Transcripts For BLOOMBERG Countdown 20160819

This friday edition of countdown. Im manus cranny. The markets are moving and the equity markets are causing for thought. What does this mean . Have a look at the dollaryen. The volatility of the nikkei is dropping precipitously down. As we seen yen rise against the dollar. Yothe yen is up to its fourth week of gains. The yen is the strongest currency in the g10. What are the traders saying . Buy the dips in yen and the rallies in dollar. The fx market literally saying japan, if youank of are going to intervene in this market, show us your hand. Wti are both down, but the dollar has a slight rally, up. 8 . It has had its worst two weeks on the down side since april. Williams suggests that september is in play. 0. 5 . Llar index is down above 70 forp nine days in a row. This emerging market index is really taking hold. We are trimming the weekly gain to just. 2 . Llaryuan, leading the declines in the asian currencies. And gold, what do you do next for gold . The dollar market goes slightly better. Those are your markets. We have a lot to get through. In the meantime, lets get the bloomberg first word news. Manus. R thanks, San Francisco fed president John Williams said he is for hiking rates, too. He warned waiting too long risks high inflation or asset bubbles that would cripple world. He does not vote on policy this year, but is viewed as important leader on the fomc. And oil is set for its biggest weekly gains since march, as it holds steady in a bull market. Wti and brent have advanced 20 from an early august low. Speculation grows that producers my bk to freezeout but. A former Deutsche Bank risk officer has rejected an 8 million reward from the securities and exchange commission. That is according to an opinion piece he wrote in the financial times. It is disappointing that the top executives retire with multimillion dollar businesses. Whistle on the bank, overvaluing a derivative portfolio. Well, Hong Kong Exchanges and clearing. It has introduced a measure to help deal with extreme pice rice lifts in the stock market. Willechanism they introduce will restrict the stock removing more than 10 during a five minute period. Two u. K. Betting companies have abandoned the pursuit of the countrys biggest book maker, william hill. They cannot make a wholesale bid for at least six months until somebody else does. And german chancellor Angela Merkel says she is back lifting russian sanctions if conditions are filled. She said that unfortunately, seenshough, she is not the implementation yet. This came from a Campaign Rally in eastern germany. Global news 24 hours a day, powered by 2600 journalists in more than 120 countries around the world. Manus . Manus thank you very lets get into the markets now. By. Wengles is standing are seeing a little bit of a drawback in some of these equity markets as we go to the close. David right, and some of these markets across asia did have an rsci above the 70. Here in hong kong, some of these benchmarks are still above 70 when you look at the 14 day rsi. It could be over but, of course. It could be overbought, of course. This is not exactly the clearest lead i am giving you. And you look at australia, as christine pointed out, we did see oil add a few more cents after it entered the asian market. We are trading at about 48 per barrel when you look at new york route. This story stands out in asia. It seems to be down to a relief rally now that they have the dollaryen. I will show you the dollaryen at the moment. It seems to be behaving itself. So, we are right at that midpoint between 100 and 100. 50. So, it is weakening right now. The dollar seems to be pulling back from some of these losses. We showed you the korean yuan earlier and that is the biggest move down as far as asian fx is concerned. Lets pull the start back a little further. It has been hitting lower and lower lows. That trend line seems to be solid. What jpmorgan is saying is, unless we get to 95 before the next boj meeting in late september, do not worry about any sort of intervention. If we get to that level, japan could intervene one time. They cannot afford a sustained intervention up until the u. S. , election , something to keep in mind. We are seeing a little bit of a bid when it comes to the nikkei 225. Nothing as groundbreaking as far as bonds are concerned. But the fiveyear bond yields in japan are down again, following that fairly successful auction we had thursday over in japan. 18 on japans fiveyear bond yields. Manus thank you, david with the latest across the markets. It has been a week of pressure for the dollar and the fed has divided over a potential rate hike. San francisco fed president says september is in play for a rate move, as are all meetings. Though he is that not in a hurry to tighten policy, he does not want the economy to overheat. We have to gradually raise Interest Rates. We can move it a little bit lower, but if we wait too long, we will not have that option. That is potentially a risky approach. Manus lets put it all together. We have the Asset Management director. It has been a week for fedspeak, hasnt it . And certainly has. Dudley, williams, etc. Manus williams is nonvoting this year. Himself and bullard seemed to be members. Up to date that is probably true. But perhaps i say that because i think the fed should raise rates. Manus how quickly do you think they should raise rates . We will hear more from Alan Greenspan later this weekend. He says when it comes, it will be fast and furious. Unless they delay, that would surprise me. I think more likely, one hike at ost, two thist, tw year, probably another two next year. It is probably safe to say that the neutral fed funds rate is lower than it was. That the fed funds rate bridged 2 . We have to assume it was average , about 1 , which means nominal turns, a 3 rate is probably natural or normal, or neutral. So, they will probably move very cautiously. The current fed is still extremely dovish. Manus the current fed is externally dovish. That shifts into 2070 . 