who is responsible? the fed? jeffrey lacker? or the new governor of india's reserve bank? we are less than half an hour away from the european equity market open. we will spin you through what we've got in terms of the equity market. solid session yesterday. let's see what the fair value points are. londono stocks 650 -- looks like it is going to soften up a little bit. let's move you on and show you what is happening around the world. let me just fix what is happening. what we have got is a story of the markets yesterday at what we did get -- i want to throw your attention here into the commodities market. gold is stabilizing. we will come back to that story a little bit later. caroline, the store yesterday, gold has been driven by the european market. it is the bloomberg reporting on the taper from the ecb. caroline: bill gross said he even traded on it. he went for a short duration. our people miss reading the brilliant story that is saying the overall ecb decides to start exiting quantitative easing, , it is to start tapering not going to happen yet, but they will indeed taper. it seems the market thinks it is going to happen right here, right now. of overa little bit market reaction. you say taper and it works up. let's get out to juliette saly who has the bloomberg news flash. jeffrey glock says deutsche bank's slumping price highlights the regions lenders did it may help prompt central bank is to reconsider their approach. he told an investment conference in new york that you cannot save your economy by killing your financial system. one of the clear poster children for this is to banks john cryan -- is deutsche bank. the u.s. vice president of candidates have attacked each other as they went head-to-head in their first and only debate. tim kaine slammed number chunk on his taxes, mike pence talked about hillary clinton's e-mail trouble. >> he is a fitting running mate for hillary clinton because in the wake of the season that american families are struggling in this economy under the weight of higher taxes and obamacare and the war on coal is stifling. hillary clinton and tim kaine want more of the same. clinton,rust hillary my vote -- we trust hillary clinton, my wife and i. we have a son deployed overseas right now. we trust hillary clinton as commander-in-chief. the thought of donald trump as amended and chief scares us. >> the national hurricane center has issued warnings for florida. matthew had hit -- this as matthew is heading toward the united states having last the caribbean. ecb officials have told bloomberg the bank is likely to gradually wind down bond purchases before ending its program of quantitative easing. they say they may happen in steps of 10 billion euros a .onth the euro climbed to a three year high against the pound. mario draghi says qe will continue until next march or beyond. global news, 24 hours a day, powered by 2600 journalists and analysts in more than 120 countries. saly.uliette this is bloomberg. reports thatg's says the ecb will likely wind down before the conclusion of its qe program. talking -- of the 2013 infamous fed taper tantrum. >> your article suggested that the ecb may taper purchase of assets approaching march 2017. perhaps they will. taper is a word, like you just suggested verizon drop in treasuries -- suggested a rise and drop in treasuries. scoop. nice caused me to reverse positions in terms of being long-duration. guy: bill gross talking about his change in duration. let's talk about what is happening with the pound. this is the cable rate. i will get it up on the screen for you. moving below the 127 level. the headline talks about the psychological 127 level. people are talking about a 125 positioning. you got a lot of options positioning around the 125 level. 120 -- some people are talking further down could be achievable. let's join our guest for the , he joins his live out of tokyo. a couple of things we need to talk about. let's deal with what is happening with the ecb. is the market overreacting? we have a nice report out of bloomberg talking about the tapering will likely happen with the ecb. the market yesterday moving aggressively. is this a repeat of 2013? speak to what is happening in europe. in japan, and the press conference after the boj's latest meeting, even a hint that the boj reduce the amount of its purchases, it did cause the yen all right to reverse after that statement. the yen dollar was weakening until governor kuroda said in forcing the around the zero target for yields might imply more or less bond purchases. when he said that, the likelihood of tapering went from zero to something higher than zero. that caused a temporary turnaround of yen dollar. the point made by your reporter theier that the market test markets are very sensitive to the t word is a good point. -- the markets are very sensitive to the t word is a good point. caroline: how did monetary policymakers managed to con the market -- managed to calm the markets without seeing the taper tantrum's saw in the united states with ben bernanke? robert: the key thing is clarity. what they are going to do with the quantitative portion of their program as economic indicators evolve back out in the case of the bank of japan, they have said this zero target for the 10 year yield -- they had not made it clear how that target is going to be suggested as rises increase. say our forecast were to come true which we think it will and prices begin to edge up, will the boj wait until prices are over 2% before they change that zero yields target? or will they move it before that. we need clarity. how monetary policy is operating, i think markets will be jittery. guy: can i talk to you about currency markets echo