Transcripts For BLOOMBERG Bloomberg Go 20160914

Can they sell enough assets and will there be the buyers to make the regulars feel ok . Jonathan some of the regulators have already given that deal the green light. Its a more concentrated industry. Alix we will be discussing this economy as well as the fed and investing strategies for a low rate world. Will be here. We will discuss whether the recent volatility is here to day with Julian Emanuel. Relativesn asia but stability in europe. Jonathan we have a day of gains potentially in europe with the ftse up. 6 . Not much action in the fx market. We are stable at 132. Data come so pretty much unchanged versus the previous month. Helping over in london. Up by 1. 26 . Credit growth in china making a comeback. In a bond market here we are. Coming in by basis point at the front end. We are set up for another big day in the markets. That 30 year treasury auction not going very well here in the u. S. Ares go around the world indepth coverage of all of those top stories. Megan murphy is in new york on translating clinton in a bloomberg all on ohio. Francine the is Francine Lacqua is in france. We will start with the deal of the morning. Monsanto trading free market. Why when the deal price could be 128 . Things johne mentioned is the biggest deal this year. Do you want to be the biggest one in the room. We saw what happened with pfizer allergan. If they combine with each other they will account for 30 of the global crop in market. Going to bere looking very closely. Seen kim china. Alix especially when it comes to the prices. We have seen companies offloading assets to make room to buy what monsanto might have to selloff to make this deal happen. What kind of buyers will be in the market for these . Monsanto whenmber they were talking to other companies about strategic options. We have not seen them so much play in the consolidation game yet. Could also be looking at some of the smaller asset. I think monsanto has been saying for really long that they have been talking to others about options even though the price is not reflecting what we hear is going to be paid today. Alix we are hearing the breakup fee will be 2 billion. Yesterday we heard 3 billion. I think they are looking at all the factors and these numbers keep moving around a little bit. We have all seen different numbers. Hopefully we will have a statement in a few minutes. Alix thank you for joining us. David there is some breaking news. Forward is having forward isward ford motors having an investor day. We want to go back to politics in ohio. Theres an important new poll from bloomberg today. We will bring in megan murphy. I think some people may be a little surprised. This is going to cause shockwaves in the Hillary Clinton campaign. We have him with a fivepoint gap over her in that state. One of the roughest stretches of her campaign so far with the concerns about her health after her bout with pneumonia over the weekend. Belty hurt her in the rust states where there is a huge white workingclass anxiety about the future. David one of the things that struck me about this poll was the reaction of people in ohio to nafta. So many people thought nafta led to a decrease in jobs in ohio. That is really sick thinking. Donald trump has been very overt about catering to this support. Hes extremely antitrade deal. Another really key statistic in this poll he has opened up a 43 among white men without a college education. Really targeting the white vote in the less educated. Those are the people he is still targeting. David you mentioned the Health Issues that came up while this poll was being it. Is there any new news on that . Of ongoing concern about what the state of Hillary Clintons health really is. Megan there were continue to the anxiety until we get transparency from both of them. We will see who steps up and ready for the rigors of the jobs. David thank you, megan murphy. Jonathan European Commission chief presented his speech which was the state of the union. Lets cross over to Francine Lacqua. What was the message from the man himself . The message was very clear. The state of the union is not that great. I hear over and over again after the three commissioners and i have also spoke to the European Parliament president is they need a union that is stronger but it cannot be stronger if the countries are as frail as they are. We heard from the European Commissioner of Monetary Affairs that we need stronger politicians that finally listen to the people. The parallels between what we theseeing in europe and popularity of donald trump are quite incredible. He spent about 10 minutes talking about brexit and then moved on to other things. He was much more levelheaded. Inwas much more emotional the aftermath of exit. Have a listen. We respect and at the same time regret the u. K. Decision but the European Union as such is not at risk. And we would be happy if the request for brexit could happen as quickly as possible so we can take the specific steps that need to be taken and so that relations with the u. K. Can take a new shape. They keep telling me it will be on a friendly basis. No one knows when article 50 will be triggered. See the waning influence from the u. K. Jonathan great to have you with us on the program. Lets get back to the stock market. Futures in the United States marginally positive. Ford stocks now trading in premarket. Saying its total results will fall in 2017 however it will improve. The big part is going to be investing in emerging opportunities. Particularly electric vehicles. Individual movers we are watching. Expecting a sixmonth profit to fall through september by about 45 . Lower toryism on terror attacks and the stronger swiss franc. Hermes also abandoning its forecast. It is the story that will never die. Wants to boost his stake. He now owns 21 . 35 he has toove get permission from those regulators. An Interesting Development for that beleaguered company. Also take a look at some of the miners in europe. Glencore bhp getting outs today. You have copper rising and nickel stabilizing. Better credit data coming out of china. As well. Hese guys a lot of action happening on the individual movers. A little stability in the u. S. And europe. Jonathan coming up, the vengeful return of volatility. The s p hits a twomonth low. Next, Julian Emanuel. He warned you the last time he was here about the declines coming up. More downside ahead for new york city. This is bloomberg. Jonathan from new york city, this is bloomberg. On Jonathan Ferro. Volatility jumps to the highest level since june. Joining us now is Julian Emanuel with ubs. You were on the program in august. He said the market was too complacent. Nearly the fix has nearly doubled. We think there is more downside ahead. Valuation levels near decade highs on the s p 500 with the earnings expected to grow by consensus 14 which we think is very over they are domestic. Youve got clearly Political Uncertainty ahead of you not to mention Economic Uncertainty elsewhere. We think there is a period of adjustment coming. We will need to see more from Central Banks and politicians. The debates are going to be important on the 26th. Its going to be healthy ultimately. We have hada very tight race in the bond market. How much leverage has been built up and how long will it take to wash out . We are seeing its not the actual several itself. Its that the leverage funds are marginal price setters when volatility turned. Thats why you can have a massive down day on friday followed by a huge up day on monday. It will seem normal but you have had this behavior that has built up and needs to unwind. This kind of volatility is going to set the table for more positive environment. Bank of america came out with a note talking about following the trends. Could see some kind of washout like in august. They put that as much as 52 billion. Half of it coming in the u. S. Do those seem like realistic figures . They may be a bit inflated. This is the worlds most liquid market and the these market is self has proven to be more liquid than fixed income. Thats a headline number that should cause concern. It is reason enough until we get less uncertainty in the coming weeks to expect more downside. Jonathan we wake up to a bloomberg poll thats a little more uncertainty. Does raise the politics question. Also there is big news out today about income in the United States having taken a big leg up. Does that give you any cause for hope . Absolutely. No question. Whatay we think about it we see typically when you come into election cycles where the electorate seems to be as disgruntled as it is once the decision is made in the reality of whoever is going to win is known markets tend to rally after that because of a backdrop like that. A congresseality was that wasnt going to go anywhere. David wu bank of america saying the markets trying to wake up to the fact of a potential trump presidency. Jonathan how you play this . The idea that we make a comeback after the election . Longterm investors should turn the television off. The professional traders can do what we suggested they do back in august. What we have had is because people have transitioned the strategy calls are still expensive. What we think you can do is sell and upside call to buy a downside put that carries you through the election in the monetary uncertainty and go from there. Jonathan if you are on the Trading Floor and youve got two screens you turn off the other one. Thats why you didnt put me behind the flashing screen. Jonathan Julian Emanuel might be back after the break. Alix he will be talking about Money Managers piling into cash. Is that a buy signal . This is bloomberg. Alix it is finally official. Buyer is buying than santa. The number monsanto. The number we have been debating comes to be about 56 dollars. 56 billion. In terms of breakup fees the number you need to know is to billion dollars. Sees the deal adding to sales in the first full year after the close and doubledigit percentage in the third fullyear. Theyre going to do it through equity and debt. 128 per share. There up by almost 2 . Monsanto barely up in premarket. 20 below that offer price. 19 billion to be raised by convertible bonds. 