Transcripts For BLOOMBERG On The Move 20160902

To reposition . Member ask the board lorenzo if they are consolidating fast enough. Half an hour away from the open of market, where do we think the start is going to take us . Everyone is going to sit on their hands. 180 is the figure we are looking for. You can see the calculation takes us towards half a percent higher. That is what you want to do first thing. Lets take you. President Vladimir Putin has struck a conciliatory tone. The territorial dispute has prevented them from signing it world war ii peace treaty. He told john nichols weight resolving the cant should be part of setting the stage to develop a longterm relationship. Trade andt territories. The problem of a peace treaty like toan, we would find a solution to this problem with their japanese friends. Tune in to watch our exclusive interview and dont miss our special report on monday. The cleveland fed president said there is a compelling case for raising Interest Rates with the u. S. Economy approaching the target on employment and inflation. She declined to say when she believes a hike would be necessary. Heldext policy meeting is september 20 and 21st. Florida is being hit by its first hurricane since 2005. It has reached 80 Miles Per Hour making a category one hurricane. It has been expected to cross georgia and the carolinas. Futures surged to a fiveweek high as the storm neared the sunshine state. Space x rocket has exploded on the launch pad in florida, the second loss in a little more than a year. It halted an initiative to spread across africa. It was being fueled for a launch at Cape Canaveral tomorrow. The rocket and its cargo were destroyed. This is bloomberg. Thank you very much. Lets get back to one of the big subjects of the day. Our putin interview is dominating coverage. Lets talk about the great rate debate. Sounding off on ultralow Interest Rates. John kicked it off by saying it is a headache for every european bank. Skepticism very clear. , the rates are now path is blocked. Rates are at zero. They can sink into negative. I was skeptical about negative rates. They do more harm than good. The view. View. Took a different were in a world where they seem to work. One of the most interesting developments i have seen in theory is a paper that said they work to a certain point and then they become counterproductive. Which point does it become counterproductive . Lets ask our next guest. E is the current chairman he joins us this morning. Good morning to you. Which side of the fence do you said on . Are you saying negative rates may or may not work at Different Levels or are you with those who say they are not working . Banker, i certainly dont like negative rates. But if you look at the broader picture, they are reflection of an excessive saving of investment. Its difficult to see, to have higher rates. It would lead to lower growth. It is clear we may have to deal with the consequences of these low rates which will continue for some time on the Banking System. We have to think of how to absorb these negative effects the world is just not able to admit Monetary Policy is no longer delivering. Whered you think we are in the journey we are taking. How far down it are we . Without other policies doing their part it is more difficult to achieve its goal. What does it mean . It should stop doing what it is . Oing and should just wait and not try to do all it can . Should it confront the political authorities. I think it is not obvious to me even if policy is having less and less effectiveness it should just stop doing what it is mandated. Achieve to try to inflation at 2 . But it is fair to say you are getting less bang for your buck with every turn we make. Draghi isnk mario beginning to run out of options . He is struggling to find the bonds to buy. Options hey, various is confronted with. Mindneed to make up their what is more effective. Dates of to extend the the deadlines for the purchase of assets. They need to extend the limits of each issue. They have to do a series of things. They need to make up their minds. Let me turn to what is happening in the banking landscape. Coming outmments suggesting europe has too many mags and we need to consolidate rapidly. Would you share that view as well frankly what we have seen since the crisis, if we compare u. S. And europe, larger banks are getting bigger and bigger. European banks are getting smaller and smaller. I think this leads to the conclusion that the Banking System in europe is fragmented. We need more consolidation across borders. Thats the most important one. Regulators should ask why these are not happening. Maybe there is something in the Regulatory Framework making the relation more difficult. This is not good in the end. They need banks in europe which are able to serve them as well as the world. That point. To the trend has been the bulk of the Banking Sector. Trunk itlot of emerges. What is it you think this has turned us against that . Now, notational Banks International banks. In a low interest environment, if you think about the enough its of consolidation , the obvious one is costcutting. It is easier to find synergy and costcutting if you have national consolidation. I think you may need to look for different synergies which are more difficult. Do you think it should be removed from the city of london . That is not an issue for me to decide. Its going to be difficult for london to keep