You are welcome. Its countdown. Im manus cranny. Breaking news on the beer market for carlsberg. First half organic revenue rises by 4 . The market had an estimate of 3. 2 . The strategy implemented across andgroup to try to cut cost take cost out of the carlsberg group. The target is to reduce their by 2022. Apital that is making progress. How is their position in russia . Beer volumes declined in the first half in russia. Their share of the market in russia comes in at 34. 8. Organic operating profit rose higher than expected. They are expecting a higher than expected revenue growth, the organic operating profit, in the second half. Russian market share, 34. 8 . Declinedan beer market 2 in the first half. These are the first half numbers coming through. Waiting of ing, we are for those numbers to hit. As soon as we get those, we will bring those to you. Abn amro is the other stock we are watching. Abn amro, let me quickly clarify the numbers, it says it plans to euros as anion interim dividend. They will pay a dividend of 45 of the reported 2016 target. That is the main headline coming from them. Secondquarter net income comes in at 391 million euros. The cost to income ratio comes in at 357. 2. Fordend to pay out of 45 2016 and they are saying their core equity Tier One Capital ofio is 16. 2 as of the end june. Those are your reports. Lets tell you how the markets are doing. Little bounce in the dollar, a real wrestling match in terms of where dollaryen goes next. , dollaryen,l dollar index itself bouncing from a threemonth low. Probability of a rate hike goes above 50 for the First Time Since pretty brexit. Xit. Ince prebre as dudley, as dudley, as dudley really opens up the best that the probability for a september hike is live. Dollaryen, i have met as well. Weve seen a nice turnaround, a nice bounce in terms of what is happening with the dollar. Excuse me, a bounce in the dollaryen story. We were careening through that 100 level. 101. 08. En trades at bank of tokyo mitsubishi and Morgan Stanley both suggesting there could be a little more to play. ¥10 trillion will be the limit of any intervention. Brent dipping ever so slightly but still encroaching on that 50 level. Ive got nickel there for you, a little bit of a change. The philippines is calling on companies to comply with environmental standards. That is your risk radar. Lets talk about the fed. It is squarely in focus. The central bank set to release minutes for its july meeting this evening. New york fed chairman bill dudley gave his take on the fed future moves. This was on fox news yesterday. Could you see a rate hike potentially in september . You also have meetings in november and december. I think it is possible. We have to see where the data falls and where we are in terms of broad support for the economy. I think the economy is in ok shape. Job gains are pretty sterling. You have some weakness in business fixed investment. Perhaps the election uncertainty may exacerbate that weakness for a little while. And generally, the economy is going to be better in the second half than it was in the first. The labor market is going to continue to tighten. Manus keeping it real, keeping it alive, that was dudley. Speaking on bloomberg yesterday, the Nobel Prize Winning economist paul krugman argued against expecting any fed action to have much impact. I think theres evidence that Monetary Policy is pretty ineffective. We came into this thinking Monetary Policy at zero rates was ineffective. Then along came qe. Then along came negative rates. I didnt think that was possible. So theres all these other things Central Banks can do, but it is not doing very much. Manus a deeply intellectual take on quantitative easing, negative rates, and radical policy. Weve got hans read accor. Youve got to love paul krugman. In, great experiment we are it hasnt really done an awful lot. Would you agree with him . Quitehe was taking a interesting stance against the riksbank, accusing them of running monetary policies too tight, implicitly suggesting that Monetary Policy was working. I guess there is a general seachange currently in the marketplace. Six years ago, the seachange was that fiscal policy is not working and the emphasis came on Monetary Policy. Now as we have run into negative Interest Rates, maybe Monetary Policy is not working. So you go into the renaissance of fiscal policy. I think we need to be very interpretation. The marketplace needs to find its new way. I guess that we are in an environment where we are going to change a lot of correlations. We need to have a very clear view about manners in Foreign Exchange and other places. Manus you are right. We are trying to understand where we are with the fed. Dudley last night keeping september live. To what extent would you agree with that . This is something you referred to in your notes. You say the libor and the dollar, a rising dollar libor rate is putting additional selling pressure on the dollar. First lets deal with dudley. Would you concur . Is september live at Morgan Stanley . Hans the fed wanted to keep its option nobody its optionality. They are pointing into this direction. It is all about optionality. The question is the structure of the u. S. Economy. Dudley is absolutely right that the u. S. Economy is looking ok, but it is only ok. Look into Inflation Expectations. That is not ok. When you have an economy which has high leverage and low return of investment, and you go ahead and increase real rates, so that actually means you would have an increase of real rates which would not be covered by productivity, it would not be covered by better real gdp numbers, then under those circumstances, you would get a real appreciation of debt. Then you get a real appreciation of debt, then a recovery is going to derail very quickly. Theres another point to be made. That is the relationship