107 in the market. You wonder how to explain that spread. Why we have a 2 billion breakup fee. If the regulator premium so to speak. You wonder how much negotiation was done on the overall price and how much did 2 billion really feel this deal. David its a problem related to dispositions that there is going to have to make. The regulators are going to have to sell stuff. Alix Julian Emanuel of ubs is still with us. Seen tieups like this in china chemical. There is plenty of cash out there for m a. We think that trend continues. The news basically gives you the elements that are with us. First of all regulatory uncertainty. When we go back to where we were in august its a very clear that in terms of politics the markets were completely underestimating the concept of regulatory and Political Uncertainty. The other trend is going back to the availability of finance and. Interest rates are still low in an absolute sense. Financing is relatively available and there is a much cash on the Balance Sheet that we think the trend continues. Jonathan the credit market has not seized up at all. I can give you examples of energy companies. The yield pretty low to what was expected. The credit market has not seized up at all. As been a very it has been a very good year for credit. You had the spasm that you had in january and february. When we found out there wasnt going to be a recession and ubs doesnt think there is likely to be one in 2017 either more seeking behavior returns. Alix this is the third leg. Earnings. Why you have companies needing to buy each other. Profits falling 1. 4 in the Third Quarter. If you cant turn those profits you have to go somewhere else. David if you are saying there is still some air to come out of this and there is a lot of uncertainty doesnt that mean you do go to cash and wait until it bottoms out . You can certainly do that. The whole point of volatility getting as low as it has is not a question of people being underinvested. People being over invested. Its natural and healthy for people to go to greater cash at this point. America survey says investors are so much in cash versus a these that in reality you should be going to rise stocks. Cash balance is about 5. 5 . Part of the message from Central Banks over the last several months is that we shouldnt expect the same degree of certainty out of their dialogue because they need more flexibility and in fact they had in over shot of certainty which caused this low volatility. We need more pricing and we think we are getting it. Alix great to see it, Julian Emanuel. If you are a longterm investor go home, turn off the tv. Corporatecoming up, america has more leverage th ever with minimal earnings growth. The risks emerging within one of the safest parts of the market. From new york city, this is bloomberg. Jonathan this is bloomberg go. Im Jonathan Ferro. Lets get a check of the market. After four days of losses. The ftse of and the dax up. A lot of speculation going on in the fx market. The session down marginally. Look at aggregate financing in china. Credit picks up a little bit. You want a proxy for china look to copper. Verye treasury market volatile over the last few trading sessions. Twoyear yields coming in via basis point that 0. 782 . The big story is that the long end of the curve. To really get some insight in the treasury market take a look at what happened with the 30 year auction of treasuries. Looking at the demand for that particular auction. Thats the blue line. The average bid to cover of the last 10 auctions 2. 3. Lower demand a little bit softer. Another indicator i have been looking at. You can break up the individual groups into individual bidders and take the direct bidders going straight to the treasury bidding for 30 years. You see it down here at 4. 6 . That is the lowest share we have seen since september 2009. Say theyhear people are nervous about the Federal Reserve and the bond market. What they are really about is ultra low yields. I think we need a countdown clock for the fed. It is never too early for a countdown clock. We are seeing the push and pull versus indirect and direct bidders. Here is what you also need to know at this hour. Bayer reaching an agreement to buy monsanto. That would create the worlds biggest maker of pesticides. Warren buffett had 1. 4 million wiped from his fortune yesterday after wells fargo fell over 3 as the fallout continued from revelations the Bank Employees had opened more than 2 million accounts without client approval. Donald trump is leading Hillary Clinton in a poll of ohio. He now leads 48 to 43 among likely voters in a twoway contest. That is what you need to know at this hour. David we have a countdown clock going on with the president ial election. 55 days to go and the candidates are focusing on key states swing states such as ohio. Emeritusr in chief says not so fast. Matt winkler writes manufacturing jobs increased under each of the seven democratic president s and decreased under the six republicans who became president in the past eight decades. This is a fascinating somewhat counterintuitive result. Its not necessarily counterintuitive. If you go all the way back in time you start with Roosevelt Truman and there never was a for liftingthat one the United States economy out of the depression which was world war ii. The policies of Roosevelt Truman were prolabor. Start with candy johnson. Another set of economic programs that were both domestic. The Great Society programs. The tax cut kennedy gave us. The vietnam war which was demanding a lot of manufacturing. That was a robust period. We get to reaganbush and people forget that was a very difficult for us economically. We went into a recession. We had the highest unemployment since the great depression. We had a stock market crash in 1980s and and manufacturing jobs plummeted. The real surprise might be clinton. Thats when we got nafta. It was initiated by president bush and clinton signed it. Nafta actually didnt have the impact either way that people thought it would. It wasnt a great benefit. Manufacturing jobs went up with clinton. I would have thought they would have done pretty well with eisenhower. It is leadership and how much of it is larger geopolitical effects such as war . How much does it matter really whether it is republican or democrat . You cant give a republican too much credit for either what happens on the downside or the upside. Having said that, president s are always better smart than lucky if they can be. There were things that did happen that did make a difference. If this was an olympic contest among president s obama winds up number three in terms of creating manufacturing jobs. Thats because he did have a toicy in 2009 which was rescue the Automobile Industry in the United States. We had a poll out just today about ohio that specifically targets the manufacturing voter. And ohio is a very large autos the. Why doesnt the Obama Administration get credit for that . Actually obama did in 2012 running against romney. And he did in 2008 running against mccain. The election hasnt happened yet. There is no question of ohio was a huge beneficiary of the stimulus obama introduced in 2009. The Automobile Industry is robust today. In part because of that rescue of the industry. Manufacturing in ohio is a beneficiary because of his policies. David take your analysis. Theot translate into Political Campaign right now in states like ohio . It should. You never can be sure. This isnt just our data. This is government data. Every citizen has access to this data. It shouldnt the a mystery. Its very transparent. All you have to do is look at nonforeign payrolls and then look at the subset which is manufacturing jobs. They are for everyone to see. David have Hillary Clinton or donald trump put forward programs that would put forward manufacturing . We have not seen from donald trump anything that specific. With Hillary Clinton there is a raft of policies that is already pretty detailed about what she would do. Infrastructure for example is big in her election plans. David thank you, matt winkler. Great piece. Really interesting. We are going to continue the conversation on politics. European commission chief presented the state of the Union Address to the European Union. I want to cross over to Francine Lacqua. We are now speaking to the Vice President of the commission. Charged with revising jobs reviving jobs across the European Union. Union isthe european going through a nexus tension crisis. Thank you for making the time to speak to bloomberg. What is the existential question the European Union should be asking itself . If you are in asia today what should they be asking of europe . I visited the United States just a few months ago and i heard several same questions which was whether europe will be more or less in the credit than in the moment. When listening our stakeholders expectations they expect europe to be more united and in the credit. Francine smaller . I dont think so. We all know written will lead the eu. We have all seen very strong want to stay in the union. Listening what our Member States are asking us to do. Do something to create the energy market. Do something to strengthen defense cooperation. Better external border control. Our stakeholders are asking for further integration and at the same time when they are in a position when they can fight against populism. Francine your stakeholders have never been no far apart. The fact that they dont have the same vision or projects that they want to post through should be worrying. It is worrying. This is a moment where we need Strong National leadership. Many strong governments have started to play games with populism. It is 100 sure that they will lose the game. What we are asking our Member States to do is explain to your citizens why unified europe is much that are then fragmented populist and nationalistic europe. Francine if you are a politician and you come under scrutiny its very easy to blame europe. You are seeing the same rise as with donald trump. Are they parallels . Similarities between american primaries in the populism in europe. The fear and this is understandable. This we have to take seriously. If people of scared of the modern world or have things are evolving we have to take these worries very seriously. At the same time we cannot give up to populism. I was a Prime Minister in my turningand i was against populists who were against everything. I didnt give up an inch. If you Start Playing the same game as populists are doing you always lose. The road has always been built on responsibility. Francine Monetary Policy is not creating jobs. How will you create jobs . Ecb Monetary Policy has been stabilizing power in europe. It cannot do everything. We need three things. Structural reforms at the National Level. Investment for an investment which we are about to double in firepower. Risk financing for private sector in europe. We need better single market. Very ambitious trade deals. Francine thank you so much for speaking us. That was the Vice President. Its very clear when you speak to a lot of commissioners here is they see themselves as the voice of reason. Its up to the politicians in charge in each country to do more to actually implement these structural reforms. Jonathan the story doesnt really change that much. Thank you for joining us. Coming up a discussion about leverage as the Corporate Bond dailies rolls on. With careversation again. He reveals whats next. From new york city, this is bloomberg. David this is. Im david westin. Coming up, david owens discusses the health of the eu and u. K. Nearly three months after brexit. Corporate america may be more leveraged than ever. U. S. Companies have an estimated collected debt at a record 2. 