♪ >> good morning, welcome to bloomberg markets. i'm dani burger. alongside me is mark cudm ore e. he's going to take us through all the market action this hour. here are your top headlines. contagion risk, hong kong fierce a global selloff. investors weighing it at the everygrande.

power crunch energy companys in the uk government hold as third day of crisis talks as the surge in natural gas and energy prices threat on the put suppliers out of business. and it's election week in germany the final t.d. debate saw the c.u.d. on the defense as angela merkel will hit the campaign trail. welcome to the european market open. it's just past 7:00 a.m. here in london. mark, i wonder what do the markets say to you where it's a sea of fled the asian session? mark: good mornings, dani, absolutely it's a sea of red. it wasn't meant to be this way. it's holidays in japan, south, korea, china and taiwan. it was meant to be a quiet and sleepy day. we were nervous about the evergrande situation. developers needed to be communist than capitalist. we've seen a panic around the evergrande story in hong kong.

it was so bad where the index went down to 4% that the contagion spread to future market everywhere that it opened it started falling. iron other is melting and that's weighing on the australian market and this only other two is australia and hong kong have both suffered deep loss. and that set a very negative tone for the session that said, they there are asia stories that may not spread too dramatically into europe. dani: that's really important and sobering context to have. it's the tail wagging the dog the hong kong wagging the s&p 500. let's see where you are on that future trading ahead of the cash trading in europe. so looking at your eurostoxx, your seeing declines there, down 7/10 of a%. dax from 30 to 40 down .7 of a percent. the moment this is asian or

seeping through the markets. it's the same story in the s mundt p500. nasdaq and dow, you have an s&p 500 down .706 a percent. i believe it's been something like 39 days since we've seen an advance of 1 nores the s&p 500 futures. people not necessarily buying the dip. what does the rest of the g.n. look like? mark: the dip had been slightly tarnished. and of course, we're going to an fnc. what if it fell and yet the market still failed to rise. but let me talk about the g.m.n. where folks are just there at that time moment. it's quite elsewhere and it's been is so dramatic in asia. it makes it more dramatic when

leeway look at that time g.m.m. with the sea of red. leading sit the australian market that's because the iron oer collapse has been incredible. but it's just really really phenomenal. the other big story as i mentioned honk on the the equity ies column. that's the one making people nervous. on the commodities column, look that the iron ore e down 8.9% at that time moment. it's been like this day after day for several weeks now. >> i just watt to know what's going on with milk there. i tweet temperature and someone responded to me is milk the hedge on the upside? probably not. i don't think so. mark: that's an interesting idea. it's a pretty tenuous one. it's related to the kiwi option. a different idea there. dani: i did not expect you to

know about milk but i should have expected that you had something to say about milk. sticking with those stocks. kong hong kong stocks with that contagious john risk from evergrande. and it line of scrimmage for the chinese property developer. for more, we're joined by steven engel. how acute is the contagion risk from evergrande? >> you know, this is a builtup anticipation of this week. there were some nerves, jitters in the market as you know, the regulators in china have already told big banks that they were -- do not expect their bank loan interest payments today. we have two big coupons on dollar bonds as well as onshore bonds that are due on thursday. more than $100 million due. there's all that pentup nervousness in the market on top of that and mark talked about it

with these reports maybe the property tycoons will be the next one in the cross hairs of regulators in china, there was a reuters storying say beijing will no longer tolerate mo top in policic behavior. anyone who nose hong kong and i've been here a long, long time this city was built on developers, right? they're the power brokers here. maybe not so much any more. given the big regulatory push and what beijing has exerted on hong kong with its political change and the national security law. hoham says this is a paradigm shift. people need to keep a close look. we've had all those jetters that we've built up on evergrande combined with this story, and big markets all on holiday you had hong kong take taking it

on the chin so it is a story we'll be watching >> good afternoon, stephen, there are so many strands to this story. it's been quite a drat dramatic day. we have china on holiday today and tonight hong kong onen holiday when china returns. one of the things that traders are struggling to understand is not so much panic about the long-term situation but panic about how exactly they trade this week in that context what, are the next few catalysts that we should be watching for over the next couple of days? >> well, obviously china will come back on wednesday. and hong kong will go on vacation after the mid mid-atom festival. you have the off-shore bond coupon due for evergrande and $36 million bond onshore bond that is due. we just haven't gotten the clarification, not that anyone

is necessarily expect i it. but as you know, there's somewhat of an implicit guarantee that the chinese government does not want a lehman brother moment on their hands. that they will soften the blow a little bit from this debt restructuring if that is indeed is going to happen. they -- they probably didn't bet on this con they justin: john happening if this is what we are seeing indeed right now. but without communicating how the government would like to see this play out, it is leading to a lot of nervousness the rest of this week. and thursday is going to be a very key day. >> perhaps this is not a lehman moment. perhaps that's a bear stern's moment. thanks for stephen engel. mark, if it's not about ever grand de it's just about this busy week that we have in terms of central banks, of course. we have the fed. is this a wall of worry that the markets will be able to climb? mark: i'm not sure it's a wall

of worry. but it's a super exciting week for macro punters. i think it's rare in the last couple of years that we haven't been dominated by one groebe thiem whether it's covid or the trade war. right now we have the asia thiem in europe, it's gas markets and in the u.s. it's fed. there are several essential bank meetings. this is the week where the macro punters who can tell the divergent stories are going to rise to the floor because it's not one dominant thiem that is overall all global markets. >> yeah, certainly will make a fun week in terms of how you position, and how you can take advantage of some of these moves. mark, is how will central banks chalk this week? how do you weigh out the balance of risk? mark: the reason i like this question, and i didn't set it. it came from my team. this is porn. i think people are too preoccupied by the tapered

discussion. i think it's the dot that is are important. 22,000, 24 dots make their debut. we're expecting some change on 2022 hikes whether we get one, two or no hikes for 2022. i think there might be some drama. but it's not just about the f-1c we're gradually going towards tighten. the e.m. has a couple of exciting meetings. both turkey and bra klim get attention. i think there will be a loft volatility from the central banks even if they're not the thiem of evergrande panic. and in the u.s. it is the f1c. dani: maybe you want to hide out for the macro punters maybe you want to move out how do you trade in a market where there's a lot of risk and a lot of risk event? mark: these are the weeks you live for in a week that's driven

by one dominant thiem, it's hard for you to outperform. how you do outperform adjusting the s&p 500? but this week it requires to differentiate, and say, hey, ho dow -- do i evaluate it in china? and how does this gas story play into european stocks? is that overpriced. it's one of those times where there will be very, very different timing cycles and that's when macro punt kearse rise to the floor. dani: i can't remember where it's not just the growth stocks. great thought there. remember, you can always stay up to date on analysis from mark and the team. that's mleavego. we speak to german finance minister in an hour. that's as the committee questions on suspected money

laundering failures. and fallout. we look into the deal between the u.s. and australia. that's how france loses out on a multi-billion dollar contract. we're going to be keeping an eye on central banks as mark was just discussing as they hold monetary policy this is week if you have any questions of your own, for our guest, please send them, that's i.v. plus tv go on your terminal. this is bloomberg