it unless it has an agreement concerning european passports. This is one of the things that will have to be brought back to Continental Europe i imagine. Im just observing. We will observe and we will watch. Can i ask what city you think will become the new city . We are watching around year a. Saying, and live with us. Most financial centers, in it couldr in paris, all depend on how the negotiation will go. Will remain attractive. There we European Centers fighting for that. Paris will be one of those. About of the points was the Capital Market union men a larger Capital Market sector for the eu in the ability to compete. He said if reg happens its going to take a long time for that Capital Market to be created. Give us your sense of the timeline for creating Capital Markets. We agree in theory. They will help europe absorb shocks. It will take time. It will take even more time. These uncertainties will not get out of the way. We have to be pragmatic. Europe will remain a financial based on credit. We have to realize that. That is a different system from the u. S. It in the sameat way. That is the big discussion that will have to take place among the regulators. Capital markets union is a good idea that it will take a long time to implement. If we get 180,000 on u. S. Payroll do you think we can guarantee a rate hike . I am struck that everything data. S on one single week after week. I think market should be given more of a medium perspective of where our rates go. Independent of each single number. I think there is too much focus on one single data. Two weeks from now there is another. E should look through the data the health of the u. S. Economy is better than we thought. It can support a second rate rise. We were in the same situation in the u. S. Economy went for it and there was no problem. Thank you for your time. I know you have a panel you have to attend. We are pleased you spent so much time with us this morning. Thank you very much indeed. Next, jobs we are discussing in the united states. What number will convince the market they will hike this year . Then it is the market open. A big week for banking. We speak to a former member. A likely third election in one year. Tune in all day to watch our interview with the russian president. We will get his thoughts on oil and the u. S. Elections. Stay tuned for that. We will hear from him next. This is bloomberg. Welcome back. Vladimir putin suggests compromise and a longrunning dispute with japan as he prepares to meet the japanese president s. Their nations have been in dispute. In a rare interview with bloomberg, he spoke of a potential deal. We dont trade in territories. The problem of the peace treaty of japan, we would very much like to find a solution to this problem with our japanese friends. Surprisingly it was by the supreme soviet and the japanese parliament. To japanese side refused appeal to it. Several years ago japanese courts return to a discussion of this topic. We did that. In the past couple of years, not by our initiative but by the japanese side, these conflicts were frozen. But now our partners are showing a willingness to have a discussion. We are talking about not an exchange, we are talking about finding a solution. Are you as close to a deal now as you have been since the 1960s . Think so. Dialogue. E begun a work. L step up their this will always be a topic of discussion for the russian president. Im sure they will discuss this topic. But in order to resolve it it should be very well thought through. Tune in all day to watch our interview with the russian president. We will get his thoughts on the u. S. Election and many other topics. Dont miss our special report. That conversation is going to be played out in full. This is bloomberg. 7 53. Lets talk about the things we should be focusing on. Heard from a number of bankers as well. Stocks have been on the move. Take a look at what has been happening with union credit. All of these stocks have been jumping sharply. Deutsche bank will have a big week. Good morning. Battered. Ve been out marketstrip perception. We have reached a bottom for the year can european Banking Sector . Valuations, it is attractive. Relative. Uite as we are in a different world. , we sawresting contrast Interest Rates rising. You are going to get some income. You dont see that in europe. On outlook depends restructuring and reform. Time need big consolidation. Is that going to happen . It is a nice one recently. A real expectation they will push through a significant structural reform. Stay with us. We will talk about the payroll number. It is the market open. We are minutes away. We will see a mildly positive start up by around a third. The open is next. We are four minutes away. This is bloomberg. Guy youre watching on the move. I am guy johnson. We are here in london and moments away from the start of european trading. Here is your morning brief. Putinn president vladimir tells bloomberg he is confident russia will reach a deal to free oil supplies and now jeers. Well have much more on that. 180,000 jobs. This employment number could cement a fed hike this year. Is the market really ready to reposition . Third time lucky. Spain may be heading for its third ballot in a year. Long can this nation to nation afford to float ungoverned . The marketsng for to get going to equity markets we are going to see a positive. Tart by. 1 the Market Makers getting going. It is an ongoing payroll day. The market is opening in positive territory. We will see what the others will do and see what is happening around the continent. London is up. 2 . It is payrolls day, remember that. It is likely to mean like volume. Uropean markets opening up this is the breakdown in the stoxx 600. Netherlands doing reasonably well. Belgium trading higher. You got a positive performance around the continent. That is not the ftse, that is the breakdown in the stoxx 600. Lets see what is happening with the mrr. This exit this down and shows you what is happening. Mx actual leading the chart amex actual leading the charge. Spain, portugal trading down. Carnival down as well. 1. 