the boj has try to engineer -- currency markets? the boj has tried to engineer the way the yen falls. rationallyet acting when it is selling right now? are some -- robert: there are some major issues in brexit going forward. the short-term indicators from the cake have not singled -- have not just from the u.k. -- iny have not signaled the case of japan, we have seen some moves in currency that are very different from monetary theory -- different from what the monetary theory would suggest. even while the fed has been cutting total monetary base in the u.s., nevertheless the yen has strengthened. people need to think about what the fundamentals are between a different currencies and not the two -- and not be too -- not paying that much attention day-to-day. aboutne: can i talk fiscal and monetary policy? .e hear talk of fiscal policy the ecb, we are going to be hearing from draghi, clearly once again calling upon governments. in japan, is it now the time? are they getting the message that monetary policy has done it's time -- done it's job? robert: that is a fair conclusion. many investors around the world are of the view that in many countries, monetary policy has done as much as it can. japan is a world leader in bringing out fiscal policy as a support tool. on august 2, prime minister abe announced a large fiscal package. the headline number was large. that is a longer term figure. ¥7.5are proposing trillion. of government spending in stimulus and another ¥6 trillion of government lending to support a near-term project. japan is in the forefront of people using fiscal policy to support the economy. even fiscal policy cannot remain increasingly supportive forever. in that sense, the recent re-acceleration of the growth strategy in japan is a supporting fiscal, just as fiscal is supporting monetary. feldman, thank you very much indeed. jeffrey lacker pushes on a rate hike saying it is needed to head off inflation. we are going to talk about what is happening with the fed a little bit more. vice president joe candidates go head-to-head in their first and only debate. what are the indications of that debate? we'll talk more about the election. sterling, i want to show you, we are seeing hits this morning. this is where we are, below 127. i want to see if i can swing your around and show you what is expected for the ftse. it is still pulled negatively. we'll see how that calculation changes as sterling continues to fall. this is bloomberg. ♪ echo welcome back. let's talk -- guy: welcome back. let's talk about what is happening to the pound. in london, you have got more selling coming through. i want to take you through what is happening to give you a heads up on what the equity story is. the stoxx 50 is pulled down a full 1%. the ftse 100 is only pulled down .1%. dax, cac pulled down .9%. again a, and once weaker sterling. we will see whether those numbers will change for the ftse 100. let's quickly move through and show you what happened yesterday. these are the two records. that is the all-time high, that is the closing high. we had a touch here and what we saw as we came in through the auction process. this selloff coming through here. we go all the way out to the intraday record high. the auction, it came down again. the read across is into london. let's get you caught up on all the news. here's the bloomberg business flash. .uliette: guy, thank you sabmiller shares have been suspended pending an announcement. ab inbev has been in a journey to acquire sabmiller. shareholders passed both resolutions related to the commended acquisition last month. google is embarking upon a wholesale rebound as its mobile -- and its mobile phone strategy. it will go head-to-head with iphone. phonesel are the first that were conceptualized, designed and tested in-house. they feature a series like virtual assistant. newfirst to boast androids operating system. crashing out of the single market could cost banks and associated businesses and u.k. almost 40 billion pounds and lost revenue according to a report. the report was that almost 70,000 jobs and 10 billion pounds of tax revenue are at risk from a hard brexit. that is your bloomberg business flash. guy: thank you very much indeed, juliette. these that's says the next u.s. move on rates will most likely happen in december. supporting the next hike will not be an easy decision and wants to see solid evidence of inflation rising. >> by the time we makes our next move, fomc communications would indicate that increases will depend on seeing changes in inflation indicators. this would help assure the public that the committee is seeking conditions to support attending our 2% inflation target sustainably, symmetrically and the sooner rather than later. nonvoter. a also a nonvoter, richmond fed president who dissented twice last year in favor of raising interest rates. he urged the fed to hike to head off a pickup in inflation. let's get back to robert feldman. does the federal reserve have to worry about inflation? robert: it has been 10 years since the u.s. hit the 2% target. we did see indications of tightening in some labor markets in the u.s., but our house view is this is not a situation that is serious enough to warrant a fed hike in the near-term. we agreed with the month of december but we think it is next year. the reason we don't see inflation accelerating enough, the issue is one that many countries face. target?e set this 2% years ago it was the right target because downward movements of nominal wages were sticky. in that environment, you want real wages to be flexible so rising prices helped with that. the situation has changed. we have a different economy. it is important for us to think what