Lets quickly check on your did. We see somey where distortions are some of the key data points we need to watch out for. Risk assets seems to be taking a breather amid the further signs that chinas economy is cooling. Base metals seem to be dragging down a lot of the mining stocks. Bp and the stoxx 600 basic resources down 1. 3 . Major currencies drifting before the Rate Decision. The inflation data which is why want to show you the pound 1. 32106. And eurodollar. We will talk plenty more currencies throughout the hour, the lets get to first word news. North korea has been to use a Nuclear Weapon against japan. Agency quotednews that japans archipelago should be sunken into the sea. The japanese said that the threat was an abominable provocation. , some has blood chinese backed investors from buying a semi conductor. The fourth time in a quarter of a century that the u. S. President has stopped a foreign takeover of a firm. China says it is concerned by the move and that the u. S. Should create a fair and transparent this is a private. Business environment. According to one u. S. Official familiar with the matter, bob is zeroing in on how russia put fake news in social media. Saudi arabia is preparing contingency plans for the possible delay of an ipo with its state run aural copy. Iol company oil company. The company may not make an announcement until next month. Promisedchancellor has that britain will not use brexit to undercut financial regulations. In a speech, Philip Hammond said he accepts the e. U. Has fears on the issue but says the u. K. Will push for greater transparency, cooperation and stand as an international law. Global news 24 hours a day powered by 2700 journalists and analysts in 120 countries. This is bloomberg. Francine we get the bank of englands latest Rate Decision in a few hours. The situation facing mark barton is complicated mark carney is complicated. Wage growth trailing at 2. 1 , the squeeze on households is very real. Where does that leave the central bank . Lets bring in james bevan. Sbc. Simon wells, at hbs do you miss being at the bank of england it all . At all . It wouldve been a pretty exciting day today. Francine what would you advise they do . Given theyre very worried about this tradeoff. Theyve been saying for a while inflation is going above target. That trade offers now gone. By their own admission without a plummet yesterday now that there is no slack in the labor market 2. 9 ,flation is should be a nobrainer but it isnt. The reason it isnt is wage growth is still very weak. This phillips curve relationship is not coming. Can they be sure it is going to . Second, of course, they are forecasting the frexit process. How much can they count on it . They will try to sound hawkish and talk tough and say, we could do this, but suitably they will be hoping they have a reason not to go this year secretly. Francine how do you explain wage growth . This is the chart you were talking about which had inflation 2. 9 . With wage growth that is not really there. Worldwide problem or is this because of the pound weakness . In part, it is. All of this increased complication from the competition from the gig economy and increased automation. They need to president to the market. The bank of england pointed to it in its last report. In the private sector, real wages have transported to the. There have tracked productivity. Maybe well see wage growth in real terms. Francine james, what does that mean for your investments . James because of the composition of the u. K. Economy, i want to invest in a company that can continue to drive strong Earnings Growth on the back of quite honest revenue. Quite modest revenue. Within the u. K. Are do think there are Quality Companies but i think the pallet for investor should be global in nature and therefore, the lion share sould be should be in the united states. Francine if you look at the composition of the ftse 100, a lot of Companies May have been depressed because of the concerns on brexit, but they have so much exposure to international markets. Like for like basis, i think a lot of the ftse 100 companies are second tier players. If you take a global oil company, which are not want to take that company . On that basis, i do not think the u. K. Is in a nominal position in portfolios. Francine we are looking at parity. On a trend. Its kind of five days ago gone off that trend. What happens to the pound . Simon we think it is going to end up going to parity. A lot of it is brexit uncertainty weve got the speech coming up on the 22 of september. Maybe that puts the European Commission in october to say progress has been made and we can move on. For now, we are just realizing the complexity. Business investment has stagnated over the past year. We know there is a big squeeze going on. The net direction for sterling between now and the end of the year is probably still going to be negative. Francine how do you make brexit as excess . The u. K. Negotiates with the e. U. In the next 18 months, how would you manage the economy so that i know if anys to be fair are a lot more competitive with other markets . Mon it depends on politics, not economics. From an economic point of view, newmont to keep his much openness to trade in what matters is not which markets you can get to globally but gravity matters, proximity matters. Of course, we have to have close trading relations up with a lurch larger the Worlds Largest economic block, the european union. There is no good coming up with a conference of deal at one minute to midnight. This needs to, the sooner the better. Francine do you these pricing negotiations, how do you think they are going . James i think is always managed to assume these negotiations can be complete within two years. If one looks at the record of e. U. Negotiations with entity such as canada, they are not they are multiyear