They have not opted for more radical wake up plan. And mexico cities earthquake leaves over 200 people dead. What impact will it have on supply chains in the United States . Matt we are less than half an hour away from the european open. Lets take a look at equity index futures. Very Little Movement as investors await the fed announcement. You can see the euro stocks futures are down at one of 1 and ftse futures are up by of 1 . We do not see any moves better than that. Take a look at the bunds and my here. Al and i have up speaking of minimal movement, we see almost nothing today. I will zoom out what we so far a move of not even close to one basis point. Been for thee have last couple of days on the german bund yield. Guy it is a focus on what is happening in washington might is all about the fed. Not about the Balance Sheet rolloff. The market seems very calm about that. It is all about the dots and what those dots will signal about the 5050 coin toss whether or not we get a december hike from the fed. This morning the dollar is on offer, the kiwi is trading higher, the aussie dollar is trading higher and the Canadian Dollar is up at. 2 of 1 . The euro is trading around 120. The dollar as well. We are waiting and watching the currency markets where the focus is going to be surrounding all of this. Lets show you what the other story is surrounding the markets as well. Bond market stays in focus. In terms of the commodity story, iron ore bouncing back and the vinci i flirt around the 50 level just shy of it right now. Lets get a bloomberg first word update. Here is juliette saly. 7. 2 earthquake has struck near mexico city killing at least 226 people. It is the second major quake this month and came on the anniversary of one in 1985 that killed 5000 people. The disaster close the airport and stop the metro and ended trading on the mexican stock exchange. The Exchange Plans to open as normal tomorrow. President trump has denied warning saudi arabia and the uae off military action against qatar. Two people familiar with the discussion said the nations were looking at ways to remove the qatari regime which they accused of sponsoring terrorism and cozying up to iran. Trump is said to have told them that any military action would trigger a crisis across the middle east that would only in a fit to ran tehran. The Trump Administration plans to renegotiate the iran nuclear deal. They think the accord is working and iran is abiding by its commitments. If we are going to stick with the iran deal, there has to be changes made to it. The sunset provision simply is not a sensible way forward. It is simply kicking as i said theing down the can down road for someone in the future to have to deal with. Juliette the uks foreign secretary has backed away from his threat to quit the government over Theresa Mays Brexit strategy. A day after Boris Johnson discuss the possibility of life out of office of person familiar said he will tend attend the speech about xraying the eu. Theresa may will offer 20 billion euros to fill a hole in the eu budget after brexit. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. Guy and matt. Guy thank you. The main story in terms of the Financial Markets today revolves around washington. Will the Federal Reserve raise rates again this year question mark it is the big question. Investors are hoping policymakers will provide a little bit of clarity when they conclude a two day meeting. Start the unwinding of the Central Banks or. 5 billion dollar Balance Sheet. That is not the story. It is the story on the dots and this is where we get to the crux of what the market is worrying about. Will the fed signal that december is going to be a meeting at which they are likely or if it is likely to deliver a rate hike . Mark cudmore and joins us. It is a coin toss right now. Trying cost . Mark absolutely. This is one of the most critical fed meetings in years. Often these things are overhyped and they are tradable but they do not set the election for a sustainable time to what the fed suggests about december and the dot plot for next year implies exactly what the reaction function is and that will last for quite a few months. Some fed members are being replaced but yellens term lasts until february which means she has five or six months of trading at the direction set by the message it sent today and the message is about the reaction, the date is clear, inflationot run away and no sign that the economy is doing very well. It is strong, the labor market is strong and we have a clear data picture. We are no longer data dependent. It is about the reaction function and that is what we are looking for today. Matt is the inflation target still key for the fed . Are they going to look to move away from that at some point . Think it is key in terms of the sense they have not hit it in a long time. They have not hit it on a sustained double for many years so therefore what they say if they say that theyre going to hike rates, theyre going to normalize policy because the economy is strong, it even though inflation is not a target, that is saying there it inflation target is irrelevant and that will be quite a big move. If they say the data says we cannot hike in december that is acknowledging that one of the main parts of their mandate is the inflation target and they are trying to achieve the inflation target. Target is relevant because it is the pivot around which they are setting the reaction function. Can see this, this is a chart we derived from the work function. It is a 5050 proposition when it comes to the december hike. My question is the derivative. How asymmetric will the response be if the fed today signals that december is a distinct goesbility and this number up, there is a high probability. How asymmetric will the response be in the dollar . Mark that is a great question. There is they are not going to guarantee december. Rates tick higher but they will wait until a late surge of guidance to guide toward the hike in december