoughts that you would pick out on an individual win? >> health care is the top example for a political story in the u.s. there are so much health care policy around pricing, drug costs and health care providers, definitely dependent on policy. with a specific stock is due to the earnings coming out. we are hearing competition in the market prices being less sensitive to abilities to change them, but health care is the top sector, but how can you manufacture, whether it is trading negotiations, labor issues, that will have an impact on certain types of manufacturers? anna: it's a complicated picture. thank you very much. she stays with us, global market strategist at j.p. morgan asset management. let's have a look at the highlights for the weekend at :00. -- at 10:00.

cpi out of the eurozone. tomorrow we get monetary policy announcements from japan and australia. then wednesday it's the final fed rate decision before the u.s. election, and a super thursday for the bank of england. we round the week off with u.s. nonfarm payroll. manus, a lot to look forward to. manus: absolutely. i love this. a little bit of joy for rajoy. could the nation's minority government have more problems ahead? with thee very latest nation's conservative independence party, sending of populist challenges. this story to come. plus, opting out. the list of opec members seeking exemptions from the deal to reduce output grows. so are current prices, set for a trend lower. this is bloomberg. ♪

yousef: you are looking at a live shot of victoria harbour in hong kong. it seems fairly sunny. the in london, 2:21 in afternoon in hong kong. let's get the bloomberg business flash with shery ahn. shery: thank you. singapore's dps has agreed to five asian countries. it will pay almost $80 million usd for the value of the businesses, which operate in singapore, hong kong, china, taiwan, and indonesia. a $30 billion deal to combine ge's oil and gas operations with baker hughes will reportedly be announced today. the "wall street journal" says

ge will control the new entity, which we publicly traded. both companies declined to comment when contacted. credit suisse is hoping to rein in costs by sharing it with another bank. alks are underway about ways to work together, which potentially includes databases and servers. they are looking for ways to boost earnings amid negative interest rates and tighten capital regulations. dbs has also said it is in talks of other lenders. and that is your bloomberg business flash. anna: thank you. shery ahn in hong kong. a huge week for central banks; tomorrow the bank of japan is first of the overwhelming majority of economists surveyed expecting governor kuroda to unchanged.us wednesday sees the conclusion of the fed's two-day meeting. markets think rate changes are unlikely, according to bloomberg's work function. there's a 70% chance of a hike.

its thirdrsday, in policy decision since last week's better-than-expected gdp numbers, the bank of england posted inflation. a lot going on with the guys to the bank of england but while investors expect monetary policy to be unchanged, they're are less confidence about the career plans of mark carney. speculation was raised about whether he will serve a new term or leave his post early. carney is leaning towards staying on and has told friends he will make a statement this week. we will see how well-placed friends are. our guest is still with us. weigh in with how material it is, whether mark carney does decide to stay beyond five years. does it matter for u.k. assets? >> i don't think it matters in general to have someone who was so instrumental -- or is

currently carrying u.k. through the post-referendum period, but at the end of the day we have seen monetary policy remained quite consistent even with changes of governors are presidents. i wouldn't say it's a case for any kind of alarm in the market. the messaging is still going to remain as important and significant to the markets as it always has been. manus: when they show you this, the spectrometer in terms of the spectrum. you've got probably the most point do youwhat see a capitulation of the bank of england. market is now pricing in the probability of a hike in the backend -- what does it take to shift the spectrometer? >> first there's the fact that the bank of england, as much as

they want to provide economic growth at low rates, they are already very close to the zero bound interest-rate which mark carney and the policy committee don't want to go into negative interest rate territory. the other challenge is inflation, which we are seeing driving quite significantly. the last month working in that gdp depreciation will be higher and next month is a hike that might bring some of those inflation projections. maybe, bute hike, looking forward to a year and a half down the line hike might be something that is needed to move into the next phase where if there is a recession the bank of england can start cutting it from a new level. yousef: it's a big week for central banks. we are also watching the federal reserve. the implied probability of in december --

where do you stand? >> markets are always sensitive to various movements and there were election jitters that pull of that lower for a december rate hike. we still think the fed will be hiking in december. the rest of the macro data, on inflation, closing at a 2% target. it looks like december is more on the table than not. has been doing new yield curve targeting, but you have to give it time to work its way into the economy and expect the new change. anna: thank you very much. she stays with us. coming up, iceland's pirate ship runs aground. they fend off the populist challenge to emerge as a winner in a snap election.

