Who is responsible . The fed . Jeffrey lacker . Or the new governor of indias reserve bank . We are less than half an hour away from the European Equity market open. We will spin you through what weve got in terms of the equity market. Solid session yesterday. Lets see what the fair value points are. Londono stocks 650 looks like it is going to soften up a little bit. Lets 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. Lets get out to Juliette Saly who has the Bloomberg News flash. Jeffrey glock says Deutsche Banks 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 headtohead in their first and only debate. Tim kaine slammed number chunk on his taxes, mike pence talked about Hillary Clintons email 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 commanderinchief. 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 thatgs 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 longduration. Guy bill gross talking about his change in duration. Lets 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. Lets join our guest for the , he joins his live out of tokyo. A couple of things we need to talk about. Lets 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 bojs 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 tantrums 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 shortterm 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 daytoday. 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 its time done its 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 nearterm 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 reacceleration 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 headtohead in their first and only debate. What are the indications of that debate . Well 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. Well see how that calculation changes as sterling continues to fall. This is bloomberg. Echo welcome back. Lets talk guy welcome back. Lets 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. Lets quickly move through and show you what happened yesterday. These are the two records. That is the alltime 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. Lets get you caught up on all the news. Heres 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 headtohead with iphone. Phonesel are the first that were conceptualized, designed and tested inhouse. 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 thats 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. Lets 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 nearterm. We agreed with the month of december but we think it is next year. The reason we dont 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 theyre 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. Weve 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. Lets 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 . Were 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. Im guy johnson as bloombergs european headquarters. A busy morning in london. Ive alongside Caroline Hyde in frankfurt, moments away from the start of european trading. Caroline has the morning brief. Caroline guy, europes 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. Were points away from a bizarre, alltime high. The markets open imminently. Thethe feds just lack or or new government indias 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 whats happening. The pound has been under pressure. Lets get into it and see whats happening. Were 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. Lets walk you through some of the charts. ,his is where we are right now ands the closing record thats the alltime intraday record. We are a little bit away that keep an eye on what happens of the pound. Fascinating stories in the stock markets lets get to manus cranny with the details. Manus keep an eye on eurosterling 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. Lets 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 ill 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 centralbank move was a little more important when it comes to whats 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 alltime highs. The auction process had a little selloff, i touched toward the alltime intraday highs. We are joined no