♪ dani: welcome back to the open. we are 45 minutes away from the cash reopening. your looking at negative future sex down about 1% for the you yo stocks. a lot of that from the 'em nations coming from china and

the evergrande story. it's all about taking money off the table. that's not the only thing dominating market this is week. we also have the fed. where jerome powell has a big communication challenge on his hands. this week's decision is expected to give us some clues on that taper timeline. economists expect a formal announcement in november. but in the come coming year of the taper, it's the fiscal version that may really bite. joining us now is peter, union banker privet. thanks so much for joining us this morning. so we have a decision coming this week. you expect some weakening modestly this week. >> good morning, dani and a good morning to all your viewers.

regarding the dollar, basically, i think everything's been priced in in in regard with the fed. we've been a pretty big miss from the m.m.p. it was underwelcoming in terms of the sequential data, particularly the core data. if your the fed, your somewhere between eight million jobs that have been lost since the pandemic and in that context, you know, looking for preemptive or early tightening has been unfounded so the fed will basically -- i don't expect that they will announce tapering. they will announce in october, november and then we'll take it from there. so given the fact that some market participants do anticipate, you know, some fed announcement in that regard, i think there's definitely scope for the dollar to weaken somewhat. just a question of expectation versus what the fed is likely to say. mark: peter, if you think the

fed won't surprise the narcotic much, which central bank meet meting are you excited about? we're asking is how will central banks shop this week? we've got the bank of engelland, brazil, turkey. which one are you looking for as the biggest trading opportunity this week? peter: the two that make it that are interest interesting the first we'll start for the b.o.e. you have had much higher data which was released last week. and you've had four of the m.p.c. members more or less being satisfied or that's a removal of stimulus measures. if we do veer towards that in the m.p.c. with the meeting on thursday that will lead to a bit of sterling peeke. so i can see some of the cable testing highs by 140 or even friday. u.s. trade ago bit lower. the second sort of meeting where

you have scope for some surprise is the turkish central bank meeting. and we've seen some noise from cbrt arguing that they're going to focus on core inflation and that's a way to tell the market, yes, we want to cut rates that being the case, i can easily see a situation where it's coming into the end of the week just on the basis of cbrt is likely to do and say. dani: certainly some movement there potential already for e. bhmplet those decisions from turkey. it's what you want to be playing in right now? >> it's a very choppy space, dna i. you've got some e.m.'s where if you look at that time reactivity function of central banks and good-looking good and so if you look at the ruble, things are constructive there. you have a decent oil price. very, very strong current dynamics and you've got a central bank which is willing to engage in preemptive rate hikes

if you look at that time ruble, it has a carry in the region of 7%. that's solid for the ruble. so the ruble looks really good. the lira as always is a nominal carry is pretty high in about 17%, 18%, 19% the issue is the rates, compounded higher inflation. -- and then if we look at cbrt it wants to reduce rates. and it can do that too quickly. so maintaining a short bias in the lira in my view is one to watch. >> elsewhere if you look at some of the currencies the likes of mexico is likely to weaken. it is somewhat supportive. the central bank in mexico is a very, very reluctant rate hiker. if we look at real rates they're not doing an awful lot. if you look at how the pace has

performed, it habit done a lot despite the risk valley. so going along with that makes a lot of sense in my view. dani: peter, stick around with us. head of the union bancaire. >> a surge in gas and electricity prices threaten suppliers. the government is set for a third day of emergency talks on monday after admitting small suppliers are under pressure. they're seeking a rescue plan to handle the cost of taking on the customers and smaller suppliers that may fail. china's top regulators defended their market crack ken: to wall street executivities say stricter rules were not aimed at private companies. csrc told business leaders recent angsts were intended to reduce social anxiety and

consumer faceing industry. black rock must have tharpe parent sim to build confidence. and it was a big night for streaming services at that time emmys. netflix one of the best drama series award with the crown giving the company the top prize for the first time. "the queen's gambit" took the best series award. global news 24 hours a day on air and on bloombergs "quicktake" power bid 200 journalists in more than 120 countries. this is bloomberg. dani? dani: it's a sad state of affair, i've seen every single netflix program. i think i need to watch something besides ted las co. but i love it. i can't help them mark: i've seen none of it. i still have to get around to watch "the wire." dani: i'm going write you out a

list of the tv programs you need to watch. but mark has been too concentrated on what's going on in the aussie dollar. weaver going to discuss that. we have record aussie dollars shorts. we'll take a look at that time currency amid a fallout from a submarine deal. that's next this is bloomberg.

dani: we're about 30 minutes away from the cash equity trading. when it comes to these market we're seeing negativity easing off a bit or going deeper into the red. that's what we're seeing. cap 40 futures down more than .5 of a percent how much is this contagion? concentrating in these asian markets, australia has been the focus. let's get the thoughts from

peter, global head of fx strategy. i want to bring up a chart for you. this is hedge fund shorts on the aussie dollar. they are currently at a record -- a record short position. this has to do with iron ore e. but i'm wondering if you look that the positioning. does this say that werdum for a short squeeze? peter: i mean, when you have positioning which is as extreme as what your seeing from these data, the sans yes it can come from a number of factors. i could come from a very bullish fed. it could the lead a squeeze in aussie dollar. and you could see it higher. so certainly, i wouldn't be jumping into aussie dollar shorts. all be it that the outlook isn't all that good from here. first you've got the huge decline in the iron oer price that's going to weigh in in terms of trade. and that will weigh in terms of

the surplus which australia has. secondly, you've got the australian's government response oh towards the delta variant, which of course is a series of very aggressive lockdowns. the effect is to suppress domestic growth. from the r.b.a.'s perspective, they've gone ahead with their taper, all of these match nations due lead me to assume that the r.b.a. will eventually sort of postpone any potential rate hike in psych. there are good right hands reasons for the aussies to underperform. if i saw an aussie dollar at 74.50, i would look at getting short at those levels for sure dani: iron ore e down far ninth day in a row. that's going to be the longest run since july 2015. peter, thanks so much for joining us. i'm afraid that's all we have time for. peter kinsella. coming up, the submarine row

continues. macron will speak to joe biden as he seeks clarification as he discuss the new pact with the u.s. and australia. this is boom blearing. -- bloomberg.

