tv Bloomberg Markets Bloomberg September 26, 2016 10:00am-11:01am EDT
vonnie: we will take you from new york to brussels and cover stories out of turkey. algeria and the u.k. in the next hour. about 30 minutes into the trading day in the u.s. julie hyman has the latest on some breaking news. julie: new home sales is the data we are getting for the month of august. an annual pace of 600-9000, month over month the klein of 7.6%. not as steep as the estimate. in recent days and weeks we have gotten more negative headlines on housing, existing home sales missing estimates. housing starts missing estimates as well. this number, although it does show a drop, is not as bad as has been forecast. annualized, 600-9000 down 7.6% month over month.
it did drop from a nine-year high. that is the perspective that we have on that housing data. ,ome sales, the smaller portion the larger portion. all three averages were already trading lower, pulled down by deutsche bank and some of the other banks coming out of european trading. you're going to get more detail from mark in a moment. the two-year yield, we have been watching that as well in the wake of this report. it looks like it is holding steady down a basis point, 07 .oint -- 0.74% the dollar showing some weakness although bouncing off the lows of the session, down 2/10 of 1%. oil continues to be one to watch particularly this week. that meeting analogy years we have been talking so much about in recent days. about whether there is going to be a more formal meeting of opec members.
have beenia expressing willingness to cut its production or at least to have some sort of production target. it seems is contingent on iran's willingness to do so. oil has been rebounding on new hope surrounding those issues. up by 2%. a check of gold prices. gold prices up as well of about 2/10 of 1%. partially linked to the weakness in the dollar as well. mark: we are 90 minutes away from the monday session. every industry group is trading lower on the stoxx 600. group ranked returns. 1.6 percent is the decline, the --gest drop since 2000's coming off the biggest weekly game since mid july, the first weekly rise in three. a bit of a flipside to what we saw last week. the banks that are leaving the decline just before we get to them this is volatility.
stocks measuring volatility on the euro stoxx 50. before today, volatility last friday actually reached the lowest level since december 2014 which led an investment manager at ing back in amsterdam to say this shows investors are getting complacent. .olatility surging biggest increase since january 2016. the euro stoxx 50 is still 9% lower. trade is preparing for what volatility ahead. futures betting on volatility in the next three months. trade close to the highest levels since 2013 relative to the stoxx index. keep an i on deutsche bank shares. record low today. this is a chart showing how far, how fast deutsche bank shares have fallen since their peak in may 2017. they have fallen 90% in that
time, down to 10 euros. .s high as 102 euros concern persisting about those mounting legal challenges. his deutsche going to have to raise more capital? we've had the government saying it is not going to prop up the lender. a merkel spokesman saying they are not going to comment on speculation as well. this year alone shares have been hammered down by 52%. today falling another 5% getting absolutely hammered on concern over capital the cause of all of this in pending litigation. as 11%.ising as much biggest gain since 2009. agreeing to abide can sure a for $2.1 billion in cash. it is expanding its lubricant
additives and flame retardants business. the offer is a 19% premium to friday's close. what a year it has been for chemicals deals? $193 billion worth of deals led monsantos takeover of $65.7 billion. vonnie: we are moments away from mario draghi addressing the european parliament. live shots of parliamentarians waiting for the ecb president to arrive and begin speaking. governmentsd to ask to extend the pace of structural reforms. we will bring you all of the headlines. let's check in on first word news. alisa parenti has more. alisa: donald trump looks to apply his new campaign discipline at tonight's first debate. trump and hillary clinton face
off at the event in hofstra university near new york city are you in the polls by learning to stay out of his own way. a new bloomberg politics survey shows the two are in a dead heat with 46% each. trump leads when third-party candidates are included. it watch the debate right here on bloomberg tv starting at 8:30 p.m. eastern area our coverage will include 30 minute pre-and post debate shows led by mark halperin and the bloomberg politics team. twitter will live stream the broadcast. beginner donors overwhelmingly favor hillary clinton in the presidential race. clinton has collected $21 million for her campaign and is supporting tax on the bloomberg -- donald trump has received only one million dollars. george soros has donated almost $12 million to the clinton cause to fellow hedge fund billionaire .im simons has given $7 million
the last test lamp rush over the bombing of the syrian city of aleppo. france and the u.k. are among those calling the bombings war crime. one group says more than 200 civilians had been killed in the last week. russia has denied responsibility. seriouss the center of russian backed government. francois hollande says brexit does not end the uk's response ability to deal with migrants trying to reach its shores. hollande spoke today in calais. thousands of migrants are camped out near the city trying to board trucks and trains headed for the u.k. hollande wants their camp to be dismantled. the oecd says carbon prices are about 80% lower than where they need to be to protect the climate. the organization is calling for .n increase in emission cost its reports as climate pledges must be more ambitious if nations are to cut emissions at least 40% by the year 2050.