and see the man who will become the next leader in iceland, taking on the populists to promise growth and jobs. we will see if that is enough in the icelandic context to the populace said they. this is bloomberg. ♪

yousef: you are looking at a live shot of the tokyo imperial palace. 6:30 a.m. in london, to: 30 in tokyo. we are getting the latest from manus. this is your terminal, take a look. these are the stories making headlines. yesterday it is hillary clinton, her lead in the u.s. headlines. presidential election has evaporated according to one major polls as the fbi announces a fresh trove of e-mails that they be relevant to its probe of

the candidate. the poll found that clinton was ahead of donald trump by 1%. that is down from last week at 12%. when you look at all the polls, the one stat that really caught my eye was those republicans who would have shifted to hillary, away from trump -- that has dropped by 26%. the disaffected gop party. anna: interesting in that context. we are now seeing u.s. prices suggesting a move to the upside. and mark carney is ready to stick around for his full eight-year term according to the financial times which sites people familiar with the matter. the decision is a push back against critics campaigning for his resignation -- we have seen many prominent brexiteers

stringent against him -- we will see if he makes an announced this week ahead of the press conference. perhaps he doesn't want it to dominate the news too much. yousef: it's a tough job. the other big story focuses on japan, where the three biggest shippers have agreed to merge their container operation. it would be the world's six largest operator, controlling 7% of global trade. anna: let's get a look at where the asian markets are trading. nejra cehic joins us with a closer look at the markets despite the surprise news on u.s. politics. nejra: good morning. what's happening with this reopening of the fbi probe is waiting on the markets. there will be a little bit of resilience in asia -- if you

take a look at how the different industry groups are performing you can see a real mix between those that are gaining and those that are declining. commodity producers are really leading the gain, up .5%. on the flipside energy stocks aren't doing too well. i want to show you the msci asia-pacific energy index versus wti crude. you have the energy index in white, crude in blue. both have slipped to one-month ass, down for a second day opec's internal disagreements undermine efforts to reach an agreement on quotas over the weekend. that's having an impact on asian energy stocks. another big thing we are watching is the dollar, the dollar index adding less than .1% after slipping from a seven-month high last session. the dollar is on course for's

biggest monthly gain since may. goldman sachs says the fed could have a trade weighted measure as the greenback climbs to levels last seen in january. goldman does still expect tightening in december but this is pointing to the fact that a stronger dollar could have a tightening effect. this here and wait is a negative territory, indicating tighter financial conditions. goldman has increased bullish bets on the peso. the mexican peso in blue, gold and white. we are seeing gold a little stronger, the mexican peso near a two-week low, and this is an indicator of expectations from the u.s. election, where you are seeing the concern. manus: thank you very much. the spanish bond markets are going to be in focus as mariano rajoy gains a second term as prime minister ending a 10 month political impasse.

this was saturday night after socialist lawmakers abstained, let's speak to our bureau chief in the dreaded. thanks for joining us. how has he managed to pull this off? it's all about abstention and technicality, isn't it? >> well, yes. i think he pulled it off because he played a very effective waiting game. there were elections in spain, in december, which reduced the parliament. and he hung in there, watching very closely the internal divisions within his adversaries . the socialist party looks like a broken force now. they were really forced to accept an abstention to allow his government where their support may have fallen even further.

it was really a better choice for them that they were forced to make it, and here we have him emerging with the great hastical victory which taken him into a new term as prime minister of spain. manus: it's a great political victory and that brings to mind the stability, the political stability, a policy implementation, the political future for spain. is it robust? is it fit for purpose? >> well, that's an excellent question, and he goes into this new government with a minority and he has the range of other political forces against him and i should mention that the socialists are humiliated in this situation. we can expect them to fight tooth and nail against his new

government. it will be a noisy, fractured parliament -- we don't know how long it is going to last. these are uncertain political times but we do go into this new problem with 3% growth, 2% next year -- good economic tailwind taking him into this new scenario and that will be a comfort to him. that makes the rest of europe begin to understand what restructuring looks like. thank you very much, are bloomberg euro chief. yousef: meanwhile, the pirates have failed to capture iceland. the weekends snap election stayed firmly conservative as the independent party emerged. the populist party, which led in some polls as icelanders voted