level the inflation target is the right one. 2% is the one all central banks are sticking to. what are we really try to do with these inflation targets? they are less credible, for example japan has not hit a 2% number for years. same is true in the united states. we need to think more about little -- more about what those targets really mean. ,nna: if you look at the ecb they're looking at the expectation of 1.3%. what should central banks be aiming for? should they be talking about overshooting inflation? robert: my view is that inflation targeting is helpful. it -- the structure of the economy has changed, particularly as a result of the change of technology. macro economics is behind in understanding the role of technology on the overall level of prices. we need to do more work on that issue. and see whether the inflation targeting regime is right for the kind of economy we have today. more important for europe with the juncker plan, both candidates are pushing for more investment in infrastructure. for japan as well. we need growth strategies that will get demand growing fast enough so we can have a more balanced view of what that target should be. -- guy: robert feldman, thank you very much indeed. from thenutes away european equity market open. the big story is what is happening with sterling. it is taking another big hit. it is trading around the 127 level. the ftse has been firming. it is still negative by a less amount. goldmine is cheapened. that is something to take a look at. gold taking a battering yesterday. we've got some m&a in the netherlands. lovely day in london. the pound under pressure once again. this is bloomberg. ♪ guy: 7:53 in london. i want to take you to my bloomberg. the pound is under pressure. we are seeing this selling fresh. this is the last three days. we are hitting fresh records this morning. another downside is move. a substantial one below 127 is where we now are. let's working through into the implications. but the difference between the expected performance of what the ftse is expected to the liver. the ftse 100 -- expected to deliver. the ftse 100 is absolutely flat. record.the closing that is the intraday record for the ftse 100. will we break through that? we saw the auction yesterday selling the pound. we had a touch of toward that record intraday high. caroline, it is rippling through every day. goldmine is being affected. what is going on elsewhere? we're watching for him in a. -- watching for m&a. 29% beingthere is a offered -- exposure and insurance, the group so far saying no thanks. they are rebuffing that. -- tesco percent called up 5% operating profit. -- operating profit falls 60%. dave lewis seems to be offering up a better power protector. manus: watch upfront for it -- guy: watch for the ftse 100. the market open is next. this is bloomberg. ♪ guy: welcome. i'm guy johnson as bloomberg's european headquarters. a busy morning in london. i've alongside caroline hyde in frankfurt, moments away from the start of european trading. caroline has the morning brief. caroline: guy, europe's paper tantrum. is the market misleading the ecb in quantitive easing intention? the ftse hangs on the edge of history. sterling gets smashed as stocks hit record lows. we're points away from a bizarre, all-time high. the markets open imminently. thethe feds just lack or or new government india's reserve bank. guy: thanks very much. caroline and i have a busy next hour. the market open -- the ftse 100 is going to be interesting this morning, to see what's happening. the pound has been under pressure. let's get into it and see what's happening. we're anticipating that we could see a mildly positive start, beginning to dip. a negative 67. a little bit away from the record, opening flat, continental markets expected to open sharply lower. we could see a 1% or 1.5% move. opening negatively, the dax should deliver a similar story. let's walk you through some of the charts. ,his is where we are right now and's the closing record that's the all-time intraday record. we are a little bit away that keep an eye on what happens of the pound. fascinating stories in the stock markets -- let's get to manus cranny with the details. manus: keep an eye on euro-sterling because the ftse made syncopated record highs yesterday -- can they hold on to that? this is the debate at the moment -- is the european central bank debating the validity of how much they go for a taper? can they taper it by $7 billion a month? on the german government online, 0% on booms. the germans are considering how to take it, negative rates in europe having heavy consequences . there was a flip yesterday in terms of duration so the bond markets will be critically important. we have industrials opening up i 1% but the real weight is on the finances, down. downgraded but when it comes to gilt market, 10 year inflation swaps in the united kingdom are far outpacing those of the european counterpart -- so keep an eye on the gilt market at the bottom of your screen. -- weged at the moment wait to see what comes next. get ready to protect yourself from inflation at the end of the show, get ready to protect yourself against this fight on inflation. let's talk about the three stocks i am watching -- we will kick it off with casco. 60%, the profit is up third straight quarter where sales rallied. there was a bid for delta lloyd, $2.7 billion. the ceo says there is a clear and compelling logic to bring consolidation to the marketplace in the netherlands. and we finally finish with ranko. yesterday, and one investor says he quite likes it -- i'll central banks would be valued if they got the opportunity. 