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♪ dani: futures indicating a lower open by a half percent down to be precise. down 1% for the, ax. not clear skies for there either are we seeing some of those contagion risks from china spilling over? or is this a big wall of worry that markets aren't able to climb today? if your going the look for market that is are down there's no shortage of choices so far this morning but you have your eye on iron

ore e. mark: absolutely, dani, i'm very excited by iron ore e prices this morning it's an incredible story of how much they've collapsed this year. and it show it is power of chinese markets and also the negative story in china at that time moment from a different angle of evergrande, but iron ore e price are down about 60%. it's an incredible collapse. more than three days. it's the fastest collapse for the singapore contract which goes three and a half years. this is a combination of the slowdown butt also the the decarbon zation drive to focus more on services and changing some of their focus. it's a dramatic story. it will weigh in on the metal sentiment. when it was 30% down, when it was 40% down, obviously, they didn't work at all where that

20% below the 61.8% is going to be able to hold. it's been glossed over been ever grand issue. they're having their worst day in almost seven months. and it will weigh on the uk index. this is a really, really big story on the global growth story. dani: peter telling us moments ago of the weight this has on the aussie dollar. certainly something we're going to keep an eye on. let's get over to the bloomberg clash. here's angel fell sanniano. -- feliciano. the carrier will issue in shares of less than friday's closing price. germany has provide add bailout of lufthansa when the carrier made a record loss. facebook is aware of the negative impact of its product.

allegations made by the "wall street journal" don't show the whole picture the issues of contact moderation, mental health risk and misinformation are complex and defy simple policy solutions. several u.s. lawmakers have pledged to investigate the social network. regulators have urged tesla to address safety concerns before expanding on autonomous driving features. the drivers will soon be able to embrace full capability of their car the national transportation safety network says that the term is misleading and basic safety issues must be fixed and that's your bloomberg business clash. dani: angel in on the beside me. australia cancel add $66 billion submarine order in favor of a new u.s. pact with the u.s. emmanuel macron will speak as he

seeks clarification. reuters is reporting that paris has called off a defense meeting with the uk. joining was more is our correspondent. france clearly still concerned about the submarine contract what exactly is their posture and what are they hoping to achieve at this moment? roy: the french are not letting it go one of the main reasons p behind it is that macron faces re-election in seven months' time, so this anger is directed at domestic audience. he wants to show that he is tough and in front of allies. and that is not letting it go. so after the very strong words we heard last week from the foreign minister saying it was a step -- a stab in the back, france has canceled their meeting over the weekend

the french ambassador saying this is affecting the vision we have of allies and reliance. whether the adequate response of emmanuel macron -- how is this going to shape in the next few days but clearly this is deteriorating the image of the u.s. in france tandz relationship between the u.s. and europe. we'll see whether macron actually will take this a step further at the european level. mark: what will be the consequences lit have of the relationship between the u.s. and the broader european block and not just france? caroline: france and germany have criticized joe biden's decision to leave afghanistan so quickly. clearly this is not helping and

emmanuel macron wants to push for more autonomy of the european defense the problem is on one side you've got germany and angela murkle. also traditionally germany hasn't really had a very strong army since world war ii. and then on the other side, you've got the eastern european countries. they're actually afraid of russia. so they don't want to reduce the u.s. presence in eastern europe so macron will have to play a very smart here in order to do -- create an alternative to nato. nato he called him granddad because of years ago during donald trump so clearly one con investigation that macron could actually be seeking is to have a u.s. port in west sahar ah.

this is somewhere where the french minister is very present and macron can actually tell joe biden perhaps on the phone this week that last week, the french minister would dill islamic state in west sahar ah and perhaps this is one concession that he could be looking for after this. dani: thanks for staying on top of this. that's caroline konein. the rifles seek a united front. we're going to get the latest on the german election debate. we have that story for you next. this is bloomberg. 6

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expertise with the governments are take ago lot of recovery money, europe, you know, has committed a lot of capital the kong is debating substantial money in the two different bills there that if those go through will allow this effort to go full speed. >> we're not doing this to make money. we're doing this to -- to seed these ideas to rapidly accelerate ideas and hopefully one or two or many ideas turn into real substantive ideas. and if they need a round -- different types of rounds of financing because it's real at that time we could bring in client money. this is -- this is really meant to seed ideas -- seed new technology to move forward. the more we can move this forward, the faster in my mind we could have money to invest

side by side. dani: blackrock chair larry fran: speaking to bill gates about they program set up to set up solutions to the climate crisis. it's a busy week. let's whip through what we are expecting. canada hold ago snap election. then on tuesday you have the economic forum. you have speakers like bridgewater ray dalio. and former fed chair alan greenspan. we have the oscd. lit be updating wednesday. we get the rate decisions from japan and of course, the u.s. we have b.o.e.'s rate decision will be on thursday as well. we will get the uk and uspmi. biden host it is quad leader submit. and we also have suga of japan. mark, it's so difficult to know

what is going to be the volatility nevin week. i kind of feel like if i want to take the easy way out, i just say the fed that's what the market is going to care about. but this morning, i mean, people aren't waiting on their hands. they are selling. maybe that has more to do with asia. >> look, i hate to agree with you you, dani, but you've nailed it perfectly. the big calendar seventh the f1c. but markets are generating enough excitement. it's about what's going on in china and european gas price surging again today which show that is this european crisis is very much front and center as well. i think we've got a couple of things that are market relevant. obviously, the afluency is going to direct talks the bank bank of engelland is the one -- englan is going to interest me the most. >> it's not all about central banks, everyone. of course, mark, we values a

german election takes place. armna was put on the defensive as his two main rivals presented themselves as natural governing partners after angela merkel departs. let's get more into this with maria. it was the last and final debate. was it enough to swing vote iners the final weeks of campaigning? maria: you know, dani, there was a poll conducted for viewers asking them who won the debate ached the winner that's 3-3 was olive schultz the -- he is seen as the most competent would-be chancellor. the dynamic has been the same. but there was one thing in the debate that caught my eye and that was the leader of the green

party who said, for me, it would be right for the city to go into the session and presented herself as the natural junior coalition partner for the cpd so it does open the path for this green cpd coalition the other thing i would point to is the c.d.u. it has been narrowing the gap. they're pulling second. they would have had the worst result in modern history when you look t election. but they are regaining to some extent. the question will be who will go into government with who? >> good afternoon, maria. schultz is expecting to take grilling at the financial intelligence unit when he was finance minister. how much damage can this inflict?