for the status quo. anna: business confidence in the uk has had the highest level since brexit, according to a survey conducted by lloyds bank. the business barometer showed confidence in business prospects increasing 17 points to a three-month high. after data last week showed the u.k. economy expanded by 0.5% in the third quarter. global market strategist at j.p. morgan is still with us. we will leave the u.k. story there for a moment because we talked about that in our last conversation. the economy has done quite nicely despite the fact that it had no functioning government. what are the prospects of spain as we look at the broader recovery picture for the european area? >> the spanish gdp numbers have and itite impressive,

has all been fairly strong for spain which gives us an indication that perhaps the government issue didn't really feed into the thing so to speak but looking at a larger picture eurozone gdp numbers supported by these big pushers, a big mix of the prospects mostly due to factors within each economy. spain is a big manufacturer for many companies also based elsewhere in europe and some of that is starting to feed through which is good for the reason and the acb. yousef: i am also watching what's happening in the u.k. -- growth numbers that showed a type of resilience. is it too early in this process to say that the economy is holding up in light of all the uncertainty? >> it is, only because article 50 has yet to be invoked. when it does happen there is a real change in the fundamental situation. we don't know about passporting

rights or how much financial services would be affected but the gdp numbers were quite strong, at least that the referendum after the -- that the u.k. is a consumption-based economy and that number does show that it's something the u.k. economy can rely on. manus: i had a look at five-year bonds for germany and what you are seeing here is five-year notes, pretty much above that lockout period -- anything below -.4% they can buy. has givenarket we had the ecb a nice bit of latitude. will that latitude last? great question, particularly after the ecb meeting when mario draghi told us that it is not being discussed -- they are still

purchasing part of the psap. yields are bumping and not -- bumping up and a lot of the german sovereign bond market, 71% about a month ago, were out of purchasing a possibility. find as thegoing to months go on that those yields will come down as demand. we are looking to see if there is an extension from the ecb to see if there is a tweaking to the program or a deposit rate of -40 is no longer needed. for now it looks like the ecb is safe to buy more things but looking forward it's going to beat half with how much demand there is for sovereign bonds. anna: on a similar line, i have a chart with the german curve and manus has a chart showing a lot more debt is now available

and there is a steepening in germany. it's now available for the ecb to buy. what kind of political justification does the ecb and the to expand the program in december? are things that enough in the euro zone economy, are they missing their inflation target enough that they can justify this? they face critics in germany. < of course. the yield curve steepening is quite good for the financial institutions who borrow on the short-term and and to help the financial sector in the eurozone in general. ecbrate to that, the stratification is a lot about december, where there are new forecasts for inflation and growth that will go into 2019. if it's really not looking good, then perhaps an extension of asset purchases for six or eight more months, less on a monthly

basis, 60 billion euros per something along those lines would be justified if growth outlook doesn't look too bad. yousef: looking at everything we had discussed, what would you say is the defining factor when you look at asset allocations? >> i think finding risk-adjusted returns is difficult in most indices and prices being so high, finding income to dampen that volatility -- we like emerging-market debt on a selected aces and these are the ways they can supplement income by avoiding bigger equity volatility. thank you very much, joining us here on daybreak from j.p. morgan asset management. coming up, we have a conversation. the chief rating officer at s&p global ratings, on your screen.

the european market open, join us. the listing up next, of opec members seeking exemption from a deal to reduce output growth. we get into the conversation. wpp will be hoping to fare better than their arrival when it reports third-quarter earnings. we break the numbers at 7:30 a.m. plus, no press briefing with the fed chair janet yellen after this week's fomc meeting, but that doesn't mean the fed can type. more on this coming up. this is bloomberg. ♪

anna: welcome back. this is bloomberg daybreak europe. futures are pointing higher after we saw that selloff that take the s&p on a downward leg in relation to the fbi

revelations on friday. startl be stronger at the of the u.s. pre-trading day. let's get the bloomberg business flash with shery ahn. shery: thank you. sony has cut its full-year profit forecast by 10%. the company's there's operating income will be $2.6 billion in the year ending in march, citing losses in its component business and impairment in his battery unit. -- says net income will probably rise to $3.96 billion in the fiscal year ending in march as demand for diesel and xmp sport-utility vehicles surged in china. buy anze has agreed to retail and five asian companies. they will pay almost $80 million operate iney

singapore, hong kong, china, taiwan, and indonesia. a $30 billion deal could combine ge's oil and gas operation with acre hughes. ge will control the new entity which will be publicly traded. spokespersons for both countries declined to comment. credit suisse is hoping to rein in costs by sharing them with another bank. the ceo told the financial times that talks are underway in ways to work together which could potentially include sharing databases and servers. they are looking for ways to boost earnings and tighten capital regulations. they have also said they are in talks on sharing with other lenders. that is your bloomberg business flash. yousef: plato continues to trade lower this morning -- let's take a look at the chart that i put together for you.