2%, the linen over in the gold story today is that a slow trickle has turned into a moderate exit. guy: we will talk about that later -- the timing is interesting, the lack of speech but maybe that indian central-bank move was a little more important when it comes to what's happening. catch manus on bloomberg radio with anna, who will all be talking about what we are all talking about, what is happening with sterling which is out -- which has been smashed over the last couple days. the u.k. benchmark failed to hold the games in the auction, but remains on the cusp of all-time highs. the auction process had a little selloff, i touched toward the all-time intraday highs. we are joined now from royal london asset management. would you expect the ftse 100 to get higher from here? >> if it continues to weaken, absolutely. if earnings come from overseas it is a simple conversion factor. a weaker sterling means it converts higher earnings -- it's a simple mathematical formula. that is the pure technicals of what you see on a day like today. you have got to think about what the implications are. the key work we are doing is trying to understand what the implications are from an inflationary factor into the u.k. economy. particularly from an investing perspective, the ability of businesses to pass on those inflationary spikes to customers -- getting into the tesco statement this morning, it's probably too early to see the pressure coming through but there are early signs of food manufacturers struggling to input price inflation. i think we will see that continue. i think that compounded with the pension issue is a growing one. we have talked about the pension problem with low bond yields discounting liabilities; put those together with a weaker margin business and we could have some significant warnings. caroline: it's interesting that you talk about tesco, currently falling 9% and managing to turn the beast around. talk to us about the great british pound at how much further we could see it go. could we go as low as 120? ,> when we look at our models that is will we think is a reasonable floor. i think ultimately it will come down to what philip hammond says in the austin statement. that thee are finding move now is away from fiscal s toulus -- is t fiscal stimulus from monetary stimulus. what we would really like to see -- and it is pleasing what he said at the party conference -- the focus will be on how to provide investment and stimulus to the u.k. economy given the brexit uncertainty. guy: what about the mining stocks? what do you make of them? it's a global index that is largely exposed to foreign income streams. nevertheless, the miners are suffering a little bit as gold comes under pressure. isy had a fantastic run -- it off the back half of those commodity stocks? >> there's a question about china and there's a question about gold. i didn't think i would see this -- that at one point gold yielded more than cash. the problem with gold as it doesn't pay you anything and it costs you to keep it in the bank. yielded you more technically than you were depositing overnight, which is a bizarre scenario and which is why it has played well. we will see if it weakens as a reflection of monetary policy. but the bigger 1 is about industrial demand, about global growth, and ultimately we come back to what's really happening in china. the story is the banking system is negative, which will restrict growth. data givesexport led you an idea and it gives you a sense of how is that economy really performing -- what does that mean for an demand? backine: i just want to go to the dichotomy we have going on in terms of the big exporters -- what about the domestic players, the smaller ones? how much will they be hit? the challenge -- we talked about it at the beginning, it will be one of margin. if we are going to see input inflation, how can that translate? we are seeing inflation in the u.k. economy, wage inflation taking over 2%. the question is how much of that passes into the broader economy? are we seeing a significant spike in inflation? you have to add that to the fact that the oil factor comes in year on year from here. the oil price effects will see an inflationary stimulus into the u.k. economy. -- ande corporates those are significant energy users -- trying to hedge forward to give themselves protection, we should stop to see the effect of that. have they been able to input that price inflation? ist is pleasantly surprising that the early data post-brexit has been an indication that the u.k. economy has continued to take on. our nervousness was that we would see a step down of investment, which is why we want a stimulus to encourage investment. it's the fact that this will take such a long time, in terms of the impact on the economy, we will only see it come through next year. guy: one stock certainly being affected is tesco, it's very positive right now but the question is what it will look like further on down the road. tesco stock jumping sharply. our guest will stay with us. next, pmi data from pound land. the u.k. president will be front and center. --in, italy, france, germany we will bring you the numbers as they cross. then, merkel ways to big to fail. we are back in berlin to break down her catch-22. and the ftse fueled by brexit. the take on the france markets record territory. this is bloomberg. ♪ caroline: a sunny frankfurt with concerns that the ecb is thinking about how and when it might start to exit quantitive easing. they haven't decided the date, but when they do tapering would be in order, which is sending mixed messages to the market. because outperforming of the great british pound. it is coming off of lows but clearly that weakness in the pound is helping, even though it is still in the