>> dissecting the fed. many officials are ready for a faster rate increase as u.s. data shows improvement. manufacturing fell more than expected in august thing to missing the target this year. -- limnings for our the timing of easter. -- limning the timing of easter. >> hello and welcome. i am mark barton and i am manus

cranny. >> a good morning to you. a hawkish tone, wasn't it? fed member sing borrowing costs have to be raised sooner than had been anticipated if the labor market persists. everything in this world has a caveat. define the many and the few in the variations in between so let's get to it. what are we talking about? these are the minutes and they came out, some participants were increasingly uncomfortable with the forward guidance on keeping the benchmark rate low for a considerable time. than half butless more than a few. just to be clear. less than half, more than a few. -- therehat says is was one dissent. >> the voices are growing.

we are getting ready for another vote. that is what that says to me. the dollar storming ahead. participants said they may have to raise rowing costs sooner than they had anticipated. a lot of the data is converting toward their objectives. it might become appropriate to begin removing monetary policy accommodation sooner than they had currently anticipated. .his is a shift in the language a more hawkish tone. chair did come out and say labor supply and growth is a source of concern because it may slowdown of the economy which also faces a drag [inaudible]

stanley fischer a little bit more dovish. janet yellen is speaking about labor markets. economists that bloomberg has spoken to suggest she will remain dovish. there is still funny of room for improvement in the labor market despite the improving figures. the caveat to last night's minutes, we had key wage, inflation data, since the july d toing which is surprise the downside. the unemployment rate is up. it gives the doves a little bit more ammunition ahead of jackson hole which kicks off today. >> the conundrum is markets. by 3%. bond yields are rising.

stocks in the u.s. fell by retraced the losses. the dollar up as we know. volatility down. gold down. mixed messages in the market. the bond markets are telling us rates are coming sooner. the stock market does not seem to care or does not believe it. >> or the stock market says great. the economy is doing better so get ready and consumers, go spend. >> stocks will rise. latest data on the chinese economy was just released. the numbers were not too good, were they? >> not as good as we expected. it still came in at 50 points which is a little bit of expansion. there are some up to mists -- optimists out there.

we were expecting 51.5. 50.3 was a big drop and it is a big drop and a big difference from what we were expecting. turn theough to shanghai composite on its head and you saw an immediate reaction across the aussie dollar. a lot of these futures, the renminbi. the latest set of numbers that we did get out of the chinese economy where you had credit growth slowing substantially. you had the slack when it comes to investment spending as far as the industries concerned. a big part of final demand in the chinese economy. an initiale it is number. we will get the final number in a week from now. and the official number coming out of beijing. just the same this will most likely be it. a little bit lower than we expected.

china, oneicking in hisp that has not kept up baby related stocks. what is that about? we have a massive rally in a lot of these chinese benchmarks but this is one segment, the baby related product's. from diaper to milk. last november the chinese government loosened. the one -- loosened the one child policy which gave 11 million couples in china the option of having a second baby. they would have to apply and get approved. ,or eight or nine months on only 3% of the 11 million have applied. there is a massive amount of money, all this exuberance that went into a lot of these stocks has been pulled out because we are simply not seeing these maternity wards in china philip because -- phil up his of

deliveries. credit suisse came out with an estimate and they are saying 37 am a 30 800 u.s. dollars a year to raise a kid all the way until they are 18 which is close to half the average household income. it is still a developing economy. are mostly here single children themselves. in that way if inamed broke don't fix it. the problem is demographics. there are estimates out there 10 years from now, 25% of the population kobe over 60. in this case we are talking about these a be related stocks -- baby related stocks down substantially. back to you. >> we just had earnings from the .utch retail

