The german electorate is undecided on who to vote for in next months election. Could we be in for a surprise result . Matt less than a half hour away from the european open. Lets take a look at how the market is assessing the damage anderday done in barcelona the response from the Trump Administration among other things. Futures down across the board. We have a drops in u. S. Equities yesterday i think the second drop is more than 1 in one week. Something we have not seen in at least the last six months. We have not seen a 1 out of. His month since march it has been a wild. Ets are getting back to risk off. You can see a threeday trade of the german bunds, now down . A oneday trade you can see that today is a day on which investors are buying those bunds, pushing up the price and driving down the yield. Function this morning, the s p down by 15 percent. Equity markets certainly paying attention yesterday. We are still trading in light liquidity but certainly something to Pay Attention to. The nikkei down by 1. 2 . Nor white down 1. 4 . European markets under pressure yesterday. Keep an eye on dollaryen. Great analysis being done on the mliv blog. Your terminal talking about that. Argentina being a big standout story this month and it is based on an election result that does not have that much bearing. The emerging markets are really quite interesting at the moment. Lets show you what else is going on around the market space. The czech economy seems to be in focus with the data coming through. Zinc continues to be a focus as well. The metals markets and the rest of the spaces again with focusing on. Lets get a first word news of update with juliette starley. Juliette suspected terrorists killed by police and civilians selled and a confrontation the barcelona hours after 13 people died and 100 were injured after a van was driven down loss run lets. Las ramblas. Islamic state has claimed responsibility for the attack. Our neighbors in madrid, nice, brussels, berlin, london have experienced the same horror that the people of barcelona have suffered and i want my first words to convey to them the affection, the solidarity, and the affinity of the whole of spain and the whole of the world. Donald trump will not move forward with a plan to Advisory Council on infrastructure according to the person familiar. The council which was still being formed would have advised trump on his plan to spend as much as 1 trillion upgrading roads bridges and public works. Following the announcement wednesday he will be suspending to other panels. A Senate Republican who once considered joining the administration has called for radical changes. Telling reporters in his home state of tennessee that the president has not yet demonstrated the characteristics needed to serve in his job. Another Senate Republican of South Carolina says that trump has compromised his moral authority with his response to last weekends violence in charlottesville, virginia. Sentte house official has jerry, and to remain in his position as director of the National Economic council. Particularly upset about the remarks in charlottesville. Leading the Trump Administrations efforts to overhaul the tax code. Global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries, this is bloomberg. Guy, matt . Guy thank you very much indeed. Spanish radio reporting that he further suspect has been arrested in relation to the barcelona attack reported by the spanish media. We will come back when we get more details on that. This follows what happened yesterday. The details still beginning to emerge as to how this story unfolded. We know that five terrorist suspects shot dead by police in a town south of barcelona after in attack in the cities las ramblas avenue. The government says the incidence are links. Incidents are links. What questions are the spanish asking about this attack . Ise big question here where the perpetrator and are thehow big it was things police are working on. The question is will they be up to find the people who are supporting the attacks . For five orooking six other people who are part of the logistics of the attack you that is the main focus everybody has today. What to do the police no right now about the first attack . Driving thee person van that got away and is still at large, to other people were arrested in towns outside of barcelona. One of them arrested in a town on the previous night where there had been a explosion that destroyed a house. They thought it was due to a gas they believe it was probably a terrorist cell doing some tort sort of test. Listened to him speaking yesterday, and he talked about the fact that the whole of spain stands behind barcelona and with barcelona. Understandable sentiments. Was there a . Subtext . There is a referendum coming up in catalonia the first of october. Would what happened yesterday and what has happened overnight have any bearing on the referendum which is nonbinding and the Spanish Government are dismissing it. Does this filter into the politics of the region . Obviously it is on some peoples minds. Think it is a key driver at this stage. It could affect sentiment of how people feel barcelona about the situation, what their main concern is today. That may have a direct impact on the referendum. However, i do not think it is the top of anybodys agenda. Spain, theto president of catalonia yesterday toward the ends of his own press said he was thinking the police and the services of the National Government and at this time there are no divisions that count. Absolutely. Given the events that unfolded, totally understandable that sentiment. Clearly were going to have more on this story. We will have you the latest as it develops. In the last few minutes there have been reports in the media that a rather suspect has been arrested as a result of what happened yesterday in and around the barcelona region. A developing story. This is bloomberg. Comeback, asian stocks are extending a global slide as volatility spikes higher. Our next guest says north korea, charlottesville, and