Clinton. She canceled a trip to california. Will hillarys health rattle the market . Caroline significant volumes, two and a half times than the usual. The vix shoots up 40 . All eyes on europe. Lights up onros friday on the stoxx 600. Guy let us talk about what is happening around the world. Having some fun with your gm function. This is the best place to start your day. The slider up. Giving you an idea of the scale of the moves. Look, some big market moves. S p down 2. 45. New zealand down 2. 5. Hong kong, two point 82. Showing you what is going on. The futures over there as well. On yours coming through gm and this morning. Let us catch up on everything we need to know. Hillary clinton has canceled a two day trip to california after her Campaign Says she is suffering from pneumonia. President ialc nominee up abruptly left a 9 11 commemoration yesterday and appeared to stumble and need help as she moved to her official vehicle. Her team is evaluating the rest of the schedule. Praxair have agreed to terminate talks. They are said to a failed to agree on the role of munich. The potential deal would have been valued at around 30 billion. North korea has completed preparations for another nuclear thatraising the prospect it will conclude its third that nation of the year. After the north carried out its fifth Nuclear Explosion on friday and claims it can outfit and atomic weapon on a rocket. Ceo frank witter that says the company is still far from overcoming the emissions crisis. It remains to be seen if the company has enough money to overcome the problem. We are making progress. We are trying to provide Technical Solutions to our customers and to regulators and we have to regain the trust. We disappointed customers, stakeholders, and employees and we need to work very hard and we do. Making progress but we are far from fully overcoming the crisis. And we have a long way to go. David samsung shares have slumped again. Seeing the biggest drop since 2008 because it u. S. Regulators and the company itself warned users that the smartphone that they should turn off the smartphones. Aviation authorities are calling on passengers to stop using the devices during flights. The phones had batteries that caught fire or exploded. Global news 24 hours a day powered by our 2600 journalists in more than 120 countries. This is bloomberg. Let us stay in asia and talk about how the asian markets are performing. In terms of what happened on friday on the streets. We are likely to see a soft european open. We are not done here either. The scale of the drop was significant. By 1. 73. Wn governor kuroda in basel today. Joining us now to kick all of this around is Michael Metcalf. ,s the market telling the fed no, dont think about september . It is an interesting mobile and financial conditions have been a big driver of fed policy. They are beginning to normalize. It is clearly a concern. Professional investors were short the vix. We have seen the vix picking up a little bit. Part of that field like short squeeze to me. Nevertheless, what should i make of that . Is referred to as the fear gauge. When ite are also times is reflecting complexity. The moves we are seeing are pulling us back. We look at the yearlong chart going back to the average is all we are doing. Right now, guy the averages 17. Ishael what we are seeing an unraveling of complacency. In. Put the earpiece back you can hear caroline. Caroline are we expecting this volatility to stay . Michael there is a lot of event risk coming up, the first is the fed. The thing that is new now is we have this question i think about what is next for Monetary Policy in the sense that the ecb and the boj are reviewing quantitative easing. We are not quite sure what that means. Does it mean that there is a new form of easing coming or that Central Banks are going to step back and let fiscal policy do the work . As well is the question about will the fed hike or not in the timing of the move and you also have the question about quantitative easing which is somewhat new. The reason for volatility being so low is the idea that Central Banks have been there to underpin any big fallout in the market. I think this is the beginnings of that question being asked right now. I wanted to gather what michaels answer is because you are saying it is being questions. Is less coming from the central bank . Michael i think you will get more from fiscal policy. But it will take a long time for that to come through. Right now, it will be about continued centralbank guidance but also a little bit about the question about whether you can have more qe and whether it has reached its limits. I cannot handle that question. The boj will go towards answering that this month. Do you want to engineer a c po curve . General corrode it is talking about looking at new places for what he will do with Monetary Policy. Is he thinking about reengineering a curve . And the unintended consequences of this program being a flat curve. Boj for obvious reasons is much further down the new monetary measures route. All the way through, we are equities all of a sudden, we cannot have longterm boj yield this low. The acknowledgment of that is a significant change. And does suggest we are at the limits of their easing. Inoline give us a sense your head of strategy role whether we put money into this market . Or do we get into cash . Michael one of the key things we will be talking about if this really is a timeframe where Central Banks are changing tact is the correlation between equities and bonds. One of the things we are reassessing is you need to think about the yen exposure. If the boj cannot ease anymore, the yen may end up stronger than they want. Economics they have been able to have a week yen but now there are questions about that. Yen that now there are questions about that. Guy what would a massive fiscal approach due to that . Satan do to that . The storyhat change surrounding the currencies because they are correlated . Michael absolutely. Uncorrelated i should say. What we have been concerned about is ons eating on a bubble for some time but they keep going. And jgb is the poster bond for that. The poster bond. Question if you do get a massive fiscal push and Central Banks are saying we cannot do any more qe than yield should rise and fisk and fixed income markets should come. Caroline , will be fed hike up next, will be fed hike . Thenard tries to put question to rest. Volkswagens cfo told me that the Company Plans to return to the bond market. We watching shares of uniper which begins trading for the first time. This is bloomberg. Guy 2 43 a. M. In new york city. The European Market is extreme minutes away. David samsung shares have slumped again. Seeing the biggest fall since 2008. U. S. Regulators and the company itself is warning users to immediately turn them off and stop charging the phones. Should authorities are also calling on passengers to stop using the devices during flights. Three dozen of the phones released a few weeks ago have batteries that exploded. Dalia client money since it started its new Strategy Early last year according to a person familiar with the matter. A rare exception in an interstate that severed from poor performance. A spokeswoman declined to comment for bridgewater. Tesla is updating its Autopilot Technology to focus more on radar images then camera. It is the third attempt to convince critics at the semiautonomous features are safe. It is also designing the software to disengage. Tesla has been under fire since a fatal accident back in may. Planning a to be major restructuring of its executive board. The company will also combine the marketing and sales operations. The carmaker is also changing its a electric car strategy to rival tesla. New models are said to be improved at a meeting later this month. That is your Bloomberg Business flash. Now, we returned to the u. S. Governor brainard will be the last of the central bank members to speak ahead of the decision in september. Some watchers think brainard is suggesting changes are coming. Her comments follow those from the boston fed president friday when he said as failure to continue on the path of gradual good to shorten rather than lengthen the duration of this recovery. Froms get the viewpoint Michael Metcalf. Give us your sense. September, are we going . Not think the market is priced for them to go at the moment. The fed is playing a cat and mouse game with the market right now and they are trying to persuade the market that september is a possibility but i think the data has wrongfooted that attempt a little bit. The reality is that unless the fed is ready to change direction as of late, the fed has never tightened rate in the last 20 when when there have right right now, you have to assume that it is the same said and they will not tighten unless it is at least 50 priced. Guy that is history. They have not done that. I can give you the probability now, 30 . People are now thinking maybe the fed is saying we are not dependent on the world. There is also an argument that says that is what the brainard speech is about today, getting that number of different you percent. There is someone at the dovish and of the spectrum saying we should think about, that number will go to 50 pretty quickly. Michael i agree with a lot of what you said. Another difficulty they have is that if they do not go in september, what happens in december if it falls below 50 . It is possible. Andink this is a real cat mouse game. A difficulty in the feds communication right now. It appears at least that they have allowed themselves to be led by the market. There is a question at some point, they have to break that cycle and show they are leading and guiding the market. Actually, fed tightens means the fed is following the market. Does the data support a hike as soon as september . Michael i would say it depends because if you look at the level of Unemployment Rate and the level of things like core inflation. We get an update on inflation this week. You wonder why policy needs to be this accommodative when the u. S. Economy is quite close to full employment and inflation there are no risks of deflation. Why you need such an accommodative policy . Against that, you do see signs of growth is a lack momentum right now and that lack of growth momentum and the lack of followthrough on wages is what the doves are pointing to yes, we know we need to normalize policy to a relative low. That is the other part, the terminal rate of fed funds will be much lower. Are the doves saying, what is the rush . Whereas the more hawkish members are saying we have rates near zero, they should not be there when we are at full employment. Why dont we begin to normalize policy . The one thing that is not a timese that has been many for the fed in the last few years, is financial conditions are fine. The International Outlook is also fine. And so that is why it is interesting that the price we have seen in the last few days, Financial Markets are beginning so financiale bit conditions may become less supportive. This is the big debate here right now at what point is the fed going to start to impose itself on the market rather than being led by the market . Thatine we will see how impacts the rest of the fx class. Thank you. We are minutes away from the open. We will look at the potential stock moves in trading. We hear it exclusively from volkswagens cfo regarding the scandal. We are also watching linde. That is coming up next. This is bloomberg. Are we making progress . We are trying to provide Technical Solutions to our customers and regulators and we have to regain the trust. We disappointed customers, stakeholders, and employees and we need to work very hard. And we do. Making progress but we are far from fully overcoming the crisis. And we have a long way to go. The volkswagen cfo spoke to us exclusively, very open about the work that still needs to be done and the costcutting they still need to do a cross the board. And they are looking at the bond market. They are having to update the market in terms of their finances. Going forward, they may be occupying that space. Guy staying in Industrial Gases downrmany, linde sharply. It could be plus 5 softer this morning. It could be because praxair and their deal with linde is off. Caroline we are german focused. Uniper is another one we are watching. The only day it will be on the dax. The conventional Generation Energy site of aons business. The evaluation will be much less than what aon had on its books. We will talk to the boss of that business later on. Four minutes until the market opens. Looking at the bond market. Germany, off but look what is happening in peripheral europe. The moves are even bigger. 