99 . Get you some bond market data in just a moment. Ftse is now up. 4 . The real story for the bond market and the equity markets today is of course the payroll number. It comes out later. We will have plenty of coverage for you here on bloomberg. Economists expect strong support to show a gain of 140,000. It will fall in line with the average for 2016. Any sign of continued strength will enhance expectations for policy tightening from the data dependent fed. Your money, make a choice. Pay your money, make a choice. Joining us now to discuss this, Daniel Morris. Enough to lockt in a fed rate rise . Daniel we saw some increased pressure on wages with data this week with the provision. We expect to see that confirmed with what comes out today. Unemployment rates low 5 . That is indicating u. S. Economy near capacity. Labor market near full employment. It is telling the fed yes, we need to be in the mood to hike rates it unless we get a big shot, i do not see that changing. We also had a big recovery after several months. Always the dollar is the keeping. Is the key thing if Start Talking the rate rise, the dollar strengthened, that which pressure back on the economy. Have been through repeatedly over the last couple of years, it could repeat itself. By 25he fed raises rates basis points. I appreciate it is a big jump but nevertheless, is it more about the rates change and what we ultimately get to echo the market now knows the fed is going to move get to . The market now knows the fed is going to move very slowly. Daniel it is the terminal rate that matters. The real question here comes down to what is the potential growth rate of the u. S. Economy . Economy was permanently damaged by the crisis and the potential growth rate is under 2 , that tells you youre going to get inflationary pressures sooner. The fed is going to hike rates sooner than you expect. That is really what to determine is can the u. S. Get back to 2. 5 growth, in which case we can be fairly calm. Evidence thatle inflation is creeping back. You just run through a whole series of data and all of them, you would normally expect would be eating at fed capacity. There will be no output gap. The phillips curve should be working at all of these things are not working. Daniel that has been the case up to noun. How many times have we thought that inflation was just around the corner. By the same token, we dont want to get too complacent. If the potential capacity for the u. S. Economy is lower when inflation does start to accelerate, which it is going to at some point. It will happen and it could happen more quickly than it has been in the past. It doesnt look like it is going to be this month, but it will come. Guy there is a discussion that San Francisco is leading. The idea that we should be raising the inflation target. We should be a 3 . Maybe we should be at 4 . That discussion is knocking around academic circles. A break ofs take japan came out with their review this month and said we are going to set a 3 efficient target. The concern is they havent met the lower target that they have said so who would believe guy we are miles away we need to go for this. Daniel there is one credibility issue. They can set a higher target. It is risk damaging the confidence that people have in Central Banks. Jackson hole, what is interesting is how little that was discussed. Yellen focus more on the nearterm economy. Agree it is something that should be discussed. To make this happen daniel it is a very defensible did position defensible position that things need to change. Guy the markets need to be given a longterm view of rates. By raising the target, what you would do is to mitigate that we are is communicate that we are prepared to accept more inflation. When inflation comes, we are not going to act. That has been the tacit communication that has come through. How does the market the fed and other Central Banks deliver that can indication . What you really want to be looking at is the inflation expectation. They have been come down even though you have had a rise in inflation pressures in the u. S. That is the disconnect have been worrying about. If changing the tone could change that, i am sure they would do it. The we believe payroll number is a useful guide the debate is not about employment. It is something very prevalent here in the u. K. , yes, youve got a job, but that job is fragile and just about makes the numbers you need to make, and you are living close to the edge. It is reverberating around the planet, certainly in the developed world. Is the payroll number that useful of a guide . Is are so terrified of what around the next corner that youre not compared to spend decentyoure not getting wage growth. The headline number does not deliver