gary cohn are catalyst sort excuses for equity weakness whatnot the main reason stocks continue to sell off and will keep doing so for another couple of weeks. The mlivategist at team in singapore joins us now. Log e outlined on the blog, a number of key reasons the market is going to continue to selloff. Can you global couple of them for it can you go through a couple of them for us . One of the big changes is excess capital in this market. Investors have too much cast and their cash. That context i should say politics, geopolitics have no real impact. Korea, tests from north turmoil in washington, whatever we have seen we rallied on it there has been a change on. There has been a change recently in the u. S. The first time in almost one decade that companies that beat earnings were not rewarded. Investors are not ready to buy. You put that together with the fact that we are in holiday mode and investors are watching the screens, the fact that retail cash locations are at a low since 2000. This is not the money that is rushing in this time. An environment where volatility can creep up across asset. Assets. Over a week ago we are going to have a sustained direction and we have certain news events that are jumping around, providing a spurt of negativity a of negativity. Catalysts from trump to go into barcelona. Everything was trading badly. Looking at the vix, the one you reference. This is a threemonth chart. Does not feel very high at 15 but relative to what we have seen over this summer that is a big level. That is a good point. It is not particularly elevated. We are not seeing volatility but it is in the context of where we have been. Because it has such low volatility, investors have had to keep on getting higher and higher returns. We got maximum leverage at the lowest liquidity. Were seeing the vix pickup, the spikes with this week its said through mextising w next week. Were going to reduce risk. Environment will stay tough for a couple of weeks. Mark, interesting stuff as well talking about the big outside moves we have seen in history on dollar yen. The move second really change the market. Many big figures in terms of the move we can see. We could be approaching Something Like that here . I dont think there is any sense that we are approaching a extreme scenario. Morning, 2008this the russian crisis in 98. 1990 for the correction as well. There are specific events. It is just a reminder that modern investors have spent nine years used to low liquidity. The last five or six years is not aware of how quickly things can change. 2008, dont would have been very gradual before that and suddenly the paradigm shifted. Things can change very quickly. How with the market react if cohen quit . Very bad news. One of the things were discussing here is it is typically bad for markets. That should not be seeing i think markets are going to trade badly whether he quits or not. That is another catalyst to get even worst. I dont think markets will trade well the next week or two even if cohen stays you im not expecting him to leave. That will be another sudden blow. This is not because we are becoming structurally bearish, we think there is a positive build in the environment. It is a very bad time of year for volatility to pick up. That will cause a bit of a material crash for a couple of weeks. Guy interesting stuff. Great this morning, thank you very much indeed. Team, a great team. You can follow it with their analysis on what is happening in these markets. Read the back end of yesterdays one, this morning, and follow it throughout the day. Airlinehappening in the sectors, easyjet looking to capitalize on air berlin insolvency. It could expand intercontinental flights and allow easyjet to boost its presence in the german capital. Joining us from berlin. Where do things stand on whether the various parties airlines go from here. Well, talks are intense. They are going to finish this up as quick as possible because the uncertainty for germany for air berlin employees is not good for travelers. The talks are quite intense. The next big chunk will go to easyjet in terms of picking up a chunk of the Berlin Operations and some of the a320s. Matt what we are hearing is that lufthansa will pick up the longer haul and easyjet will pick up the intergerman shorter haul. German government officials are flying back and forth between german cities all the time on air berlin now. Are they going towards to fly around on easyjet is an is almost a National Security question . When you let a british soon to be no longer in the eu airline operates your Domestic Airline travel routes . I12 it is a security issue in that sense. Theyre going to come up with an austrian operating license soon. They will have a european foothold. The question is, a fair question, to what extent lufthansa takes over the Domestic Travel operations in German Government. To get the politicians from different corners in berlin and brussels. I do not think it will go all of the domestic stuff but that is what we will have to see. Some of it may fade away and the German Government is going to have to take the blunt you matt is this becoming an election issue . Afloat couldrlin be a idea because they will actually gets to come back with their air berlin flight. Schulz does not think that is a good idea. It is for the German Government. There are two significant issues going on right now. You have the diesel summit which is an industry that is near and dear to merkels heart and you have the air berlin situation. It is going to be hard to pin either one of them on merkel, especially they had problems with the coalition. It is to issues like Economic Issues for an economy that is really so strong they are having to deal with right now. Time, air berlin and the employees at least through the election. A loss written about the fact that effectively sometimes there berlin air berlin to keep ryanair at arms reach. Reactionhy lufthansas in the way that it has. This is by the German Government has reacted way it has why do