There is no alternative come and that is why they are investing. David it is what youre seeing. It was not the fundamentals of the equity markets, it was the liquidity pressed into the marketplace that drove up the values. Alix notice rick parity funds now those risk parity funds that is the risk Going Forward. We will be discussing all of this, plus centralbank policy and the feds next move and the state of the bond market with peter hooper. That is coming up in just a moment. Jon, you are taking a look at the after of that friday bond selloff. Jon the followthrough into asia and europe once again. A threeday losing streak in europe, every Industry Group trading in negative territory. The miners got hammered in london, the ftse down by 1. 5 . In the fx market, dollaryen lower. The dollar stronger on both of the other on most of the other crosses. Positive by about 2 . In commodities, risk off with crude, brent, and the bti coming in at 1. 8 there. And wti humming in at 130 there. The bond market is where the story has been. Up another two basis points on treasuries. We trade 1. 69. The 1. 5 4 , and the bond market story in the u. K. Has been phenomenal. Yields spiked as much as 20 basis points on the 10year in three trading sessions. I want to bring in the Bloomberg Team from around the world, beginning in london with nejra cehic, covering the european asiats, then moving on to with enda curran in hong kong, and mike regan here in new york. Into, the continuous story friday and monday what do you see . Nejra i am seeing a stock selloff in london. Today down 1. 7n percent. It is headed for its biggest loss is the aftermath of exit. If we look at the bloomberg, at the grr every Industry Group is down. We are seeing Commodity Prices decline. You talked about volatility rising. That tracks the eurozone volatility is headed for its biggest jump since january. If we look at the bloomberg, here are three month volatility futures versus the ev stocks. Traders are really pricing and more volatility down the line because this relationship is at its highest since 2013. Talking about the bond market, we have seen the u. K. Gilt market lead the selloff. We saw that happen on friday. In germany, it pushed the 10 year yields back above the zero we are almost four basis points on that. It is headed for its highest since june 24, these yields in germany up for a third day. Finally, this is europes worstperforming bond market portugal. We are at about three Percentage Points. You can see it ticky higher. Jon thank you. Friday, the followthrough into asia, pretty brutal. Froms bring in Enda Curran Hong Kong lets bring in enda curran from hong kong. More of the same as it reaches asia . Enda absolutely right, jon. We saw a bond selloff in the region, in australia and new zealand. It just goes to speak to how the vulnerable ciao vulnerable asia is it just goes to speak to how vulnerable asia is. ,o not forget that the yuan there is the view that china has gotten quite lucky this year. If we start seeing money out of asia if all that change, we will start seeing money coming out of asia. Jon enda curran, in hong kong. Lets bring in mike regan from new york. Mike, another story on friday, ringing futures lower. Are we expecting more of the same . How significant are the fed speakers coming up throughout the morning . Mike it is significant, but it is not unusual when you have a long stretch of quiet with Little Movement up or down in the stock market to see volatility come back quickly like this. The question is, what would cause it to stop . I still think this is largely a tantrum after the ecb last week disappointed investors. That said, everyone has other eyes on the feds next meeting, and the speakers today, people will be glued to those speeches. To get back to your put about the movers friday were all bond proxy companies utilities, telephone companies. That is what makes this dip in the market unusual. Defensive groups that perform well in a stock market correction, but since they were the bond proxies everyone had piled into looking for yields, throughout the last year and a half or so, they are the leading groups on the downside. There is a bit of an unusual situation. Out governord pick Lael Brainards speech some people call it fed noise. There were expectations that she would come out with a hawkish tilt. Does the Market Action friday into monday does that change at the fed . Mike i think it probably does. If the market freaks out enough, it takes the odds of a fed increase in september off the table. Hillary clintons health is now a very big concern, and obviously it throws a lot of uncertainty into an election that the markets seem pretty comfortable with her in the league, and now there is a lot more uncertainty Going Forward with that. Jon mike regan. Futures are negative in the United States, equities are down in europe. You saw the followthrough in asia. Lets get you some movers and crossover to alix steel. Alix definitely uncertainty in the market and in individual stocks or Deutsche Bank is getting hit, along with the entire european market. Ceo john cryan is saying Asset Management will remain a central part to the business. There were a lot of rumors and speculation that that division would be sold to raise capital. In a letter to stafford in a he said theyffers, are committed to the union. Another stock getting hit hard is samsung, the worst twoday slide since 2008. You had those faulty batteries in the note 7 smartphone. The total cost could be 1 billion, as we look at the 2. 