caroline has been going over the numbers. >> a miss in sales and profit. sales fell more than 1% but 4% if you're taking into account the changes in foreign currency. that was the miss underlying operating profit down 15%. this is a company that is huge not only in the netherlands but the u.s. and they have stop & shop and giant food. they are bigger in the u.s. than they are in europe. i'm a 60% of sales comes from the u.s. in the netherlands you have brands and europe is about 40% of their sales. this is likely to be a tough quarter. we had the late timing of easter which is why the company is winning the slowdown in sales but a challenging competitive environment. the chief executive has warned about this and the analysts have

said we are expecting profitability to be under pressure. we are expecting sales to be under pressure. sales u.s., like for like fell more than expected, down 1.8%. share in newmarket england. they are looking at potentially bidding for that chain, $3.5 billion value. they're investing and trying to improve the in permit to shop in. we have price inflation under swallowingd they are this. we will bear the brunt of reducing commodity prices and that will [indiscernible] profitability. putting money into the internet. >> online is the area of growth. 18% sales are 19%, they have been investing and they

want half a million houses to be .erviced by one of their brands they are trying to push that out and they're looking more optimistic for the outlook which investors and analysts might be impressed about. they are still investing and they have all these terms, it is called simplicity in these areas of focus of change but they say in the u.s. tments they want to slow the pain and want to start winning out against their competitors but if you have slowing inflation -- you cannot raise prices. if you are that is eating into your profitability. margin is. underlying at 7% and the netherlands at 5%. they're holding onto margins. >> we are seeing [indiscernible]

margins are coming under pressure. analysts have braced themselves and it is where the market had expected them. there is handwringing and grabbing of hair and screaming at people's desks, this is not that bad. many people have raised themselves but it is not a pretty picture. lex we will see how they deliver. thanks for that round. we discuss when and why a fed rate hike will come. lynchf america at merrill 's representative joins us after the break.

>> time for today's company news. advancing the shares to the most in a month. foreign exchange gains helped. the biggest budget airline in the second quarter saw profit surged more than six times the net every year earlier. bank of america is record settlement over the sale of mortgage bonds in the run-up to the 2008 financial crisis could be announced today. that is according to two people familiar with the matter.

the bank will pay $17 billion, one of the people said. the dublin-based aircraft leasing firm awas aviation plans to add more jetliners to meet surging demand for budget travel in rate -- asia's pacific region. air asia biggest are and singapore airlines and qantas. minutes revealed unease with the current promise of low rates. investors will be listening to janet yellen when she speaks as a jackson hole supposing him. symposium. good morning. forwardringing it slightly, the expectation of a rate increase. 52% chance of an increase by july next year. that is 48%.

it is a slight increase. is that a fair assessment? of how we should read the minutes? >> yes, indeed. there was a hawkish tone. this is the forum where hawkish members can express their views. although the fed is likely to be very cautious, we are starting the cycle. fedming this continues the will sound more confident about the economy and the market will which we expect to be the big thing for the next six to 12 months ahead. fired and has been they're catching up with the bank of england. are they net connect? >> will have this debate for months to come but we believe this case is with the fed.

like ay this has been monetary union with the u.s. and the central bank has not been moving if the fed is on hold. eventually they start hiding in this will create more room to follow their own monetary policy. >> what is the risk is weak though into jackson hole, we will have various voices. what is the possibility that he will reflect on underemployment which is one of the key issues on her dashboard. is that what you think we will get from janet yellen, more dovish this tomorrow? >> on the one hand it is supposed to be a relatively academic speech. on the other hand i am concerned

about most of the time she comes across as very dovish. having said that, she may not be as dovish as the markets expect. >> looking at your notes and looking at the dollar, looking at the euro-dollar, the gun has been fired. and it is strong. how do you take what we just discussed and put it into the dollar context, you're still very bullish. >> the truth is that we are in a situation in which they are was behind the curb at the opposite extremes. ,he fed has been very cautious avoidinghave been unconventional policies. even if the fed remains more supportive they would be moving in opposite directions.