>> today he's in the hot seat. but it's very important to stress that no one has alleged that he personally benefited from this, that he personally enriched from this. this is more about flood oversight from the ministry that he guided. now, two things on this, however. these issues are incredibly complex and it's very difficult to nail this specifically on him. and secondly action lot of this is happening while he was, you, no also in government with the c.d.u. it's very difficult to separate all of the minister of finance by led by angela merkel. if you look at that time german political scene, there is kreft theme this is something that the c.d.u. is looking to pro it from the timing of this. they're not interested in getting the questions. they just want to make olive look bad. this is not about the content. it's still very much about the narrative and the optics around

oh live to try to remove some momentum from him ahead of the election. >> maria, for us in berlin there. thanks so much, maria. don't forget you can catch up on our special preview what's at stakes in germany's election. a really great program. definitely check it out. a lot of great thoughts from the deutschek. now, let's get over to the first news with angel feliciano. >> janet yellen has renewed her call for kong to raise or suspend the debt ceiling. yellen said failure do do so will produce an economic catastrophe. it could send the u.s. into a payments default next month. uk energy companies are seek ago massive government bailout as a surge in gas and electricity prices threaten suppliers. the government sat for a third day of emergency talks on monday

after admitting small suppliers were under pressure. now bloomberg sources say clarke suppliers are seeking a rescue plan to handle the cost of taking the customers and small suppliers that may temperature australia cancel add $of 66 billion submarine order in favor of a new pact with u.s. and britain. macron will speak to president biden in the coming days. and it was a big night for streaming services at that time ies. netflix won with "the crown" giving the company with the top prize for the first time. "queen's game bet" took the best series award while lasso won best comedy global news, 24 hours a day on bloomberg an bloomberg "quicktake" with more 200 analysts in more than 100

countries. dani? dani: we're going the look at your stocks to watch that includes lufthansa. they have announced plans to pay back part of a government bailout that it received during the pandemic. we'll have that for you next. this is bloomberg.

♪ >> welcome back to the open. we're just about an hour way from the future es open. more than 1% losses for most of these equity bench mark futures really a lot of pain showing in the cap 1.7%. let's see what stocks are on the move beyond some of the negativity that we're seeing in the futures. we have joe ethan joining us.

you have your eye on airlines today. joe: that's right. loft than ah is raising around $2 billion in order to pay some of the bailout that they got around the pandemic. they did receive $9 billion euros during the depths of the crisis and given that they've got these funds from the government, there are restrictions on what they can do in terms of dividends in terms of bonuses and in terms of m.n.a. they're looking to pay that down and move forward with the business. there's a note for morgan stanley saying that although this will be positive in terms of removing some of that uncertainty, the valuation is still quite high versus pierce particularly vs. the shorter airline that is had a big boost last week following the news of the uk restrictions coming off. but potentially we're looking to see that lufthansa fall this morning of >> good morning. joe.

not severin exciting about uk gas price as i am. what's happening in the utility space in >> there are a's lot of unsentiment we're looking at these companies potentially having an an an uncertain outlook on the price and how this will impact the government is in talks with a number of smaller pierce. on one hand, it could mean some less competition for the bigger names, some of the smaller companies maybe pushed out of the mark. but on the other side, it might be quite costly in order to get these customers on to the books of the bigger companies. and it could be some uncertainty there in terms of the regulations as well. we also had a double hit for the sector. we've had news from f.s.c. being that they haven't decide whrd they will split up the business following some pressure from the activists elliott. an uncertain outlook given the talks with the uk government. dani: we have action with novard

tis. this is -- >> only three analysts have cell ratings. 31 that have coverage on it. and deutsche bank saying there will been some disappointing lung cancer drug and also the delta variant will cut down on elective surgeries tonight positive side they do have a lot more exposure to the u.s. there's a lot of regulation concern over in america at that time moment. but deutsche bank becoming negative on novartis. we'll expect to see that stock dropping add well. dani: that's joe easton. you mentioned in the program that it's possible that the european open is negative that some of those fierce start to -- fears start to ease. but it is still a more weak

session. i mean, is this something that that continue? or do you still expect that perhaps some of those fears as trading goes underway? mark: it's a great question, dan irks, you can see futures have dipped a little bit lore. european stock fedders want to push this sentiment further. it comes down with how the hong kong stock market closes got another hour of trading minus 4.22% will put it as the worst session since last year. it's a little bit oh off the low as it was down for man 4%. but people are concerned about hong kong. but the extra backdrop here is that on the other side of the world not in europe but on the u.s. we have seen the s&p 500 trading really, really badly. we're seeing futures very heavy there this morning. the sentment be quite lower in europe. dani: it's been like 40 days since we've seen a 1% move or

higher in the s&p 500. this is perfect time to use crypto as a hedge. but we're not seeing that bit coin down about 4%. i mean works can say what's moving it but not acting as a ballast in this storm today? mark: you tell me what's beginning on there, dani, i've seen athryeum getting hurry today. it is a broader crypto sector that's getting hurt. it's not crazy. but it is notable that it is not a fran: the storm. everywhere people are deleveraging. that's the real driver. >> at what point does it become a fire snail certainly something frightening for global markets? thanks for spending the past hour was. seen from will be joining us for the market open which comes to

you in about five minutes. at that time moment as mark was points out, we have futures trading down more than 1 nores a lot of these bench marks. so how deeply negative will be open be? we'll find out in just a few moments. this is bloomberg. .

♪ dani: welcome back to the european market open. a minute to go to the start of cash equity trading. i'm francine lacqua with dani burger. dani: contagion risk, hong kong shares feeling global selloff as investors way that debt crisis. power crunch, energy companies and the u.k. government hold a third day of crisis talks as the surge and natural gas threaten suppliers out of business. election week in germany.

the final debate followed the cdu on the defensive as angela merkel set to hit the campaign trail. francine: let's get straight to the futures. this is what we're seeing across the board. 15 seconds until stocks start opening, the focus on the fed this week, a lot going on in china, which could put pressure on the banks. we don't know the read across forever grande. we look at -- for evergrande. we look at prices. we're seeing the real prices. you have the market action. dani: markets just opening up now. you mentioned risks of contagion forever -- for evergrande. in general, you can see a lot of these boards in the red, some of the stronger dollar given some of that concern of evergrande, what it means for china. france opening up, the cac 40 down. in terms of china exposure,

france is a large one. we have luxury goods over there. if you're going to be trading, where does china concerns get to when it comes to the european trading session? look out for this index to be underperforming. we're seeing spain down 1.5%. a lot of arguments out there that evergrande is a bear stearns moment. there will be a bailout. but if your'e a trader now, your imagination can run wild. we are seeing continued indexes opening lower, india down 1.3%. let's go ahead and see where some of these sectors are shaping up so far this morning. again, it is a down day for energy, down 1.5%. this has been a problem for europe the past week, energy prices skyrocketing. it's about stacked -- gas stockpiles not being high enough. wind, what kind of impact will

that have? goldman sachs has been warning of blackouts. fertilizer plants have had to shut down. calling for a bailout in the u.k. that's leading is down, banks leading us down, and autos down .7%, certainly a day where people are deciding to take cash off the table. looking at w m go, mass markets go on your terminal, it is, again, a very red date. the degree of red is more than 1% from most of these markets. as i was saying, the cac 40 in france down 1.5%. it's going to be higher beta markets, but francine, it's an ugly day out there, a lot of that having to do with the contagion fear coming from china. francine: it is ugly. just don't know the ramifications of something happening to evergrande. european equity markets opening a little bit on the local side -- low side.