red. guy: we are all waiting for the possibility of a new record high on the ftse 100. morning.red 127 this we can see this really clearly around europe in terms of the breakdown. the tesco numbers this morning are really driving the story home, the cost-cutting that has been delivered written large across the supermarket sector. william morrison, sainsbury rising nicely. that acquisition in the netherlands. caroline mentioned what's happening with the ecb -- officials told bloomberg that bank is likely to gradually winding down bond purchases. what they don't include is when it will happen. we are joined now by the macro marketist -- the reaction to all of this is interesting and reminds me of what happened of may -- in may of 2013. talk about the market reaction -- is the market getting this right? >> i think they aren't getting it right at all. i think the story was that there's a consensus that when the qe program needs to be ended, that it will be tapered. not any issue about when it will be ended. they haven't officially disgusted yet, which shows it is unlikely to be the end. the idea of tapering -- there is some concept of how it might be tapered, but it was always assumed some form of tapering had happened. they were never going to withdraw 80 billion euros in liquidity just like that. of where so in terms we are going now, do you think we will get clarity from mario draghi? on saturday he gives a speech in washington; could he really lay out to the market that don't worry, we aren't taking qb off the table? but unsurprisingly we might taper if we do. >> i mean i think what they will try to do -- they gave a statement last night saying they haven't discussed this yet, and i think that will stay there line. we aren't even discussing it because that's not an issue yet. first we need to decide if they will extend it and they still have four meetings. the growth in europe still seems to be slowing. inflation is set to increase but nowhere near target. and the banks are struggling -- this doesn't seem like the time to withdraw qe and they have given no sign yet that they don't believe in it. guy: in some ways we should be delighted that they are thinking about it. we should also probably be delighted they aren't thinking about doing anytime soon. great to get your take and read your stuff. many thanks. -- guest is still with us how far away do you think the withdrawal of monetary stimulus is? --still a long way away until the problem with the italy banking system is resolved the ecb will have to stand there, acting as the bank of last records. for us, what's a bit more alarming is that we force ourselves into negative rates, which is having negative consequences for banking and insurers. part of the reason is because of -- you takeimately deposits and you lend long and effectively it is a carry trade. there is no real carry trade. until you get banks back to doing what they are supposed to do, you won't solve the problem. we have almost gone too far. you want to be supportive of the financial system. there should be more encouragement to put houses in order, to deal with the problems. the irish had to deal with it sooner but others left it to fester. the problem is that low rates have hidden the problem and pushed into the future. it was bailed out because of the hurdles hasn't been there. that theous to say rising environment helps the causesrade and probably you to tackle some of the structural problems. that carries on the zombie banking sector. it has never really been tackled. i think that is my criticism of the ecb, not getting to the bottom of that issue. caroline: so are you expecting the ecb to change tack? do you think it's the end of monetary policy and its efficacy? >> no, i don't think it is. havee structures that they there isn't much more they can do. they have to stand there and support it encourage the likes of italy and deutsche bank to resolve those issues and improve the banking system. the problem you have is that the scandinavian bank has a very strong balance sheets and they are in a catch-22. encouragement is to identify the weaker players and say, come on, now is the time to get the house in order. open-ended qe has always been something the bundesbank hasn't liked. you have to have some form of exit plan and raising the fact that you do it on a daily basis is a logical thing to say -- when that happens i can't see the end of it. francine: thank you very much -- guy: thank you very much. up next, the vice presidential picks took the stage. we will discuss fallout. this is bloomberg. ♪ caroline: welcome back to a sunny frankfurt. welcome back to "on the move." the u.s. vice presidential candidates have attacked each other as they went head-to-head in their first and only debate. while tim kaine slammed donald trump on his taxes, mike pence hit at hillary's e-mail controversy and america's role in syria. >> i think he is a very fitting running mate for hillary ofnton, because in the wake the season when american families are struggling in this economy under the weight of higher taxes and obamacare and the war on coal and the stifling avalanche of regulation coming out of this administration, hillary clinton and tim kaine want more of the same. >> we trust hillary clinton, my wife and i, with the most important thing in our life. we have a son deployed overseas right now. we trust hillary clinton as president and commander in chief. the thought of donald trump scares us to death. guy: have you priced in what is happening in the united states? is it part of your portfolio strategy? >> we had a long conversation about this. i wouldthe one thing take away is that both of them are talking about the need for