5 million unit recall. Thatllion market cap is Molson Coors Brewing apache. It is a bad twoday slide for this company. Company those talks are set to end. The issue was where the company would have been helmed. The Merger Company was supposed to be headquartered in europe, the Operational Center for praxair. Lindein lies the issue wind is down in market share. David there is another story that may be weighing on investor seminar on investor sentiment, and that is the health of democratic nominee Hillary Clinton. We saw that disturbing video yesterday of her stumbling as she was being helped into her vehicle. Here it is, just after the 9 11 ceremony. Megan we know what happened yesterday, where she was taken away from the 9 11 ceremony. First we were told it was heatstroke, and then that video emerged, showing her stumbling, needing to be helped into her vehicle. We were told eight hours later that she is suffering from pneumonia, diagnosed on friday. She canceled her planned trip to california today and tomorrow, and we expect we will have further information from the campaign. When this first happened, they waited to typical mode, which is a lock down. They withdrew access to the press, and information was pretty scant until late in the day. David what possible effect could this have on the campaign itself, particularly as this risk as this race appears to be tightening . And could it affect the markets . Megan in terms of the impact on the campaign, the main issue is this has been a type of issue that was always brushed aside as a rightwing conspiracy theory, question her health. Several on the far right have been increasingly vocal about it in recent weeks, as she was coughing. And legitimizes that issue and brings it back to the center of the campaign. An increased call for her to release her medical records. The markets have been relatively sanguine. We have talked about how the markets do not seem to have priced in a donald Trump Victory or presidency. I think you will see part of a reaction today will be about increased uncertainty. You will see people starting to wake up and say this is a real possibility. David will this cause both camps to be more forthcoming about Health Records . We have to bear in mind that donald trump is 70, Hillary Clintons 68, and neither side is forthcoming. Megan there will be increasing pressure for both of them to release medical records, and for her to have a full investment a full medical workup. They will try to say, do not make this into a mountain. This is a limited incident, she is fine, we will see how it plays out in the coming weeks. David megan murphy, thank you for being here. Jonathan, as if the markets did not have to deal with so much. Jon the 10 year yields, we reynardwe have governor governor brainard. This is bloomberg. Jon from new york city, this is bloomberg. Im Jonathan Ferro. It is indeed another busy day for the fed before the quiet until begins. Deutsche bank says governor Lael Brainards speech is an important opportunity. Great to have you with us on the program. This speech gets scheduled come and you come out with a note that says this is an opportunity, and all of a sudden we are expecting a hawkish tilt from governor brainerd . Y . Peter normally these speeches are scheduled well in advance. We have been hearing earlier in sanweek people like francisco fed president williams sounding hawkish but the market not responding. So it could be a coincidence, but it is an opportunity for the fed to give a message to the market that is very critical. Lael brainard is dovish. Something more hawkish, the market will listen. It means janet yellen does not have to give a special interview, which is a little less convenient. It is obviously an opportunity to send a message to the market if they decide to use it. Jon what do we base the assumption on, why they need to go out and do this . Peter it is not terribly effective if they are going to september. G in they have been careful about saying september. I do not think they want to lock that in at this point, but they have not moved the markets. Expectationss with and the market only about at 30 , that makes it difficult to move. 50, would like to see it up be a0, without having it major impact on markets at the time. Alix but when they take the opportunity, the market winds up not believing them. It seems like none of the theish guys if you have dove, maybe the markets will move a little bit. Thed the more they talk, less the markets listen to them. Is there that level of coordination with janet yellen and Lael Brainard . Do you think she went to Lael Brainard and sadid please be hawkish . Peter it is possible. These people obviously talk amongst themselves in the halls of the fed. Faced with a situation that is pretty much locking them out of moving in september, this is an opportunity to move things. It does not happen that often, but it is i think more comfortable for janet yellen to have someone like Lael Brainard give this measures than for her to come on and have to do it herself. Reaction have market on friday bleeding over to today. You have the feeling of a temper a 2013. A l does that make things more dovish . Jon if you believe that what is happening in japan is driving Global Markets, then by default you believe the two guys at the end of jgbs are driving markets. By default, it is two blokes trading jgbs, driving Global Markets. Why should the fed pay any attention to that whatsoever . Peter volatility went up on friday, financial conditions came down at it. I do not think it did anywhere near enough to cause them to move off track, if indeed they want to move in september. The economic case is there. The labor market is doing well. Inflation is not quite where they want to see it, but you have been hearing a lot from leadership saying the case is better. A little bit of volatility in the market will not throw them off. If we get a big drop, that is something else. Jon based on what we saw friday and today, there is more reason to maintain some kind of credibility. Alix Morgan Stanley saying that the fiveyear yield, at 1. 