they haven't decided which direction to go. it's also a fed week and we have the debt ceiling that we haven't started on. it's a big week for central banks. wednesday's foc decision on the taper timeline. joining us is david and franklin. great to speak to you today. there is so much focus. i know you're on the others, but it's other side, but it's -- on the others, but it's taper. what happens if all the things that could go wrong go wrong? david: we like to be longer-term investors. we don't get too concerned over a little wobble a day or two. it's going to be about, does the fed announced when they will discuss the taper? we think we probably will start tapering later this year. when you have the u.s. tapering into 2022 and you have the ecb tempering -- tapering into 2022,

we have this massive printing of money for several years coming to an end. how is that going to impact markets? that is one of the areas people need to be focused on. dani: where do you pin the balance of risk heading into the fmoc meeting? could that be what shocks markets today? david: i think two things. one will be the dot plot, more, hikes in for 2023 or if any are dragged forward into 2022. that will determine how quick the taper will need to be. but the big one will be powell and how he tries to massage the market with his statements after they've put out what they're going to do. francine: when you look at the sea of red right now and markets, and i know you're focused on european fixed income, what is the market worried about? what is the main focus the next two or three weeks? david: i think we have several geopolitical issues, such as china, what is going on there.

i think that could potentially have longer-term problems the next couple of weeks. not that big of an issue. i think the energy crisis in europe is something a lot of people are focused on as we already have elevated inflation in europe and the u.k. and the u.s. and if we start to see energy prices continuing to go up, that could be seen as a one-off, on top of elevated inflation. it will start to bring a question, is inflation a bit more durable than originally thought? how do central banks react to that? dani: you mentioned china perhaps being a longer-term issue. how does that play out? what do you want to avoid if what we're seeing in china, given evergrande, or even the credit impulse, given the longer-term picture? david: china is a major player in the world. and they are basically setting themselves up to not be exactly opposite the u.s., but there is a geopolitical tension there.

i think everybody will be focused on what is happening in the financial markets in china. is it slowing? they are one of the biggest additives to growth. if they start slow, global growth will slow. and rates coming out of this whole pandemic recovery, we want to ensure it maintains a steady space. if it's any insight on, is china slowing? is this a problem for the global economy? and what is the knock on effect to other countries? francine: what happens to debt stealing -- debt ceiling? we had a nice opinion piece by janet yellen in the wall street journal, saying this could be catastrophic, economically. and at the same time, so many questions about that $3.5 trillion biden package. what does that mean for markets? david: we get the debt ceiling, we run into it on a fairly frequent basis. i don't think anybody wants the u.s. government to stop

functioning properly. i think they will come to a compromise. we may have a couple weeks of volatility, but than the debt ceiling will be raised and we'll see more stimulus coming out of congress. dani: certainly no one wants to see dysfunction. everybody wants to see a functional government. do you not give any credence to the argument of guggenheim's scott minerd, saying the debt ceiling is enough to put the fed on pause? is there any credence to that? david: i think if there is real disruption from the debt ceiling not being passed to actually raise it, then i think that could worry the fed. but again, i don't expect that really to happen. we tend to have these standoffs and then get it pushed through. and the fed is looking at there's longer-term. it needs to start tapering. one of the big areas is we have this big fiscal impulse coming, and this is a time for the fed to reduce its monetary stimulus at a time where fiscal will take the offset.

they will still remain on track, may a little bit slower, but overall i think we'll be fine. francine: david, what's more attractive in the european fixed income space, especially if we start looking at ecb starting to taper? david: our big focus in europe has been to move away from the periphery because if the ecb does taper, they have been big supporters of italy, spain, greece, etc., so we have been moving back to the core. but also i think we need to look at credit because investment grade and high-yield, they have great fundamentals at the moment. you have strong growth and inflation. and in europe, with inflation, that meets companies pass through, it will hit topline and bottom-line. we are overweight credit out of the periphery and more in the short bonds for the short duration posture. dani: great to get some calls for you this morning. that is david zahn. thank you so much for joining us today. now coming up, we turn to

germany where german lawmakers set to grill -- we'll have the latest on the german elections. this is bloomberg. ♪

♪ francine: welcome back to the open. we're 10 minutes into the trading day, and a lot of focus on the lower side of the

markets. all groups in the red, looking at minors the biggest decliner, iron or, consumer products suffering amid a selloff in luxury. waiting for the fed later, and after that, waiting for news of evergrande, to figure out what will happen there. let's turn to the german elections, which take place on sunday. olaf scholz confronted a potential stumbling block when he faced a closed-door drilling from lawmakers over a probe into an anti-money laundering agency overseed -- oversee by the finance ministry. anna? >> good morning. we are joined by fargo tomasi, a member of the german parliament, and he's done a lot of work on this so i'm very happy to be speaking to him today. when you look at this grilling that's going to happen today from olaf scholz, you've done a lot of work on this.

you yourself have called for more investigations to be done. how reliant or how trustworthy is this testimony from olaf scholz? do you really expect to see any answers from him? >> well, i don't expect to see other answers than he has given in the past year. he has crated additional jobs as the financial intelligence unit, which has to process basically reports from banks. . but it's not enough. it's not enough because we clearly have a problem here and it's becoming big scrutiny for the fourth largest economy in the world, which is germany because we are dealing with suspicious transaction reports on finance. we had the wiretap scandal. it has not worked out properly. soi t's a big problem for mr. scholz. maria: and you talk about wirecard, carmax happening not just under scholz, but is this

disqualify him from being chancellor? fabio: that's something the electorate has to decide. the problem in germany right now, the other alternatives, the other candidates are also quite weak, so this is what scholz has the time of his life right now. a huge portion of the population doesn't trust any of the candidates. that's my impression. for other people to decide, i will suddenly cast my vote, as well. but what we really have to talk about is how to fix this problem. and i think there's a lot of finger-pointing between the cdu and the spd. the cdu is also responsible for that situation because they moved the financial unit, tasked with countering anti-money laundering, analyzing suspicious reports, and disorganization have been removed from the federal relief to customs by the

cdu minister of finance. they're both culprits in this and now they have a big show. so my focus is much more on how can we reform anti-money laundering laws and how can we enable the financial intelligence unit to be something like an anti-money-laundering fbi, a true police force, as we have in italy, for example. maria: right, and you have been very critical of both parties, i should note. but talk to me about the timing of this raid. there's many political commentators in berlin that say today's grilling is not about getting answers. it's about making olaf scholz looked at. the timing is very funny -- look bad. the timing is very funny. what do you make of it? fabio: we asked for this special session because it is obviously a very interesting situation that they ministry is rated.