are seeing a conversation with opec and non-opec, not making a lot of progress with the secretary-general warning of it. let's take a look at additional data out of the u.s. in terms of what money managers are doing -- what you have here is an increase in bats on lower wti for the first time in five weeks. they have also reduced their net long position which has decreased by 8%. stakes an awful lot at and if they don't reach an agreement, oil will fall like a rock and could be trending as low as $40. anna: the deal in algeria, it's moving upwards in the latest data that has got people thinking about the market position. yousef: our guest is still with us. opec is not making as much progress as somewhat have hoped.

are you betting on an agreement or not? the reality is the track record of the market this year hasn't been entirely accurate. >> but i think it is a supply driven market. the moment we hear about potential cuts or rallies and there is news of non-opec and opec coming to a conclusion, then we have the extension of further short positions. overall, we do expect the oil price to rise in the long-term some next year there should be a bit more production cuts. in the meeting to meeting drama it is difficult to protect where there will be a talk of further coordinated cuts. the breakeven price, however difficult they are to calculate, is a lot higher than the current oil price. at some point there has got to be a capitulation. anna: i was interested to see that one of the delegates said

anonymously that progress was made on friday. that we getsense there slowly, making use of baby steps toward an agreement. >> that looks like opec is doing what central banks do, messaging, saying progress is being made. they just say from various officials, the mood is that it is getting closer to some cut. what would that do? if you think about the bandwidth in terms of where oil trades, all the way back up the mountain, we are skirmishing around $50. where is the next band? where are you and the girls at j.p. morgan thinking saudi can take the oil market? >> i think we can take it five dollars or $10 per barrel higher next year but it depends on

various developments. gradual,ll be slow and perhaps even higher in 2018 in 19. , we so much will happen will see a higher price going forward in this is good news for coventry's -- for several countries and their breakeven's but in general earnings in the u.s. should look better with a lot of the energy companies having a better topline revenue to work with getting earnings to the investors. yousef: what is your take on the health of the u.s. oil industry at the moment? the baker hughes numbers out over the weekend, for the first time in several weeks a decline after a series of increases that showed that the u.s. shale patch was recovering and comfortable with the new price environment. is this something opec can celebrate? that it does

illustrate that you production market is more price sensitive and the breakeven costs are higher. when you have these things coming on and off, it tells us that these companies are working efficiently, trying to get as much earnings as possible but we will have to watch and see if this is a longer-term trend. obviously we have been fixated for years and with the oil price has been doing ever since we saw the big decline and that left central banks around the world with this big deflationary challenge. but we are seeing that turnaround with a big recovery in oil prices and at the same time you have seen the chinese story changing, cpi inflation seems to be dissipating despite years of that being the talk. in terms of the more global conversation around inflation,

are we on a more solid footing these days? >> i do think that fears of deflation we have so strongly are dissipating. you have a strong developed market inflation, getting closer to the 2% target. the chinese numbers are very comforting in the fact that prices are starting to pick up, more of a simmer than a boil, but that's good for markets to take in slowly. we will see how the consumers are going to react because you want to make sure that the consumption doesn't get too scared off by rising prices and that doesn't seem to be the case as growth numbers show consumption is doing well. manus: the consumption is doing well but you don't want to shake away the consumer -- looking at the chart behind me, three bond markets, getting smacked this month.

thatn the concern inflation could be more prescient than we think. i call you just give me on oil -- does that shift the dial in terms of your view on bond market, the developed sovereigns? >> it does, actually. we were looking at the price of oil and sterling -- it has risen about 110% since the low price earlier this year. that has still yet to be fully captured by some of the cpi data . i definitely think inflation has got more potential to the upside but whether it is in germany, the u.s., u.k., to factor in that rising inflation and rising pressure. anna: thank you very much. the global market strategist at j.p. morgan asset management. up next, there's another opportunity for martin sorrell

to justify his $70 million payback/ third-quarter earnings, coming up next, from wpp. we will look at the features as well. this is bloomberg. ♪

yousef: this am its top democrats escalate party attacks on the fbi director over the clinton e-mail probe. polls tightness the election looms. it's a huge week for central banks with policy announcements from the boj, fed, and be a week. what could the biggest decision be from mark carney about his future? and crew to come down. oil continues to fall after opec fails to agree on a deal with other major producers to restrict supply.