global news 24 hours a day, powered by our 2600 journalists and analysts in more than 120 countries. i'm alisa parenti. this is bloomberg. mark: thanks. getting headlines for mario draghi. he's about to testify before the european parliament. euro recoverye area has less momentum. recovery is to continue at a moderate and steady pace. he says the impact of the u.k. referendum to leave the eu is contained. he says economic insecurity is a major concern. that ecb policy measures continue to filter through the economy. the ecb's baseline scenario he says has downside risk. the implication of a low rates must be carefully monitored. financial conditions must stay supportive for the baseline
scenario but he says other policy actors must play their part. this will be a big part of his speech am a putting the pressure on policymakers on government to play their part, taking the onus off monetary policy. drug he says he will put -- draghi -- if warranted, act with all available instruments. that is the theme he has been saying recently after -- we are awaiting mario draghi's testimony. we will bring it to you. his opening remarks in full. vonnie: u.s. yields are lower. fuss to giveom dan a look at the bond market. foss manages the $15 million bond -- year to date beating 89% of its peers. he was asked about the increased appetite for so-called tips which are protections against
inflation. dan: it is hard to determine but i would say it is mostly hedging. hedging against the rise in inflation further out. a factor in the market that is very sizable. it is in the market overseas, perhaps much more overseas particularly in asia than in the u.s.. it is hard to put a number on but since march we have been cautionre of the asian with the u.s. election. i should say upset. mark: to go back to jonathan's chart, it was not just the absolute number about the interest in the text, indirect buyers were -- sometimes are a surrogate for overseas buyers
which might confirm what you're saying now, those purple bars are the indirect buyers. dan: i think that is the point. the indirect is overseas. upset --most of the our sense of the upset is not the normal overnight buying of u.s. debt. that is coming from a different sector of the markets. not inclined to go to war treasuries or tips -- go toward treasuries or tips. this would be more -- i think you have got your finger on it. hedging asis people to what on god's earth is going to come out of this u.s. election. that is the concern. david: it appears we will have some volatility going forward for the next 40 days or so. what about the underlying concern of inflation?
we have fed president rosengren saying we should be concerned about this. we had alan greenspan on this program saying inflation is coming sooner or later. do you see indications of that? dan: to be frank, i have been much too early on that. you see the pressures building essentially the cost of people overall. labor.st of however you want to measure it. new york city is not a good place to measure that sort of thing because of the swings both ways. across the country, the employment, the skill requirement, has gone up. there is a shortage developing. boston is an extreme example. the more in demand skills in the modern world. that is getting severe. that starts to drive prices. if you take out essentially the
gas, youfuel, oil, and look at and say things are starting to move up. david: unit labor cost is what alan greenspan talked about and warned about. he sees that going up more than 4% per year. in your core inflation, north of two now. dan: as reported, yes. david: yet we do not see inflation expectations picking up. why is that? dan: darned if i know. the sampling technique i think. expectations, you're asking people. where are they, who are you asking? w credibility and surveys like that. i would rather look at the hard numbers. david: as somebody who invests in a lot of bonds, what is that tell you about your investment?