so we have no choice. and one has to say that this whole operation by the general has been the general that requested this rate as a member of the cdu -- raid as a member of the cdu, which is correct, but also a neutral judge that looked over this, and one has to be fair and say before this raid happened, there were a lot of steps taken that have not been public. they asked, for example, for emails that were not delivered repeatedly. and then they discovered that the ministry of justice had written to the ministry of finance whether there so-called -- their so-called risk-based approach has been contributing to actually not punishing certain criminal offenses anymore because they simply did

not forward any criminal offenses which had nothing to do in the more narrow sense with anti-money laundering. maria: fabio, ice, but i wonder -- i see, but i wonder also do you think german voters care? especially when it comes to olaf scholz, they do not say he's corrupt. but would you say he's competent? fabio: as i said, i think the other candidates are very weak, so i don't think this will have a substantial impact on elections. but that's not my primary concern. my primary concern is that whoever is leading germany last year, we can't afford -- next year, we can't afford to be the fourth largest economy in the world and risk our integrity. and that is my primary concern. but all the other electoral gains, all the other people -- games, all the other people can play them. i'm entirely focused on my job, on my homework.

maria: and we appreciate your time. just before we let you leave, very quickly, if you were to say how likely it is a red or green coalition likely to be from a scale of 0-10, what number would you give it? fabio: i would give it probably a five right now, but if enough people vote for my party, then it can be a 10. maria: [laughter] fabio, thank you so much for joining us from beautiful verona. i'm very jealous. thanks for your time. i hope to see very soon. francine, dani? dani: little campaigning at the end, got to love it. maria tadeo live in berlin keeping an eye on the story. let's take a look at what is moving elsewhere this morning. certainly we have that iron or story being a large one. anglo american down today about 5.3%, but really the entirety of the energy space of the minor space is down, iron ore falling

below $100 a barrel. but it's really all about china. they want green skies for the olympics. francine: i haven't had my espresso yet. the markets are going to settle and maybe they will find their bidders. but if you look at the ftse and these indices, they're on the low side. i'm the good cop, live tons of raising 2.5 billion dollars to repay state bailout funds. that story came out a short while ago. when understand the airline group issued new shares at 3.58 euros apiece, and lufthansa currently gaining 3.7%. dani: now you're making me feel bad because i have to play bad cop again. francine: we'll switch again tomorrow. dani: thank you. i have another decliner. another macro story down 5.5%. they're raising up to $3 billion in hong kong share offer. if you look at what's happening

in hong kong trade today, it's been such an ugly day. not only does this dilute shares, but that hong kong shares, which makes things very difficult here. let's get to the bloomberg business flash. here's angel fliss yana. angel: facebook is pushing back on the negative impact of this product. it's is negative impacts don't show the whole picture. content moderation, mental health risks and misinformation are complex and defies simple policy solutions. several u.s. lawmakers have pledged to investigate the social network. u.s. transport regulators have urged tesla to address safety concerns before expanding on autonomous driving features. elon musk said drivers would soon be able to upgrade the full self-driving capability of their cars. however, the natural transportation safety board told the wall street journal that the term self-driving is misleading and basic safety issues must be

fixed. that's your bloomberg. francine? francine: thank you so much. we are following the markets. coming up, contagion concerns. the fallout from evergrande spreads. dani and i will have the latest on this story. there's a deadline looming. that's on thursday. credit markets not feeling too great about it. we talked china next. this is bloomberg. ♪

♪ francine: welcome back to the open, 23 minutes into the trading done. dani burger, the queen of charts, after heather re-, trying to teach a couple of things to look at in terms of credit. is very clear there are three things weighing on investors minds. evergrande and what happens in china, the fed if it starts tapering, and the debt ceiling in the u.s., and that all plays in the economic agenda for president biden. hong kong real estate giant has suffered the biggest selloff in more than a year as fears of evergrande intensifies. joining us now is bloomberg's china credit kevin kingsbury. a million questions, 20 seconds to get through it. first of all, others a crunch because we could see real default coming from evergrande?

kevin: right, we have two different bonds coming with interest payments, another $36 million on a local bond. they have not had interest payments in several months on bonds and so far they have made every interest payment and met every bond maturity. so for whatever reason, there is not payment made on thursday, this would be the first time evergrande has not done this. comes on top of the company giving different discounted properties to certain creditors for paying bills. so obviously there's a lot of cash that they are looking to save, and it appears that cash may go to these bond payments. but until we see on thursday, we will have to wait and get the final word. dani: just very quickly, a couple seconds, francine mentioned the markets were paying attention to this. are contagion risks very present at this moment? kevin: definitely.

we've seen asia high and chinese high-yield bonds both falling today, one cents to two cents on the dollar. there is some broader movement out of not just property bonds but also some of the other parts of the bond sector. dani: kevin, thank you very much for staying on top of this. it's been pretty remarkable. we talked with mark cudmore earlier today who said the chances of this spreading to europe are slim, but you look at what these markets are doing and certainly, there is a lot of red out there in europe. francine: i don't want to panic anyone, but it reminds me of what happened with lehman. our lesson was lehman. one of the questions and maybe we will get kevin back on, if the pboc and china authorities have to shore it up, how much do they spend? if they let it go under and let off some steam, we don't exactly know what it will touch at this point. but it could be limited, or

there could be some liability that we don't know of. dani: that's such a good point, just the unknowingness of that weighing on markets. u.k. energy companies seeking bailout from the government. we're going to have more on that story next and the surging gas prices. this is bloomberg. ♪

♪ francine: welcome back to the open, 30 minutes into the treading day and here are your top stories. contagion risks, hong kong shares risks sink as investors weigh the debt crisis at evergrande. bond part -- bond payments blue this week. power cranshaw energy companies and a third day of crisis tops it as a surge of natural gas and energy prices threaten to put tummies out of business. the cdu on the defensive as angela merkel was set to hit the campaign trail.