17 . That shifts into 20 williams will become a voting member. It is very interesting that he is shifting. Bullard has shifted back and forth, very carefully analyzing the economy. Williams comes on board on the other hand, is the president of the kansas city fed, who is the hawk of hawks. She is voting this year, which means she will not be voting next year. What is really important is of course, if you look at the permanent vote, janet yellen is very dovish, but on the other hand, dudley, the president of the new york fed, he once had a dovish reputation. But he came out and said he did not quite say it is time to hike, but he is making sure that september is in place, as williams put it. Manus i was told it would be folly of the Federal Reserve to raise rates because inflation is not yet they are not yet staring down the barrel of inflation. A great piece was written in terms of how do you battle against this sort of lackluster inflation environment . Irvinesher, channeling fisher saying, raise rates around the world, that is what you need to do much more aggressively. And in jpapan, it is. 2 . But i think japan is a completely separate case. U. S. Underlying inflation is 1. 7 to 1. 8 . We have seen an edging up. If you want to avoid the rush of hiring Interest Rates, it is better to move rather than wait. Also, i have to be very careful here. I dont want to say, we should raise rates so we can cut them if there is a recession, which we will bring on by raising rates. That is obviously a meaningless argument, but it cannot matter very much for any decision, whether the feds rate is 1. 5 . 75 . Fedit would mean that the had more space to move, both up and down, then they do right now. They are very constrained. No, i get that. The point of raising gradually is to store up the piggy bank. But we have tantrums, we have market tantrums. With the tantrums, that is very clear. That is a problem. What we have seen post the Great Recession is markets have become much more central bank dependent. Now, the fed says we are data defendant. Well, to a certain extent. But Central Banks, and that very much includes the fed, our markets defendant. Start with the original tantrum in. 2013 what did he really say . He said something along the lines of, we are going to discuss whether possibly we should look into maybe cutting down a little bit on the quantitative easing. And markets said, bloody hell, this is an absolute disaster and the fed backed out. The pattern almost since then has been, the data comes in strongly and fed spokespeople say, we need to raise rates and prepare markets. Andake two or three forward one step backward and the fed says, we cant raise rates now. Start theave to process all over again. In my view, they should have said in 2014, the economy is improving, we are not in a recession anymore. We are going to normalize Interest Rates. Get over it. And they should have very gradually have moved then. They could still do Something Like that and they dont have to move in 25 basis points. Manus i dont think they have got it in them to stand up and almost people say dont fight the fed. I dont think the fed as it in has it in them to fight the markets. The public, i am not so sure. 25 basis points will not make much of a difference, but whether the fed is prepared to move, i dont know. I am a bit pessimistic. Inecast is one hike september. I would like them to do two this year, whether they do even one. One is becoming more likely, that is true, but they are moving too slowly in my opinion. Manus gabriel, thank you. Someone else thinks that u. S. Rates should rise soon. This man is often accused of keeping them too low for too low. In an interview with Bloomberg Radio, we spoke with Alan Greenspan about future rate hikes. You dont want to miss it. At 9 30, we round up the weeks post brexit data with britains budget deficit numbers. At 6 00 p. M. This evening, u. K. Hughese get the baker u. S. Rig cout. And then, we have the Credit Rating on turkey. Coming up on countdown, is apple hitting a dead end . They are trying to make themselves less dependent on the iphone. We bring you this story. Using makingry japan a more attractive aspect . Plus, what a difference a week makes. Post break the data allayed some fears. That is all ahead. This is bloomberg. Manus it is 1 19 in the afternoon in hong kong. Lets get to Christine Harvey for your business flash. Christine thanks, manus. U. K. S Financial Services industry has reportedly given up hope of universal access to the eus single market. According to the financial times, they are seeking for different sectors to trade with europe with similar, but stronger ties than switzerland. The paper says representatives from the industry will present their brexit policy ideas to theresa may. Ideas to theresa may next month. And the billionaire is requesting that all investors take more risks in their bets. The legendary macro trader is boosting the amount of money he is managing to more than 50 of his hedge funds assets. The moves are essential to the shakeup of the business, which recently cut 15 of its staff. Apple has it roadblocks in making major changes that would connect its march to sell Cellular Networks and make it less dependent on the iphone. The tech giant still plans to announce new watch autumns this autumn, boasting improvements to helalth tracking. Manus japans economy always seems to be lurching from expansion to contraction. The reality is a potential rate of 0. 2 has recession never far away. Lets bring in jodi schneider, joining us from tokyo. Jodi, every time we catch up we try to talk about the yen. It is moving and it gets a lot of attention. In terms of japan, where are we, in terms of its revival . Jodi well, we had several key pieces of data this week. They show continued weakness. The gdp data came out early in the week and basically showed the economy was, as you put it, in a very slight growth. It has been also letting between the slight growth and contraction with 0. 