infrastructure investment, and i think that's an important trend change. there is a ring fence fund which allows estates to bid for capital to invest in infrastructure, but most states are reluctant to do that since the fiscal budget has been quite tight. i think both candidates are saying we want to encourage improvement and anyone who has been to the u.s. on holiday in the last year looks at how weak infrastructure is in major cities. if you go to boston, the contrast, they did that big bid and is a beautiful city, it's amazing what they have done. i think both of them are looking at that and saying we need to encourage infrastructure investment. that will create jobs, and that could be a positive. but the bigger challenge comes with donald trump. how does the global stage change some of his rhetoric and the international impact it has on global trade. guy: would you short the market if you -- if the polls go positive for trump? >> we would be more cautious on that for sure. when you take it to the stock market or exposure to bonds, either way we would think about it. caroline: and what about in terms of the next campaign? how was the chief investment officer, do you do it a couple weeks before the election, as we saw with brexit? brexit one. showing there likelihood of remain was pretty high, and we positioned ourselves to remain. but if you told me the result at the beginning of the year and how markets have performed, most people would have got that wrong. i wouldn't have thought the inflation would have been the best-performing asset class on the back of the brexit vote but that is what happened. in thinking about the u.s., my point about the infrastructure investment is quite important. that doesn't seem to matter and that's an important driver. we talked about the importance of moving on from monetary to fiscal stimulus, and at least both of the candidates now get the need to encourage growth in their economy, encourage corporations to invest. in the u.k., hammond is indicating that. one of the things we have seen since 1997 is a massive reallocation of capital from long-term savings schemes from equities to fixed income. theink we need to provide idea that long-term funds by equities again. to my mind, a gross frank dividend is essential. taxes have already been paid in the same way charities do, and you can encourage a longer investment into u.k. guy: he will stay with us. we will talk about the ftse and. deutsche bank this is bloomberg.. ♪ caroline: welcome back to "on the move." 30 minutes into the trading day. risk aversion out there. a great piece showing as and when the ecb decides to end quantitive easing, they will taper. they won't just take it off the table. however markets are overreacting and thinking tapering is being uttered, sending shivers down many aspiring. -- many a spine. the great british pound is weakening. guy: yep. pound land is the place to be if you are an equity investor, maybe not if you are on the fx side. let's talk about that. this is what's happening. the pound has been weakening. let's zoom in on what's happening today. it moves down through 127, and though we have popped a little bit, market positioning as important as anything. 12.2715. this is yesterday's session. that's the closing high, intraday high. high,ded up toward that and the auction process shows that we have climbed back, although we are a few points away from the intraday record high. some of the stocks moving, tesco, moving very sharply to the upside. roth ira up nearly 8%. delta lloyd up 30% on the back of the acquisition. the low rate debate story is swirling. and you saw what happened with gold. the gold story is rippling through what's happening in the mining sector, down by over 1%. haven't talked much about deutsche bank the last couple days. don't talk about it seems to be the story at the moment. the german chancellor angela merkel continues to face problems. she spent years leading the push to contain bailing legislation. this has a risk of contagion, not just for germany but across europe. let's go to berlin. whereo we know about merkel is these s? >> as you are saying in the lead in, she hasn't giving much of a clue, due to that conundrum. the point is that merkel has simply said i want the bank to do well, and she has characterized the difficulties as temporary, which you could read between the lines, but then again the government has given us a little indication of where they stand on this that it has left everything open, and will pave the way for a lot of speculation. caroline: tony, election-year next year. if there was a bailout of this bank behind me, what would that mean for angol angela merkel? >> that's .1. -- that's point one. merkel hasn't decided or is still weighing whether to run for a third term. many people expect her to, and some of her party surrogates are urging her to. the other point is that a bailout for a bighas definitelyf these matters at arms thth. and then of course on the vw story you have different regulatory regimes in europe versus the u.s. and germans i vw, they just do. deutsche bank is a different animal, but it comes back to is sucht that the bank -- although probably the average person out in the street may not think about that directly -- the bank is hugely important to the financing of germany's companies and to the economy. what that means for a bailout or no bailout, that is still -- that is still in play. caroline: tony, head of german government team, thank you very much. let's bring it back to our guest at royal london asset management. how worried are you about the bank behind me? employee.former i know the bank well. what i observe is that i don't think you will see a bailout at