we look at the markets. it's going to be a very busy week. it's not a great start because markets are down and they are right about china. dani: we also have the fed this week. it's almost like it doesn't matter. usually we say everyone is sitting on their hands, waiting, not making any moves. this is not the market selling. it is the opposite of sitting on your hands. maybe the market gives us some action. francine: if you look at the fed , i don't know if there is repricing ahead of that and congress is also coming back. there's a lot going on. dani: there certainly is. what does it mean for yields? are the dot plots going to move? certainly is affecting market so far. francine: i can't wait to see the groups losing the most. dani: let me take you over there and show you exactly what is on the move so far this morning. a lot of these indexes move into the red. on this board, i want to point out the dax. it is down more than 2%. those losses really accelerating

as we've gotten through the open. it wasn't the most moving, so what you're kind of seeing here is those higher beta cyclical type names underperforming. you have the cac down nearly 2%, ftse outperforming ever so slightly and euro stoxx 600 down 1%. more than 1.5%. there was some hope we could see a cyclical bounce. wrapped growth would pick up. but the fear is what is coming out of china. we did see a note saying it is not a lehman moment. so authorities will come in and step this. but at the moment, if you are waiting for this risky week, you are just not taking any chances here. you are taking money off the table. let's see what the sectors are doing so far. you mention minors, it's everything. it is basic resources. that's what is at the bottom here, down 3.5%, iron ore plunged below $100 a barrel,

down nine consecutive days, longest losing streak since july, 2015. where are you going to find protection in this market? it doesn't look to be equities, but something doing a little bit better, we have consumer goods, health care, and food, beverage, tobacco, real estate, these are more of those defensive plays. it is clear but the market is telling us today. this is a very textbook risk off. is not a european stock or in these sectors but i wanted to point out that bitcoin is also down more than 4%. you can't even get protection in bitcoin today. francine: what is this market? one of my favorite things when i come into the newsroom is waiting for dani to brief me on crypto and bitcoin. some of the wild moves that we're seeing on the markets. bill gates has raised more than $1 billion for the energy catalyst. amongst those coming on board

our microsoft and blackrock. bill gates spoke to erik schatzker. bill: very exciting that we've got founding partners at catalyst, companies that care about climate and even beyond getting rid of their own emissions, are helping to support the projects that will reduce the costs making things like aviation fuel or hydrogen. and so it's not just their missions that will be impacted here. as we take this over $1 billion in capital we already have -- and that's just the start -- and fund these projects -- we're going to bring these costs down so that all companies and all countries will be able to participate in using green products. so i saw this as a key element. i first went to satya nadella,

then seeing how out in front larry has been, i went to him. the two of them encouraged me to get a group together now. we've got five other companies who are leaders in this space announcing substantial commitments. we start with over $1 billion to help fund the scale of projects that will bring the costs down. and there's a lot of leverage here because there will be government money, government tax credits that will pull together dozens of these projects. erik: and you've got, if i understand it, in addition to microsoft and blackrock, you've got bank of america, general motors, bcg, i may missing one, american airlines. bill: those are the seven founding partners that are going to help guide this effort. we do expect to bring in lots more companies. we have announced that catalyst

is also working with governments, the eu and the united states announced that they see this effort is very complementary. and so designing these contacts well, which the government's was doing itself, you have the expertise. so our expertise, the company's expertise with the government's that are taking a lot of recovery money, has committed a lot of capital. congress is debating substantial money in the two different bills there that, if those go through, will allow this effort to go full speed. erik: larry, you're one of the first people bill approached in his effort to get this off the ground. what convinced you to support him and to support catalyst? larry: we need to rapidly find ways to bring down the green premium, to move to a more sustainable world. at this moment, we're spending more time focusing on a blue-green world, and i just

think if we don't find a new technology very rapidly, it's going to be highly inflationary to get to a green world, and many parts of society behind. so it became very real to me that we needed to be focused on investing in new technologies very rapidly. and importantly, though, we needed to invest in new technology that may not turn out good. we needed to be investing in new technologies at the very onset of these technologies. some of them may work. and if they work, they're probably going to be enterprises that maybe blackrock decides later on, where client money. but at this time, it's very important for us in our position, as an organization, to put our capital to work through our foundation to really start accelerating the idea of science and technology coming forward to rapidly try to find solutions to move, as bill said, to green biofuels, to green cement and

green steel. dani: bill gates and larry fink speaking about the energy catalyst. let's stay on energy, u.k. firms seeking a massive bailout as the surge in gas and electricity is threatening suppliers. the government is set for a third day of emergency talks today after admitting small suppliers were under pressure. joining us now, we have will kennedy, bloomberg's executive editor, and eddie van der walt from our bloomberg mliv team, a dream panel here. will, i want to start with you on where we currently stand. we have smaller suppliers and some larger suppliers asking for a government bailout in the u.k. is that where we're headed? will: well, what's happening is there supplying power to british homes in the market has gone away where they are capping how much they can charge those households by the government's

cap on utility bills, that they'havere -- they're having to go into markets, which have tribute and quadruple -- tripled and quadrupled. the expectation is several more will. normally what happens is those customers get transferred to one of the bigger supplies, who takes on those customers and puts them on their books. but right now, that's not an attractive proposition. those companies do not want to take those unprofitable customers on, so they're asking the government, it's your problem. find a way to supply power and gas to those customers. pay us to do it. that's where we are. francine: it's a huge political hot potato, as we say. eddie, what does it mean for the markets further down the line? eddie: will is absolutely right. a lot of these companies have

taken on risk, and they are facing big exposure here. but it's a little bit like the evergrande situation in that we don't know if we see one or two of the bigger ones fail, what the knock on education will be for the rest of the market. energy prices significantly higher than anyone expected at this time to be. and unless the weather really plays along, we could see a significant squeeze higher and energy prices pushing up further. dani: that's kind of a lot from the company side, will. i wonder if you're an everyday consumer, this is something you also need to be concerned about, that you could be paying through the nose. will: well, in the u.k., prices are kept. that's a decision that has been made. prices will rise just over 10% in october and probably rise again in spring. so higher bills are coming, but we know what they are.