German Government has reacted the way it has. Does he have a point surrounding this and do you think the authority will have a very careful look at this . Yeah. He does have a point. Basically ao be done deal before the insolvency was announced. German government is working behind the scenes for quite a while to make sure air berlin does not just collapsed in an uncontrolled way. They want to get as much of air berlin in the hands of lufthansa as possible to make sure German Government officials are not flying on a foreign carrier. Point whether or not cartel authorities have an issue there. So far they have said no. The German Government has said they dont have a problem. This is a fair point because ryanair and easyjet are Significant Players in the german market. Ryanair has been expanding aggressively. Whatever happens to air berlin you probably see ryanair and he gets expanding one way or another. Matt i thought it was interesting to see a comment from Martin Schulz, the candidate against merkel referencing michael oleary. There is no bigger capitalist than this man and i believe in this sense he met capitalists as an insult. It does sound for georgia. For georges prince prejorative. We will carry on with what is happening in barcelona, front of our minds as we digest the horrible events that took place yesterday and this is covenant the subsequent shooting. Another suspect has been arrested. More on this through the mornings open. Six minutes away. This is bloomberg. Theory let us take a quick look at what the fair values are telling us. Down by 0. 9 . Down by 0. 8 . The ibex down 1. 3 this morning. We are likely to see some Market Reaction based on spain today. Matt i have a chart here. The size of the moves in the s p 500 broken down on a daily basis. The red line, anything that goes young that is below 1 . Anything above the greenline goes above 1 . We have not had any of these kinds of swings lately and now a week. Had two in the last time we had a 1 moved to the downside was in may. This just shows you have seriously the markets have taken these issues. London to open down 0. 5 and slightly bigger moves in the continental markets. Down like spain will open by over 1 this morning following the attacks from yesterday. There is the stoxx 600. We are waiting to see how the dax will open and the ibex. Ibex, down as suggested by about 133 . We are expecting similar numbers or the similar numbers for the cac and dthe dax. The stoxx 600 down by only 0. 6 , it pretty much in line with the ftse. Significant softness in the continent markets. The ibex is down by 1. 3 . Imap. I am looking at my i realize i have to change this because mine is in german right now but i will do some translation. Financials are the biggest losers. I. T. Is clear as is industrials. And the materials. Raw materials are losers as well. The least of the losers are real ,state, health care, telecom and utilities. You have basically the defensive stocks. You would expect on a day like today would be the least of the losers. And financials are down the most. Everybody though, obviously, are down after the big moves in the u. S. Carry through asia and now into europe. All of the Industry Groups are down. Guy in terms of where we are seeing the losers ryanair is ryanair is down as is easyjet. A Market Reaction to what we are seeing out of spain. Participants big in the spanish air routes down to barcelona. Aether or not there is reaction in the tourism story, we will wait and see but certainly the market is marking down. There are also a bunch of spanish stocks including spanish byks santander is down 1. 9 today. There does appear to be a reaction in the spanish market. The spanish market is underperforming compared to its peers. And easyjet as well as the hotel groups are under pressure. Five suspected terrorists shot dead by Police Following the attack in barcelona. 13 fatalities resulting there. Lanta government the government says the incidents are linked. Asked youquestion i earlier, but let us recap it. The authorities have a bunch of questions that they need answers to and they are trying to piece together what the cell looked like, who was involved and who is missing from its ranks. Whatger question is are the spanish people asking about this attack . Operandiith a modus that is clear. We have seen vehicle attacks used in a bunch of cities. Are the spanish asking why here and could it have been prevented . I do not think that is a question. Like the opposite. There was an expectation among people, especially those at the attention to these kinds of attacks. That this would likely happen in spain at some stage. When because it has happened in isope and number two, spain a big economy in europe and a tourism magnet. It makes sense that this would be a likely objective. And also, spain has a history of networks, terrorist linked networks operating out of spain. They do not necessarily attack in spain but they give support to attacks in europe. There has always been a lot of attention paid to terrorist groups in spain. I think that puts to rest the question you were making about why it would happen here. Regarding the other part of the question could it have been prevented . I think the feeling is that the police have acted quickly and it is well coordinated even though there may have been some questions at the beginning of the night. Matt the question puzzles me as well. I know you have had a horrible in the lastttacks couple of decades. But, the islamic integration in , at least, more notable than any other country in europe. It always stuns me more when things like this happen in spain. Let us talk about the facts. What do the police know right now about these attacks. Start with the first. There are three stages. First stage is what happened specifically yesterday evening. A van hit a group, three people were involved. One was the driver and two others have been arrested. The driver is still at large. The second stage is that the been aefore there had strange incident where a house exploded in a t