affairs. Onee, it is a question of the big issues is the pricing from the north asian economies. They have been a source of significant deflation for an extended period. Not necessarily taking on board the requirements to make profits. Very much a clarion call. I would say that there are changing. Therefore, we have a greater underlying inflation . Simon i think a lot of the global structural factors will persist for a bit longer. Does globalization mean that open economies like the u. K. Are in charge of their own destinies . On one are committee can say in no. Nt years, perhaps we should let inflation run softer. On the other hand, we know essential bank and always genearate inflation if it wants to, ask zimbabwe. Francine visit globalization, or the fact that we are sharing economies, and prices are automatically down is it globalization . Is a Global Supply shock. It would be expected to reduce prices particularly if trade is good. On the other hand if you look at Services Inflation and the u. K. , it has been remarkably stable. And this is part of one of the bank of england is wrestling with and had been for a wrong time. The big part ofs the challenge. Targeting 2 and average of you have very low goods inflation. Francine we will talk more about this inflation target and whether maybe we should have brought it to 1. 5 . We are back with our guests shortly. We will bring you the breaking news on the bank of england policy decision. At 12 10 u. K. Time. Stay with surveillance. The tricky business of coalition building. With german selection 10 days away, we speak with the secretarygeneral of the green cpaparty. Will todays cpi move the needle for the fed . This is bloomberg. Francine this is bloomberg surveillance. Lets get to the business flash. European car sales growth accelerated august. And therages purchases European Automobile Manufacturers Association says registration has jumped 5. 5 to 903,000, more than double the rate of growth seen in the previous two months. By harvey interim it will wipe out three quarters of its profit and turn the companys ability to meet its fullyear earnings target. It had previous given 2017 carelli has been put behind bars. The move comes after the former pharmaceutical executive offer a bounty for a strand of Hillary Clintons hair. The 34yearold was convicted last month of three charges and faces 20 years in prison. Thats the Bloomberg Business flash. Thecine now, secretarygeneral of Germanys Green Party says Coalition Talks after the election in 10 days will be difficult. Michael keller spoke exclusively to bloomberg. That is not good for the country on a longterm to have all of these strong correlations, so there, therefore, all parties are asked to see how, what else is possible. What we need to do is having a serious talks and to see what is possible and not possible. There is a huge difference with the right wing part of the conservatives and there is a huge gap between us and them. There is seems to be quite a challenge the speculation is right after the election at 6 p. M. On sunday i think it will be situation that we will see. Francine still of us is james bevan and simon wells at hsbc. When you look at the composition of the coalition, its done d eal. I do not know if markets are taking too much in stride that Angela Merkel stays as chancellor. Could it change when it comes to Nuclear Energy and diesel emissions . James the details are very important and not at all clear. We could go in a number of directions. This could have very significant market implications. E complexity issue i think markets are way too relaxed. I owrrworry about the target two system. A lot of people think the central bank is sorting this thing out. I look at the credit balance which the bundesbank is continuously building and the borrowing via the target two system, the balances that never square back to zero. And this is getting bigger and bigger. Francine for the help of the european union, can we care whos finance minister in germany . Simon given his popularity and germany, i would be very surprised if there was any change, and given that were strongly expecting another cdu led government, they are not going to abandon their key principles of balance budget. And not going to give away much more by way of money unless other countries give away more fiscal theall of macrons claims French Public is not going to go along with giving away huge amount of fiscal power. In terms of integration, a little tough around the edges but not a huge step forward. Francine how much of a headache for mario draghi is a high eruu . It depends on which country you are looking at. The less could, for competitive economies like france and italy, next year it could reduce export growth slightly. Will beably inflation around a percentage point lower than it would otherwise, given depreciation. Is it a massive headache . No. In some ways it is providing a bit of an excuse. Francine how much do like European Assets and what would you be buying right now . James equity. I do not understand who really wants to Fund Government deficits in two year paper across the european union. Francine because they are distorted . James absolutely. This is done in the backs of quantitative easing. If we look at the 10 year yield, think they are way too for growth and inflation. To me, it is an equity story and i think of Global Companies in are extremely wellplaced for the long haul. Agricole, we talked about in the past, is wellplaced to produce a paid in the resurgent French Economy i suspect mr. Macron is able to deliver at least in part. Francine up next, precipitation and inflation. Floodsrricane harveys make an impact on u. S. Cpi . This is bloomberg. Francine this is bloomberg surveillance. We get crucial inflation data out of the u. S. Later. Expected to have ticked up to 1. 