45 basis points off in portugal. Decent moves. Michael metcalf is still with us. The periphery had recently been well bit. Does the market no longer see a qee are going to extension effectively delivered by rocky by mario draghi . Michael the ecb question is being reviewed. Clinical risk in italy and spain. Guy the market open is up next. A couple minutes away. This is bloomberg. Guy good morning and welcome to on the move. I am guy johnson. We are in london. Erland high Caroline Hyde is over in berlin. What is the morning brief . Caroline a rude awakening. Slumber,tbrexit several weeks of that the market falls out of bed. Volatility comes surging back. Betting on brainard. The market looks to the feds relative dove. Will she put september to rest . Clinton canceled a trip to california. Will her health rattled the market . We will be will her health rattle the market . The asset class is still crucial. It will stay an essential part of Deutsche Bank. And they are reaching the finish line. Is the Deutsche Bank fascinating. The banks are back info. Let us show you what is happening. We are expecting a softer open. This is what we are looking at. That is already falling. You can see it happening. We will wait to see what the story is. A selloff on the backend of friday. We are leading lower and lower. Starting to play a little bit of catchup. Are coming the cap into the and the cac are on. Ng let us show you what is happening with the stories which has athe dax lot of moving parts today. Let me get my fx sp back on screen. Let me show you what is happening. What you have for me . I had the u. K. 10 year yields up. We solve this yield rise 10 basis points on friday. The u. K. Led a global selloff in bond market. On concern that the Central Banks are coming to the end of the quantitative easing. We heard from the ecb and we heard from the hawkish leaders. We are at 88 basis points on that 10 year yields. Moving onto to what is happening on the stoxx 600. Red across the board. Looking at the imax function. Utilities are down 1. 8 . When we saw the selloff in entered riday, it was a luxury things going down. Financials following closely behind, down 1. 5 . They just switched with materials. Down lower on Commodity Prices. Looking at specific stocks. I wanted to start with a be foods. With ab foods. Fullyear retail operating profit margin are close to the first year level. 9 ahead of last year. It sees fullyear sugar revenue and adjusted operating profit to be a head. To be ahead it looks like we could be seeing that a little lower at the open. Ism not sure if that todays price and it is down 3 . And praxairt linde terminated talks. They were in talks to join the two biggest producers of gas. Those discussions have ended. They failed to agree on the role that me a net, lindes headquarters would play in a combined company. These companies had been in talks since midaugust about a merger. The deal could have been valued at 3 billion. This is an industry that has been getting increasing antitrust scrutiny. On the same day that aon spins energy, theer unit, Renewables Grid and Retail Business is being split out of the german utility confirming plans for an ipo in the Fourth Quarter. Guy this is the ftse. The mmr. What it shows you is that we are seeing some fairly substantial moves in the mining sector. 4. 47. P glencore, up 4. 14. Rio is factoring down. We are seeing some big moves. Has the market taken the deutsche comment . Caroline still down 1. 5 . It does seem to be the key take away. The asset business is not for sale. They are keeping the overall Asset Management part. It is crucial to the future of Deutsche Bank. Let us talk about what is happening in the banking sector. Michael, the michael the market has been rotating out of morey into some of the cyclical elements, banks in particular have been a big day in her. Gainer. What you make of that move . What do you make of that move . Out of the rotation utilities generally was all part of the complacency we had over the summer. Because we had these centralbank questions, as the year draws to a close, people will question the complacency. It will be interesting to see if the rotation continues. Some of the cyclical stuff will be down more but in general, this is a blanket weakness we are currently seeing. Guy let us talk about what has been driving the story. For the is picking up fifth consecutive year. Corporate bonds highlighting the growing strain on Company Balance sheet. Morgan stanley estimates that ompany debt what do i make of this . There are a number of interpretations. This has been a world where borrowing is easy and cheap. And at a time when you are still remunerated as an executive for keeping your share price elevated and you can do that i buybacks. By what happens next . This is why the Central Banks are taking a step back and reviewing the impact they have had on the market. A slight yield curve will hurt the banks. And corporate are incentivized to borrow heavily. Henkel can borrow at negative yields. Michael you are creating these massive distortions. There was an assumption that corporate would borrow and invest and the investment numbers at the moment are