that. Daniel if you would get the unemployment rate, it is not enough to say underemployment rate is still elevated. The dispersion between the wage growth at the lower end of the spectrum there are still a lot of challenges of the next resident of the u. S. Needs to address. There is a lot of structural issues facing the u. S. , japan, europe that are still there. I think is understandable i think it is understandable that for large swath of the population guy guy when the fed look at desk fed looks at that kind of debate do you think it is absorbing that calculation . Daniel mandate is for full employment. If you get a configuration between the president and congress after the election in november, that is a little more progressive, a little more thinking about what they can do to change the economy to make it better interagency and to raise wages. Guy Daniel Morris joining us from b. N. P. Paribas. He is going to stay with us. We got more of an exclusive interview with the russian president. His thoughts on the ruble. Dont miss our special report on monday at 5 00 p. M. U. K. Time. Coming up next, no joy for rat rajoy. Four we are going to take a closer look at that story. Clambering back. Oil stays in territory after its biggest fourday drop since february. All of that ahead. This is bloomberg. Guy 11 minutes into the equity sessions in europe. This is the picture around the continent as you can see. Mildly positive. It is payrolls day. The market is going to wait and see and wait for the number to hit. At the moment, we have a fairly mixed market with low volume. Lets pick down from the stock point of view. Desolating the losers making the. Ame leading the losers nevertheless, it is payroll day. Here is the bloomberg first word news with kristine. Thanks guy. Clevelands fed president says there is a compelling case for gradually raising Interest Rates with the u. S. Economy approaching the centralbank target. She declined to say when precisely hikes would be necessary. The f moc holds his next meeting on september 20 and 21st. Japans Ruling Liberal Democratic Party will form a group by the end of the month to examine how to best collect and compile economic tests that are used in key measures including bdp gdp. That is according to the lawmakers. He will chair the groups and any changes will result in stronger figures. All the worlds biggest banks are pressing u. K. Prime minister reason may to strike Prime Minister theresa may to strike an agreement could that is according to two people strike an agreement. That is according to two people familiar with the matter. Florida is being hit its first hurricane since 2005. Hermine reached 80 miles an hour making it a category one hurricane. It is expected to cross georgia and the carolinas where the winds and rains threaten to flood agricultural regions, damage cotton and soy crops. The storm nears the socalled sunshine state. A spacex rocket has exploded on the launch pad in florida. It is the second loss of a space by elonof a spacecraft musks it venture. By elon musk venture. Werehe rocket and cargo destroyed. News, 24 hours a day, powered by more than 2600 journalists in more than 120 countries. This is bloomberg. Guy echo guy the russian president sat down with bloomberg editorinchief, John Micklethwait for an exclusive interview. Ahead of the annual g20 summit in china. He challenged putin on his statement that if crude oil fell below 80 a barrel, there would be a collapse in oil production. Whether by asking pollutants thinking had changed at all on output. If i said that then i was mistaken. I said that off the top of my head. Maybe i just am remember. [indiscernible] stickley speaking, that is what has happened. Strictly speaking, that is what has happened. But maybe even surprisingly, our oil and Gas Companies are continuing to invest. In the past years, the Oil Conference if you take a safe investment in the pipeline [indiscernible] than the Overall Investment in energy is a. 5 trillion more than than the last year. This is quite significant. Our oil output is increasing. Production has declined a little. By the way, where the worlds in terms of natural gas experts with a National Share of 20 . In the export of liquid hydrocarbons, we also hold a leading position could where he third. We are third position. We are third. [indiscernible] demand for gas have dropped. That is the result of restructuring of the situation in our Domestic Energy market on the whole, it is in great shape traditional parts of the country. Cooks youre going to talk to the saudi deputy crown prince at the 20. Would you still be in favor of a production freeze if the saudis want that . Aware, thes im we reallyprince have struck up a good relationship. This is a man who knows what he wants and knows how to achieve his goal. At the same time, i think he is a very reliable partner. And can be certain that those agreements will be honored. Still, if it was not for rejecting the idea of output levels. It was our partners who changed their view. [indiscernible] our position has not changed. About this think about this [indiscernible] we believe this is the right decision for oil and energy. Thing, everyone knows [indiscernible] production is to be frozen including iran. Related to the wellknown [indiscernible] i think be unsafe that some of the viewpoints make economic some sort of compromise. Im sure everyone understands that. The issue isnt economics