does that affect duration? dan: big-time. you have to be careful using duration when looking at the swings in the market. you're better off looking at average maturity. duration is wonderful when your liability matches. the problem you have is interest rates are very low. there is increasingly strong reason to believe they will have higher at some point. my first guess is the fed won't do anything until the election is over. i think it's reasonable to see a rise in interest rates. vonnie: that was dan fuss, vice chairman at loomis sales earlier today on bloomberg . don't forget to use the function be rgi if you want to see returns on the bloomberg market. mark: we are rating mario draghi who appears before the european
parliament and brussels. he says the ecb baseline scenario has downside risk. he says the implication of low rates must be carefully monitored. other policy actors must play their part. that is the message he will be taking around europe this week. he hits the berlin on wednesday pressuring the likes of germany to do more from their start best from their side. mr.raghi: i'm grateful to be back speaking to your committee less than a week away from an important anniversary for the european parliament. , direct european elections possible, signed. i'm happy to be speaking to you, the direct representatives of the people of europe. europeans are calling on our institutions to bring tangible
benefits to their everyday lives. we need to respond to this appeal with action, within our respective competences. this is why i'm here today. not only to demonstrate, once that thee importance ecb places on being accountable to eu citizens, but also to discuss with you how the ecb is acting to fulfill the mandate that was democratically conferred upon us. today,re, in my remarks the impact of our monetary policy measures. then, the request of this committee, i will discuss financial market conditions in the euro area and in particular the evolution of financial market integration.
the recovery in the euro area is expected to continue at moderate and steady pace. with slightly less momentum than in june. on the positive side, income and information continues to point to the euro area economy being resilient to global and political uncertainty. eu u.k.following the referendum outcome. the initial impact of the vote has been contained. the strong financial market reactions such as equity price holds have largely reversed. at the same time, the substantial weakening of the foreign demand outlook since june is expected to dampen expert growth -- export growth, along with other factors.
prospects.sk to the according to the september ecb microeconomic projections and real gdp growth, is excited to 1.76% in each of the next two years. inflation continues to remain at low levels reflecting pass the -- declines and week wage growth. 1.2% in 2017. the continued economic recovery and decline in luck are expected
to push inflation further up to 1.6% in 2018. ,gainst this background comprehensive policy measures continue to filter through to the real economy. barring conditions for households have eased considerably and credit creation has strengthened. supporting aggregate spending across the euro area. let me focus on the description of the credit easing components of our policy measures. act as critical submission channels for the monetary stimulus by facilitating meaningful reductions in funding cost for the real economy. year, and last
first twoonducted the operations of our new series of targeted longer-term refinancing operations. which subtracted significant demand. two additional operations will take place in december and march. these operations allow banks to secure long-term funding at very attractive conditions that they can pass on to their customers. likewise, the credit easing components of our expanded asset purchase program, namely the backed securities, covered bonds, and corporate sector purchase programs further boost the pass-through of monetary policy by directly lowering the financing cost for crucial actors in our economy. the abs bp, the
asset-backed security purchase program, and the color bond purchase program, empower the monetary pass-through by espp, the costs, this corporate sector purchase program, directly lowers the cost and improves availability of market-based funding for nonfinancial corporations. stress in that respect pp ishis espp -- the cs benefiting not only the large companies which can directly access the bond market but also smaller companies. market conditions for large companies incentivize them to obtain more funding from bond markets, bus leaving more space
on banks balance sheets for providing loans to small and medium-sized enterprises. overall, our projections indicate the economic monetary policy stance would continue to provide effective support to the cyclical recovery. financing conditions must remain for a baseline scenario to materialize. the governing council will continue to monitor economic and financial market developments very closely. we will preserve the very substantial amount of monetary support that is in that it in our projections and that is necessary to secure a return of inflation to levels below for close to 2% over the medium-term. act byanted, we will
using all of the instruments available within our mandate. grateful that today you decided to discuss the state of fragmentation in the euro area. i remember almost four years ago in this same building in my statement to you i commented that "the impact on financial and monetary conditions of past reductions in key ecb interest rates differed considerably within the euro area. -- euro area."he the situation is largely improved. financial market fragmentation has declined substantially and the financing conditions of firms and households have improved markedly across the whole of the euro area. in particular, the reductions in
key ecb interest rates have been passed through in vulnerable euro area countries to a larger extent and the fragmentation funding cost and loan conditions across different countries has receded. to give an example, from october 2012 to july 2016, the composite cost -- an indicator for new loans, declined by almost 287 basis points in portugal and 200 business point -- basis point in italy compared with 117 basis points in the euro area as a whole. a similar phenomenon has been observed for smes which have benefited substantially from improved financing conditions and reduced fragmentation.