between real rates and the fed financial conditions. The equity market has become increasingly dependent on real rates staying low. Look at the headline revenues. Look at costcutting programs which have been running in the past. We are now seeing that corporates are driving profitability and numbers lower. The result is that the equity market can only stay stable or rise from a relative valuation perspective. You need to have real rates being low were falling to justify further equity market gains. You have seen what happened overnight, the immediate negative response of the equity markets on those commentaries. I guess it is going to be selfcorrecting. You have shown what happened in dollaryen. It has rebounded quite sharply. There has been verbal intervention taking place from japan. Then you have to think about if this is not going to lead to a situation where either the fed is going to stay where it is with current Monetary Policy and do nothing. Then we are talking about ral u. S. Dollar weakness. If the fed would tighten, you would have a negative risk event. Manus what would that be . Hans the negative risk event is simply based on the assumption that when you hike rates, you would have an increase in real rate. When you get an increase in real rate, you take one of the major arguments for equity stability away. So the equity market is not stable. Manus i get that. What im trying to get my head around is going after record after record in the nasdaq and the s p, those equity markets. You have to think about at what time can you correct. I believe you should only correct when you see inflation moving higher. So if you have to see in the case of the United States that inflation is a global event, it is not a local event, it has very little to do with the output in the United States. It has to do with the overcapacitys you find globally. Within this environment, the fed and other institutions would be well advised to allow inflation to develop, and then to act. If you act preemptively, you rise real rates. That could have an impact on financial conditions and the whole thing would be derailed early. Manus hold that thought. Very significant warning shot in terms of the ability of Central Banks to run inflation. Hans redeker at Morgan Stanley stays with me. Rosalind chin is standing by with the first word news. The bank of england has found enough bonds to buy to meet its weekly target. Yesterday the boe purchased 1. 1 7 billion pounds of gilts after attempts last week fell short of the Central Banks target. Cisco systems is reportedly to cut up to 14,000 jobs worldwide. That is 20 of its workforce. The networking equipment giant will announce layoffs in the next few weeks. Cisco has been shifting toward softwarebased networking products. Japanese shares climbed on thin volumes this morning. Exporters are gaining and million halted its advance. It was the second time this year that the japanese currency has risen above that level. The businessman and Economic Advisor to donald trump says the republican president ial nominee could free the u. S. From bad trade agreements. He spoke to bloomberg about how trump would balance the books. The way that the trump plan will balance the books, im not sure the books will ever be exactly balanced, but the trump plan calls for stimulating the economy and thereby generating more revenues for government, by relieving the private sector of burden. Global news 24 hours a day powered by 2600 journalists and analysts in 120 countries. Im rosalind chin. This is bloomberg. Manus thank you very much. Lets get into those markets. Juliette saly is standing by. Dollaryen has turned around. Up is still trying to chug towards 50. Equity markets seem to be pausing. Juliette yes. That research in yen resurgent yen has given a good used to japanese equities. The nikkei has posted its first win of the week, up 0. 8 . Good news for japanese equities. Elsewhere it is pretty flat in asia. We are seeing Energy Stocks really leading the gains. We have seen crude fall back a little in asian trade, but Still Holding above 46 a barrel. I want to show you cap a pacific shares in hong kong. They are the worst performer on the hang seng index. Cathay came through with a miss in its profit numbers. Half expecting the second to be challenging as well. Looking at a few other stocks were watching in the region, we have been looking at hong kong exchange. This is the Hong Kongshenzhen link finally got that will ahead. Probably not going to make that much of a difference to hong kong exchange. Bhp billiton rising, saying it sees the end of that commodities downturn. Qbe insurance, a miss with its earnings in sydney down almost a percent. Certainly seeing japanese stocks get a good run today. Manus thank you very much. Juliette saly with the latest from hong kong. The highlights of your day ahead. We get another snapshot. Weve got the jobless claims. That is what we are going to focus on. Mortgagethe mba applications out of the United States. At 7 00 p. M. U. K. Time, the minutes from the fed policy meeting. Coming up on countdown, the june unemployment data. Can it stay below five present levels . We take a closer look. The strong japanese currency briefly broke the 100 threshold to the dollar. What are the limits to the governments ability to stem the rise . Plus, ford goes autonomous. The ceo says a massproduced self driving vehicle will be on the road within five years. More on that in bloomberg. This is bloomberg. Its a glorious day in london. Manus welcome back. Is, the hangit seng is 22,962. Lets get a business flash with rosalind chin. Good morning. Rosalind carlsberg has reported first half profits that missed analyst estimates. The danish brewer said earnings before interest, taxes, fell to 522 million in the companys ceo will be on surveillance this morning. Fund is sent hedge to dismiss about 15 of its work worse. According to people with knowledge of the matter, the employees range from Money Managers to support staff. The cuts come after more than 2 billion in investor withdrawals from its fund this year. A u. S. Giant and its german competitor have completed preliminary discussions about a potential merger that would create the Worlds Largest supplier of industrial gases. Any potential merger is likely to face antitrust scrutiny from regulators. Cathay pacific has reported first half profits that missed analyst estimates. 