4 times the collective earnings. We want to bring in Robert Kerrigan at a dana analytics firm. Frontve a great window seat to the underlying credit quality of these companies that you track. 30 billion in issuance last year. What is your assessment through the data of the underlying credit quality of Corporate America . Track 250 million businesses globally. We have a unique view about their access to capital. Billstimeliness in paying and their credit quality. The clearest index we have is the Small Business health index. Had shown that over the last seven months we have seen a year on year monthly decline and we whichit a oneyear low implies a Slower Growth rate for the overall economy given the importance of Small Business. Alix markets and the underlying leverage. We talk about the reach for yield. Investors happy to give money to companies. In your world has that changed at all in the last five or six years . Do we have lower quality rated companies . Struggling fore growth. When we look at our database only about 20 of all businesses had any real meaningful growth above inflation or gdp. Are struggling for growth. They are using data for Risk Management and as an asset to be able to drive new customers, to segment the fine customers and leveraging data to be able to help grow their businesses. Does the demand correlate with the general Business Cycle over the last few years . As there is more lending companiesnd borrowing are pulling more credit reports and certainly that benefits us. There is a trend in using data has a way to be able to find great prospect. The same data we used historically for Risk Management now they are using for targeting and segmenting and press acting and making their marketing much more effective. Other big story of the day is that ohio poll that shows trump is five Percentage Points up. When you are mining data for companies and looking at their credit quality is the election at all a concern for them . How do they factor that into how they use your data . I will bring it back to the growth challenge the businesses face today. I know this is a focus of both candidates. Only about 20 of all businesses had real growth. Whoever takes office will be faced with this challenge. You see your business growing over the next five years . Stock has been going gangbusters. Have identified a much bigger market opportunity. The traditional trade credit prospect thing, now we are focused on a 24 billion opportunity. That is a broadening of the Risk Management aperture focusing on areas like supply Chain Management using data and insights and analytics. Also global compliance. How do Companies Make sure they are doing business with the right actors and partners. And then sales and marketing opportunity. Departments project they will spend on technology. They are using more science and art in the pursuit of the new customer. That all bodes well for data and analytics. It is a way to gain competitive advantage. Alix great perspective. Bob carrigan chief executive of done and bradstreet. David yesterday in Lower Manhattan Hanks Greenberg finally got his day in court. He was sued by the new York Attorney general over a decade ago for how the Company Acquired over a half billion dollars in insurance deals. I talked to him and his lawyer outside the courthouse right after opening arguments. Why did mr. Greenberg continue to fight so hard. I did nothing improper. I just cant accept that. David is your goal vindication . You call it what you want. You dont go it meeting something you havent done. Talk more broadly about where the line is for Senior Management for innocent mistakes that get made in every corporation. Where do we hold Senior Management accountable and not . In some states they understand that and they reconcile it. In some states they dont. I dont think its anything secret. Thats not the way you should be drawing the line. It was originally brought by eliot spitzer. He is long gone at this point. Why has the Attorney Generals Office kept this up. . Tendency to been a go after business leaders. The attorney general describes him as a rich and powerful as this man. It was illegal to be rich or a businessman or even powerful. I think the invitation to go after people simply because they are rich or in business, it was very dangerous. Businessmen should not be immune from the law. A lot of things that people are upset about. A financial crisis. A lot of people responsible for that state it out. D becauses hank ma the people that took over aig and he was forced to resign helped put in office at aig engage in very risky action that brought down aig stock. Did terrible damage to shareholders. So i think theres a lot of anger out there. I think whats important is to distinguish between executives who have knowledge or andicipate in wrongdoing executives who are to some extent at the scene of the because no ceo of a multibillion Dollar Corporation can ensure that he is taking care of what everybody in the company is doing. I think its knowledge and participation. Its really very disarming when your own government destroys the greatest Insurance Company in history. For what purpose . Daily benefit from that . Employ 100 people. We are down to about six. 40,000 jobs. Not all of new york but nonetheless around the country. Is that the right role of government . We asked Hank Greenbergs opponent if the new York Attorney general for an interview, but he declined. Statementman issued a saying after a decade of avoiding trial mr. Greenberg will now face the same Justice System as anyone else. We look forward to proving her claims in open court. He is seeking to demonstrate there is one set of rules for everyone no matter how rich or powerful. Can avoid responsibility for misconduct. Alix a lot of feisty words. Hank greenberg is 90 years old and he is not a slowing down kind of man. An entirejust spent day in the courtroom which is not an easy or restful experience. We had to cut the interview short because he was hopping on a plane to fly down to argentina. Alix he is still the man in charge of what kind of investments you could do. One of the things he looks forward to figuring out is whats going on in brazil. Alix we will have much more of your interview with Hank Greenberg later on in the show. Lets get you up to speed on the markets. The Global Financial scorecard. Futures up about three points. Equities up in europe. Some out performance in basic resources and the commodity producers. Crude performing solidly throughout much of the day. In after the route yesterday. Dollaryen with a 103 handle earlier now trading back at 102. Jim tisch joins us to talk about investing in a low rate world and gives his outlook for oil and the energies sector. From new york city, this is bloomberg. David month santos gets its buyers. It is now official. Bear will by monsanto in a deal valued at 66 billion. Jonathan volatility returns to the market and investors repair for centralbank decisions. Alix European Commission president gets his first postbrexit address on the state of europe. David welcome to the second hour of bloomberg go. Im david westin with Jonathan Ferro and alix steel. It became official in the last hour. Monsanto bader. Jonathan why do we still have this massive spread between the offer on the table and the share price currently . David 27 difference. Alix some regulatory fear. That was the key number that came out of that. You have a lot of deals. Investors not capitalizing on that in the market. Jonathan following the action on this particular deal. The input from analysts across wall street in the city and from our reporters right here at bloomberg. We will be discussing the fed and investing strategies for a low rate world. First have a look at the markets. You had weakness over in asia and a little bit of stability in the u. S. Jonathan youve got three days all at once. Futures at the moment not signaling much price action. In europe a decent bid on the ftse. Up. Dax performance half the bloomberg pretty much changed on that day. Withe commodity market chinese credit growth starting to pick up again. The proxy for chinese growth is still copper. The real conversation revolves around this asset class. The bond market. Really soft auction. 30 years yesterday in the treasury market. Today yields coming in a little bit. At the front end across the curve. To be the story for the next couple of weeks. For the ecb and the boj and how the shape of the curve looks from here. Alix lets check in with the bloomberg team. Said to finally be reaching a deal to buy monsanto. Megan murphy in new york. France on thea in European Commission president state of the union speech to the European Parliament. And of the lisa jackson on this now volatile stock market. Jeff mccrackens executive editor of global deals joining us now. When trading relatively flat in premarket. There are buyers saying this deal might not even close until the end of 2017. What does that say about the regulatory process around the steel . Six playerso we had and now we will be down to four. Theres a lot of fear. A lot of them suspect the deal is going to get locked. It is way too soon to know what the regulators are going to do but there is a lot of concern that no matter how many investors they come up with its unlikely to get through the threshold to get approved. Alix the other puzzlement was the price. Looking for awere price as high as 135, 140. Did the price surprise you . No. Was 122, 125, 1 2750. I figured it would be 130. 