>> will come to you to talk about the ecb and we have pmi data released later as well and minutes to discuss from the bank of england. our guest stays with us.

>> there is a belief that austerity would work and we see the enormous price that europe is paying.

--ore the crisis here is europe was below the trend. you are wasting trillions of dollars in the prospects are even bleaker. hopefully the reality of this failed policy will strike, will be realized and people will say let's try something else and that is very clear. economists all over the world have seen that this set of policies has not worked and their other policies that hold the hope of working. joseph stiglitz they're speaking to bloomberg about europe's bumpy road to a caught -- recovery. still with our guest. thanks for sticking around. you are in his camp. >> to make some very good points. i do not always agree with some of his views but in this case the way to see the ecb is

missing its target. we can disagree what exactly they can do about it that they're missing the target. not only now but in the medium term target. solutions. are they have been behind the curve for while. when every other major center was correct if they were behind the curve and now they are paying the price. >> the pmi data will back that up today. >> most likely it will be slightly weaker. what we have seen in the eurozone recently, soft data has been relatively ok but hard data has been very weak like the latest gdp numbers. >> you have downgraded your view on gross but you said there is a little blink of flight in some of these numbers. it comes down to what has dragged investment lower and that is supposed to be the good part of these numbers.

inflation numbers have been disappointing in the eurozone. countriese year that will experience growth. because of deflation or very low inflation is low the projections and this makes a huge difference for sustainability. >> one of the stories is about u.s. atf's exchange funds. over three point $5 billion from the rest of the equity markets. is that is what is driving the drop or the differential with the states? >> it is this equity outflows. earlier there was -- the euro was relatively supportive and it was the equity flows into the eurozone. what we have seen in the last month for number of reasons is because of weak data and the

reluctance because it was disappointing. recent weeks they were equity outflows. >> the minutes yesterday where they news events of the day. after three years of no dissent. it made monetary policy more exciting. what does that mean for sterling? it doesre expecting mean that there were high grades this year. repeater --inancial report. the market was very long sterling. we believe that it was more balance.

u.k. has been very strong. >> we have had some data from isna and the flash pmi disappointing. how does that play to the kiwis? and the key we -- active.market is when we get some good data we will forget. they have been in a soft landing and that is what the authorities want. we believe this will continue. we believe the market is still long emerging-market currencies. , we if the fed is cautious might see some adjustment.

thank you. hp returns to growth. we will dig down into the turnaround plans. are they having an effect?

>> welcome back. time for a quick foreign-exchange to. the dollar is on the move. out ad technically comes little more hawkish last night at their fomc minutes. according to technicians the dollar has risen too far too fast. the dollar index is rfi. tops breaking above its end. overbought would be the

takeaway. how do you translate that into the euro? many of the members noted that labor dated -- data was coming toward their objectives. traders have raised the betting on the chance of a rate hike. .he euro-dollar trading saying the dollar 20 is -- $1.20 is achievable. that was below the estimates of 51.5. you are seeing the officer dollar trading lower and iron ore is on the low for 2014. >> these are the bloomberg headlines. theasing the minutes from last meeting showing members of the federal open market committee are increasingly uncomfortable with the central banks forward guidance because

labor markets are improving. many members believe they might borrowing costs sooner than anticipated. purchasingnary managers index was at 50.3. china will miss its growth target this year and germany is reversing a post-world war ii arms doctrine. iraq.g arms to approved armsers for kurdish forces. from.k. from mr. returned his vacation early to discuss the response and french officials met to weigh their options.

largest chipmaker make a by four $5 billion. hans nichols joins us from berlin. will do theed they deal. what is power management, fill me in. everything from automotive to satellite. you have these semiconductors and these devices and what they really get is the low-power chips. these low-power semiconductors but on a bigger level what you have is the bavarian companies getting a little slice of silicon valley. you do have more production and more offerings for products. at what the future of energy companies is you see this from google all the way over to siemens.