2 growth. But driving it was really there were not a lot of drivers. Spending was a natural contraction and private consumption was up a very slightly, making up 60 of the economy. We did not have a lot that was pushing forward. Later in the week, we had our trading data, which showed continued weakness in exports. Exports were down the most since 2009 and had fallen for the 10th consecutive month. A lot of the of course, is based on strengths of the yen. Manus the data seems to be concerning policymakers. They are worried about the overall path of the economy, arent they . Jodi yes, they are. Again, without a lot of drivers of growth, they look forward and see what is going to propel growth. And what had been helping of course, was the ewaweak yen. That helped exporters and stock prices, but now we do not have that because the yen has been up 20 since the start of 2016. They dont see a lot there that will allow that growth. And remaining very far from that 2 inflation target is another concern. Of course, this puts pressure on policy, and on the bank of japan. Manus jodi schneider, thank you very much. Gabriel stein is still with us. From relief to concern in japan almost on a weekly basis. 600can abe really get to a 20, given thaty 20 they have thrown a lot of mud . That is a 20 increase in five years, isnt it . I am not even sure if they can do that. Manus in september of 2015, he announced an ambitious plan, 600 trillion yen by 2016. It is highly unlikely. It is very difficult to say. We saw in july that the bank of japan did move a little bit, but they also disappointed in terms of what they did. What i would really like to know is, why did they do less than expected . Whaas it because they wanted to gauge the state of the economy and they are going to add to their measures in september . Was it because they feel that Monetary Policy has reached the end of the line and they want to pass the buck back to the fiscal side . That puts a different complexion on things. Or, is it because they want to make a radical break and try something new . Manus you would maintain, oxford economics, would maintain a lot has been, i suppose poo pooed in terms of helicopter money. Why are you so assured of this. To quantify it is very difficult. Manus give it a go. 8 instead of buying trillion yen of assets, the thing to set it to distribute the money to households. I think it would mean Something Like 600,000 yen per i household. Its about 18 of gdp. Sorry, 16 of gdp. It is quite a substantial sum. How much of that would be spent . We dont know. Studies from the u. S. When they had a tax rebate in 2008 imply anywhere between 10 and 25 in favor of more spending in japan. Households have a very low savings rate. Against more spending is they have very bad demographics. Lots of old people and very few young people. From a spending perspective, that is not very good. I wish i could say i am 100 sure the japanese will move there, but i am not. Next step,ical regardless of the fact that the governor of the boj has ruled it otu. Nothing else seems to work. It would be extremely powerful, we think. Basically, just keep pushing money at people, as opposed to pushing it to the banks. And it should have a substantial impact. Well, we think the likelihood has increased. Manus ok, the likelihood has increased. What worries me even more is that where japan goes, everyone else seems to follow. Up next, privatization for south africas biggest companies. This is bloomberg. Manus it is 1 30 in hong kong and 6 30 in london. The dollaryen trades at 100. 25. That is a little bit of a turnaround. What do the traders say . We will talk more about that in a moment. We have a new edition of daybreak. It is on your mobile and on bloomberg. This is the man who is on the front, a pretty impressive man. The jamaican sprinter, you know who it is without evening tagging it. It is of course usain bolt, making history in terms of his feat last night. He won the 200 meters, is eighth olympic medal. He admits potentially, this could be his last, he is unlikely to run again. A powerhouse that owns more gold than any small state albert around the world. State they are around the world. So, he did it. He pretty much averages the time i run around the track. [laughter] manus the longest slide in four months. There is that much fedspeak that he might follow for yourself if you are a dollar trader. The latest of course, governor williams in San Francisco saying, get ready. Alan greenspan, stay tuned to bloomberg over the weekend. There is a governor that knows about raising rates hard and fast, but does the world and the fed have the stomach to replicate the greenspan plan . Finally, daybreak, focuses on the lenders in china, who have been left in the dark, zombie companies. That is perhaps one of the single biggest concerns out there for the markets in terms of the overcapacity, the overcapacity in the chinese system. Ok, lets talk about sterling versus the dollar this morning. It is eroding some of yesterdays gains. Elliott, good morning. The pound is down this morning. We actually had a pretty good week for the pound. You had dollar weakness as well, but we had a bit of Pound Strength as well. We are up by about 1. 7 . If i squint, i can see that on the terminal there. That is the fiveday chart of the pound against the u. S. Doll dollar. We had jobless claims a little bit lower, although the Unemployment Rate remained the same, as expected. Yesterday, we had the surging retail sales as well. The sun is shining on the british pound this week, before i go away for the weekend. We are still down more than 10 against the u. S. Dollar since that momentous day on june 23. The other thing i am looking at this morning is gold. Gold has also had a pretty good week. We have been rising the most int he thwee week. Ng streakfour day winni and today, that has come to an end. The fed is more inclined to raise Interest Rates if that will dampen down the inflation. Gold, losing not maintaining that four day winning streak before the weekend. I wanted to give you a personal recollection on gold. I was at a conference in october, telling people, you should include gold in your portfolio. That was back then on october 14. Since then, gold has risen some 14 . I guess that is why he is a billionaire and we are not. Manus great work on the chart this morning, elliott. Lets put together a little bit of a theme for you, elliott. Equities have driven these markets. These are the charts that matter the most to me. Kick it off with the dollaryen. What you see there is a big break, a big psychological break, which is breaking the 100 yen. This is the third time since brexit. What is going on in the market, where the sentiment seems to be that you want to buy. This is about challenging the bank of japan, in terms of their ability and capacity to actually intervene unilaterally, or it could be quarter needed. Or it could be coordinated. We have been through the 100 level. 