135 140 always seemed time. Its a premium to the unaffected price. Thats a pretty good premium for a seed company who is actually not doing all that well. When santa last year was trying to buy syngenta. Have missed some of the earnings expectations that were out there. The other key number was the breakup fee. You have dow chemical and dupont merging. Theres going to be a lot of assets flooding the market to make these deal has been. There are plenty of buyers. Some ceos have mentioned weve got money to set aside to buy the assets to come out of this deal. The termination fee was a huge element of this deal. If you are meant cento you know there is a decent chance that your deal gets locked and you would rather walk away with some money. Alix thank you for breaking the story. Jeff mccracken. You dont want to be the last horse to the party. Is that the right metaphor . David we will turn to the campaign trail. A bloomberg poll has just come out targeting the all important swing state of ohio. We are bringing in megan murphy. Poll andhrough this how important ohio is in this election. Megan it is such an important swing state. Ohio is really seen as a bellwether state. The new poll shows donald trump up five point. It comes after one of the roughest stretches of Hillary Clinton and campaign with concerns about her health. This is really showing that this race is tightening not only on a National Level but also in these crucial swing state that are really going to decide who sit in the white house. Talking about a lot of volatility in the stock market and the bob and market. Deplorables and health issue. How reliable is this poll . Is it likely to move around in the coming weeks . We seeone of the reasons so much volatility is we have an unprecedented situation where the two candidates are disliked by so many people. That leads to swings. People making up their mind late in this election are going to make up their minds. Anald trumps gap in ohio is staggering 43 points among white men who lack a college education. Effort toe little Court Minority africanamerican latino vote. E he has made an explicit push to solidify his advantage among the white workingclass. So far that is working out for him in the rust belt states. This is where its going to come down to him and his strategy. David thank you, megan murphy. Jonathan lets head over to strasburg. Commission chief addressed the people of europe with the state of the union. Francine lacqua joins us now. What was the message today . He talks about an existential crisis. He says we need to rethink. He also announced a larger investment fund. Double thewants duration and capacity of the 315 billion euro fund he put into place. We are not going to see the direct money being spent to spur growth and jobs which frankly is what a lot of people here say we need. Keeps comingulism up in europe. I just wonder how distracted these guys are over in europe by whats happening in the respect nations and the rest of europe. Francine i would say a lot. They are very distracted. Every commissioner i spoke to said populism is a danger. If you think existentially about what admissions do they are almost an advisory board. They dont have the power to actually intervene directly. Populism is the same concern that feeds Donald Trumps populism. They are concerned it makes want to goliticians even more right or more left. Busy day. Thank you for joining us this morning. We are going to go back to equity markets now. Volatility returning to the market. We are seeing three straight moves of 230 points since last friday. Anneliese jackson joins us now. The fact that its september. It is historically both of the most volatile month and we have seen the biggest down moves in this month going back to 1920 seven. A lot of people are also attributing it to the fed. Yesterday we had oil prices down. David are people in the market actually asked acting continued volatility through the fed . People i talked to now that the election is more in focus that is likely to cause more volatility in addition to the fed. Abouts a lot of opining whether a rate hike will occur this year. Theres a meeting in a couple weeks and two more before the end of the year. If theyre going to raise rates they dont have much longer to do so. David thanks so much. We want to get an update on whats making headlines outside of the business world. Russia is warning the u. S. Backed rebels in syria of violating the ceasefire. The truce that began on monday appeared to be holding. Russian Authorities Say artillery shells were fired 23 times from areas controlled by rebel forces. They say syrian troops have not returned fire. President obama meets today with the de facto leader of myanmar. American companies will be watching for any sign that they will get access to one of the Fastest Growing economies in asia. The u. S. Groups in complain economic sanctions have shut them out. The share of Americans Without Health Insurance dropped to an alltime low last year partly due to programs and rules and president obamas Affordable Care act. Bureaung to the census just 9 of Americans Still lacked health insurance. Day. L news 24 hours a this is bloomberg. Jonathan coming up, the risk of a prolonged low rate world. The challenges of investing in todays environment and why the fed might be creating a bubble in treasuries. This is bloomberg. David this is bloomberg. Im david weston. The markets seem to be driven by the Central Banks. Investors react to what the fed and the ecb may or may not do. Some of the investors most affected by the ups and downs are insurance companies. Jim tisch. Welcome back to bloomberg go. Pick up with that point. You have a lot of money you need to invest and you need to get some returns because you have some obligations you have to meet. What do you do in this low yield world in order to meet those obligations . All you can do is grin and bear it. The markets are priced for perfection. Long bonds are trading 80 basis points higher. I think Everybody Knows in the longterm those securities are going to trade at a loss. Youve just got to invest. To keep your portfolio as short as you dare to do and uruguay you wait. David where on the market do you make decisions . Are definitely short duration. Generally we have been fined 10 year notes and they have been rolling down the yield curve. The problem is the fed is managing the entire yield curve. Rates in the intermediate to long and that are 300 basis points below what they should be. Thats causing all manner of problems in the investing world. Jonathan we hear a lot of people talk about bond scarcity. . O you feel that and see that not enough securities for you to buy . We have 45 billion of assets. The scarcity issue isnt so important for us. Whats really important for us is the level of Interest Rates. I talk about the level of Interest Rates and its not that im thinking about our Insurance Company. Im thinking about the entire economy. The fed has been him barked a policy for the last seven years of zero or near zero Interest Rate and it hasnt worked. The lowest Interest Rates in the United States and around the world that we have ever had in the past thousands of years. I promise you the economy isnt the worst its been in those thousands of years. The fed has gotten thems the into a hole of zero Interest Rate and they dont know how to get out. Jonathan or do they still think its a solution . It could be both. If they still think its a solution the question is why hasnt it worked in the last 7000 years . I thinke the king bernanke handled the crisis very well in 2008 and 2009. Zero rate interest policy made sense for the first two years. After that it was time to take us out of crisis mode and get back to normalization. That is going to wean us off of something we are pretty used to it this point. How you prepare your portfolio to be ready . Weve got constant cash flow coming in and we constantly have to invest. We will just scale higher as yields go up. David are there opportunities that are more tips for you and work for you . Everything is so picked over. Owns close to 4 trillion of securities. They have taken a lot of assets out of the market and theres a lot of money desperately looking for a home and cant really find it. David jim tisch. He is the Loews Corporation president and ceo. Alix coming up, we are talking about oil. Stock really taking a beating thus far in 2016. Will shares be able to rebound as Oil Companies look to increase their production . Thats ahead. This is bloomberg. Alix this is. Im alix steel. Diamond offshore drilling has one of the best Credit Rating in the oil services group. Stock has gotten hammered. Tisch is chairman of Diamond Offshore and president and ceo of loans. An insideally give us look into the oil community. The first thing Oil Companies are going to want to do is increase production. Surplus forng a longer in 2017. Whats your oil price call . Have sworn off making oil price calls for six months from because its impossible to gauge whats going to happen over the next six months. Over the next two years i think oil is going to go to 70 to 80 a barrel. The industry is dramatically under investing in now. Theres not going to be enough production two years from now to satisfy the worldwide demand and so prices are naturally going to go up. Is theart of the story massive decline we have seen in offshore day rig rate. If you take a look at the chart the average rate has been completely hammered over the last few years. That doesnt seem to be recovering anytime soon for offshore. It hasnt. Day rates went from 600,000 a day for years ago. Now i would say they are 125,000 a day if a transaction where to take place. To 100 75,000 a day to operate the rakes. Oil companies can have them for less than the operating costs. What is surprising to me is they are not biting. They are not chartering these rigs. That says to me there are just dramatically more interested in paying their dividend and getting through the year than they are about thinking about dots going to happen to five years from now to their productive capacity. That makes your call of Higher Oil Prices much more potent. Nowhe more they dont drill the more positive i am about oil prices to three years from now. Alix do you warm stack or cold stack . Go butkeep it ready to that increases your costs dramatically. It increases the cost when we want to begin operating. If its going to be laid up for three or four years in essence it doesnt make a difference in the cost of ringing it out whether it was cold stacked or warm stacked. Weve gone the cold stack mode. Alix you are really setting yourself up for a weaker environment over the next few years. Lets talk about on shore. Nowink oil rig utilization is 400 are operating. Thats down from 1600. We are operating at 25 of capacity. David what are your competitors . The environment you are describing requires staying power. You have it. Are other people shaking up . The environment requires staying power that the staying power relates to whom is the actual owner of the rig. Whether the company goes bankrupt or not that rick is still going to be there floating on the water. Do the equity owners own that . Holders are debt going to take ownership . Holders tend to be people who dont want to own the holders ae going to take ownership . Rig so they are going to have to figure out a way to sell those rakes and those companies are undercapitalized and chances are a lot of those are never going to work again because there will be nobody to put the money in for them. Alix such a pleasure. Jim tisch. Up, 82 daysming since the u. K. Voted to leave the European Union. Who is better off, the European Union or the United Kingdom . From new york city, this is bloomberg. Hey hows it going, hotcakes . Hotcakes. This place has hotcakes. So why arent they selling like hotcakes . With comcast Business Internet and wifi pro, they could be. Just add a customized message to your wifi pro splash page and youll reach your customers where their eyes are already on their devices. Order up. Its more than just wifi, it can help grow your business. You dont see that every day. Introducing wifi pro, wifi that helps grow your business. Comcast business. Built for business. Jonathan from new york city. This is bloomberg. Lets get a check on the markets. Futures up. 1 . Data has declined in europe. Dax uplly again with the. 4 . Switch up the board. We will get to the asset classes. A great fx market with unmoved. The dollaryen did have a 103 handle. A marginally weaker japanese yen and yields are coming in at two basis points on the u. S. Tenure. Year onng insight year, they are pretty steady. If the dollar wines of stabilizing, this is a really good dollar readthrough. A month to month sequential basis, the stronger dollar is weighing on the import prices, looking. 