September 11 is always most difficult, theres no way to put it. This is a beautiful shot from our world crisis next to bloomingdales in midtown. That is the Freedom Tower in the distance. It doesnt get easier. Guy the story will continue for a generation after generation are it generation. We saw yesterday as well how important this date is. It could have a meaningful impact on the election. What you make of what happened yesterday with secretary clinton . Tom i think it was the moment where all of a sudden everyone considers the health of both candidates. It has been sort of a subset of gossip. Theove on with that secretary has pneumonia. Hillary clinton is suffering from pneumonia and has canceled a Campaign Trip to california. She stumbled as she was helped into a van after the 9 11 anniversary ceremony. Donald trump will keep quiet about her health for now. South korea says that north korea will conduct more Nuclear Tests at any time. Its exposed its exploded fifth nuclear device. They may detonate another device at a test site. Impose unilateral sanctions against north korea. A Syrian Rebel Group warns it will not respect the ceasefire that starts today. The troops would benefit the dictator. They worked out the seat fire. Ceasefire. Work permits may be a way to control migration into the u. K. After brexit. The ideaneed to accept of visas traveling to european countries. Net want to reduce migration by 300,000 people. Thousands of protesters protested to show their displeasure. They are calling the brazilian government illegitimate. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries, this is bloomberg. Thank you so much. Lets get to the data. There are challenges from friday. There is further deterioration in the last hour. Futures are 12. The yield is churning. The euro is churning. That is a misquote on oil. That is the wrong number on oil. West texas intermediate right now, weve got that. On to the vicks, its back to normal. So much for complacency. We will get to that of a moment. Futures are below 18,000. Deal, to see that emerging market proxy and the adjacency of the united spades. Carl weinberg is joining us in the next hour. Guy we are talking about the election and whats happening. We will discuss that a little bit later. Lets look at the euro dollar. Its rarely budging. The bond market is waiting to see whats going to happen later on. We saw a big move friday. Moving,e talking about but not moving aggressively. Euroe down 1. 8 on the stoxx 600 at the moment. Tom i like that positive yield. Over to the bloomberg, a correction. Do you remember what a bear market was . Guy is too young to remember that. From the peak where we are right now, this is back over the last four years. Off to the left of the chart is a little more volatility. The red is a bear market, 18 . It drives me nuts how people generalize those across assets. Youve got to do it based on the standard deviation. In this case, there are the two corrections recently in the last 18 months. There is no bear market insight. Guy the pullback in positioning, when i think of this chart, it speaks to that you we that. We have been talking about the nationals in the market short the vick. They dont think anything is going to happen. We have people writing crazy things. What you saw friday was a big move higher. You can compare it to whats happening to the vicks on my bloomberg. That move is substantial. Its a big move. I think positioning is going to be important in whats about to happen next. We have the global head of deutsche bank. Lets get his take on whats happening. I think on thursday and friday last week, we had the ecb disappointing some of the market by not easing policy further. The bank of japan is starting to make noise about more Central Banks easing. He fed is in limbo nobody knows what the fed is going to do. They came together in a bit of a perfect storm and caused investors to have a fright. Everybody is getting excited about this rethink. Is this something they want to seeneer . Are we going to that . Is that something Central Banks desire . They may have got a little bit too far in terms of aggression. It was not there intention to flatten the yield curve. We can see its not great. I am a big believer that the yield curve is a great indicator of animal spirits. When youve got a very steep yield curve, people can put entrepreneurial trades on. You can invest out the curve. When you have a flatter curve, entrepreneurialism does not work. In that sense, i think Central Banks are at least considering that maybe their policies are starting to cause problems in the market. Isot of the Market Reaction i dont want to see an overreaction. Get change in policy, its not going to happen overnight. Its going to be a gradual thing. Tom lets look first at that yield curve. Good morning. This is a vanilla curve. , they look at a lot of different spreads. Curve flattening is below 100 basis points. There is a little bit of steepening there, but nothing near the repression recession level. I know we like to talk about tenure and twoyear, i noticed its a little bit dicey. What is the state of the oil in the engine right now . Is quitery short and technical. End is quite technical. I dont think the fed will move. Price the market for higher probability of a move. Is the emerging market adjustment, this will be a theme thate next hour, is adjustment we are seeing, does that tell janet yellen what to do . Its a one or two day move. I think its quite clear that if , there a huge selloff are a number of assets that would be affected in the emerging markets. That would be one of the first to be affected. I think yellen knows this. I think she is getting close to being one of the most dovish on the committee. Some are more prepared to risk the consequences. Guy lets wrap the conversation up there. We will come back to you. We have a bit of news that will catch your eye. They are going to be leaving the boe. We have a decision coming