welcome to bloomberg daybreak europe, our flagship morning show. anna: let's get to breaking news. data cominggerman through, german september adjusted retail sales down 1.4% month on month against an estimate of an increase of 0.2%. that number came in well below estimates. the forecast range was from -0.2% to .6%, so this seems to be below even the worst expectations. i'm sure many in germany would tell me these monthly data can be volatile but that is certainly one thing we are focusing in on this morning, the retail sales number coming in

much weaker than was previously estimated. breaking news from wpp. yousef: the communication has numbers in the third-quarter revenue up revenue ateported 3.60 one billion pounds. wpp sees the 2016 conference revenue sales growth at more than 3%. third quarter reported revenue at 3.61%. the consensus estimate was for third-quarter net sales at 3.07%. on that consensus basis that net sales would be a beat and this comes off the back of the city saying that the main focus will be organic growth, and especially in the united states bloomberg intelligence as it sees european upturn in u.s. no wordatic fueling --

yet on how brexit is affecting the overall picture. anna: it's a big picture. let's get to the futures, and see how everything is looking for the start of the european equity trading day. it looks as if we will see a sluggishness to the start of the european trading day. we will see whether that maintains its hold. we have the asian equity session not doing too bad, the u.s. market on friday crawling out of bed on the back of that fbi story. we will see whether that flows very much into european trading. if we look at the risk radar, it didn't have much of an impact in asia. manus: it didn't really, in there is a lovely line on our story today. stock eases at the right time. money managers are holding cash on the side by the most in 15 years. what you have here today is the difference between politics in the polls, which are showing

hillary clinton's lead dissipating to one percentage point ahead. if you look at the other side of , the probability of a rate hike in the united states of america sub 70%. the markets are still pricing a hillary clinton victory despite the polls. gold, the haven dissipating. bottom, and another $10 on top of that. the secretary-general at opec saying all this chat and discussion is taking too long. everybody needs to get on board opec and non-opec -- a freeze is not going to do the business. anna: let's talk about with regards to oil.

october hasloff in a silver lining for the u.s. economy according to bob dole. he says the bright side is that the 1.2% loss we saw in treasuries -- they say the bright side is the improvement in the u.s. economy. here we have the generic yield at 1.84%, and we talked about how the recovery in german yields could give a few more options heading toward policy decisions in december are much is expected. let's get the bloomberg first word news. the senate democratic leader says fbi director james comey may have broken the law by disclosing a revived investigation into hillary clinton's e-mails. harry reid escalated three days of attacks from allies. the latest polls have tightened in a tracking poll showing 7%

of voters makes them less likely to support her. on the subject of oil, it is continuing to fall after opec failed to get a deal with other major oil producers to restrict supply. non-opec countries and did two days of talks on saturday saying internal divisions over the role of iran and iraq prevented a broader agreement. vowed --or renzi has matteo renzi has vowed they will rebuild the homes destroyed in the latest earthquake. the tremor on sunday was a 6.6, the most powerful recorded in italy since 1980. there have been no reports of fatalities. the bank of england governor is said to be leading toward staying in his post, according to the financial times, which is reporting that he told friends he is likely to make a statement this week to end speculation about his future. yesterday greg clark backed the canadian to stay in his post saying he had done a tremendous job.

arrieta rajoy has claimed a second term as prime minister of spain. rajoy has claimedit ends a 10 l impasse that his minority government may struggle to impose its authority over a fractured parliament as it tries to tackles a state budget deficit and bring down unemployment further. global news, 24 hours a day, powered by over 2600 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top . yousef: let's check in on the markets in asia. shery ahn is standing by. shery: we are seeing asian stocks gaining ground, but that's only after falling to their lowest level in two weeks. asian shares have taken a beating this month -- they are seeing their biggest monthly loss cincinnati. mixed corporate results out of the region not to mention during