2 . For august. Jonathan look to the u. K. Off the back of brexit and a weak pound and prices have been searching. Looking. 2 . So one story in the u. S. Economy to another in europe, outlining his priorities for the year delivered his state of the Union Address. The next months are decisive if we want to reunite our union. Arepe only works when we pulling in the same direction. With us now to discuss europe post europe, postbrexit, we have david owens. David, lets start with you. For the European Commission and parliament, how distracted are they . But also with what is happening in their own country . In the light of france . David he came across clearly in the state of the Union Address. Very concerned that he europe will actually fragment and could potentially fall apart. But trying to stop that happening and breaks it something that was a really mentioned but it is something that is in their mind. Europe is not really pulling together. And the problem here is again that the european economy is not growing that rapidly. If europe was booming it would be a different story. Jonathan the political backdrop is with Monetary Policy and things are getting more confusing. When saying the government needs to do more, is there any choice with what he can do . In terms of keeping the foot to the pedal and keep on trying to stimulate the european economy at a time when the little backdrop is incredibly uncertain . David that is absolutely right. Came togetherthat was an investment program. Doubling that. In terms of where we are now, moving ahead quite nicely. But germany is not playing a role in this at all. You can see the italian in the spanish have stepped up but not germany. Jonathan printing the quote spoke to and take a listen to what he had to say about the potential. Year, it end of the will be the optimal moment now to start this conversation. Before, it would be too early but after, that is why we are ready. Jonathan the u. K. Is not ready to pull the trigger. How significant is that . To wait and see when they will pull the trigger and the discussions begin . And how long will it take . It could take more than two years . Gabriela i think this is an issue that will be with us for years to come. The unwinding of the u. K. From the European Union. What i think is crucial for our clients. And there has been a recovery jonathan we always talk about him as the leverage. The outcome of who has the leverage is, well, it is not greece, it is everyone else. , the datalabor market looks resilient. That is extensible question. I doubt whether the u. K. Will look at it in the next six months. A lot of businesses will be putting investment projects on hold. But the data does look stronger. The u. K. Has actually and the eurozone fell in the Second Quarter. So there are some signs of the u. K. Recovery, in particular, losing momentum. And this remains a major issue. It isnt working quickly enough. Governments tong have a much more use of fiscal policy. There is longterm Growth Prospects in europe. The u. K. Has leverage. David we know that the u. K. Is sound and doing well. And you say there is growth in europe. As an investor between u. K. And europe without u. K. , where the greater opportunities . Gabriela in both, the way you talk into them is very different. There has been to mystic demand in the Second Quarter but we think it is quite sound. The eurozone, we want to tap into the companies that have accessed the domestic eurozone recovery. For the u. K. , a different story. We shouldnt fall into a sense of calm that they will not feel any sense of detachment in the next year. To access the u. K. Will be the large companies, not as much of the domestic ones. Alix when you take a look at up givingion, we wind the ecb more bonds to buy. Ironically, does the rally in convince them to do more and expand the program . David owens i think the ecb will expand the program. They have to because inflation will be moving back to target by march 2017. The program,extend it is a question of whether they can wait until december. They will announce an extension with stimulus around the edges at that meeting. Know if the fed will actually pull the button in december but assuming the ecb will announce stimulus for sure. I the end of this year. What you have seen from the data so far, we are a couple of months away from november when we get the big Inflation Report, its again. If we had asked investors a few months ago about whether they should cut rates, they would say yes but where do you stand on that now . David owens that was on the bank was giving the indication in the august Inflation Report is that if things are good, the bank of england did expect u. K. Gdp to grow in the Third Quarter so they were not forecasting a recession. The general impression im getting is that they will cut rates again. U. K. Ate decisions in the could be pushed back into 2017. The more interesting thing is the autumn statement which is penciled in for a member 23rd. November 23. Jonathan unfortunately for Monetary Policy, they have to they see what the fiscal responsibility is. And looking at a market where, with the remarkable rally and remarkable selloff, around 30 basis points, are we starting to reprice the curve for a beention trade that hasnt put in in the months after the brexit vote . Gabriela right after brexit we shifted to the extreme view of monetary dovishness. And the impact of brexit hasnt been felt as strongly. So that extreme expectation is getting felt back across developed markets and Central Banks. So what were due for is for the markets to move forward with volatility along the way. Gabriela santos and david owens, thank you very much for joining us. Alix i want to take a look at market action. We saw oil move remarkably lower below 45 a barrel. A highlighted headline here, libya could plant and export of 6000 barrels a day. Going to libyaer and it could be open which means more supplies coming on line. Opec supply has been responsible in the recent surplus, citing the reason why they see the surplus continuing into the end of 2017. Stockt drag down the market as well . Take a look at the futures, how futures up 21 points. Coming up, buffett takes a hit. Falling 2 as he falls out from wells fargo. This is bloomberg. Jonathan i am here in the hewlettpackard enterprise greenroom. Coming up, monsanto ceo discussing the 66 million deal. Samsung has come out with a stopgap measure to prevent the new galaxy seven phones from overheating. Able put out a Software Update that caps the phones battery at 60 . For now, the update is only available in south korea. A new report from mckinsey says that job cuts alone wont be enough to save the worlds biggest bank from technological and regulation changes. Whole businesses must go. The report predicts that only 35 Global Service banks will recover. Go. Others will have to thank you. Late last week we learned that wells fargo had fired 5300 people and paid 185 million because employees were meeting sales goals by creating over 2 million fake accounts. The clients may not have been material but the aftermath has dragged the ceo into Congress Next week and jpmorgan has overtaken the crown as the Worlds Largest bank. Laura keller is here and she has written a piece on this. So this is not the first time there has been this sort of scandal . Youre right. There are other scandals that we have heard about. But i think the thing that investors are thinking about is that analysts are hearing it is the first time for john stumpf. Is an eminent retail banker in the u. S. , this is the first time we are seeing him join ranks of the wall street colleagues that he tries to distance himself from. That means people like jamie dimon. As the first time he has been caught in any sort of water. David next week, he has to testify in front of congress. Laura he did a major media tour yesterday. He talked to jim cramer. And he kept saying we and some people have really pegged him for this and said, is this something to take responsibility for, as head of the bank . Item notch or he is quite there as opposed to where you see jamie dimon coming before the Banking Panel and saying, this is my fault. Im not sure. Maybe he will do that. Also clawbacks year for the woman who was in charge of Consumer Banking operations of the line. Where does that stand . Telling us isyre that this is a poor decision and it may be deliberated upon by the board that it in something they are currently considering. The Consumer Financial protection bureau, one of the regulators Going Forward in this, they did know that the group that she was in charge of, that the management was in fault. Alix and the question also , will we hear that frederick ramp up . As we put the jamie dimon thing away, is this the next thing . David you are so right. A culture issue. There is a culture issue to be transformed. It would be a surprise for wells fargo. And it is very different from what they have said their culture stands for. Because they have wanted to be the antithesis of wall street. People who gothe hit in this is Warren Buffett. He owns a largest piece of wells fargo. And they estimate he has lost as much as 1. 