but political. Much like to incorporate every market just spent i would very much like to incorporate every market dissident. Thats every Market Participant every Market Participant. Leeway to do with the need to do . Yes. Guy president putin getting clearer what he expects to come out of algiers. What he hoped would come out of the meeting which is coming up very shortly. The market has been paying a great deal of attention to that. Well talk about it in more detail. Is this a credible position . There is plenty to discuss. We will be doing that with amrita sen. This is bloomberg. Guy 23 minutes past the hour you are watching bloomberg for the break, we heard from the russian president talking about the idea that we could see a deal between opec which would allow production to be frozen. It is a deal with russia that would allow iran some sort of opt out. Is that a viable plan . Said joins us now im her to send joins us now on rita said amrita it means they can continue to get target share from the saudis. That still needs to be ironed out. Guy how much trust you think there is here . He thought there was a deal. The saudis decided there was not going to be. President putin talks about his faith in the ability to negotiate. You have to wonder. Absolutely, though hard was not positive for any of these meetings. It is taken a lot of time and effort to rebuild that trust that i will say that indiana, opec did this in vienna, opec did very well to rebuild the process. In vienna, opec did very well to rebuild the process. He has been out there talking to other producers. Also a subsequent also subsequently. I think as of right now, the situation is better and there is more trust amongst the member countries. Guy what are we talking about . Is it something that the Energy Market is going to Pay Attention to because of the elevated levels which pumps are already being used . Amrita this is the most critical point, because from a fundamental point of view, a freeze does not change anything, because like you said, everything is pumping everybody is pumping at record levels. Iraq is 4 million barrels. Saudis are 10. 7. There are they are maxed out. The very fact that opec and russia can come together, they have had so many differences. If they can agree on something, it is suddenly putting enough uncertainty in the market that maybe down the line, there could be a cut. That alone is worth five dollars to 10 and the price. Guy give me a sense of where the russian industry Russian Energy industry is right now. Affected by the low oil price. Where is it echo what does Vladimir Putin where is it . What does Vladimir Putin need . Amrita despite being hit by low oil prices, what has saved the oil industry in russia is the cost of production, because that has been very low thanks to the ruble collapsing. That is why russia is the only country where producers are increasing capital expenditure. If this doesnt fill the hole for putin, because the revenues have collapsed. There are talks about potentially implementing taxes on the upstream and downstream. Much. Mrita, thank you so up next, the spanish Prime Minister rajoy faces what the next push back thats what is the next what is the next respect . This is bloomberg. Guy 8 30 in london. 30 minutes into the trading day. How things are shaping up this payroll friday. Here is a picture of the markets. As anticipated, a reasonably quiet session. Why . Because of the payrolls we are waiting to see what the number is. We think it is going to be around 180,000 on the headline. Lets return back to your. Lets talk about what is happened return back to eurozone. Lets talk about what is happening in spain. The session on the shores of lake como. Theyre all attending this annual closeddoor forum. It is a beautiful session. On alk more about plus zero is one of the speakers goodplessy of morning to you. Thank you very much indeed for sharing some of your time with us. Thate to ask you why is it spanish politicians cannot find a way out of the current deadlock . Quality politics in. Pain is a world we are going through organization of confusion. Confusion, ofn of change manifests itself in different ways. Reasonableore outcomes than many expected, a yearandahalf ago. Wee are finding meeting the active politicians, we the spanish people are trying to find a way out of this situation. You point toen take into the to context of what is going on in different places, from brexit to the disinfection in the united states. Where in a deal of change we are in a period of change. Reacting all this changing in a satisfactory way. It is time for the politicians to translate this new picture, this picture of going from a two party system to a multiactive party system, into we will. Im sure that we will get there. Guy is the problem the fact that the political system is set up with two parties and needs reform, and needs to adapt. Or is it that there is such animosity toward mr. Rajoy that he needs to step down and as a result we start with a blank piece of paper almost . Ana it is so easy to shoot the messenger. We need to take what is going on in spain in the context of what we are seeing in many all over the world. Yes, the system in spain until now has been a very clear cut two party system. Minority or governors backed by less than the less of [indiscernible] would have thought there could be questions. We are in a different situation. Just appointing frank by just