Economic symposium in jackson hole is officially underway. Markets around the world can set their clock for the first keynote speech from fed chair janet yellen. Yesterday, Michael Mckee caught up with Kansas City Fed chair after george. Esther george. He asked her about the International Impacts of Monetary Policy. We live in the global world, obviously, and the connections are growing between our countries as the fed thinks about Monetary Policy. It is focused on the u. S. And its mandate, but we talk about the geopolitical risk, we talk about what is happening in the economies of other countries because w we affect each other. Has mario draghi called . Mario draghi has it well in hand, i am sure. Draghi, our next guest says that the ecb president could steal the spotlight at jackson hole. Thank you for coming in. Draghi could steal the limelight. We have heard a couple of voices telling us in the studio and again the conversation in jackson hole about whether or would be theeuro best gift that they fed could give. It would certainly be helpful given the inflation outlook. I like going back to 2012 when in london in the closing days of the boes quantitative easing scheme, draghi said whatever it takes. Now we are the closing days of the u. S. Q. E. , and maybe it is time for him to repeat that performance. Announce it, but talk about how the labor markets could be hope by an Asset Purchase Program. Hint that theyre going to go down that road. Would he be talking to german lawmakers . Is that the stumbling block, the thing that stands in the way between me ecb and q. E. . It does not stand in the way of the Asset Purchase Program if it does not involve sovereign debt. Pressurized bank loans would not be an issue for germany. It has to be done, too. It is clear that the takeup of not going to be as robust as they are hoping. They will need more stimulus. The targeted loans not going to be taken up as much as expected . Toy are designed for the ecb take on monday to the Banking Sector and that Banking Sector to lend it out to business. Why do you not have faith in that . I get a sense that there is renewed risk aversion out there. Even though there might be demand for the first time in some time, and a while for these sorts of loans, from households and businesses, the banks might be a bit less willing to go down that path than they wouldve been a few months ago. Wewhen you look at the data have had recently out of the eurozone, we have got the pmi coming in still showing some growth but weaker than expected. We have seen already evidence of geopolitical tension over russia. If not, will we have to wait months . Yes. Of ans going to be more impact. We saw it already in numbers like the june german orders. We are down 10 . That is why the pmi was weaker in august. Italy is back in recession. The French Economy has stalled. The french pmi speaks to the French Economy perfectly. Miss then pmi contraction in the second quarter. But there are much bigger issues. What is going on in the ukraine. Such as the French Economy. The fact the italians have given up on reform. The gdp numbers of the sizing the downside to those scenarios. In spain, things are looking great. Are you being unfair on the italian Prime Minister . He was elected. Politics early has gotten away way of the reform process at italy. Markets have given italy this for the time being. Bond yields as in spain and portugal have gone to low levels. But it some point, i think there is going to be a crack in the eurozone that may involve france or italy. But certainly those of the economies that need to be worried about. Of course, many people will watch what janet yellen has to say at jackson hole today. Is she going to disappoint investors, and if so, define disappoint . It can mean Different Things to different people. I dont think so. This is not the form she wants to use to deliver any sort of message. Ant changed irs have usedcha it. Have they . She has plenty of opportunities to talk about Monetary Policy. Deep, heartfelt concern for people and strife in the labor market. That is what we will hear more about today that some sort of hint about a shift in policy. Is the righthis form to be viewing to the lens is that the focus we need to have fun what she has or is it more of an academic exercise . I think people will come away none the wiser in that regard, but they will come away better educated in terms of how the labor market and Monetary Policy interact. Thank you for joining us. Now, over to ukraine. The nations foreign minister wants a merkel plan. That as diplomacy intensified ahead of a weekend visit by the german chancellor. Hans nichols joins us from berlin. Hans, what would a merkel plan entail . Is it a Marshall Plan . That was the hint. That was a hint from him this morning when he spoke to german broadcasters. He is talking about economic aid. To playly wants merkel a very big role both in bringing his country to the west but also resolving the conflict in the eastern part of the country. Now, it is worth noting amid all this diplomatic activity that the fighting on the ground is still very much going on. On a ceasefire is unchanged from when he spoke to us on monday. That is you cannot have a ceasefire as long as russia is arming in supplying the rebels. The Ukrainian Government did claim over night or early this morning that it had killed 100 rebels and assaulted three tanks. At the same time yesterday, president poroshenko is calling for peace. Ukraine is seeking peace. The whole world is tire of war. Phone calls between the russian and german minister. All of this is ahead of a meeting between president putin and president poroshenko in the capital of belarus on. Tuesday we will see how much diplomat clegg work is done before then and whether or not the situation on the ground either gets worse or makes the peace deal more likely. Anna . We have been focusing on the convoy. I am seeing breaking out of the first russian aid trucks are heading