99 is where the losses are. This is the Movement Year today date. A great piece of advice from the advisor. He calls for gold action. Toord economics just said me, we are potentially looking at the ability of this administration to look at helicopter money. Nevermind qe. So, lets have a look at oil. This is a cracking chart. Wti and the brent mark, both are back in bull territory. Oil is set for its biggest gain since march. It is the longest run of games thiins this year for crude. U. S. Stockpiles have declined. Will opec deliver a freeze . These are the moves we wanted to with the Asset Management director at oxford economics, gabriel stein. What a cracking run. It does not take much. That is right. Of course, exacerbated or strengthened, if you want, by rumors that the russians and the sauids might get in bed with each other and agree. The two biggest producers of oil , together. However, lets look a little bit at the numbers. First of all, how many times have we heard that the russians and the saudis, and perhaps others, are going to agree on an oil freeze . I think it is the third or fourth time this year. Manus yes. Second, where what they actually freeze oil . Back in january or february when there was a discussion, Russian Oil Production was at an alltime high of 11 Million Barrels. And saudi Oil Production was headed for 10 Million Barrels. In june, saudi up it was 10. 5 Million Barrels and in july, 10. 7 Million Barrels. So, what these two countries are saying is, we might consider freezing out buput at record high levels. We will let everyone else follow suit. Are the markets going to follow suit . Are the uranium going to follow iranians goinge to follow suit . Whathat a freeze would a freeze due to the oil price . It might remain around 50, as opposed to going down a little bit again. But, even that depends on everyone being in there. Remember one thing. An oil price around 50 is apparently a nice oil price for shale oil in the United States. That is the problem. Opec can today, and other large producers like the russians, can push the price down. They can push the price up because they hire it goes, the higher the interest for the u. S. , canada, and so and so frotor. There is an upside limit and until supply and demand change around massively, which we dont think they will do for the next year, that is not going to change. Manus lets call this 50 and change. Lets say that is the new corridor for oil. Put that into perspective with ppi and cpi. Ultimately, that is going to channel through. What does 50 oil do to global inflation, or the state of play in lack of inflation . I hope you are not asking me to quantify that because they cant do it in my head. [laughter] matt if you look at that chart that you have behind you there, and if we could have that on the screen as well, the key thing is the change. So, the base affect that shows we are moving up and will have an impact immediately on headline ppi and cpi, eventually. And of course, as the drops disappear, the base effect will mean that inflation will stabilize at a somewhat higher level. That will be welcomed by Central Banks everywhere, probably welcomed by most people everywhere. So, from that perspective, that would be good news. Is it a game changer . No, not really. Manus there you have it. Gabriel, thank you for being with us this morning. Gabriel stein, asset manager at oxford economics. Bloomberg was told that the u. K. s brexit vote was a mistake. The man who has a net worth of 7 million said he is impressed. He spoke to us about the politics, the business, and the influences. Things that many everybody should be concerned about. , i mean, the obvious one being of fundamentalism. The obvious, i would say, thellusionment in some of smaller countries. Warringre borin factors. The possibility that there could be a presence in the United States, all the problems europe is experiencing. So, compared to what . We have our state of difficulties, with which i would much rather deal than with some of the other difficulties. Be in the u. K. A week or two after brexit, and what was impressive was in the short span of time, the brits managed to steady the ship. New prime minister, new ministers with apparently excellent credentials, and making the right noises. And the ship is steadied. We are looking at, knowledge, at acquisition. Operations, not only in the u. K. , but in france, germany, and china. The point i want to make is, between african or african buyers. In fact, the opposite. We as a group, are very committed to south africa. We are ever optimists. We believe that this country, and in fact, the continent, both have a great future. But it is africa. You have to get in tune with the rhythm and you have to understand it is a medicine and not a splint. The chairman ofc inhoffg haste international. I have to find my african rhythm, it back to those drums. A great, great interview. How did he become africas richest man . So, christo wises net worth is more than 7 billion, i think 7. 