the u.s. presidential election and increasing potential of the fed rate hike this year. we saw the shanghai composite fall 1/10 of a percent, losing ground for a fourth consecutive session. the hang seng is still up 2/10 of 1%. the biggest news out of china was that the authorities are stepping up on mainlanders in hong kong and how that will affect the markets. of course we have an ongoing political scandal there, the nikkei down. a busy week for results after the markets closed. ,e have sony reporting results raising there for your profit forecast while sony cut there's. another big news out of japan was from the three biggest chippers that just announced that they will be merging their container business to create the

world's sixth largest box carrier. they gained across the board. thank you very much. is race for the white house heating up, tightening as we have the renewed fbi investigation into hillary clinton's e-mails. r bloomberg politics reporter has been following the developments from washington. with just a little over a week until the u.s. presidential election democrats have decided to fight back directly against director james comey's announcement by notifying congress that there are newly discovered e-mails that will be investigated that might be connected to hillary clinton's previous use of a private e-mail server. director,r to the fbi harry reid, the senate democratic leader, informed the

fbi director that he believes he may have violated the law by going t public with such scant details which would impact the outcome of the election. this comes as the fbi is poised to begin going through thousands of e-mails discovered on the laptop computer of anthony weiner, the estranged husbands of one of hillary clinton's closest aides. while the clinton campaign maintain there is no evidence of wrongdoing, it has become political fodder for republican donald trump to use in his campaign. with the clinton hard revelations about the investigation. hillary clinton said he is taking a different tack, allowing top campaign officials to criticize the fbi director while she returns to the issues and her attacks on donald trump. there is this happens

evidence that the polls are tightening in key battleground states -- the question is will they tighten enough to make a difference to the outcome of the election. cio at capital investment management joins us in the studio. great to see you on the program. leading markets on the dance, a big selloff on u.s. equities, looks as if europe will play catch-up and factor in weakness. i wanted to show you this chart we made up -- the initial .eaction on reversing its calls we like to talk in the media about how politics plays into markets and how it informs investment strategy -- it's incredibly difficult, even in a very average election campaign, to work out where policies lead us. >> yes, it is.

but i think generally what we are seeing is the chance for trump increased, and there is slightly more uncertainty. uncertainty is something markets do not like. politics wise, it is not overly surprising to see such a strong reaction, because i think the american public really got itself convinced, or at least large parts of it, that washington is just corrupt,t, politicians have called each other that for too long. now the public believes it. therefore this fbi initiative comes quite well-timed, it seems. anna: gladly depending on whose side you are on. yousef: how do you factor that into your long-term decision-making? we heard earlier that maybe there is no need to read too much into it. there might be some volatility,

but ultimately there will be gridlock, there won't be any major policy shift. lessthink it might be tumultuous than it seems, even if trump who came to power. wise, we have positioned our performances accordingly. we have neither gone under nor out and that is how we are going to manage this difficult period. manus: i love that phrase, good morning. we have the bond markets behind me -- what is driving markets? we had a rally in s&p, a rally is it emerging markets, the probability of a hike dissipating? >> no, i think the hike is pretty much in the cards, even if trump comes in.

the u.s. economy has done so well over the last quarter, it will be very hard to argue for the fed to not hike, unless we get a big market upset if trump gets elected. i am just not convinced that it's necessarily going to happen. anna: we have a fed decision before december. not quite so talked about. i have a great story this fed couldat shows the put its money where its mouth is with regard to the montrose it likes. the likes to say every meeting his life, that it stated dependent, not swayed by politics. they could act on all of that and hike rates this week. i'm guessing you don't see it as likely. >> no, i don't. of course they could, but if they hikes rates, they would increase the potential for market upset if the result isn't

expected. the market expected. i think we will get a very strong signal like last year, that it's going to happen in december unless something terrible happened. yousef: there is precedent for that. the data tends to change before a major decision. i spoke to christine lagarde last week from the imf, and she said that you can't just put it all on the central bankers. you have to have structural and fiscal changes as well. expect axtent can we normalization of rates in light of the lack of effort on the fiscal side? i i think it's not just lack, think it's that politicians have to do the job of shorting of confidence again in the economy and the decisions. that is what's really lacking. that is why all this money is sitting in cash and not being invested. that is where the politicians

have to do a job. fiscal policy will help to get that confidence going again, but we could do with a bit less bickering amongst politicians calling each other names and just moving forward to getting us back on track. anna: we will see if that happens. thank you. up next, it's a big week at central banks. but the bank of japan is expected to wait for the fed. the fed is expected to wait for the election. at the bank of england is still waiting for mark carney to decide his future. a lot of waiting. this is bloomberg. ♪

