Plunge in the pound since the brexit referendum with traders saying the slump exacerbated Like Computers initiated sell orders. David lets bring in guy johnson from london. Exactly what happened . Midnight and london, liquidity light and everybody asleep and suddenly this happened. We dropped like a stone. Data shows we got to 11841, some platforms had a 113 handle and the bit off a spread blowout 250 times what it normally is. Normally this traits on a wafer and it got blown out. What caused it, we do not know. Like liquidity, a combination of alcos and maybe fat fingers causing this to happen. It has stay down. It found currently trading at 123. 66. Jon you can see how tightknit is. Tight that is last night tight that is. What was bigger, the flash crash over the week, talk about the fundamentals and how nervous people seem to be to buy into any seller of sterling. The icing on the cake was the event that the cake has been a very difficult week for sterling. We have seen it going lower as the combination of hard brexit and tough language out of theresa may at the birmingham meeting of the conservative party drove the currency lower. Ata has been fairly good if you talk to currency strategist, if you went on the data, sterling would be around the 130 level but we are no or near that. People do not know where we are going next. Therefore the short positions keep piling up and i think that will be part of the story going. Orward lets bring in a global strategist. I got a tweet that says the u. K. Should avoid a rent of chancellor no one has ever heard up and fired him on the weekend when the strumming his 110. This feels like an emerging market currency. What is the story . The government is heating the desire of the british people to stick a banner into the spokes of our biggest clothing Global Trading relationships and hope we do not fall off. That is the stuff emerging market crisis is are made up. Vast amount of uncertainty about the Economic Outlook and vast amounts of uncertainty which are leading people to step away from buying the selloff in sterling and inventing numbers about where we may go. Until the uncertainty eases, it gets difficult and although this started with confirmation, we will trickle article 50 and start the process of leaving the eu by the end of march. That means two years of the u. K. Isand putting control of immigration of the top of the wish list and the eu is putting dealing firmly in line with saying it can only have control if you give up access to the Single Market at the top of theirs. In that environment, and two years, three years, sterling will be between 121 and 125 against the dollar. Anything goes if you want to have this much uncertainty. It does trade like an emerging market currency. We need to get a handle on what the downside, upside risks are from this and i do not see how we can get there. Jon talk to me about Market Structure appeared this is meant to be a very liquid currency. Wait for london to go to sleep if you want to see gassy markets. We associate that with the South African story we saw earlier this year, why are we seeing it in sterling specifically and more broadly, why are these events happening in global fx. There is a belief that, in the sense of there was always infinite liquidity but if i walk into my favorite coffee shop and say, what is the price for a skinny latte and they say, two pounds and 35 and i say i will have 5 million of those, they will laugh at my face. We have gotten used to liquidity in the markets that the relationship of the Banking Sector with marketmaking so that marketmaking proprietary trading washed up in one with risks taking on both sides, it has changed, because running risk in banks and advertising risk in banks has changed your we have a more brutal market than we had before. As we try to find the right price. We have not gotten reduction in overall financial risk around the world. Long time to get back to the situation where the price discovery process, we have bad news or a big seller of how we find the right pricing in a bunch of asset markets, that will take it while as we go to a new world order exacerbated by the number of computer programs trading for people in one way or another. This will be difficult for a bit of time. Alix when we have a flashbacks in u. S. In terms of equities in 2010 and we had regulators preventing that from happening again, do we have the same formula in the fx market . It is harder in overthecounter markets there in exchange markets, markets on exchange you get the rules on the market stops trading if you go more than a certain amount or you get put a bunch of regulations in place to control events and we have to do this in Financial Futures markets and equity markets sometime ago and it is harder in a big global , byebye off you and you sell, the sum total of someone in singapore selling or buying with someone in hong kong. That is harder to stop this kind of move in. I am sure this will be a wakeup to havesay we do need orderly markets and we will have to look at what happened on why it happened. David stepping back from the individual existence and talking about the larger picture, all of this decline in the count against with theresa may and her remarks at the party conference. How much is it of a priority to number 10 that they bring regularity to the town, is that important, she is not concerned with the banks but what about the strength of the pound . In the first instance, the pound is a shock absorber, if you think of this as a negative trait shock that is coming, we have decided to facing negative economic but negative trade shock in order to gain more control of immigration. That is the vote of the british people and what the government is putting true. It is a correct economic response from a policy maker to say if i have a weaker pound it will offset some negative trade shock. They will not want more than anybody else would want, a disorderly curtsy