7 billion at bloombergs must count. He is africas richest man. He built his business and career really around obviously, retail, but specifically, the lower and more affordable end of the spectrum. Are now the largest food retailer in africa. Another one of his bigger successes sold to steinhoff for more than n 5 billion two yeraars ago. Chairmanu said, the of steinhoff, sharper horizon, and other companies. Manus he was very clear during the interview that he is proafrica and prosouth africa, that he believes in that business. Obviously, he is making headlines. Pretty much, rapidfire succession of takeover bid throughout the year. Suppose that brings the question globalto what his aspirations are. What is wiese up to . On the subject of moving out of south africa, he was very clear that he called himself an ever optimist. It is not a matter of antisouth africa or antiafrica. The size of the market limits what they can do. And so, as you mentioned, it has been a pretty wild ride for steinhoff. They got into competitive situations this year with bid s for both home retail and the electronics division, and physically walked away from both. More recently, reason agreements month,o, just this announced a 2. 4 billion takeover. What they are trying to do is with a global retailer, specifically, a focus on the value end of the market. One thing he did mention was the pace with which the deals happen. He caused purely an relat accident of timing. It could slow down or it could increase. Manus i mean, what was your sense . You had unfettered access to this man for a great period of time. What do you think his aspiration in life is . It is not in africa. Is he an anglo, or the red, white, and blue, america . To be honest, he struck me as fairly exhausted. He is the little phrases repeatedly throughout the interview when i tried to ask geographies was, it is entirely possible. Studentery clear and criteria of what targets needed know, in termsou of financials and the potential for growth and size and so on. Otherwise, it does not sound like he is anything else. One would be forgiven for would besteinhoff done for a little while, but thi i hope not. He says he would like to see steinhoff double in size in the next five years. That is possible, entirely possible. Manus a very great interview, lisa. , a long on countdown fought dispute between viacom and its ceo. Finally, over. Voterexit, key post data. Are things looking up for the economy . Plus german data has not been firing on all cylinders. Europespipi from biggest economy . This is bloomberg. Manus they are probably some people having a late martini in a couple of those bars. That is what you do on a thursday, early friday morning. In london, there are no shots here of martinis. We have a Bloomberg Business flash. Thanks, manus. Leave theeo is set to company on september 13. That is according to people familiar with knowledge of the matter. They said the companys ford has approved an agreement, ending a monthlong legal dispute with dauman. The chief operating officer tom dooley will serve as the interim ceo. And the billionaire Paul Tudor Jones is demanding that all of his managers take more risks in their bets. That is according to an investor letter obtained by bloomberg. It also said the legendary macro trader has boosted the amount of money he is managing to more than 50 of his main hedge funds net assets. The moves are essential to his shakeup of the business, which this week cut 15 of its staff. A spokesperson declined to comment. Apple has hit roadblocks in making major changes that would connect its watch to Cellular Networks and make it less dependent on the iphone. That according to people with knowledge of the matter. The tech giant still plans to announce new watch models this autumn, boasting improvements to health tracking. That is your Bloomberg Business flash. Manus kristen, thank you. We have had a week of expectation leading to post brexit data. The u. K. s inflation rate was pushed to. 6 . 8,600. Less rate fell the office of national statistics. If i was a betting man at all i would say, brexit, what brexit, sir . We are having a great time and i have not lost my job and there is a little bit of inflation. I think the first thing to be clear about is the timing to which this relates. So, if you take the market figures, very strong, as you said, stronger than people expected. But they mainly relate to the perio d of april and june, almot entirely prereferendum. That tells you something because there was a lot of debate in the first half of the year, is the uncertainty going to impact the u. K. Economy . The answer seems to be, if it did, not very much, yet. But those figures relate to that period. We do know that the economy looks to be pretty strong. Manus retail sales, it really was a splurge. Some people are saying to me actually, manus, that in essence, is the reason. Party think it is more to do with the belief that we got past all of that debate . S,ople in some way realized it did not and in end in theory. They relate to july. So, they are differently postreferendum period. In that sense, it is the first hard indication we have had about activity. We also have some prices from last week, but this is the first real information we have had about what is happening to the real economy. Now, you are right. July had very good weather. N some of the i in footwear,uding 3. 5 up. But actually, there were no weak sectors. That was not even the highest. The highest was actually the socalled nonspecialist store, the departmental stores. They grew 3. 9 . So, i think it is not just the weather. Something else was probably going on. It seems early to say very much on those figures alone. The real story will unfold over the next few weeks and months as the data comes in. They have not that anything about what businesses or doing or about trade, but they do tell us that consumers actually spend pretty heavily. Manus and this is the rebuttal against the recession, which many people before brexit were warning about the catastrophic potential for recession. Where do i look where are the red flags for you, in terms of assessing the recession watch . I dont think you could give me, manus, i dont think there will be a recession, but i am pushing it anyway. [laughter] what the figures do tell us is that fear people had immediately after the recession results after the referendum results, that there would be a catastrophic fall in consumer confidence. That does not seem to have happened. Does that mean there will be a recession . Well, no. The story is still unfolding. We know something about the first month of how consumers behaved. We dont know how they will behave as the effects for the pound come through. We dont know how businesses are going to behave. We have no data on that. And we dont know what will happen to trade. We get the figures, in a few we eks time. Manus when i bring you back again, i am going to introduce economist known as donald rumsfeld. That is joe grice. Stay with bloomberg. 