pointing fingers, we do not solve anything. We need to address what the to aons needs to be new reality that is a multiparty for big parties. Right . Ain is ok, it has been dealt with quite calmly in many ways. The spanish economy continues to do what it is doing. Spain seems to be doing ok without a government. Ana first, we are not without a government. We are with a government that is that doesnt have the full powers. Yes, the economy is doing well. Yes, spain has a growth and for you viewers, this is an important fact, the spain economy is getting out of the deep hole where we were these are good news. In spain there are many things that have to be done. Visionot lets have a of the different aspects of the realities. Spain is doing well and it is doing well with a government that is working. A government that doesnt have full powers. We really need a government that is full powers. I am very confident on the reactions, not now, since the transition. Enough tom old remember how many spanish system has been deemed doom or been in a very difficult situation. We came out and the same goes into the economy. Votei wish there had been in the Parliament Yesterday that would have taken us out of the woods. We will be there, but lets have a serene vision of what is going on in spain. Guy lets ask you to change hats. Take the political oneoff and put your legal had on it should the eu hat on. Should the eu the involved in national tax cases . Eu i know you are speaking from london. From london, after the brexit eu isbut just opposing the wrong way to go. The Eu Institution has its vote. The government of course [indiscernible] all the powers of the institutions are given by the government. By the treaty. Pitching go on institutions against government. The imot sure not sure that is the view held by dublin at the moment. Thank you very much indeed. , a lovely place to be. Up next, more from our interview with Vladimir Putin. Were going to talk politics. Stay tuned for the conversation. This is bloomberg. Guy 8 40 in london. The russian president sat down with the book editorinchief John Micklethwait for an exclusive conversation in russia. The g20 summit is taking place in china. He asked president putin about the bnc, the hacking scandal. In ied any involvement the kremlin is ready to work with any administration. No, i dont know anything about it. You know how many hackers there are today. [indiscernible] the necessary time and place other hackers from other countries. It is actually difficult thing to check. It is nearly impossible to check. Isnt it time important . Really does it matter who hacked the data from the campaign . Thing is what was given to the public. Lets do a discussion about this. [indiscernible] but i want to tell you again, i dont know anything about statelevel russia. Imagined r american psyche. The american society. Clinton somrs. Even from this point of view, we could not have officially penetrated this. You understand to do that you need to have a finger on the pulse. Specifics, i dont know [indiscernible] do not think this a time where everyone should come clean about it . America tries to hack russia . China has to hack america . China tries to hack russia . This can become a more diversion when everybodys doing it. Allegedly. I think it would be better for the g20 not to get involved. [indiscernible] to are going [indiscernible] very serious issues, then we will agenda. That instead of working on issues, structural changes to a the economy, and place of that, we will argue about serious problems. There are plenty. It is better to find other things and other forms. Other forums. Guy Vladimir Putin in conversation with John Micklethwait. Lets continue the conversation and delve a little deeper. Ofy kapoor is the director the think tank redefined. The dnc hack, we had nothing to do with it but it was a putting surface. Service. A public you wonder what Vladimir Putin thinks of the possibility of the republicans. Sony at the end of the day, putin is a sensible man. Particularly in terms of the interaction between two of the most Nuclear Armed states in the world, there is something to be said about having a leader that you may not like, that may not be your friend but is addictive the insane. Saying,edictable and is versus someone who is totally unpredictable as trump is. He has put a . Over the that she has put a question mark he has put a question mark over you would not want trump anywhere near the red button that would launch a nuclear missile. Any day, putin would much prefer Hillary Clinton as president than trump, no matter how friendly trump may be. Guy im im not sure that the bloomberg would suggest that donald trump is insane. Well deal with that off their. You talk about the fact it will be a hostile relationship. How does the clinical world look from the kremlin right now . The pressure seems to be off a little bit. We have seen what happened in the ukraine in the applications of it have become a part of the background noise to the pressure seems to be much less on putting that it was 18 months ago. Sony part of it is everybody has gotten used to the new normal wear and china, u. S. Relationship is the most important. Ussia has disappeared there are many more important issues and every passing, a new issue dominates the headlines read the last few months have been dominated by brexit. The second thing that is happened is because of the simultaneously