5 billion. This is not the first time Warner Buffett has had to deal with a banking crisis. Early 1990s, when that happened, he had to go in front of congress and we do have something from the archives to show you as to what he said in front of congress. After they first obey all rules, i want employees to ask themselves whether theyre willing to have any contemplated appear on the front page of their local paper to be read by their spouses, children and friends, with the reporting done by an informed reporter. If they follow this test, they need not fear my other message to them. Lose money for the firm and i will be understanding. And a shred of reputation david ok, a ruthless Warren Buffett. He seems to be interested in the reputational issue. John stumpf is. So maybe he is already taking a page from Warren Buffett, because for him, i think that is the real take away. He said that these are people he doesnt want in his bank. He doesnt want it Going Forward and what the bank is now trying to do is put this behind them. Of course, and this arena there are many, many questions. But you can go back and look at the tapes from Warren Buffett and learn how to deal with the regulators. The senators are doing this because of a congressional oversight. And the question is, should they do more laura . An interesting question. The have been people who have somed at the numbers and people are saying, is this really enough . Is it enough for what happened . They be that is the question that should be pursued. David laura keller, thank you so much for being here. Jonathan coming up, the impact of the u. S. President ial election. We will show you that in the battle of the charts. The cache away from open. Futures positive after yesterday. Equities rallying in europe. This is bloomberg. David this is bloomberg. We are going across the Atlantic Ocean for our battle of the charts. Ryan chilcote, what do you have . Ryan the mexican peso is just shy of a record low. Take a look at this number. Was june 27 of this year. We may get there while i am talking to you so we will watch that. The peso has a problem. At the problem has a name and the name is donald trump. A pretty dramatic correlation that we have seen for the past four months. The better donald trump polls, the worse the peso does. Out, the cruz dropped peso started to weaken. After the convention, we see the peso weakened. To show you it works the other way, and Hillary Clinton got her bump after the convention, we saw the peso start to strengthen because donald trump was getting weaker. And again, a surge of donald trump of support in the polls and we got a weakening of the mexican peso. And most noticeably on sunday we had Hillary Clintons health scare and that has really pushed weaker and peso into weaker territory. Why . We have a bloomberg poll that just came out that isnt an actual poll. If you look, the weakening of the peso that we have seen with Donald Trumps polling numbers, a bellwether state in ohio and what our poll shows is that donald trump is leading Hillary Clinton there i five points. And what do you see . You see the mexican peso just off a record low weakening by. 5 . Worst emerging market currency for the last year. David do you think it has something to do with the wall that he wants the mexicans to pay for . Part of it. S he wants the remittance to do that. And that goes to help support the peso. Obviously if he was to do that, and he also is against nafta. That hes a good chart. He annotated it and i did that. Weeks, ithe last few am looking at risk parity and what the risk is with a market selloff. This is the risk parity index and the idea is that if you are a risk parity fund, you own stocks and bonds. One upsets the other. You wind up investing in both. As we seen here, we have seen a downturn and it is a downturn in risk parity funds in september, over the last few days. And this next panel describes why. It ishe correlation now. 25. The idea is the yield and the s p are negatively correlated. ,ond prices are moving together you are seeing a selloff in stocks and bonds. And that hurts risk parity funds. If you are over lever or levered a little bit, that kind of selling can exasperate itself. Bank of america said yesterday that 52 billion could come out of markets and half of that in the u. S. As you see the overleveraged pieces play out and washout. So to me, this has been the risk. This is the chart that is most operative. Yes, Ryan Chilcotes chart is critical in the year ahead. But for me, in the wider market, alix steels chart tells the story of what is happening. , great. The bond market went on an epic they are. David i love politics. I want to go for Ryan Chilcote but im actually going to vote for alix steel. Im sorry, it is a great chart. Jonathan he says it so reluctantly. Coming up next, binky chadha weighs in on the rise in global yields. This is bloomberg. Alix we are 30 minutes from the opening bell in new york. Happy wednesday. This is bloomberg. It is official 128 a share with a 16 discount is what monsanto stock is trading at now. David 66 billion. Jonathan if it goes through but the bottom line right now is that markets are not buying it. When you have a spread like that and the price in the premarket, markets are not buying it. Alix and you have analyst saying that if buyer was truly confident in the deal going they are not seeing it completed until the end of 2017, it sounds off alarm bells. David and they have had a long time to look at this and decide whether it will go through. The biggest Business Loan in history. 57 billion. David coming up, binky chadha, Deutsche Bank chief global strategist, he will be joining us and we will look at the bond market. But first, we want to check out the markets. Jonathan 29 minutes away from the cash open. Teachers marginally positive. Four days of losses for european equities. The dax is up by 4 . Supporting the outperformance there, the move is in basic resources. That has been the leading Industry Group gaining throughout the day in europe. Factor in the rally in metals, chinese credit growth is on the up. A bit of a rebound. Loosing some appetite from the proxies. And the fx market is very quiet. The cable rate marginally weaker. The u. K. Labor market data, very resilient despite Political Uncertainty. To wrap things up in the bond market, global bond yields back to june, at the long and off the back of a 30 year auction. Today, yields come in at the front and by two basis points. Lets lift the lid on the equities market. Alix we want to start with the deal of buyermonsanto. Take a look at the price, it is up by. 2 . This is even off the highs of the session. 128 a share. It is the fourth time, is the fourth time the charm . Some analysts were looking for as much as 140 a share. The market is saying look, we are discounting the stock because we are worried the deal might not go through. , doing if itside well over 4 at the numbers are so huge. 57 billion is the loan that they will take out in addition to issuing 19 billion of equities. That loan is the third biggest loan in history. He single biggest deal ever for a German Company. So it is a huge m a deal on this wednesday. Theyat the likes of are questioning its sustainable turnaround. The company is seeing a sale following below. Morgan stanley is more negative on that stock. At equityook residential. This company is declaring a special tax dividend of three dollars following the sale of noncore assets. Vanguardst holders are , getting upwards of 100 million based on the dividend. For more on what is happening in the markets, Abigail Doolittle is joining us at the nasdaq and mark barton is in europe in london. Abigail, taking a look at moves in biotech . Abigail thats right. Companyf the biotech are soaring. Higher on reports that a drug could be approved soon by the fda. This is after a key fda person left the fda last week and he was opposing the drug. It was enough to put out comment sayings it is now on the fast track for approval. Tos this would put an end the with line. This stock has gone up and down at least 17 times. Cracker barrel, shares of the Restaurant Company companyr after the posted a mixed fiscal fourth quarter. Weighing on the stock is the First Quarter and the full year of 2017. Earnings came in below estimates. That have the ceo saying she thinks that challenges could persist. Interestingly, this could be pleasing to bears out there. There is a high bearish interest of 19 . Alix thank you, Abigail Doolittle. Joining us is mark barton in london. A different story in asia. We are up for the first day, that is something, after the longest drooping stretch for almost a month here in europe in basic resources, health care the bestperforming Industry Group. Everyone has their eye on the luxury sector. Political, monetary issues happening. Hermes. T the biggest drop since december 2010. Chemont operating profit will probably drop. Adding to the luxury goods industry with shares down by 3. 3 . I want to talk about unemployment in the u. K. , proving the resiliency of the u. K. Economy. ,taying at the 11 year low 4. 9 . This chart goes back to 2007. The number of people in work to 31. 8 million, the highest on record. Are concerned that the number of people claiming jobless benefits is rising by 2000, the number of vacancies in the economy climbed as well. That is the to say, take away two people having doubts about the economy. And it want to show you the 10 year yield. Earlier it was rising for the , the consecutive day longest stretch since november 2015. That losing run has come to an end but we are still above the level we were when the bank of england added the stimulus on august 4. 80 basis points then. 91 basis points now. That sets us up nicely for the boe meeting tomorrow. Alix those deals are holding in there. Thank you, mark barton, joining us in london. Talk about the biggest deal of the year. The biggest takeover of a German Company ever. Clenching a deal with monsanto and joining us is jeff mccracken. And binky chadha. As john said earlier, the market does not buy it. What has happened over the last 1820 four months, so many deals have been blocked. Pfizer got blocked by the treasury. Two huge u. S. Health insurance deals are under review so there is a ton of concern. I think im much of what they would block it over. I think they might block it because syngenta and were going from six crop seed Fertilizer Companies to cointreau. I dont know what they could divest to get around that. I dont know. I just dont know. Jonathan on the table is a check for 2 billion signed by a bayer, a breakup fee. Why are they so confident it will get done . How did he get to 2 billion . Expectation of the market is to climb to three it was at 1. 