9 30, we get another piece of the brexit puzzle. We have special coverage every friday, analysis, the conversations that matter. What is going on in Brexit Britain . Up next, disappointing manufacturing data. What are the ppi numbers in germany . This is bloomberg. Manus williams ready to height. The San Francisco fed president warns that waiting too long risks high inflation. Attention shifts to next weeks jackson hole meeting. And the bowls are back. For its biggest weekly gain since march. German Producer Price data is breaking across the bloomberg terminal right now. How is europes biggest economy faring . We had straight to frankfurt and berlin. Good morning. We got there. It is friday. It is countdown. I am manus cranny with your Producer Price index in germany. It comes in at plus. 2 . Analysts looking for a number of. 1 . Beat on the headline month on month number. Same story in the united kingdom. Producer prices rising a little bit here. 2 . Producer prices up year on year, they fall 2 overall. So that is a little bit better reading on both the Producer Price side. We saw a similar story coming from china earlier in the week. Better data than estimated. Perhaps a bit of good news. Lets have a look at European Equity markets. Are just geeking out eking out the tiniest of games. You saw the yen go a little better. A little bit of a selloff in the yen. Andre down. 25 in london paris. You are seeing the markets just pulled back from what has been a fairly good run overall. Lets check the risk radar. The msci, the dollar on the move. All making progress. What you have is pretty much a shortcovering rally. Worst twoing the weeks for the dollar since april. The yams, the San Francisco Federal Reserve president , saying that a hike september is live. The msci asia index down. Markets have had a cracking run. 70 stress indicator is above for the ninth day in a row. I have also just popped dollarwon in. That is one of the main currencies on the downside. Lets take a look at the bond market as well. Williams speculating that september is live and that they do not want to run too hot. You are seeing yields pick up slightly. Alan greenspan, you will hear more from him. There is a fed governor that knows a thing or two about ratcheting up rates at a rapid rate. He said that when the rate cuts come from the fed, it could become more rapid and dramatic than the market is assuming. German Government Bond yields are unchanged at the moment. Christina harvey is standing by with your first word news. Christine thanks. San francisco president John Williams says he is for hiking rates soon. He warned that waiting too long risks high inflation or asset bubbles that would cripple growth. Although williams does not vote this year, he is viewed as an important leader on the fomc. Oil is set for its biggest weekly gain since march as it holds steady in a bull market. Have advanced more than 20 from an early august low as speculation grows that major producers may act on output. Hong kong exchanges and clearing dealintroduce measures to with extreme price swings on its market it will roll out a volatility control mechanism could it will restrict a stock from moving more than 10 during once aminute period session. The ukS Financial Services industry has reportedly given up hope of universal access to the eu single market. According to the financial times, the city is taking a bespoke deal to trade with europe with similar but stronger they willitzerland present their brexit trial policy ideas to theresa may. Have. K. Betting companies abandoned their pursuit of william hill after it rejected their 3. 1 billion pound bid. Under u. K. Takeover rules, they cannot make a hostile bid for at least six months until someone else does. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. You can find more top stories on the bloomberg terminal at top. Manus thank you very much. Christine with the latest on the headlines. Lets get to the market. David ingles is standing by. A little bit of a shift in dollaryen. The equity market down, just pausing for breath on your side of the world. David right. It was a bit tricky. As you these markets, pointed out, were a bit overbought. The likes of hong kong, for example. The markets that are pulling back the most were the markets that were bid up. A lot of money went into the likes of taiwan. Earnings was a big story. Checked, it is about 69 and change. There was still a little bit on top of that momentum indicator. Have a look at what is happening in japan. That is closing up, as is australia. You could argue that the stability of the japanese yen providing some sort of jumping. Ff point or investors have a look at how australia closed. Very strong momentum into the close. A decent bit when you look at the one the mining stocks. Il and gas just to update you on how oil traded during asian hours, we look at a oneday chart. About . 23er by after it entered that bull market. 48. 