move it at a cheaper pound is part of the solution in the process. How they feel about the last 24 hours and all of this week, the scale of the move we have seen, we will wait and see, i bet it causes consternation. Natural currency is a and necessary shock absorber for the economic shock we have brought upon ourselves. David you are staying with us in london. We want to catch up on Hurricane Matthew up the coast on the United States. Lets go to first for nude. Hurricane first word news. It pounded floridas east coast, it has been downgraded to a category three hurricane but still as max sustained winds of 120 miles per hour. Power has been knocked out in 200 70,000 homes in business is in florida, the center of the hurricane is addicted to stay over florida for most of the day before moving into georgia and scepter line of morrow. Georgia and South Carolina tomorrow. The Nobel Peace Prize has been awarded to the colombian president. He helped broker the agreement that ended the five decade war with guerrillas known as farc. It may be bittersweet, boaters and columbia directed the peace plan and he is now in negotiation to salvage the deal. United Nations Security Council will extend the crackdown on Human Trafficking of the libyan coast. Member nations will be allowed to inspect ships on the high seas if there are grounds to suspect they are being used to smuggle migrants from libya. Global news 24 hours a day powered by more than 100 from six thousand journalists i am watching oil as Hurricane Matthew moves its way up the east coast. , a sharp. M. Eastern decline in oil prices as the Russian Energy minister said that he does not see an accord reached with opec next week in a meeting, opec and russia potentially meeting on the sidelines of an Energy Conference in istanbul next week. Why do they need another meeting if they already got to an agreement last week . Skepticism now to the oil market. That is having an effect somewhat on stocks, a push and pull of the weaker oil plus a stronger gold which is looking at first gains in nine days. It looks like the miners are moving on the higher gold. Cannot with a note yesterday that says if gold goes under 1250 they want to be a buyer, helping the miners in europe. Cit group, they are selling Aircraft Leasing business to a company in china for 10 billion which will distribute 3 billion of that to shareholders. It had been under activist pressure calling for a breakup and now will bring the market up 7 premarket with the distribution. Ahead, the countdown underway for the september payroll report, with us will be did a fuel a september rate hike when the numbers cross . An interview with bill gross. Alix this is bloomberg go. 172,000 forecast of four september with the payroll report. I want to touch with you first because we see a monster rally in the dollar. What happens when we get the numbers at a 30 8 30 . There has been a degree of stability in the payroll growth for the last few years about 200,000 each month. Every little volatility with the Unemployment Rate going down slowly and wage growth picking up even more slowly. If we see a faster acceleration and wage growth, i think the market will not only think we will get rate rises in december but might rethink where rates will be an 12, 18, 24 months. That is where you could see the dollar potentially push higher against the euro and the japanese yen. The big question will be in the Foreign Exchange market looking yieldswe see higher bond and do we then see risk aversion come into equities and emergingmarket . Alix if we do see that scenario, a probability of rate hikes higher and the dollar higher, what is the trickle down to u. S. Equities . Isgood news for the economy likely to be not so good news for the equity market. If you look at the last month and a half, and going back to the summer when rates globally bottomed on the long end of that , won 30 on the 10 year, you have a negative correlation 130 on the 10 year, you have a negative if you look at the report this morning, we are right at the level, one in three quarters percent on the 10 year yield, that goes back to the brexit vote, if you are shooting through there, if the number comes into hot, that will put pressure on the equity markets. Jon how much is a global bond market story . Inflation premium seemingly built up in the uk debt market on the back of what is happening with sterling. Will Everything Else follow, shipped up from that . It has because part of the story of the last month or so has been a central bankers have been telegraphing their reluctance to continue providing infinite monetary accommodations but the flipside of that is that we are getting a sense, whether in japan, in europe, and in the u. S. Between the candidates, that there will be fiscal stimulus next year and that should close rates in the long integral higher. David who has the lead in the National Bond market, is it the fed, janet yellen . For a long time we were told it was the bank of japan, who is leading . Leaving kit i think the fed still reads it but there is still this question, it is right the fed stillleads but there is this question, unusual Monetary Policy in the world, a negative l, that iseading, there is a downside of keeping rates this low for this long and we cannot assume we go on doing it. We could wind back to past times when we have assumed policy is easy forever and inflation low forever slow forever and we can go on buying aunts and risk we forget that and say im not sure that is right anymore. And if im not sure that is writing more how much of an adjustment do i get in yields . It was led by the bank of japan but the fed is the 500 todd gurley in this game. If we reprice where u. S. Rates are in two years time, not where theyre going this december, then we can have a decent sized adjustment of bonds and every other market will follow. Alix this is dhs go function on the terminal, s p versus the 10 year yield, the correlation