fall of the ruble which is linked to the sanctions , the domestic sector of oil and gas sector in russia is doing relatively better than it would have been given the collapse in oil and gas prices. Investmentas were has gone up. There is the pressure from the election, the parliamentary election that is coming in september. He needs to make some more noise. Even domestically in russia, because ukraine and crimea has become one of those frozen conflicts of which there are many. The public and domestic have gotten bored of it has gotten bored of it. He needs to put ukraine back onto the agenda. He is is very aggressive diplomacy. His very aggressive diplomacy. A lot of this is directed toward the domestic parliamentary election. Guy why does he need to do this . Votesonce you reach 90 as in many of these cases we have, a fall from 90 to 85 in your popularity is something you really need you really developed. I think direction is important. At some point or the other, putin will be looking at his successor, looking at the institutional structure. That has been one of the drivers of why he has managed to get rid of a lot of the older government. I think he is trying to personalize or did people who oh everything to him. Who are absolute nobodys before he picked them out of the blue. I think this is all a part of consolidation of power. He probably will only sleep peacefully once he has 100 popularity in russia. Guy what does he need to do internationally . Domestically, there is very little to do. That it depends on the ruble. If im sitting in another foreign capital, im thinking what you think it is . He is looking at g20, japan at the moment. How does he position himself . Sony anything that plays on russian domestic media which shows him looking powerful and plays is a narrative that really burn well with really really well with the russian public. Any kind of external threat, be it real or contrived, be it isis, chechen rebels, etc. , that putin can seem to be bank whooshing, that plays well. At the end of day, the Economic Prosperity and reality is really important to russian people. The arrow is wanting upward and the economy looks better if tomorrow looks better than today. The combination of these three things, him seeming to be important with inflation was a leaders with influential trades, him trying to this threat to russia and the economy is starting to pick up speed. Guy sony, always a pleasure to see you. Up next, fed talks. As 100,000er as low be enough for janet yellen to force another hike . We are going to get into that conversation next. This is bloomberg. Dc 3 53 a. M. In washington,. The focus on the fed as we await the payrolls number to be developed tests to be delivered later on. Economists expect u. S. Jobs will come in at 180,000 which would fall in line with the average for 2016. Any sign of continued strength will enhance expectations from a data dependents fed. Data dependent fed. Meeting justomc joining us now to discuss all of this, kristine aquino. Should be brace ourselves for disappointment . Kristine 180,004 august does seem a little low. 180,000 four august does seem a little low. Expect that fluctuates a little bit month on month. There was an element of seasonality in the august data. The last seven august reports since 2009, payrolls have disappointed seven times five times this month. Very likely. Guy clearly everybody focuses on what this number means for the fed. If we get a decent number, it locks and a rate hike this year. Is the market convinced . Kristine up the market is only pricing in a 34 chance of a rate hike. We go to 6 by december. Byis about we go to 60 december. It is about even odds at this time. Every meeting should be considered live. It really depends on the progression of the data between now and december whether we get a rate hike. Guy we are getting very excited about whether this number is enough to deliver a rate hike this year. 25 basis points make any difference to the u. S. Economy . Kristine there is argument over how much of a difference that will make. It is not so much the amount of hikes they are going to do but more a signaling affect of the fed indicating to markets that they are ready to start normalizing policy from the very low Interest Rates we have seen in the last 10 years. Guy we will leave it right there. Kristine aquino, thank you very much indeed. Normally, that would dominate our coverage. It would be jobs day in the united states. But, weve got something bigger. True. Tune in all day and watch our exclusive interview with the russian president , Vladimir Putin. We are going to get his thoughts on u. S. Elections could many other topics including oil. That is an interesting conversation. He believes a deal can be done in algiers between the saudis, opec and russia that will give some sort of an opt out for iran. There is a special report on this interview coming up monday at 5 p. M. U. K. Time. That story you do not want to miss. A quick look at the markets as we wait for payrolls. European equities up. Day, putin day. This is bloomberg. Francine shock tactics. Putin blocks both donald trump and Hillary Clinton as he denies russias involvement in the u. S. Vote. Jobs day in the u. S. This employment number could cement a fed hike this year but is the market really ready . Live at the what brexit means for europe . We speak to the former ecb president. Francine welcome to the pulse life frobl