into ukraine. They will be marked with the red cross, symbolic, im sure. Lets talk about the other side of the country. There seems to be some activity in kiev. Perhaps early elections. Tell me what is happening there. There is a prospect that they will dissolve parliament over the weekend, and then they would have to call for new elections. Real quick on the envoy. That is significant. There has been so much back and forth on these 300 trunks that basically mean they are entering ukraine, that they have been guaranteed some sort of safe passage in sign ukraine. Has signed off that there are not weapons aboard those. It is a humanitarian convoy. It is going to be revealing relieving some civilians. Thats an extremely positive development. We will if the rest of that convoy gets in and what those International Red cross employees report from eastern ukraine. Anna . Hans nichols in berlin. Now lets talk about airlines are on alert. Flights may need to be canceled across the north atlantic. We are joined with more. Good to see you. What happens to the, bring us up to speed on what is happening here with regards to this volcano. What is happened to prompt the slanted authorities to issue an orange alert. It has seen a number of earthquakes, a swarm of earthquakes around the rim of the volcano. There has been a lot of seismic activity battier has come but it has come to a peak. This is happening under an enormous glacier. What sort of interruption and the timing is open to debate. It could actually be something that happens underneath the glacier, which could cause a lot of melt and flooding. It could cause an ash plume. We will have to wait and see. Word thatstill a strikes fear into the hearts of any airline executive. Remind us what happened in 2010, and tell us if things are going to be different this time. It should be very different. In 2010, it was a perfect volcanic storm. You had weather patterns that resulted in the ash spreading across europe. You saw fine ash. In the rules that were in place at the time were very conservative and just really grounded a lot of lanes. Er, there was another volcanic eruption in iceland, and Even Stronger eruption. And that only resulted in 900 flights being canceled versus the 100,000 canceled the year before. That gives you an indication of the improvements in both technology and also regulation in place. Lets talk about technology, because some airlines are working on trying to create technology that identifies ash and allows pilots to take actions to avoid plumes. It was during the 2010 problem, the biggest hit carriers were some of the lowCost Carriers. So it is appropriate that easyjet is one of the leaders on this. They have developed a technology called avoid. Yes, were talking to easyjet later. That infrared technology is developed by the u. S. Military, and they have a trial version of upnow that is ready to go and do test if the volcano in iceland does start erupting. They would be looking to put that on planes sometimes next year. That allows pilots to fly up ash from 60nic kilometers away. They can take evasive action. They seem to be putting more emphasis on airlines to make decisions about what their airline can cope with. Definitely on airlines now, which seems appropriate. There have been advances in tech elegy more based on the ash density weather than rather than weather patterns. They have run a number of exercises to simulate what would happen. So all of those improvements have been made to we should be better this time around. Fingers crossed. Thank you. For the latest on that potential ash disruption. Coming up, more on the rumble in the air. Details of the latest technology that could keep planes in the sky amid a plume of ash. We are live with easyjets head of engineering. The pulse the pulse welcome back to welcome back to the pulse. Anxiousis keeping an agen eye north. Experts cannot say whether another eruption is imminent but some airlines are not taking any chances. The volcanoness of belies the activity happening hundreds of meters below. This giant of central iceland is awakening. These earthquakes are indicating that there is magna beneath the surface. If it reaches the surface and comes out of the ground, then that is when we get it eruption. It happened in 2010. Ption close european airspace for six days, stranding 10 million passengers. 100,000 flights were grounded costing airlines 1. 7 billion. There was a very explosive irruption that sent a cloud of a sh up into the atmosphere. That, combined a fact that the jetstream was moving the wind down from iceland towards europe. You got this combined the ash spread throughout europe. This volcano lies under icelands. Largest place your elands largest glacier. The particles constrict the turbines byop melting and congealing inside of them. Rbus, easyjet, and norwegian developedkanika have technology that spots fine ash from a distance. This was the first test off the coast of france last year. Into the dumped ash atmosphere. The other uses infrared cameras to detect the concentration of the ash, giving pilots enough time to fly around it. Its called the avoid system. And it works. Future, easyjet will not necessarily be grounded by interruption. Theres just one hitch. The technology is not due to be fitted to the easyjet fleet until 2015. So in the meantime, it is one of a handful of airlines watching and waiting. Lets pick up the conversation with ian davis, he ad of engineering at easyjet. You were in that report on that plane doing those tests. Tell us about this new avoid technology. Very significant. One of the one of the sweetest tools we have to track where ash is. So we can get the thickness of the ash cloud. The technology we have proven year wills test last give advance warning on board the aircraft. 