this stage. i think the more likely scenario is that we see a race issue but they don't want to do that until they have addressed the issues in the u.s. and the litigation that is outstanding. i think the more likely scenario ispart of the reason for that is that we are seeing a rise of investors suing companies for providing appropriate information. part of the reason why they have been quite silent as they want to get the house in order -- we have addressed that issue, we need to stabilize the balance sheet, to return investor confidence. , i would expect that in the next few months. from our perspective, the german government has to say we don't have a bail plan, and anyone who has worked in the german banking system knows that there will be a plan should that event come to pass. is some likely scenario form of rights issue. guy: i just got the price of the book for deutsche. the chart points in one direction. very, veryery, diluted rights issue. >> i don't disagree but the question is this one you can hang your hat on? we talked about this earlier -- across the board in the banking system there are lots of zombie issues that haven't been tackled, because you have historic low rates. guy: why when you subscribe to that rights issue when you believe that further down the effectively only be kicked into the longer run because of the structure? why would you subscribe to it? >> obviously we don't have a position in deutsche but one in thing we might be stabilize -- if you the business going forward, you have the best asset management business in germany bar none. it has been highly profitable in the past and the focus they are talking about is asset management as a key driver. if they go back to investment banking, it's a very strong export opportunity. you put those cornerstones down and that's a pretty compelling story. but the issue in our minds is there is always something that comes out of the woodwork. caroline: are any of the banks a by? is anything attractive? >> i talk about the scandinavian banks -- generally speaking a lot of the good work has been done there. but the nervousness about the ands is what the ecb european bank regulators are doing in terms of capital requirements and the returns you can generate -- it just moves the goal post up. even when you have got the better performing banks goal post just gets moved. the attraction has been really challenging in europe. the interesting thing is we are starting to see an improvement in the u.s., albeit slowly. the question is there an element that is reconciling that we need an officially operating banking system? guy: thank you very much for spending your time with us. the cio of oil london asset management. next, the egyptian pound has slumped. we will chart its demise, coming up. the story in the currency market is what's happening with the british pound. as you can see, we are trading north of 127. that story, next. this is bloomberg. ♪ caroline: welcome back to "on the move." the pound is down for a six th day, and overall it's off by .2%. the big move comes in cable but we are still seeing sterling weakness versus the euro, currently we are seeing a rally up to .2%. let's move in and get to juliette saly. nn group has offered to buy delta lloyd for 2.2 billion euros to boost its scale and the pensions and insurance business. so far they have rebuffed the unsolicited offer. shares are trading lower on the news while the takeover target is higher in amsterdam. tesco has reported first-half earnings that beat analyst estimates, sending shares higher. operating profit rose to 596 million pounds before one-time items. 's planult shows the ceo to revive the grocery is gaining traction. prices, narrowing product ranges, and improving customer service and made a price war triggered by other discounters. google is embarking on a wholesale rebound from its mobile phone strategy, debuting apparent handsets that will go head-to-head with iphone for the first time. they are the first phones that were conceptualized in designed in house. they feature a series like virtual assistant, flashy camera features, and are the first to post a new operating system. britain crashing out of the european single market could cost of banks and associated businesses almost 40 billion pounds in lost revenue. that's according to a report by the lobby group. that almostarns 70,000 jobs and 10 billion pounds of tax revenue are at risk from a so-called hard brexit, according to two people familiar with the contents. guy: thank you very much. the egyptian pound is sinking to a new record on the black market. let's get your chart of the hour with yousef. we have been watching this on carefully, where the devaluation will come through. what are we getting right now? youse:f this is a real foreign currency crunch they are facing, an economy that has been battered by tourism to remittances from abroad and has not really work -- really recovered. but at the end of the day what will weaken it is the imf dealing. take a look at this chart. this is the egyptian pound spot rate in blue. in yellow, those are the 12 month non-deliverable forwards so how do they expect the egyptian pound to trade when you're from the? you can see the disparity. that is the kind of pressure the currency is under. they expect a devaluation to happen as soon as this week. then you can see that there was already a devaluation earlier this year to the tune of 13%. and all of this they are facing the highest inflation since 2009, and less time the central bank that they kept rates unexpectedly on hold, the thinking that they are keeping the powder dry for a super mike. in terms of how managers are moving their money around, we have seen a