5 billion if you weeks ago and i think the fact that it is only 2 billion bayer the fact that the doesnt have a lot of confidence. Im not sure how to read that. And we wont get at that kind of detail. That is a big concern. Why is it only 2 billion . Given the size of the deal, 66 billion, it should be more. David it isnt just u. S. Authorities, that it is also brussels. And has not been shy about exerting their power. Jeffrey i think the eu is the larger hurdle. Monsanto, they are not highly thought of in europe because of the genetically modified feed side of things. So he think there will be a lot of pushback by investors, so it is lower than people anticipated. This is because of the other deals. You cant ignore the other two big deals out there. Alix and the other elephant in the room is the 57 billion takinghat buyer will be out. The third biggest loan in history. Have seen an Investment Grade issuance these are staggering numbers. Binky i think the important itng to keep in mind is that relates clearly to what the flm p says. So janet yellen us in august that she is making the case for raising rates and it has strengthened and corporate are going to frontload issuance. I have done this a couple of times before and they havent livered. But i would argue that frontrunning the fed makes a lot of sense. David what is the timeline . Jeffrey at this point, they say the deal wont be closed until the end of next year. Which is also why shares are below. The expectation is that you will get some feedback and pushback from regulators early in 2017 and theyre hoping to get the deal completed by the end of next year. Thank you, jeffrey mccracken, coming up with a gig interview. Binky chadha will be staying with us. We have the bayer and monsanto ceos. Why does the market not by what they are so confident about what is happening . Over 3 d shares falling yesterday, we bring you the latest on the Wells Fargo Bank scandal. This is bloomberg. David this is bloomberg. Thean update outside business world, we get the first word news. Emma a new Bloomberg Politics poll underscores how the president ial race has tightened. Donald has pulled ahead in a battleground state, ohio. He is leading Hillary Clinton 48 40 3 . Trump does well among men, independent and union households. One of the problems there is the massive trade bill that passed when Hillary Clintons husband was president. The trade agreement did hurt jobs and exports. The u. S. Has agreed to the single largest pledge of military assistance to another country. They are expected to sign a 10 and itreement today replaces another longstanding deal. It is expected that the money will be spent on usmade military equipment and the share of Americans Without Health Insurance dropped to an alltime low last year. That is partially because of the Affordable Care act, which expanded coverage to millions of people. Americans still lack health insurance. Global news, 24 hours a day. Powered by our more than 2600 journalists and analysts, in more than 120 countries. Jonathan thank you. We are 15 minutes away from the cash open. 50 minutes 15 points on the dow. Fewstory over the last trading sessions, nervousness in the bond market sparking a round in the equity market. Taking a look at the global bond market. A recordsetting 2016 with record lows but now the kickback. Yields back to june highs. Till with us is binky chadha how much of this is a pure reach for yields unwind and how much of it is the nervousness about what is happening aggressors aggressively long durations . We are well below the average. Binky the story is not to start with u. S. , it is to look at what andappening in europe japan. And the presumption of the markets where it made a lot of sense to buy long bonds with negative yields because Central Banks would continue to cut rates. And it is that perception that acted upon. The empirical record over the last three years is very clear. It is unambiguous that these policies may have had a nonpositive affect. So it is time to stop and the perception is growing. It is time to talk big and do small. And so the perception is moving back. And it comes to europe, the u. S. Yields are driven primarily by what the fed has to do but there has been an important component over the last few years which is the insert in the u. S. And when you look at u. S. Yields, there are still 30 basis points. The lows of already turned. The indirect bidders still made 57 of the foreign central bankers. Jonathan a question i would ask of you then, looking to the bank of japan and they may allow the curve to stephen. Road, willdown that they back off again . For a long time has been that there will be serious carnage at some point. I much or when. I dont think they will suddenly wenge the religion and say, will do anything more. If they did that or if they announced that they would start normalizing rates, you would certainly get that reaction. And so, you know, the timing of a turning point, it is not always easy. And that would be the obvious catalyst. What is fascinating is that we have seen the bond selloff stay relegated to the market. Investment grade credit and junk bonds, there is still demand for that. The move in yields is still very modest. We are still talking about 1. 7 . The gdp has been about 2. 1 . Inflation is at 1. 5 . That is the historical average over the last few years. Bond yields look out of whack. If you could have the bank of japan decision, which one would you take right now . Which one would you want to know . Binky i would want to know the fed. I would argue that the fed is furthest along in the cycle. If you think about where unemployment is and where inflation is and you think about the last 50 years, policy rates should be 3. 7 . And so, it is difficult to get away from the view that the fed basis points because it has a strong view about the future. But current unemployment and distillation, rate should be at 3. 7 . So there is a very strong view about what the future is going to look like. And we could talk about what that is based on alix oh, we will. [laughter] binky chadha is staying with us. That is next, this is bloomberg. David this is bloomberg. Growth, the about conversation turns to productivity. Economists agree that we cant withouttained growth productivity but what drives productivity and what can we do about it . Binky chadha has studied this and has specific ideas about where productivity growth comes from and where we can find it, Going Forward. We will start with a chart that shows the dramatic growth in productivity coming out of the financial crisis. You can see the big leg up there with the arrow. What drove that . Binky the point and would make is that there is a tendency to think about productivity growth exogenous,g that is it happens with technical progress and the pace of technical progress tends to be random or not predictable. During then see financial crisis, when productivity growth jumps up by 7. 5 Percentage Points, keep that number in perspective in the face of productivity growth that we are in, we are in the 13th year of a slow phase productivity growth where the average is 1. 5. So during the financial crisis, you saw the private sector and the corporate Sector Factor in five years of growth into a time that was about panic and it is hard to argue that the financial crisis caused a big leg up in technical progress. David it did cause a lot of layoffs. Is the growth getting more out of fewer people . Binky it is, and that is not the kind of shock that one would look forward to. Nearly. But if you take a longer view and you look at u. S. Productivity growth, what you will find is we have these long of veryrnating cycles rapid productivity growth and very slow productivity growth. That there see is are two characteristics of growth that are very relevant to today. All productivity growth phases are characterized by a tight labor market and while that may seem counterintuitive, it makes a lot of sense. Pressureorporate under , they raced the productivity of their workers, because they felt the pressure and now unemployment is at 5 and labor is not cheap and easy to come by. The rate in productivity is going to be there. Into a tight labor market and the second factor is the u. S. Dollar. The history is not as long as there is for the tight labor market. But what we see is the combination of a tight labor ,arket and a strong dollar seeing productivity growth rise. So when we are today, the dollar is 30 below cycle lows. The last time this happened was 1995 when productivity growth really went up. Chadha, great to have you with us. Scorecard right now is a rollover of futures down by 20 points on the dow. Futures negative but they were positive throughout much of the day in europe. 2 . Ax is now up by switch of the board and here is the action in other asset classes. Crude rolled over. A basis point by at 1. 72. At the dollaryen hold steady. This is bloomberg. Jonathan from new york city, this is bloomberg. I am Jonathan Ferro. We went 43 days without a one percentage point moved to the upside order down, then three came in a row. It down marginally weaker on the s p 500, down 1 10 of 110. We have come off the session highs at 10 to 1 . In the fxsituation market. 13173. The weaker yen story kicking and in toand yields come 1. 72 . Will run us through what happened but after 25 seconds in the catch open, lets begin with alice. Look at this relatively unchanged all caps off or. The nasdaq is up. 1 . Stabilityn asia, some , and then european markets got a little softer and futures markets rollover a little bit. You still have to watch the 100 ,oving day average for the s p if we could bounce off again that level, it is all a more positive sign. Still in until early october, early november. Part of the reason for the relative weakness in equities has to come from oil. Take a look at this terminal chart. Blue line is the oil price. Futures started to roll over and you can see a decline there and you had oil prices coming off in the in part because it recaptures some of the sports. A tanker headed from italy to libya, more supply creating. Eakness in dollars. Month cento, a 16 discount from of 128 per share. Not a lot of confidence in the fact the deal will get done. Buyers say the deal will not close until the end of 2017. The number i dig is 57 billion. That is what the buyer will be borrowing to make the deal happen. Other names making some news, ford coming out saying total results will decline in 2017 and improve into as an 18. In 2018. Good cash flow, dividend yields saying choppy markets as we head into the fed, eight days away. Nexthan it will be wednesday, september 21. I believe that is a wednesday. Into theee minutes session, equities are unmoved, unchanged. Two months until the u. S. President ial election. Trump is gaining ground. The republican nominee has pulled ahead of clinton among likely voters in a key battleground state. Cio of