as a result, the spread between lending rates for small loans and large loans was similar in july 2016, in vulnerable and non-vulnerable euro area countries. 135 and about 120 basis points respectively. a situation not seen since the spring of 2011. one of the challenges of financial pregnant patients has been largely overcome, there are new challenges we have to face. the low interest rate environment selected for today's discussion is one of them. symptom of the underlying economic situation. they reflect weak long-term growth trends and the protracted macro economic slump that has
resulted from the crisis. policy hasonetary provided significant accommodation to limit the negative affects of the global and euro area specific shots on the economy, thereby mitigating their dis-inflationary impact. nevertheless, monetary policy cannot determine the sustainable level of really just rates in the long run as they in turn depend on long-term growth prospects. that out of policy actors need to do their part pursuing fiscal and structural policies which will contribute to a self-sustaining recovery and increased economic growth potential of the euro area as i discussed with you in june. in the meantime, the lower interest rate environment has a range of implications for economic actors, the need to be
carefully monitored. i'm sure this was part of your exchange today with the chairs of the european supervisory authorities. i am happy to continue this discussion and answering your questions. isther more recent challenge the outcome of the u.k. referendum on eu membership and its economic implications for the euro area. the extent to which the economic outlook will be affected depends on the time, development, and final outcome of the upcoming negotiations. so far, the euro area economy has been resilient. , ouro this uncertainty baseline scenario remains subject to downside risk. regardless of the type of relationship that emerges between the european union and the united kingdom, it is of
utmost importance that the integrity of the single market is respected. any outcome should ensure that all participants are subject to the same rules. -- more generally, it is important to ensure the european union meets expectations of its people. this requires three lines of action. first, new common european projects should focus on the immediate concerns and needs of its people. for this challenge goes unequivocally beyond national borders. effective solutions require joint european action. from that perspective today's fields of include migration, security, and the .ans -- and defense for further integration to be acceptable, trust among its nations and people is essential.
to bolster such trust, it is important that a great -- that agreed rules are respected. union, theomic framework is essential to avoid imbalances that would eventually risk destabilizing the euro area. for the euro area to thrive, actions by national elements are needed to reduce unemployment and empower individuals while offering essential protections for the most honorable. -- the most vulnerable. our economic and monetary union remains -- as long as we do not complete the integration progress -- projects we have started. we need to develop an ambitious capital market union to support cross-border investment. european parliament played a key part in setting up the banking
union and has an important role to play to ensure swift progress on the legislative discussion as part of the banking union and capital market union agendas. making determined progress in these fields will significant re-strengthen are economic and monetary union and constitute an important step forward with the roadmap proposed by the five presidents reports. thank you. >> thank you very much, president draghi. >> we continue to monitor for headlines to reiterate some of the headlines that he made. mario draghi says the ecb baseline scenario does have downside risks. the applications of low rates must be carefully monitored. he says other policy actors must play their part, finger-pointing
at the likes of germany and the governments, who must act to release growth. you can watch this event in its entirety on live go. vonnie: turkey stocks dropped the most since july, moody siding risks due to external financial needs and slowing economic growth. daly, fromis kevin aberdeen asset management. we definitely want to get the turkish lira underperforming and the mexican peso in the elections. to wrap up mario draghi is a speech, we talk about the federal reserve having a major impact. does the ecb decision ever have that kind of impact? kevin: ecb will always be central in terms of how markets react. this that is the biggest and most feared by markets.