8 on year on year in august. It comes as janet yellen and her college prepared to meet next week. They are widely expected to keep Interest Rates unchanged while announcing the start of the start of the slowmotion plan to 4. 3 trillion bounty. When you look at the u. S. , how much parallels are there between the european economy and the u. S. And how they do with inflation . Simon quite a lot of parallels pretty is the trillion dollar question. How is the fed going to respond if the inflation keeps on the downside . Even though the headline might pick up, cause probability not going to. The question is how much of this is autopilot and how much of it is data dependent . We still think there is going to be a rate rise in december. It is hard to have a huge amount of conviction and that call that even if inflation continues to disappoint, can they start stretch asset values . Francine is it more dangerous to wait to start normalizing more or is it too dangerous to normalize . Simon do you think that allowing things Financial Markets to continue to rally and rally and then risk a big cra sh . Its more damaging than tightening when you do not need to end slowing the cycle. Bondsne when you look at do you think they see something ugly in the World Economy and could that come from china . Bonds arehink that mispriced because of the actions of the Central Banks rather than because they reflect the consensus of real expectations. So, i expect we will see the fed finish the hiking cycle at two Percentage Points. Inflation will get to 2 . Gdp growth will be at about two Percentage Points and that is enough to keep markets on the up and up. The big swing must be china. It is the engine of Economic Growth. The provider of liquidity and cash flow for the pricing of markets. Rolin the 12 month position, arolling year ago, we seeing 1. 3 trillion coming out of china. Treasury markets equity markets and property and major cities. And football teams. Now that flow is down to 600 billion. Half the flow. We said seen in the prior 12 months we need to keep the capital in china. With policyt initiatives come i think the support for markets becomes much more varied. Francine do you worry about a trade war . Stick with the model. That one of the biggest risks to the u. S. Economy at this point or is it the fact that t reform may be delayed againax . Simon in terms of the underlying structure, in the mediumterm, trade war would be a lot more damaging. And history is not necessarily on our site here. These things go in cycles. We could be starting a super cycle protectionism. But lets hope not. Everyone has got a solution lets hope not. Francine what does that mean to assets, very quickly if we have a trade war . Jamesz it would be a bear market. Francine thank you so much. Theext, we will speak to chairman of the Italian Holding company chia bout its wide range of interests and its role and partner. We will talk about italian politics, reforms and talk about, how his businesses are doing. He also has exposure to the health department. We will have a great conversation on that and that we go to saudi arabia to talk ipo. This is bloomberg. Francine this is bloomberg surveillance. Lets get to the first word news. North korea has threatened to use a Nuclear Weapon against it had. The staterun news agency said the island of japan should be suckered into sea. Japan said that the threat was an abominable provocation. Donald trump has blessed chinese backed investor from buying a semiconductor. It is a fourth time that the u. S. President has stopped a foreign takeover because of National Security risks. Chinas ministry of commerce says it is concern and that the u. S. Should create a fair and transparent business environment. Russias efforts to influence u. S. Voters through social media is the focus of Robert Muellers investigation into the 2016 election. According to one u. S. Official familiar with the matter, his team is soaring in on how russias spread fake information to the media. It is looking for additional evidence from facebook and twitter. Saudi arabia is preparing contingency plans for a possible delay to the ipo of its state owned oil company. Aramcosting of saudi may slip into 2019. It may not make an announcement until next month at a conference. Global news powered by 2700 journalists and 120 countries. This is bloomberg. Francine thank you. Is 40 years old and remains controlled by the family. The Italian CompanyHolding Company has a wide range of interest across sectors including media and health care and financial services. It controls the publisher of newspapers, including manufacturers automobile parts for some of the worlds biggest carmakers. Employee for 2000 people, it reported revenues of 2. 6 l ast year. Joining us is the chairman of cir group. Always a pleasure to host you. Thank you so much for coming in. When you look at your various therest across the board, economy and growth is not that bad. Where do you see the biggest opportunities . I think the mood is actually good. This is refreshing and we are kind of not used to it in europe. I was in the u. S. A month ago, and iwas surprised to see how people are pretty concerned there about a bunch of issues. And very positive about europe. There is a lot of capital moving into europe. Thei think this is based on fact that the two largest countries in the continent, germany and france, look like they have found some political stability, which is clearly reassuring for markets. And the macro gdp numbers have been quite good lalteltely. Low Interest Rate environment. Francine i do not know if it is high euro because some of the things that you sell maybe a bit dependent on Favorable Exchange rates or whether it is centralbank policy. Im not too concerned about currencies, because yes, it is true, there has been a fairly Significant Movement in the euro dollar in the last few months, intoutti