equities believes a trump could be a plus for the economy but the Market Reaction could be negative. Walk us through the story. One thing that is bothering hillary with a report in congress, nothing gets done and now we are facing a possibility that trump could actually win the election. The market i think near term is worried about that. He would replace her with a nonqe type fed government. We think a lot of this would be quite good for the country. Near term, the market will be nervous about that. Jonathan nearterm factors, negative, what does that mean for the markets . It typically means dollar strengthens. I think it is a combination. We are longterm bowls. Bulls. You say there are more sellers and buyers and that is where we are. Valuations are stretched nearterm and you have got an and a lot ofction noise around the fed. Out if we has figured are debating september, were definitely in december. It contained, that means qe is over there. Nearterm onerns ande about Interest Rates people have to adjust 2017 earnings down. The consensus is way too high, almost 22 off of where we are now. Peoplefourth quarter, freshen up the numbers and they come down. There are not a lot of nearterm drivers. Shortterm softness, as you see it. Play out the trump scenario. If donald trump were president and we had both houses of congress, at what point does this kick in . Is the treasury president more important than the fed president . You have an Economic Team that is progrowth. I think it could be exciting. In that scenario, their idea of fiscal will be more to improve the tax structure, bring down tax rates generally. Certainly will do big infrastructure spending. Structural reform is where they ,re heading and the big thing this is something that is choking the economy. There are all these positives for productivity, or regulation is strangling the economy. He will see some attempt to scale that back on a trump presidency. Anathan i will try to get firm answer from you. More debt, a Federal Reserve chair that is more progrowth but less on a qe side. Where we going . The nearterm, the market is very worried about it. This is noise. Right now, we are in an overbought treasury market, it is backing up and people have it in their head that once they get going, treasuries will go to five. That will not happen in this cycle. A lot of demand is coming from demographics globally for income. Treasuries peek out to an 2. 5 on the twoyear. Noise, get through the people say this is a bullish environment. I agree on treasuries right here but settle down. This is just noise around the beginning of the fed hikes. Do you want to be going in and buying bonds and stocks . Absolutely we are trying to set up our investors for that. We will be buying the correction. I think it will come in more before it is over. There are more sellers than buyers. How worried should they be about a unified oneparty government . First, do no harm. Can the government do no harm if it is all the same party . Senate,licans hold the they will have 51 seats. They do not really have control of the government like they did in 2008. We will not have a oneparty government and the house has been more divided. Plenty of checks and balances. Thanks for being here. Coming up, my was of interview with Hank Greenberg, 11 years on fraudwas sued charges. Greenberg finally went on trial yesterday and we asked about his thoughts on the state of the Insurance Industry in the new high regulated world. That is next. This is bloomberg. Coming up, former white house Ronald Reagan 2 p. M. Eastern. Jonathan unchanged with the dow slightly positive in the s p 500 up about. 1 . Apple, potentially a fivemonth high right now. Outperformance. Lets dig in a little more and cross over to the nasdaq. Big movers for the nasdaq, starting with a massive mover. P 157 thisll add 2 dermatology drugs to elegant pipeline. As much as the stock is up, it is 10 below its record high. Company drug the could be approved soon by the who had beenember opposing or criticizing the drug recently left oppenheimer. Drug is now thinks the on track for the fasttrack approval for the fda. Shares are up nicely. Elliott liking two of the companys drugs. E thinks the stock will double back to you. Thank you, Abigail Doolittle joining us from the nasdaq. We learned wells fargo paid 185 million in fines because employees were reading sales goals by creating accounts. The aftermath has dragged the ceo in front of Congress Next week. Is you ares today now getting a response from wells fargo. Yes. They sent out an email to 16. 5 million customers, 16. 5 Million People in the u. S. Themillion or so people in u. S. . It is a lot of customers. On the heels of him going to washington next week. What will be the conversation on capitol hill . You might see hear from them asking questions, which provides this fodder to the senators to say this is a real problem. How did it happen and why for so long . Back to 2011. Explained to me how it is affecting. Im not saying it is a good thing at all. As i understand it, the people theyll to account for did not lose money. Say did not affect revenue for the company. What was it about . I think for regulators, the effect is the idea that you had something taken out in your name and in some cases, money was transferred to an account without permission. Some people have had credit. Cores impacted there are instances where police opened these Bank Accounts in their name and their email address to wells fargo. There is a little detailed to bigrstand and it is not as a deal as some of the huge losses from the Goldman Sachs ceo. It is a little bit like americans can look at this and say this happened to someone i know. Idea wellspoint, the fargo is relatively unscathed, this was the bank to beat, the biggest in the u. S. Now the label is coming under scrutiny. Particularly the ceo who was really mr. Clean. Held up as an emblem of what you should be as a banker. Where does that stand . I think that halo might be dissipating a little bit. We will see how he does. Be a big week. As they put this behind them, customers appreciate getting an email and saying, ok, at least i am aware of this now. You have to go down there and swear in and they ask you all these nasty questions. This is obviously having ramifications in that respect. Thank you so much. David . Hanksterday, i spoke with greenberg after the first day of his trial in manhattan. One thing we discuss is the current state of the Insurance Industry and how he might run it like today. Here is what he had to say. Strategies, technology, you have got to be at the leading edge of that. You have to be global and understand the global markets. You have to have relationships. It takes years to do that. Would current regulation permit you to build a large Global Organization . You get into things like too big to fail rules that the large large burden. You could not do it in united eight. Headquarters, you should put it up and consolidate someplace. Advantageous to your shareholders. Get it in one place, do it in another. I will not ask you who you will vote for and who you support. But we are in a president ial election. You are the attributes looking for in a president question markwest we need a president who understands the country and what has to be done to fix it. We have to create more jobs. We cannot punish students going to college coming out with debt. , the economy growing at 1 or 2 a year. That is inadequate. I agree with everything hank said. In addition, i think we need a. Eader with experience we cany whose ability count on and we know where they stand to we may not always agree with them. I think we need a president who will help unite the country. For all americans all working together. I think we need somebody who has that vision. I will add one thing. The leader internationally. I think it is pretty much view that we walked off the state is the stage. We lost that role and we have to get it back. That was part of my exclusive interview with Hank Greenberg and his lawyer. You have two viewpoints. One is that there are a lot of things broken and we need strong leadership and the other is we need predictability and experience. On the national stage, it is an interesting layout there. Hank greenberg saying the u. S. Walked off the national stage. Other leaders around the world having more protection area. Issue regardless of who you get. A great point. We pulled back from trade come you wonder whether that would be a leadership position in the world. Exactly. Stocks are relatively flat continuing the trend we see overseas. Jonathan we will look at the markets with vonnie quinn and mark barton. Joining us now, vonnie. Whether we see Interest Rate increase or not. Theill see at the top of hour, Deutsche Banks top strategist. To tell us whether we will see pattern or a holding before the decision. Later, we will speak with the going monsanto, the deal through and some questions do remain. Ceo we will speak with the of the electronic call to electronic version of formula one. This is on the news that formula one last week that is all coming up. Jonathan matt miller would be outraged. Coming up, is volatility making weig comeback question mark will show you why and how it is. That is up next. This is bloomberg. Coming up today, two important things. First, we get energy. An allowance has been paying close attention. We will also hear from the monsanto ceo on a big deal, 66 billion earlier today . And all about the 2 billion regulatory fee. Will be looking at the nonmove we will be seeing in the market. Take a look at the chart. It shows the changes within the s p. Three days, a 1 move. The first time we saw that and 43 days. Comes to anike it end as we see little bit of weakness in stocks and relatively flat. It has been incredibly volatile. Believe whates not you believe, that this deal will go through. Stock rally in, that tells you a lot about this. The stock rallies. It feels a janet yellen, they keep talking and no one is listening. Jonathan big interviews coming up, 25 minutes in the session, equity is going nowhere. Europe, ftse holding its head above water and the dax remains unchanged. Coming up with vonnie quinn and mark martin, they wrap up potentially the biggest deal of the year if it does indeed go through. Thank you very much. From new york city, this is bloomberg. Vonnie from new york, i am vonnie quinn. Mark welcome to bloomberg markets. Vonnie we will take you from new york london and cover stories in germany and japan in the next few hours. Create the to biggest buyer of seeds. Both companies coming up in 30 minutes. Shows latest survey donald trump in a battleground page of five Percentage Points, pushing the peso lower today vonnie . Vonnie