if they think it is ok. If they say, we are going to have to take a part of this rate cycle, we them a have seen a large amount of dollar depreciation so far this year and many people would say surely that move is done, it cannot go too much farther to the downside. My worry is we see love relief about the dollar stabilizing. It is barely based off a twoyear low and the markets are celebrating a rebound in the dollar that has not been seen. The pain trade is for more dollar weakness. I have no view on which way the fed will go but if they are dovish and if the dollar depreciates again, that is where you will see the real pain in the market. Matt thanks very much, mark cudmore, lubeck mliv strategist. You can follow his insights and the entire teams on mliv. You can watch full coverage from 7 00 p. M. U. K. Time here on bloomberg. You can find that on the bloomberg at tliv. Trump has denied warning saudi arabia and the uae over taking military action against qatar. They considered removing the regime in the early stages of their ongoing dispute militarily until the u. S. President intervention intervened. Lets get more on this and speak with tracy alloway, the media joiningexecutive editor us from abu dhabi. What is the deal here, did the president warned saudi arabia against taking military action or did he not because he flatout denied it. Did flatout deny it. Saudi arabia is denying the report. Bloomberg is quite confident in the sources it spoke to. The notion that two members of the Gulf Cooperation Council could consider military action against another one of their members is pretty shocking. The gcc was supposed to be a European Union like for the gulf region. Lots of economic and political cooperation. If it did happen it speaks to the depth of deterioration when it comes to relationships between qatar and the rest of the gcc members especially considering we do not quite know what the exact catalyst was for this ongoing dispute and blockade. Things are pretty murky on this one issue. What is clear is that trump is becoming more personally involved in the qatar dispute. He was on the sidelines of the u. N. Meeting yesterday saying that he is pushing for an end to this argument or blockade and that is because he believes isolating qatar will push it. Loser to iran there was a lot of antiiran sentiment notably from Rex Tillerson who was calling for significant changes to the iran nuclear agreement. Guy to divert from the script a little bit. The fact that they and if this is true, considered doing this tells you how serious this is from a golf point of view gulf point of view. Does it tell you the direction of travel in terms of the way the gulf is going . What are they thinking about in terms of iran and gearing up they are preparing for that . You look at dispense defense spending, it is clear that rings are getting worse, not that are from that perspective. That is right. The trajectory of the relationship does not appear to be positive. Trump denied the report, he also thought there would be a resolution to the dispute. He used the words that we might be surprised that there would be a resolute a resolution relatively soon, Something Like that. It is unclear who is going to make the first move. A couple weeks ago we had a supposedly call between saudi arabia and qatar that deteriorated into another round of insults and recriminations. If we cannot get the two sides together for discussions and that suggests this is going to be an ongoing and complex dispute. We are already past the 100 day mark and we are entirely sure what the catalyst will be for any sort of solution. You very much. Next we will speak to the cfo of thyssenkrupp. That conversation next. This is bloomberg. Thyssenkrupp and entered a joint venture. Ceo joins us now. The name has been synonymous with steel. What an historic moment that you are going to separate yourself from the steel business. Howd do you come to this decision . Guest this is not a decision to separate from the steel business. If you take a look at the steel manyess, it is a merger of entities in the past as well. It was we are taking another step in this journey to merge into an even bigger entity. The clear number two with a focus on product and innovation and Technology Leadership in three basically locations in europe. The strongr on number we want to form. It is a continuation to create a Better Future for steel. Matt the second largest shareholder is said to oppose this deal. Cbn capital has pushed for a complete spin off of the business. Why go this direction instead of that . We have always been very transparent with our Supervisory Board on the way forward and on our strategic way forward that we want to move. We have always clearly stated and we have done that to the outside world that we believe in consolidation as the best solution for steel. We have come to a solution and to an mo you that we can clearly communicate and this is not yet a signing so we will negotiate with all involved parties including employee representatives, how this will finally look like and want to come to a signing including all approvals for january of early next year. We are positive we can move ahead and find the consensus on what we are proposing. Guy can i come back to the point about consolidation. Consolidation is the way forward in steel and in some ways that is hard to argue against. The point that some are making is there a there is a discount applied to your stock. Some parts of the valuation does not add up. You could generate more share value for shareholders if you spun off everything else, that is the parts of the automation business and you would release more value for shareholders if you were to pursue that route area so why havent you gone down that road, why have you decided to go for this route . Guest one thing is clear, whatever you do in separating assets, you do not create fundamental values. With this joint venture we are creating together with tata, we are creating with each