100 kilometers advance notice . A minimum. The ash cloud we created was lower density. If it was a higher density, we would pick it up from as much as 200 kilometers. This technology is not installed on your feet right now, but it is coming to easyjet next year. In the meantime, what is the latest on this potential eruption in iceland . What is the news that the Engineering Department has at easyjet . At 3 00 on saturday morning, i got an email from up in norway who told us this activity has suddenly started. So the activity has been fairly stable. The earthquakes, many of them, several thousand earthquakes have taken place over the last three days. We are monitoring that on an hour by hour basis looking for an increase in frequency and the magnitude of those that would give an indication of an impending eruption. Our friend in iceland are very good at that. What we have been doing is putting into place all the contingencies we have to make sure we do not have a repeat of 2010 or 2012. Most of that is around we need to fly safely, we need to determine where ash is. Although we do not have avoid, we have the same technology we can use today from satellites and geostationary orbit. We have access to this right now. We run simulations every six hours. The latest one we did was 8 00 this morning of where we would go. We are confident we can cope with it eruption this time without major disruption. You mentioned that no region business you are working with. Why is easyjet involved . You are lowcost airline. Do you make a habit of testing this kind of new technology . It is. Because innovation is important to us. The innovation we go around is safety. Safety is our number one issue. The customer is really important. After that, that is the second highest priority we have. Making sure our customers are safe. The technology we have got enhances safety and that is why we invest the money in it. So, innovation is all about improving the customer, the safety of, their comfort, or the actual experience. How is the infrastructure around the Aviation Industry set up this time as compared to 2010 . How has it changed since then . During that eruption, a number of airlines were critical of these oversight bodies that grounded aircraft for such a long time. A putly yesterday the eis out a statement to all airlines giving guidance on what is the airspaceerms of closure. Airspace will not be closed now by any of the Member States in the eu. We are dependent than on individual Airline Safety cases which we have had to submit and have excepted, which we are. We are one of all Large Airlines in the u. K. And europe have the safety cases. We have different needs. We think our techniques are really advanced to be able to track where ash is an forecast where it is going to go. So there will be no airspace closure this time. It will be up to us as an airline to decide whether it is safe to fly or not. That is the important thing for us. Thank you very much for joining us. A fascinating conversation. Head of engineering at easyjet. Coming up on the program, we will continue our conversation on the vocational later in the show. Our expert panel weighs in on how the insurance sector is preparing for any potential turbulence coming up ahead. Welcome back to the pulse live on Bloomberg Television and radio, streaming on your tablet, phone, and bloomberg. Com. Jonathan ferro has more as we await the details of jackson hole. Exciting stuff. Let me wrap up the week if they can if i can. Highs. Cord european equities having their best run since february. It has been that good. Ftse 100 down. Dax down. By. 4 . 40 down as you say it is all about a speech from janet yellen. The mention some of previews. Citigroup, she will respond in force to early calls for a rate hike. Credit suisse, she will delay hawkish rhetoric. Hsbc, she will talk about undesirable slack. Spare capacity. The bar is so high. Everybody expected the dumbest speech. Will she disappoint . Bey want jackson hole to less about Monetary Policy and all of these big issues. They wanted to be about leadership. When you frame the debate so firmly on what is exclusively around the labor market, reanalyzing labor market dynamics. You know what is going to happen. Mario draghi speaks as well. Who takes the headlines . You decide. We will see. Town ahead, an iraq boom goes bust. It was once a real estate goldmine but now it looks like a ghost town. Details on the ground later this hour. Paneour final discusses l discusses the impact if there is another volcanic eruption in iceland. Welcome back to the pulse. Im an edwards. Here are bloombergs top headlines. Investors are awaiting clues on rateime of interest increases. She speaks in jackson hole later today. Stocks from the u. S. To asia rose after housing and manufacturing reports showed strengthening in the Worlds Largest economy. After several delays, the first russian aid trucks have begun crossing into eastern ukraine. They are marked with red crosses and they are all under the control of the International Red cross. The trucks have been inspected to make sure no weapons are getting through. The crossing could mark an easing of tensions between ukraine and russia. And hamas is said to have killed 11 palestinian informants after israel killed three top thomas commanders. Hamas commanders. Israel is vowing to target more hamas leaderes. S. Forces will continue to hunt them down wherever they may be. Now, u. S. Defense secretary chuck hagel says the militant Islamic State poses an imminent threat according to five u. S. Intelligence officials, the incentiveate has an to conduct a major terrorist strike. Meanwhile, president obamas top pentagon adviser says the group can only be defeated by tackling them in syria. Now staying on geopolitical developments, kurdistans capital has been a boom town of iraq with developers pouring billions of dollars into the real estate sector. But the threat of the Islamic State has put these ambitious plans on hold. Just a couple hours from the conflict zone sits this small slice of the American Dream heard the first selfproclaimed subdivision. How much would one of these houses cost . ,000. Day its around 250 w