60 here. Currency markets, it is about the dollar managing to call back some of the weakness. Have a look at dollaryen at the midpoint between 100 and 115. Jpmorgan is saying, do not worry about intervention. Unless we get to 94 95 or 96, chances are japan is not going to intervene. Dollarwon, one of the biggest movers to the downside. Manus thank you very much. David ingles in hong kong with the latest german ppi data just hit the tape. Prices fell 2 in july from the same time last year. Is backor Angela Merkel on the campaign trail ahead of next month state election. Joining us for more is our government editor in berlin. Paul, i want to turned you on the data. Ppi comes in better than expected. Yes. These numbers are relatively volatile, but they do tell the story that inflation is coming back into a system. It is coming back very slowly. The breakdown of those numbers shows that Energy Prices for the big drag the further you go up the value chain. Slow. Incredibly this is in germany, where you have record low unemployment. You have a pretty robust economy and falling debt levels. Even then, you are going to get inflation picking up. Anna is the eurouch area . Where germany goes, it has that accelerator effect. How much is the rest of europe relying on germany question as you are well aware, i think most people would like germany to spend more. That is not happening so much a the moment. Yes, germany seems to be carrying a good chunk of the rest of the euro area. Strong economic growth. France and italy are nowhere near those kind of levels. The euro area is potentially exposed. You do not want to be relying on one economy. You do not want to be at low levels of growth and inflation. That will continue for quite some time. Manus thank you very much for that. Thats turn our attention to tony. He is out on the campaign trail for the state elections. Set out the scene for us. Is on the defensive these days. You can tell when she is out on the campaign trail. Terror attacks, including some linked to Islamic State in germany last month that really shook the nation. There is uncertainty over a refugee deal that germany and. He eu did with turkey obviously, all the uncertainty connected to brexit. Merkels Approval Ratings are down. She is out campaigning in eastern germany in an election that her party may lose. That said, you still have what paul was talking about, which was that the German Economy is doing well. Sometimes, it is the old saying. It is the economy, stupid. Sometimes that dog sits at the forefront of peoples minds. What are the domestic challenges . We know he immigration story from a media perspective in this country. His immigration the key domestic challenge . Tony in many ways, it is. The economy only goes so far sometimes. You can tell for example, she was out campaigning yesterday and talking to farmers, who were complaining that the eu sanctions against russia are impacting her livelihood. There are all these issues out there where she is on the this statend, in election, the alternative for germany is the antiimmigration party that surged since last year. It looks like it might get about 20 of the vote. They have been doing well in other state elections. Aey are not always bellwether, but it is significant and something that merkel will have to deal with as she heads to a National Election next year. , i suppose it is a lot to play for in terms of the political field. Met the Eu Council President for dinner last night. This is about setting the roadmap for brexit. Tony yes. Of course, the roadmap is still extremely unclear, which is something that german policymakers are viewing with a little bit of impatience, unsurprisingly. There was not much of a readout on those talks, which maybe indicates the sensitivity of. Hem as to who is going to play a major role, guiding this brexit process, is on a tour of europe. And merkel, who he met in a government manner in the countryside, is one of the most important people he is going to talk to. Again, this is very much at the beginning of a process. Special summit that will be held next month without theresa may. So that is all being that is all in play, if you would like. Manus there is a clue. If you are not in the room, you cannot control the conversation or participate. Thank you very much. Laying out the landscape of the politics in germany. Chief investment strategist at msf investment management. Thanks for joining us. Always hot off the plane. It is always good to get the u. S. Perspective on how our markets look. We are seeing the data from germany. A little bit better than expected. Fundamentally, the world still faces a challenge when it comes to deflation. What would be radical in your perspective . Step it is spent, the next would not be radical, but a bold one, for germany and the u. S. To start fiscal spending. Lets build bridges and highways, revamp the Railroad System just to get things going that much further. Manus do you think there is enough political appetite . You have your own set of candidates in the United States of america. Do you think there is enough political clout to shift . That would be expansionary. What would that do for the dollar . You are right. World that has grown to 300 of world gdp. The highest it has ever been. The more you borrow, the more you push growth down on the road and slow it down to the long run. I do not think it is the solution, but i think there is the political will because people are frustrated. Manus we are about to have another i mean, the ecb stood firm. Lets focus on europe for the moment. What i have for you are the Inflation Numbers in your. In europe. They do not make for a good reading at all. The services in blue, the core cpi in orange, and eurozone cpi overall just beginning to tick a little bit higher. What does it take to shift the dial in terms of europe and European Markets from an investor perspective . U. S. Investors have been pulling money from the European Market on a weekly basis. I think what would change it is the fact that there is the sense that there is Pricing Power. We have not seen that in these numbers. There is excess capacity in china. The u. S. Has excess capacity. There is still too much world capacity and it is not coming out of the system. Until it does, no matter how easy money is out there manus part of that translates to earnings. I said, if you have not got Pricing Power, you have margin pressure which seeps into this sequential drop in earnings in the United States of america. It defies the logic of why i would want to own the equity space. You cant not, but you have to be careful where you are. The defenses have gotten so