in other places in europe, other types of supply people it may rise faster. importantly, businesses have and businesses are starting to see energy costs fall. and i think one of the things we need to be aware of is how that leaks into other parts of the economy, paying more for food, paying more fertilizer prices going through the roof. that's going to feed into farmers cost. what we need to be looking for is higher energy prices, because prices, while spectacular, are going to leak into the wilder economy and build in inflationary pressures. francine: and we've had reassurance from the u.k. government that no one will go under. no one will be left without gas in their homes if someone were to go under. but if we talk about the broader markets, there are two or three news putting investors angst at the forefront. is that going to change? eddie: and we've seen these

pullbacks before. we're only down 3% or 4%. the drawdown isn't spectacular. as you pointed out, we are in a fed week. we could see the fed saying things to calm the markets. and the one thing that policymakers at this moment do not want is the li bin moment anywhere -- lehman moment anywhere. so, i think whether it is energy prices, whether it is evergrande, it doesn't really matter. policymakers will be very closely watching, will want to avoid any sort of spillover into the wider economy and just negative sentiment for investors. dani: thank you so much -- francine: thank you so much, will and eddie. let's get straight to bloomberg first word news with angel feliciano. hi, angel. angel: hi, francine.

after several false starts, bankers are finally getting back to their desks in the city of london. at this headquarters, traders, salespeople, and support staff have been told they're expected to be at their workstation five days a week. meanwhile, occupancy at goldman sachs is around half and continuing to rise. china's top regulators defended their multisector market crackdown to wall street executives, saying stricter rules were not aimed at tech or private companies. bloomberg was first to say the vice chairman told business leaders recent actions were intended to reduce social anxiety. for consumer facing industry. beijing must ensure consistency and transparency to build confidence. and it was a big night for streaming services at the emmys. netflix won the best drama series award with "the crown." "the queen's gambit" took the

best series award while "ted lasso" won best comedy. global news, 24 hours a day on air and on bloomberg quicktake, powered by more than 2,700 journalists and analysts in more than 120 countries. this is bloomberg. francine? francine: angel, thanks so much. coming up, property prices forcing people all over the world to abandon all hope of owning a home. we've got that story. this is bloomberg. ♪

dani: welcome back to the open, 46 minutes into the treading date and it is a sickly looking day to put it mildly. you have the dax down nearly 2%, easing off some of those losses, down 1.5% for the greater benchmark. but it is more than 1% for all of these. it is a remarkable that the negativity has been kicked off with evergrande. you have been talking about how massive it is. francine: i spoke to kevin after he came on tv and it was $300 billion of liability. if the authorities decide to come in, is not going to be chief. -- cheap. but this is a key week for the markets. it started horribly. dani: usually you get that dip buying. you haven't seen it yet, s&p 500

reaching below the moving average. maybe this is not the week you want to buy the dip given those concerns you are talking about. francine: and if you break it down, a lot at the u.s. and the fed and what we are or not hearing from the 3.5 trillion dollars economic plan of joe biden at the debt ceiling and then looming over this evergrande. i don't know if we know before thursday whether that is the big liability. dani: of course it doesn't help china is on a holiday right now, kind of let's people's imaginations run wild. francine: so we'll keep on watching everything happening in china. i think japan is also on a holiday. prices forcing germany and people all over the world of all hope of owning a home. also it's of ideas, but little evidence of an easy or sustainable fx. bloomberg's alex crawford has the story and he joins us now. i know it's taken a lot of months of reporting and looking into the various countries and metropolises.

how bad, first of all, is the phenomenon around the world? alex: just to give you a flavor, francine, in changing, china's answer to silicon valley, the inflation of an apartment is 43.5 times the average worker salary. and equally in the u.s., we've seen property price increases of more than 10%. right across the board. this is not just the hotspots of san francisco and new york. right across the first quarter in the country, so it's a phenomenon. it's global. and it's governments, both democratic and not so democratic. dani: of course, there is a political element to this. you mentioned berlin and germany in your work here, and of course heading into election. what has the political responses been to this issue? alan: well, governments are

faced with different aspects of this because rates are also rising in many of the big cities. in berlin, the city government, it bought 15,000 apartments to try to alleviate the strains. we've seen demonstrations on the streets here. and there's a referendum, a local city referendum on seizing control of properties from private landlords. it's that serious here. dani: alan, thanks so much, a fascinating story, bloomberg's alan crawford. go to the terminal, read the full quicktake. you can also check it out on bloomberg.com. european stocks plunge, filled with risks, as francine and i have been discussing. falling commodity prices, the fmoc meeting coming. we'll discuss what you need to be aware of for your trading calendar next. this is bloomberg. ♪

♪ dani: welcome back to the open. we are less than an hour into your european trading day, not a pretty day to start out your week. we are seeing most markets down more than 1.3%, but the worst is france, down more than 2%. all of it is about this risk in the market. francine, you have laid this out.

the it the fed, central banks, or china. i also want to draw. to your attention the gmm today is the perfect datatype those letters and go into your terminal, gmm . your equity indexes, be forex falling on the dollar. if you look at the fourth column, a lot of stress in iron ore. but if you want the green, it's in natural gas. unfortunately a negative story, but giving us some green. francine: i need to pay for my rent, the gas. it's a problem in the u.k. talk about these markets, nora. i think the concern is that we're concerned a lot of the selloff hasn't been long-lived for the summer months. what is going on here? what do you worry about monday, september 28? is it fed, evergrande, something else? nora: i'm worried about policymakers. whether it's a lack of

intervention from policymakers when it comes to aidg to evergrande in china or what happens when the fed comes into session later this week, even if you look at iron ore, that's china also stepping in, and where you sell that in australia and later in brazil because that is one of the biggest producers, as well. dani: iron ore has been pre-remarkable to see how it's been falling. you mentioned australia and brazil. those are the points that we'll see come from the commodity damage we're witnessing. nour: absolutely. if you compare iron ore's journey, you will see the bloomberg commodity index is still up about 26% year to date, where's iron ore has really struggled because of chinese intervention. here's the thing. china is also trying to intervene in the crude market, as well. whether that impact is going to be seen is up to the auction or whether they sell some of the reserves.

some of the reserves are notoriously less than what you would expect to have an impact on oil versus opec. francine: we also had this wall street journal opinion piece by janet yellen who called on congress to suspend the u.s. debt ceiling or risk widespread economic catastrophe. is the market discounting this at the moment? nour: i would tell you very much so. but in the case she wrote an op-ed, which is very much a concerning point. and if you are reading the market news over the weekend, you were going to come in with a complete risk off mode and you are going to want to sell off and look for haven trades. that's why we are seeing the dollar soaring today, commodities falling off. you mentioned france, equities falling. that's luxury stocks, as well. that's the picture people are taking. debt ceiling in the u.s., it's up to congress. so far, they have been meeting their targets. whether or not bipartisan approval is met is very much in the books.

francine: thank you so much. we saw price rises. it's amazing to see how that will actually make debt demand in the future. that's it for the european market open. surveillance: early edition next. ♪

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