the ecb is still somewhat constrained in what they can do. the bank of japan is trying to shift policies and influence how the long end of the curve -- try to push a long and yields. ecb is more constrained than boj, given that the lisbon treaty prohibits them from effectively setting the government bond yields for 1900. for now, markets will look at ecb in terms of policies remaining pretty much status quo. benie: have to ask you opinion on the turkey downgraded. doesn't matter and its political motivated. but it does matter to the currency. the lira is having a terrible time. would you see going forward for the likes of turkey? does: if the lira overshoot here, and we've seen a reaction in the eurobond yields, we actually think this is an opportunity to add to the
turkish risk. this is not going to change the outlook for turkey. it does potentially force investors to reduce their exposure to turkey, but it has been somewhat well telegraphed. this is not new news. turkey, for us, is a slow burn. we see a deteriorating credit overtime where growth is going to be impacted, where the fiscal position is still relatively prudent. but there is some risk that this government has to increase some of the fiscal easing, shall we say, so there is a risk that you're going to get some deterioration in turkey. but we don't see it as a big negative on the short term. k: don't worry about a sudden disruptive reversal in foreign capital flows. don't worry about a rapid fall in reserves. kevin: let's go back to 2013,
when everyone is focused and worried about the fragile five. the external position was much worse than it is today. from a financing standpoint, turkey still faces challenges. five noher fragile longer are facing the same challenges that turkey does. if turkey's policies were to shift, where markets start to get concerned, that external position becomes a worry. we are less worried about the financing of the current account. mark: can you elaborate on the selling aspect, that they have to buy assets in the country is less than two of the ratings companies don't have an investment-grade rating. that is the case right now. more selling could we seen, have we seen, is there to come? issue of more of an
those who are benchmarked with berkeley zag -- barclays' ag. as far as emerging market bond indices are concerned, turkey had two sub investment-grade ratings. don't have any investors who are going to be forced to sell it because we don't have that sort of investment-grade cut off in our mandates. for global mandates, crossover investors who invest in turkey, there is probably some for selling. some of this for selling will likely occur back in july after the failed coup attempt. you probably did have some lightening up and then movies came out and said we were going to review this rating in august. it's probably been enough time for investors to adjust their portfolios if they were worried about turkey falling out investment-grade. vonnie: we are focused on tonight's presidential debate,
the first one. we are seeing a real market reaction in the mexican peso, very close now to 20. we are actually trading at 19.8269. what happens after today? several traders are calling for a hike of more than one of the basis point if it's off 20. itin: that's too extreme, may send off alarm bells because the markets will take it is a view that there is no price -- there's a high price to the currency. 20 is a psychological number, if we get through that, markets will get concerned and look for a response. we are more than what the going to get a response on thursday, 25, 50 possibly. we still have another month volatility. the first bid tonight and several more on the horizon. the peso will remain in the spotlight, in the glare. interveneobably not
in the stock market, they will , we will see to what extent they continue to defend the currency. there are a lot of people who think this thinks go to 22, 23 of trump were to win the white house. vonnie: kevin daly, thank you. before leo management on the fixed income -- portfolio management on the fixed income team at holy management. this summit held in hong kong, london, new york. our guests include ken wallace, mark lies rate, and and garden. mark: we get a preview of the highly anticipated first debate between hillary clinton and donald trump. this is bloomberg.
vonnie: you are watching bloomberg, i'm vonnie quinn. mark: i am mark martin this is your global business report. ecb president mario draghi speaking out on monetary policy and calling on your been government to do more to boost their economies. vonnie: now the marriott is the world's biggest, it's expensing -- it's announcing big expansion plans in the middle east and europe. mark: look at north korea's continuing nuclear tests and the motives behind their latest threats. vonnie: mario draghi is speaking out on the state of europe's economy. he told governments to do more to counter growth. mario draghi: it's continuing at
a steady pace, with slightly less momentum than in june. on the positive side, income and information continues to point to the euro area economy being resilient to global and political uncertainty. mark: the company the just became the world's biggest hotel operator plans to almost double its workforce in the middle east and africa. marriott will add 30,000 more people as it opens new properties in the region. the company just completed its 14th billion dollars purchase -- $14 billion purchase of starwood resorts. a proposal to eliminate pollution may cost. require allow -- companies to offset growth by funding in our mental -- environmental issues.