expensive and these yield clays, some of them are 10 multiples higher than the rest of the market. The Earnings Growth are pretty much the same. These are very expensive stocks, this whole migration toward lets get dividend yields as if it were a bond. Manus evil are having to pay a premium for that. Do you trust this rally in the Global Equity cycle . I dont. I need to see Earnings Growth and free cash low growth that is what i want to see generated in a sequential basis. How do we do it . We have had four quarters of margin compression yield. The reason i thought this was an energy story. It is not. It has spread to each of the s p sectors. Manus hold that thought. We are going to talk about oil and how that may play. That is James Swanson from mfs investment. . S apple hitting a deadend we bring you that story. This is bloomberg. Manus lets get you the Bloomberg Business flash. Christine harvey is standing by. Viacoms ceo will step down and leave the company on september 13 according to people with knowledge of the matter. They said the companys board has approved an agreement ending a monthlong legal dispute between him and controlling shareholders. Chief operating officer tom dooley will serve as interim ceo and can take the role permanently. Billionaire Paul Tudor Jones is demanding that his managers take more risk in their bets. That is according to an investor letter obtained by bloomberg. It says the legendary macro trader has boosted the amount of money he is managing to more than 50 of his main hedge funds net assets. The moves are central to a shakeup of the business, which this week cut 15 of its staff. A spokesperson has declined comment. Apple has roadblocks in making major changes that would connect its watch to Cellular Networks and make it less dependent on the iphone. That is according to people with knowledge of the matter. The tech giant still plans to announce new watch models to help tracking. That is your Bloomberg Business flash. You very much. Have a great weekend. It has been a week of pressure for the u. S. Dollar. Sounds divided over the timing of the next rate hike. The San Francisco fed president fomc is in play for a rate move. Williams says that while he is not in a hurry, he does not want the economy to overheat. We start getting packed on the path getting back on the path of gradually raising rates, we can move a little quicker as needed. If we wait too long, we will not have that. We may have to move more abruptly. That is potentially a risky approach. Manus sounds like a hawkish John Williams. So williams adds to the cacophony of discontent in terms of not getting on with the rate hikes. Will they hike . They wont and here is why. I just dont think they will. They are looking at this and they fear this was in the academic writing of fed chair yellen. The big mistakes they have made in japan and germany were to tighten too soon. None of these numbers show them running out of capacity. None of these numbers show a wage price spiral. Inflation is ticking up, but it is years away from becoming a problem. Manus that is the point. They are not facing inflation. Talk to me about your note. Im going to read it out pretty much verbatim. Not all the usual signs of reception our president our present in the United States. It, butread the rest of how worried are you about a recession in the United States . I am not in the next year because the u. S. Consumer is not borrowing. They borrow too much and it becomes overheated. The u. S. Consumer is not borrowing. Debt to disposable income is manageable. Corporations are starting to borrow but we are at least a year away from that kind of trouble. What worries me is the share of continues decline declining. That does not embolden the private sector to start spending. Manus the m a space, in terms of the deals that are being done, do you think it is a race for growth . Absolutely. These companies do not have Pricing Power and do not see or exciting organic growth. These are the prices they pay. Manus you have got to work hard to make that kind of premium. Talk to me about the oil market. I want to get your thoughts. Here we are. Have gone from veritable bear to bull. A lot of this is driven by our jet geography in terms of opec. The guys and girls come back in. And there are a lot of companies in the u. S. That produce shale at 40 50 a barrel. I would say that you are in the sweet spot here. It is a commodity and goes up and down. We are not going back to 100. It is just not there. Every time the price creeps up, more supply is coming out. Manus this is good news overall. You see settling in the oil price in terms of losses on the Bank Balance Sheet and jobs in the u. S. Earlier this year, we traded at 25. Anna that is right that is right. Heavy job losses, but we made it up in other sectors. The economy is balanced right now. We would rather see it stay where it is rather than up and down. Manus you are here for the next couple of days. You had the u. S. , europe and japan. The bank of japan possibly doing something much more radical. How much does japan interest you . It does not interest me, really. As an equity investor, cultural plays, yes. There are no there is no organic growth. How do they export their way out . They have a high yen. How can they do this . They are just stuck. The next step is the government has to spend more. What is their debt to gdp . 240 . Manus you are right. Both of us caught the right number in our heads at the same time. James swanson, thank you for being with us today. Thinks the u. S. Rates are going to rise sooner than we anticipated, this man. Often accused of keeping them too low for too long. But when he went at them, he went hard and heavy. On Bloomberg Radio this weekend. The former chair of the Federal Reserve, Alan Greenspan. Guy welcome to on the move. We are counting you down to the european open. I am guy johnson. Caroline hyde is out today. This is what we are watching. Crude recovery. Optimism permeates the market. He negative rate debate another big week for the japanese yen. The boj scratches its head. And a we o