up later on this week. She will be going at the end of 2017. She is going to be joining the London School of economics. We will have more on that story. We will talk about the bank of england further on down the road. This is bloomberg. Guy i am guy johnson in london. Lets get a is this flash. Is seeing its future in copier and printers. They are buying samsung enter business for a little more than 1 billion. Hp will have several new copiers for corporate clients. Shares of samsung fell the most in more than four years after warnings about the notes 7 smartphone. Regulators warn users to him easily turn off the foam phone and start charging it. Batteries have caught fire or exploded. There is a worldwide recall. A top volkswagen executive says they are not close to read putting repairing the damage. He said the worst of the crisis is behind it, but the damage is not been repaired yet you yet. Providee trying to Technical Solutions to our customers and to regulators. We have to regain the trust. And weppointed customers need to work very hard. Making progress, but we are far from fully overcoming the crisis. We have a long way to go. They are not clear if the 20 billion they have earmarked for the scandals will be enough. That is the Bloomberg Business flash. Tom thank you so much. Jim reed is with us. We are celebrating a very thoughtful report on our shorttermis him sm. I want to start with the idea of stability and instability. Your colleague makes very clear we are going to spend a lot of time on instability in the coming weeks and quarters. Where are we on that metric right now, the idea of refleeting doing it with painful instability . Last several years now, Central Banks of stabilize the market. The Financial System is fairly weak, the Global Economy is fairly weak. Central banks have stabilized it. Is centralhe fear banks deciding they cant do any more and want to store up a little bit of ammunition. We could create more instability into the market. Point, you do have to translate to a different policy. Its whether you do that gradually or suddenly and how it goes about. That is what is back the markets a little bit at the moment. Tom this is something guy has been showing every day, bring up the chart. That white line cutting above zero, thats the german 10 year with recent negative yield coming up. When you look off your desk at the shift from negative yields to positive yields, do you just assume thats a normal process with stability . Jim its really the weight of money. The ecb is lying and enormous amount of government debt. There are not a lot of bonds around. There wont be for a while. I dont think the ecb is going to change course. Iny extended the qe program december. The ecb at the moment is most likely still going to continue with the same policy. They may fiddle with eligibility. They are not going to change too much in the next few months. Mario draghi, i wonder what he is talking about. What he did say was the review carryinghat the boj is out is something they would like to take a look at. Changet they really what they are doing . Jim they always tend to review. I think they are starting to be more sympathetic. Perhaps a continuation does have side effects. They did not have the same side effects. When you are in negative territory and Interest Rates are negative, it does have a side effect. Guy the Corporate Credit marker, issuance is off the scale. Central banks probably one of the ig market to be part of the investment process, we would see Large Companies investing in stuff that would make productivity better and we would live in a better world. That is not working very well. What are they looking at in terms of the review process . What is happening with the ig market . How does this all fit together . To say its love the biggest bang and most important thing to the economy. That is a small part of their qe program. I think they implemented it to give some variation to get a higher qe level. In europe, companies are still fairly conservative and still fairly defensive in nature. Being able to our own a few tenths of a percent less, i dont think theyre going to be aggressive. U. S. ,s was done in the u. S. Companies would buy even more shares back and do m a activity. There is a different culture in europe or you dont have that gung ho animal spirit. Qe has lowered the borrowing costs. A lot of the deals are refinancing refinancing. Him we are going to talk to briefly throughout the hour about Wage Inflation and wage growth and its dropped to a different animal spirit looking at nominal gdp. Mexico, and emergingMarket Reactions are a clear and present danger. Carl weinberg will join us. We will talk about the peso at 19. From new york and london, this is bloomberg. Guy i am gone johnson and tom keene is in your. Its time for the morning mustread. View. Tes in bloomberg esters investors would be well advised to the economic reality. The markets telling the fed its not live . Maybe Monetary Policy is coming to the end of its affect its had in the past . Is this time different . Jim question the fed will be they will be reluctant to get above 35 or 40. It makes it difficult for the fed. There is a slight change and you can hear the slight emphasis. Maybe six months ago, they would have cared more about the markets than they do now. I dont think its a huge stage. They are leaning more shopping the market than they would. This is to be taken seriously. I think they need to say we are in charge. We are not lead by the market. The market should be led i. S. Do you think that shouldve happened before greenspan . Banks, to now suddenly be a bit more on the hawkish side, they have to be able to take the consequences of doing that. They may be prepared to do that. I understand august was ridiculously quiet. It was deutsche banks fault. We get that. The idea of 3. 