it will be easier to have a single international standard. vonnie: time now for the bloomberg think tank, where we provide context and background on issues of interest. its fiftha conducted and most powerful nuclear test in a decade. the asian countries aggressive nuclear tests held the world on watch. we look at what's driving north korea's nuclear threat. >> here's some things north korea does not have. a human rights record to speak of, or enough food to feed its citizens. here's what north korea does have. a nuclear weapons program in an unpredictable young leader whose fingers on the button. north korea's -- are north korea's threats something to fear? on september 9, 2015, a 5.3 magnitude detected here, it was north korea's fifth nuclear test of the decade on the second this year. it was also the most powerful so far. well military experts suspect
north korea exaggerates achievements, they agreed it has furthered a theme of mounting a nuclear war had on a blizzard missile. korea has been ruled by a family of aggressive dictators since 1948. each intent on nuclear strategy that has deepened the nation's isolation, which is why the u.s. currently has nearly 30,000 troops stationed in south korea, backed with firepower such as apache helicopters, f-16 fighters, and nuclear capable b-2 stealth bombers based in the region. all just be a tactic. north korea has a long history of escalating and then d escalating hostilities in order to broker economic and diplomatic concessions. support korea, with from japan and other nations, will bear most of the cost of providing north korea with fuel to make up for the nuclear energy is losing. >> which leaves the u.s. and the world in a tricky position.
most diplomatic situations call for a characteristic approach. north korea, neither the carrot in the form of aid, nor the stick in the form of sanctions has worked. with none of north korea's opponents owing to risk a military complication -- military confrontation over the issue, it's either stronger sanctions or waiting for the downfall of the dynasty. his erratic behavior is added to the mix. vonnie: you can read more about north korea and all of our quick takes on the bloomberg. had to bloomberg.com for more stories. mark: let's turn to the race for the white house. tonight's first head-to-head debate between donald trump and hillary clinton, the latest national bloomberg poll shows clinton and drop at a dead heat ahead of the debate. each with 46%. when third-party candidates are included, trump has a slightly. from the spin room at hofstra university in new york, kevin cirilli.
team referred to him as the babe ruth of debating. can he keep his discipline? kevin: we will find out just about 11 hours, where hollering clinton -- hillary clinton and donald trump will go head-to-head. the sources i'm speaking with inside of the trump campaign are telling me that they expect donald trump to be much more insured and less bombastic his opposition hillary clinton. however, this is 90 minutes and this is donald trump. there are no commercials. the big question is whether or not donald trump can avoid what'sa so-called " moment that will define the rest of his candidacy for the remaining 40 or so days. for hillary clinton, she's got to make sure that she is preventing -- presenting a
vision for the future and not the past. they both have to convince undecided independent voters who quite frankly are a little concerned with vote choices. other bloomberg poll shows that hillary clinton is expected to have a better performance. what fascinates me is who has done the prep work? how have they prepare differently for this big evening? clinton, we all remember when she testified for 13 or so hours on capitol hill, responding to congressional republicans concerns about benghazi. ,he is very much a policy wonk this is a storied politician. she prepared for this the same way she prepared for this congressional hearing, by the book. on the flipside of that, donald trump in contrast has prepared for this the way donald trump would prepare, and between massive rallies, having people like rudy giuliani and senator jeff sessions and newt gingrich quiz him, giving him different
policy questions about trump force one. he did hunker down to cram a little bit over the weekend and trump tower. they prepared in very different ways. vonnie: the clinton campaign released a negative at about is playing in swing states like florida, ohio, north carolina nationally. will that have an impact coming into this debate? could it hurt her? kevin: with interesting is if you talk to anyone on the republican side, people who are supporting donald trump's candidacy, they look at those and compare it to their public and primary, when so many of the former opponents for donald trump were unsuccessful at using those negative ads to define his candidacy. what they believe is much more helpful to him on the republican side is unifying the republican party. if you look at the way the