2 , does show a 60 probability of a fed hike by december. What is the magic number . The treasury market need to be to have the market be ok with a rate hike . Peter the general belief is that september is out, december is in. 60 . 50 ink to get things up to for september, Lael Brainard has give a decidedly less dovish talk today. We are hearing from dennis lockhart, the atlanta fed president , a centrist. If he gives a strongly hawkish effect it will have an but not as much as the Lael Brainard speech will have at this point. The theo you look at brp function, or do you look at end of the yield curve . Peter we look at both. Alix with growth slowing around the world, it will not take much the way of and they get if of a negative economic shot to break the tension. Peter hooper breaks down the five headed dragon that could weigh on global activity, next. This is bloomberg. Lets get a check of the markets for you. Deep into negative territory, more of the same after the s p 500 posted the biggest oneday loss since june 24 of this year. Futures down by 1. 19 on the dow. In europe, the futures down by 119 on the dow. Dollaryen with a 101 handle. The story in the bond market, starting to differentiate things a little bit. Friday was a blanket selloff. Today treasuries are relatively resilient with yields just off one basis point at 1. 69 . David, it is pretty much risk off commodity. David and gilts have reacted much more. Lets take a longer view on what is going on with these markets. It is time to do a Sensitivity Analysis on what factors there are that could have the most effect on the fundamentals of the economy. Deutsche bank has done just such an analysis, and peter hooper is here to take us through what they found. Lets take us to the subject that is on everyones mind when the fed will raise rates. Look ate took a with the data said, historically what the activity was in Major Companies in and said action. The fed raises rates 25 basis points over the next two years, it is going to reduce gdp globally by. 4 . 2 per year. That is a noticeable negative impact. David with china being heard among the worst. Peter a number of emergingmarket companies are particularly sensitive to this action. But if i could add a point to what Eric Rosengren drove home yesterday, yes, it is a negative impact, but if they wait it could be more negative. They could have to do more down the road, which means more pay later on. If they do so now, it will cost you. David so it is not necessarily an argument against the rate. The price of oil went up 10 if that happened, what would happen . Peter there would be winners and losers. Perhaps not us up perhaps on balance, global activity, not as much impact. Consumers this would be a negative, Oil Prices Going up. For producers it would be a positive. We saw this in spades over the last drop in oil prices as a shock. David at the moment we do not need to worry about it, because oil prices are down. Jon but with what we have experienced over the last 18 to , weve only really seen the negative effect on a net basis. Some would argue that with the wouldch you did some argue that. With the research you did, what has changed the echo peter in the u. S. , it shifts to core suppliers. Being a negative. But the u. S. Consumer overall is looking pretty good right now. I attribute some of that to what has happened to oil prices. Globally it is seen to be the plus side of the picture, and i think there is benefit. Certainly in the u. S. , that is a clear case. David china we talk about it a lot. What would happen if you took 1 off the growth pattern of china . Peter that is a bigger shock than the fed raising rates. Up to half a percent or more on gdp across countries, particularly countries who are close trading partners with china. David particularly Asian Companies particularly Asian Countries malaysia and gapore they will hit they will be hit particularly hard. Peter if you pull together a ,umber of negative shocks that could be at the big negative. But we do not know if it will be positive or negative shots, so it works both ways. There is a fair amount of uncertainty out there bank. The range of uncertainty around the expectation of noble growth being something in the neighborhood of 3 to 3. 5 in the next year, it could be 1. 5 . David thank you so much for being here with us today. Jon clinton cancels california. Schedulees her following a diagnosis of pneumonia. That is ahead in Global Markets. Quities are lower the futures are down by about 100 point for new york city, this is bloomberg. Alix this is bloomberg , im alix steel. This local of 30 p. M. In london, and heres what you need to know. Democratic now many Hillary Clinton canceling a twoday trip to california after her Campaign Said she is suffering from pneumonia. It followed clintons abrupt departure from the september 11 commemoration after her doctor said she became overheated and dehydrated. The fed governor will speak in chicago today. Mr. Last scheduled appearance by the fed official before next weeks policy decisions. Ahead of that speech, were seeing stocks fall around the world, following fridays almost 400 point selloff on the doubt. For more on the markets, lets head over to jon. Remarkable. Nathan you see the followthrough to asia and europe from fridays ugly session. The dax is down by two Percentage Points. Are highly classes correlated. The dollaryen lower, is also a stronger dollar story with the bloomberg dollar index up by. 2 . Risk off in commodities as you would expect. Wti and crude coming in by two Percentage Points. Are driven byly was happening in fixed income. Yields move higher on the front end of the yield curve in treasuries, we move up by another basis points to 79. Tenure guilt is moving at about 20 basis points over three trading days. Up at aboutuild is 20 bas