8 standard deviation, it gets my radar up. When you go to your desk this morning, what will you be watching to show that we are containing a brutal move . Marketthink the treasury is probably the first point. We dont have a lot of time to wait. It could get a lot worse or better weekly. There is agine today bit of a waiting game for the next several hours. Treasury is the first point. Tom thank you so much and congratulations on your new length of decadelong some of our cycles and what we may see. London school the of economics. We will talk about american policy. The idea of a secretary clinton, her illness over the weekend and donald trump. The presidency of donald trump would be a substantial adventure. From new york city with the Freedom Tower in the distance, this is bloomberg. Tom a lot is going on this the marketrticularly pullback. Looking at the bloomberg, 11. Guy some rebel groups in syria skeptical about a ceasefire before even begins. One rebel group aligned with al not signing on. The democratic candidate was stumbling or collapsing in new her when she was injuring injuring her secret service unit. The president spoke to survivors attack on the pentagon. He said that extremist groups would never be able to defeat the u. S. The State Government that is home to frankfurt is looking to loosen employment laws. Global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. Guy what happens next with the Central Banks. Good morning to you. As a general question, do you as a general question, do you think the markets are losing faith in the ability are we reaching an Inflection Point here . The fact that mario draghi is not ease policy right now just to prepare. I think this will come in when the especially when forecast for 19 will be available. Guy im wondering whether or not some of the unintended say a very flat reshaping policy accordingly . There are three arrows. The generalized feeling is, of twothree arrows, the other are lagging behind. Donek nothing can be only with one arrow. Guy it is called into question whether or not a steeper yield curve would bring back animal spirits, as we discussed earlier. We know that things are in trouble. Thatay of dealing with would be ran operations. An lower rates now in order to have higher rates in the future. Tom how we got where we are in the economic history. Lord desai joins us this morning. Is there a shift going, like what you have written about for decades . We will see. Situations, the lines are going across country. Tom within that, do we risk regional blocs . The repeating of history . That it feelsrks we are falling back to the 19 century. A brexit gives unnoticed notice. Of globalizations are over. We are breaking up regional alliances. Guy we will talk more about brexit in detail in just a moment. A bit more broadly, if we are to see governments delivering fiscal policy, leakage will be a serious factor. If you think about how governments will spend, they will not want to spend 150ewhere, they wanted to focus on their own economy. Spoke earlier of Monetary Policy. Is it the kind of Monetary Policy we have seen prior . That has failed because that beyond thenot go bi thinks banks. Money is not transferring to the economy. A lot of people are saying, forget about Central Banks and the open market operations. We need helicopter money. Either you finance the deficit with printing money. Give everyically country a in the leading to thes transmission of money into the economy. About re talking infrastructure investment, borrowing while infrastructure investment, borrowing while the year is so low i have written about this. Tom lets do this. Grexit. Talk coming out, lord desai on a on a trump presidency. Why do we do surveillance . William white coming up in the next hour. This is bloomberg. The first debate, i believe the 26th, and then on to november. A beautiful washington, d. C. Guy johnson in london. We welcome all of you as the business season starts. Us, lord desai. You always surprise. Is that true . I perform the task if we trump were to win, what would be consequences. I want to know, what would happen if trump woodwind wo win. Lets prepare for the improbable. Tom the news of the morning, secretary clinton is ill. It is amazing, and you have the history to understand, what is of the short century . It is more Health Conscious now than it used to be. David owen wrote a book about how sick john kaneb he wants. He would never make it to the. Residential nomination i think america exaggerates come on, people. As long asou know, they can function as leaders, they dont have to run the marathon. Guy eight years though, it is a long time. Four years at a time. Tom four years, to terms. Guy there is a desire for Ronald Reagan is the right idea. [indiscernible] dont micromanage. Poor Hillary Clinton. Lets say, low probability. If the democrats had any other candidate, trump has no chance. He has no chance against joe biden. Guy im just kind of now thinking about 18 different questions that come off of that. It is in terms interest to keep hillary there. Guy that is why he is not saying anything at this point. How big do think the win would be if it were someone else . Wide. Guy with that feature into the house as well . It is veryi important to get the a businessman or business woman is president. We look back to coolidge. Certainly mr. Hoover as well. Im not very sure for the british, but what is the theinction british, but what is the distinction of a businessman with the distinction of president . Borrowing for growth is a perfectly normal thing. Debt is not a problem. I am fascinated by trump. Tom a point of debate here as the debate of september 26. Guy Johnsons Brexit p coming out, 5 00 tonight, of course, the campaign. We moved to the important first important first debate with all due respect. Very good. The conversation of the moment. This is bloomberg. Tom good morning, everyone. Bloomberg surveillance. Guy johnson in for francine in london. Right now, a Bloomberg Business flash. You. Ank blended and factor has entered talks to create the Worlds Larges