bloomberg poll, for example, donald trump is unified 90% of republicans. that's the same number as the democrats unified behind hillary clinton. if you had asked me that question a couple of weeks ago, were even just after the convention, there's no question that we were all reporting about how does unify the republican party was. but clearly just the other day with ted cruz endorsing donald trump, there are more and more republicans coming around his candidacy. cirilli ofin bloomberg politics, a great da'' university. we will be speaking to you throughout the day. for our special coverage of the first presidential debate. bloomberg politics will be on the ground in new york before and after the event. we are also teaming up with twitter as the exclusive streaming partner for the debates. tter.com ordebate.twi follow at bpolitics. aboutopec members talk
mark: live from london and new york, i mark barton. vonnie: and i am vonnie quinn. opec has become a meeting in algiers -- begun a meeting in algiers. the focus turned to one of its most important members. saudi's are very important member of the organization. they are ready to do the maximum for the success of this event. it's ready for any eventuality. freeze, it'sr a ready to lower production, it's available to make it a success. conan --erley and
caroline connan is available. what are they? willing to do? caroline: the algerian oil minister was optimistic that a , it couldbe found transform these opec meetings on the sidelines of an energy conference into extra ordinary opec meeting where decision could be taken. nigeria, for example, we saw him coming in just a few minutes ago in this hotel in algiers. he was saying the nigeria is not ready at the moment to accept a .reeze on its production they had to reduce their production due to militant attacks. but we've been seeing things hotel,in in the sheraton
we have high expectations for the meetings. said we have high expectations here in algiers. vonnie: we had a report earlier that iran had proposed a target based on 12.7% of the opec markets. what does this mean? is this an offer on the part of iran? iran is not here yet, they're going to arrive tonight in algiers. the main difference between these meetings and the dough our ar meeting is that iran is attending this meeting. we'll have to see what they had to say about that. april said iran did not want to join. now they told me the saudi's are actually ready to accept some kind of deal.
possibly a freeze, possibly production cuts, if iran wants to join. possible that this meeting will come with no decision and we will step of the later this year possibly at them november meeting in vienna. caroline, how much of a blow would no decision be? were rising ony the expectation that there would be a deal this week. what sort of blow would be to the oil market if we don't get a deal this week? investors are starting to price in the fact that the deal could be delayed until november. with some analysts are predicting that this will increase the pressure on prices. they predict that prices could go as low as $40 a barrel if
there's no deal in algiers this week. there will be too much oil in the market. the strategy of opec for the to dowo years has been maximum capacity. that's what they are still doing. as with the saudi's are doing at the moment. iran is increasing production, almost back to precincts and levels at 3.6 million barrels a day. this would add pressure on the prices, because they said this would mean that demand would outpace supplies. until the end of next year. mark: caroline, great job. we will not see you through this week in what the big week for the oil industry. caroline connan from algiers. the skit to mario draghi, still speaking before the european parliament of rushers -- of brussels. he says monetary policy has been effective at low interest rates are a symptom of low growth. the ecb policy effective not yet
exhausted, does that imply more easing is on its way? low interest rates for a long time have side effects. pieces european banks have profitability problems and deutsche bank shares are absolutely getting hammered. the concerns about profitability and capital levels. we monitor the headlines for you and you can watch the full event on the bloomberg at live go. close. is the european it is 3:56 in london, deutsche bank falling to a record low on speculation germany's biggest bank will need to raise capital. have a look at the markets, the closes next. -- the close is next. ♪
european close on "bloomberg markets." i'm vonnie quinn. mark: we are going to take you from new york to munich. algeria and brussels in the next hour. here is what we are watching. we are going to talk about karen sees -- currencies. how it could hinder growth in countries like japan and the uk. vonnie: the latest on the oil market. no agreement is expected to be reached. saudi arabia could cut production. poll,bloomberg politics donald trump and hillary clinton are locked in a tight two-way