synergies we can realize on the market value that will be there for our shareholders and no other solution to split up can offer a fundamental Value Creation as this. We have always been very responsible owners and we have always said we want to address the underlying industrial issues. This is what we have done throughout the strategic way forward starting with the transactions we did in stainless they where we merged and took them over. This is a responsible way generating more value for all our shareholders and this has been constantly applied bias by us. We are moving in the right direction. We are improving and comparing our business is to inch mark and we improve our performance. Take a look at the improvements we have realized as well as in components and elevator technology. We are on the right way to create sustainable, longterm value for our shareholders. You talk about merging the stainless steal business and separating completely again. This makes me think that someday you will not have the steel business. Doesnt that strike you as an historic first . Guest i would not say that. There are two very strong partners, merging their steel assets in europe into one joint venture. Both companies have a long history in steel and they are always looking for solutions that help to improve the situation in the Steel Industry. Two partners with the same culture have come together to combine their businesses to create a very Strong Innovation and Technology Leader in steel and europe here and i think now to focus on this and realize it and make it happen. I probably do not need to tell you the world is awash with steel right now. How big an impact do you think this deal will have in terms of the capacity story and do you think you can control the capacity story given the chinese mills that are throwing out as much steel as they are right now . There is a couple of things to say about overcapacity. The overcapacity that is there in china is bigger than the demand. That you see in the u. S. And europe. This besides all of that, what we clearly see is we are there is an overcapacity issue in europe. All the movement you saw so far, that was always regarding price movements, you saw in the competition and no party going out even if they were lossmaking. A consolidation can address this issue of Capacity Utilization in a much better way. With sabeen the move and [inaudible] this has been at different merger a merger of Different Companies and this can help overcome the european situation and improve it here. Matt you expect more globally, you expect to see a wave of consolidation may be starting are continuing with this. We have seen a lot of movement and consolidation if we take a look at the u. S. Market. The japanesekorean market. Weve seen movements toward consolidation. Consolidation is a good way of sharing the burden and doing the necessary steps to better use your capacities, to better use your R D Investments and all to do andyou want address and overcapacity issue. That is clear and that is what you can see everywhere in the circlerea guy just a back to the beginning of this conversation, one of the things we have been talking about to the runup of sundays election, germany has an economy that is built for that 20th century, not for the 21st century. Bigdo you as one of the industrial giants of germany resolve this and is what we are seeing today part and parcel of that process . Guest i think it is clearly part of that process. You can clearly see that now we are creating the first time not only german mergers in the Steel Industry but we will have a european player in the Steel Industry. Thyssenkrupp as a company has been willing to move outside germany and develop businesses there. We were focused on our german business and this will be a move outside germany and create a strong number two with assets outside germany in a much stronger scale together with tata. Germanybit more outside but i would not completely agree with your view that you say germany is an economy of the 20th century. If we take a look at the exports and how the Economic Situation in germany is like, it is a Strong Economy that seems to grow appropriately over the years so i do not know if we will not risk that for the 21st century in the way we are doing business today. Most of the large conglomerates in germany and the Big Companies here have, the have the biggest part of their business abroad and they seem to be not unsuccessful in regions outside germany. U. K. Let me ask about the as guy ask you about germany. The steelworks have been in focus. Do you see a longterm future for that plant inside the group . This was one of the major things we have to discuss and one of the prerequisites that we clearly defined. We wanted to see to come to a joint venture a stable solution and a good solution for the pension plan. There was a plan that was linked to port talbot. Talk to has put quite a lot of money. We have seen a stable situation. On top of that we want to see an operation in port how but is moneymaking and has significant restructuring so the performance is getting better. See the numbers are doing better. Guy a minute to go until cash opens in europe. I do not expect a great sense of direction. , and that fed probably will determine a lot of what is more to happen over the next few days three palm we even longer than that. At the moment, we have a cautious open being priced for the fair value on europe. Called up. Up,er way, plus or minus. 1 point to down. Matt. Dot ave all go up here. Now, there is a big gap in between what the market sees and what the fed sees, and that may change tonight when the fed releases its announcement and answers questions that will certainly pertain to this gap. Guy markets are opening. Expect too many fireworks here. We are anticipating the session will be a quiet one as we wait for what could be one of the most significant fed meetings in quite some time. Is where the ftse is trading, just positive. Only just. We are seeing it