was quite high in the summer and back in august and it has come down significant, now at. 3. Is there a possibility that stocks can the couple from what the yield curve does . There is but when you look at it, there are other incentives uncertainties on the horizon, the president ial debate, the beginning of earnings season, the message of that correlation softening over the last week or two says to us that the backdrop for 2017 for the equity market is positive. Earnings will recover and we will get growth and likely to get fiscal stimulus, maybe some tax reform. That is a good backdrop but you have to get through this uncertainty to get there. David coming back to the United States any jobs numbers which come out later today, how , howtive are the markets much is priced into the market and how much would move the markets upside or down . Kit we have seen a backup in break even inflation rates and Market Pricing is inflation and the bond market, we have seen that go up globally, huge in u. K. If you work to see, the market is looking for a 2. 6 points on average earnings, even if that is 2. 7 you will react, if it is higher than that you will get more overreaction. The payroll number, anything 200,000150000 and over does not move anybodys expectations. I will be watching the wage numbers first and foremost and then see if there is a surprise that makes everybody nervous. David thank you for being with us. Talking next about what the upcoming u. S. Election may mean for the stock market over the next 32 days, are we in store for more volatility . David this is bloomberg go. That is the Capital Building in washington, d. C. President ial debate sunday, who will move into 1600 avenue . The markets of the call had but Julian Emmanuel think we may be in store for swings. He has a note that takes us back through history of close elections and it is not pretty. When the voting public has a difficult time making up their mind, markets are volatile and that goes back to the whole uncertainty principle. Markets are uncomfortable with uncertainty, we saw it this morning in the british pound in september with the rising yields that spark volatility in the equity markets and we think we will see it into the election. Alix i have a great chart, my favorite for the next x weeks. Six weeks. It looks at the risk parity trade index for a clintontrump spread. You own stocks and bonds, the blue light is a clintontrump spread, not a one to one correlation but the red circle is well im highlighting. As you saw the look from gain in the polls, rick perry got hit hard, is there a correlation . It ties back to what we were talking about over the last couple of months, the correlation between stocks and bonds has shifted. When rates are rising and stocks are going down, if you are running a leveraged portfolio like a lot of these risk parity strategies are that assumes that there is a correlation that does not work that way, you will going to risk off and that to us is one of the big risks come not only in the payrolls report this morning that looking out over the next month, uncertainty causing risk aversion generally. Not justur study was about volatility, about market return coming out of elections where it was really a close election and pretty mediocre, a couple outliers, fdr did pretty well. If you want to go back to 1944. In general, when we have these close elections, the market does not do well in the aftermath . No, and the best example is the 2000 election which was decided in the Supreme Court a month after the boat. Markets are rightly after the vote. Although a month before the vote in 2000, the get any pull with eight points, similar to what some of the polls we have seen now, you still got to the point up until the election where there was this uncertainty in the markets could not handle it. Alix volatility has not picked up to this uncertainty, equities, fx, or treasuries. With volatility cheap what is the most effective way to hedge this . Buying a downside put spread in the s p funded by selling an upside call because we think that until 2017 and we actually see earnings start to do better and we know we are returning to growth, we do not think the market runs away even if we are wrong about how half the market is in the next 30 days. David how much is the cap between expectations on earnings and what earning performance ask him how much that exacerbate the problem . Normally it would not because fundamental analyst tend to be over optimistic by nature. When you have these other uncertainties in the background and you know that estimates are going to be reduced want to earning season starts next week, that is where the disconnect is and it makes this a challenging time. Alix great to see you. Thank you. The Ubs SecuritiesMark Halperin and John Heilemann will host a special debate special ahead of the second president ial debate on sunday evening starting at 8 30 p. M. Eastern in new york. Jon still ahead, Deutsche Bank is set to hold a formal sources Security Forum to explore options include raising capital if the legal bills mount. From new york city with an i on the fx market, and a sterling flash crash, this is bloomberg. Jon this is bloomberg go. 12 30 p. M. In london. The state of the markets, futures down 33. Six and everything is happening in london, the ftse 100 up a tencent 1 . 8 10 of 1 . A flash crash, a safe person moved to the downside. Yields creeping higher. On our away from payroll. Up one basis point. We are just one hour away from the september jobs report, the median estimate is for a gain of 172,000 jobs, the Unemployment RateHolding Steady at 4. 0 . 4. 9 . We will break that down on radio and television with bill gross. A plunge in the pound to a 31 year low, traders saying the slump was exacerbated by computer initiated sell orders, the 6. 1 decline the biggest since voters chose to leave the european union. Millions of people in the u. S. Southeast order to flee as