45 million u. S. Dollars as losses masked gains from carrying more passengers. Billionaire steve wynn said his is 4. 2 million other resort targeted squarely at adults. That is despite government officials attempting to reinvent the worlds biggest Gambling Center as a Family Friendly playground. Bloomberg spoke to wynn ahead of the resort opening. Means itification isnt just a place for a baccarat player. It is a place for people who want to stay in beautiful in the hotels and be well served, and the sense of the hospitality industry. So you spend more money on the rooms, on the food, the restaurants, and on the meeting facilities. That is diversification. It doesnt mean adding a roller or ferris wheel. And that is your Bloomberg Business flash. Anna thank you very much. Inflation ticked higher in july. The cbi increasing to 0. 6 . This came as the import prices jumped the most since 2011. We will be keeping an i on u. K. Unemployment data. Hans redeker is the managing director and head of global fx strategy at Morgan Stanley. Inflation is here and it is coming at a faster clip than the market anticipated. There is this debate that the bank of england is perhaps underestimating the velocity with which we will see inflation hit the u. K. You get some people out there saying it is going to hit 3 next year. The bank of england doesnt see that until at least a year later. Is it going to hit harder and faster than we anticipate . Hans we got a significant decline in the exchange rate. There will be effects in higher import prices. The question is what is really of concern in the most brexit environment. The inflation rate was in a global deflationary environment. I dont think so. It is all about activity. The central bank has made it clear that they are willing to look through an increase of inflation. Then you have to think about how that recommendation would work. When you have higher inflation rates, then you have the flexibility to set the real yield and relevel where you as a central bank want to set it. You do not want to get into a state where the European Central bankers control on setting the real level of rates. The reason why they have lost that control is that yield curves got exploited and the inflation rate are too low. You have an undershoot of Inflation Expectations relative to nominal rates. In the u. K. , you dont run that risk. When it comes to Foreign Exchange valuations, where do you think sterling is going to move in this environment . You have in the u. K. The lowest real rate levels you find in the g 10 and even globally. That implies that it is fairly to all the money markets. The current account deficit of 7 , this currency is going to depreciate further. This i think is well within the game plan of authorities. In a post brexit environment, this country is going to be in trouble on supply side. It, you try to stabilize then all the majors the measures should be focusing on the supply side too. That means a Lower Exchange rate and lower corporate taxation. Therefore im quite confident that our forecast of 1. 24 in cable and eurosterling of that is 92 to 94, that a very valid forecast. Many people would disagree on the eurosterling side because we are currently trading u 86. The point here is that the European Central bank has lost the capability to manage the exchange rate. It has lost it because we are running in an environment of yield curves in europe. Nominal rates are already very low. The downside is limited. That means you can get easily Inflation Expectations moving faster to the downside than nominal Interest Rates. So you get what i call a deflationary increase in real rates. Well, it is the battle of wills between the market and Central Banks. Stay with me. We got a little more to get through. Up next, capital inflows and strengthening currency. Were going to talk about new markets. Avtk0 manus Beautiful Day in tokyo. Dollaryen is moving. No longer facing down the barrel of 100. We are 101. 1. That is up 0. 75. Sony mobile. It is daybreak and it is available now. Lets look at the top stories. Cisco very squarely at the front. This is one of our biggest corporate stories that we are tracking. Giant potentially plans to lay off 20 of its workforce as it moves toward softwarebased products. A spokeswoman for cisco declined to comment on this particular report, but that would be quite in cisco. Ant shift up next is spain and their attempt to form a new government. That story is running. Leaders with his party to consider the reforms proposed by the freemarket party in an attempt to end a sevenmonth political stalemate. You are seeing one of the strongest turnaround stories in the area. Political chassis. There is no government yet. About the fedl minutes. What is driving at jackson hole . President bill doubly spark it again. September rate hike is still on the table. It will be interesting to see the access of rhetoric comes from janet yellen and the new york fed. Here is that he is deputy court share of the fed. Feeling confident that the bank of japan stand in the way of further yen strength. The currency surpassed 100 to the dollar. That was the second time this year. We are looking a closer look at the market. Firepower fizzled. Wrestling,a fan of it is not a was the biggest wrestler that ends up winning the b