yousef: welcome back. you are looking at a live shot of london -- anna: it might be. we are not sure. yousef: that is really foggy by most standards. let's get a bloomberg business flash with shery ahn in hong

kong. a slightly better day in hong kong -- let's go to japan has just erased his four-year profit forecast by 10%. the company says operating income will be $2.6 billion in the year ending in march. they cited losses and their component business. honda motor has raised its forecast and says net income will probably rise to $3.96 billion in march as demand for its diesel and x rb sport-utility vehicles surged in china. singapore's dbs has agreed to buy and invest in a retail and five asian countries. they will attain almost $80 million of the businesses which operate in singapore, hong kong, china, taiwan, and indonesia.

billion dollar deal to combine ge's oil and gas operation with acre hughes will reportedly be announced today. ge would control the new entity, which we publicly traded. spokespersons from both companies declined to comment. credit suisse is hoping to rein in costs. the ceo told the financial times that talks are underway about ways to work together which could put sharing databases and servers. they are looking for ways to boost earnings on negative rates and titans capital regulations. ubs says it is in talks with other lenders. that is your bloomberg business flash. manus: thank you very much. a huge week for the world's central bank as we have been tallying it. an overwhelming majority of economists surveyed by bloomberg are expecting that governor

kuroda will keep the stimulus unchanged. with the markets thinking in a rate change is most unlikely. function,to our work there is a 17% chance of a hike on thursday. it is the first policy decisions since last week's better-than-expected gdp numbers for the bank of england. they also published a new forecast for growth and inflation. we have investors expecting the bank of england to leave monetary policy unchanged. they are less confident about the career plans for mark carney. speculation has raged as to whether or not the governor will serve a full in your term or leave his post early. he is leaning toward sustaining on according to the ft, and says he will make a statement this week. that's the inside track on carney.

let's look at the investment management into the conversation. we have the spectrometer. goes,ney -- if carney potentially for family or geographic reasons, how much impact, if at all, do you think it would have on sterling, on the gilt market, on inflation expectations, which are ratcheting higher? >> i think it would have a considerable impact. he is one of the stability factors we have in the u.k.. he has not changed and if he decided to go it would be a that there is not enough support from politics. i think the market will take it quite negatively. anna: that there is not enough support from politics whg given, you would see it as a political story? >> i would. anna: this is btv 4601 if you

want to bring this up. aboutked for a long time when we were going to see another rate cut from the bank of england, given what they did in august, and expectations around weakness. some of that weakness hasn't come to pass perhaps. as a result, markets are reorienting their thinking around the giving the policy, and this shows in blue the probability of a boe rate hike in 2017. the bankdown to, yes, of england says they will look through inflation caused by weak sterling, but there are other factors and limits. >> it also depends on how the economy is doing. stay relatively strong and get that inflation, then while the mandate of the bank of england says key monetary policy stable -- i wouldn't quite yet

battle the rate hike, but i certainly don't expect another rate cut. yousef: what is the downside risk? what could derail the plan going forward? >> well, i would be watching the economy. if all of a sudden we are mp,ting more of a slu already seeing a cutback in industrial production, that's not great. they may will be forced to do it. manus: that takes me very nicely to gilt. back at brexit levels on the yield. if they did a little bit more -- are we cap doubt in terms of the spike we have seen? the bank of england, they are fully locked in fully loaded. >> well, i think we have seen so far was more of a coming back from overbought levels, a bit of a correction, where markets had

gone too far. but also if there is more inflation, bondholders will want to price that in. it's a stark reminder of what can happen if the currency falls too far in an uncontrolled manner. if the currency falls an uncontrolled manner, what would cause us to have another letdown? if carney were to confirm that he's going? with that be enough to trigger something substantial? >> i think it would trigger another letdown, particularly if politicians are not helpful in trying to stabilize the situation. that wouldn't be good news generally, i think. but at the moment is more with -- we saw this latest letdown as politics make it further. anna: back to politics in the u.k., politics in the u.s. -- we saw this latest thank you for joining us. the cio.

this is that from us on daybreak europe. bloomberg markets european open is up next. we are catching up with the u.s. this is bloomberg. ♪

ets: europ markets: european go open." the polls tighten in the united states. with just over a week to go until the vote, did the news of the fbi probe into hillary clinton's e-mails turn out to the again changer? oct,