lot of investors moving to stocks and real estate to try to get through this devaluation period. in terms of how foreign institutions are placing themselves, we saw the latest news on barclays, that they sold their egyptian unit, 1500 staff and 56 branches. they had a historic presence in the country so this is a major move. guy: thank you. yousef on what's happening out in cairo. let's talk about what's happening in italy. we just had some data out with the italy services number light. anticipated around 52, so we are well off that. 61.1, sotent number is the italian data is a little light. the big focus in britain for the financial markets, bounce by brexit. the ftse remains near record high. we will get a perspective from the trading floor. we will talk about that. this story next on bloomberg. ♪ caroline: breaking news. french pmi numbers coming in, and it is a mess. -- it is a miss. september we see 53.3, preliminary reading 54.1. france sluggish, italy sluggish. and the united kingdom as well. guy: 9:30 a.m. london time is when we get that data out of the u k. and talking of the pound, it's the big story once again. trading of the pound increasingly means -- the prime minister trading buying the end of march, a couple characters that will have an influence of sterling. and while negotiations can officially begin, any indication will be read through the pound. where do we stand right now? check out sterling, another interesting morning. there's the ftse 100. let's see if i can get to you what's happening. it is bouncing back just a little bit. let's bring in our bonds reporter. when we are watching the politics, what are people getting their heads around? so many people, so many stakeholders around the negotiation table who have a say arehis deal that traders now getting used to cruise from the finance industry. who is speaking, when they are speaking, what kind of implications it can have on markets. that is what's bothering traders. caroline: we are about to get to a trading floor, they give us the sense of the strategists and traders -- how are they interpreting this? >> it's different for long-term investors with strategies. some like the volatility but at the same time, you would like to position yourself correctly, and that is the same strategy. politics are quite difficult to plug into your models, to come up with trends. right now it is officially brexit; it's not just politicians, its politicians from across the area. that is something that is really important. long-term investors, the one i spoke to yesterday said that this is all delays. merkel, iangela would listen to her. up myd not be calling investors over and over again to change strategies just because of something a smaller politician said. guy: politics, as ever, present. the fx story looks like with the political element attached. let's check in on where the ftse sits right now. let's just run through the lines. that's the closing price record, the intimate price record. we sold off in the auction yesterday, and we continued that down slide. we have been coming up a little bit off that now, but we are watching carefully what's happening with the pound. flat.bsolutely let's find out exactly how they are reviewing all of this on the trade floor. we are joined now by the cnp market analyst. what have your clients been saying to you over the last couple days as they have watched what's going on? >> sentiment around the ftse is fairly bullish. certainly in the context of what we have seen over the past couple days. i wish i could say the same about the outlook for the pound. when the pound goes on a run, there's no stopping it. 2008, it in 1993, 1992, and we are seeing it again today. as far as currencies are concerned, this is volatility our clients like. from an investment point of view, ultimately, it is also fairly positive because stock markets are performing well. caroline: give us a sense of where people are putting their stocks. what are the expectations? 125,have got a target of initially with the pound against the dollar. that i can't help feeling that this is a crowded trade. the reporter was right, there are an awful lot of politics and noise and i can't help feeling that we could get a significant squeeze in the pound, potentially back to 130. ultimately timing will be problematic. at the moment everyone is focusing on sterling. next week it could be something completely different. once the politics has died down i think we could get a clearer idea of the direction of the pound in the short to medium term. caroline: we just heard about europe's part -- german markets are just coming in, services beating at 50.9. expansion in germany -- how do you read the tea leaves when it comes to european voices and theresa may when it comes to the euro-pound? i think there is way too much talking on. ultimately no one really knows what happens. you have to put this in the context of theresa may talking to conference. she's talking to a targeted audience and her tone will be different as we head into the end of the year and the beginning of next year. if you look at the u.k. economy, it's not doing too badly. virtuallymaker admitted that in the text of the speech is due to give later today and the imf has had to eat humble pie. guy: thank you very much. great stuff. we have data coming up at 9:30; we will watch that carefully. stay with bloomberg. "the pulse" is up next. this is bloomberg. ♪ francine: it's the european paper tantrum -- is the european paper -- paper tantrum in the works? chicago fed president evans says he expects it rate hike this year. rockets selloff. -- markets selloff. bank -- banks fight back on brexit. 10 billion pounds of tax revenue at risk. ♪