all the devices that are powering, some say controlling our lives, they may be run with lower energy chips and that is what they get here. on this real estate question, take a look at this from the ceo . here's what he had to say. it is important for us to be in the u.s. and close to the highly innovative regions of california. but as the ceo. he has been on the hunt for an acquisition since he has joined the company in 2012. both boards have approved the deal. we have a $40 cash offering per share. that is a 51% premium. they are paying a pretty steep price. when you see the size of a deal there is the possibility of overlap. is there anything in terms of consolidation? fronts,are on both

there have been strong hints that there will be job cuts in the california area. a 4% advantage in terms of productivity. and some of the chips that are produced in silicon valley, they have the scope and their bavaria office. manufacturingme leaving the states and heading down toward the core of the middle. oldne of silicon valley's guard posted a gain in third-quarter sales. caroline is here with more. paying off?vamp >> the first increase in sales and 12 quarters, three years we see sales and chip only 1.3%. profit is still down because of

restructuring charges but we are saying a warm breeze flowing from pc sales. this has helped microsoft. the xp software is no longer supported on older computers. businesses are busy buying up newer computers that can support new software, helping drive pc sales. saw is why the sales group growth of 12%. the sales numbers for their fiscal third-quarter is because of pc's sold. elsewhere not so good. across the board we are seeing the likes of the areas of .rinting which is 20% of sales also services. that is the storage and service and software. those divisions had little or no

growth. definitely trying to find new products to invest in. the trajectory is not going to change. forsecond quarter was good pc sales but the trajectory is generally down. we will see more people going on to their computers. we will not have desktops. >> there is a huge debate about investing in r&d. those companies have spent the actually underperform. there is this great debate. she wants to invest but it is where and how. she is cutting jobs and continues to do that. differentiating product. the r&d spend is paying off to a certain degree since 2011.

she has returned this company to profit. some standouts are 3-d printers but also service. they are trying to tackle a $4 everyn market of what data center operator has a problem of. it gets too hot. you are spending and a numerous amount on energy to try and cool down all your super powerful computers. powerful.the most to cool itng water down, putting water in the system. it is seen as something that is patented. maybe they can get into this new one and not billion reduce the energy costs. -- meg whitmanis

is also chairman. in herbelieve trajectory. she has returned to profit. few to say that this is a changing trend. it is safe to say that many of those hp computers were bought online. thank you for joining us. it is a big story. affecting those that sell those items on the high street? >> things are always changing. the merger is interesting in that respect. it is very much about

technology. where are people buying and how people are using these devices and i think it is not a question with the you buy on your tablet or your smart phone because you can do that. it is how you use it. the biggest effect is consumers are much better informed. they can and do check out one retailer while shopping in another. i think that means they do not have to make do with second-best anymore. this is the whole retail spectrum. i think that is why we are seeing such huge differences in performance. there are 10 or more points of growth. that is phenomenal. products whato we're seeing is retailers are trying to fight back. advantage thatce

online retailers had is partly because they had that start up money. manifesting on the high street in terms of the into some, you look of these stores and there are desks for you to go to for service and that is an important aspect. >> you have to come up with something different. retailer can say you can see the product which may not be that important but you can play with it. they have to offer service because a lot is complicated. you need to understand what is going on. has beenst improvement improvements in service.

you have people who know what they are talking about. >> it is not -- >> it is about the convergence of technology. >> i was there the other day. service was very good. >> i have been in there and i have used it to her three times for pc and laptop and tablet. each otherneed what have got. so bringing them together is interesting. there is -- it is interesting to see how that new group can use the carphone warehouse data. great newst has been for the high street. it really has strengthened it. you need to look more closely at

the numbers. coming from the high street ford vice. apple is about to blast us out of the water with innovation wristbands and bigger screens. >> there has been a bit of a pause. >> do you think that durable goods, electronic items have less of a shelflife as in when you come to the end of your to your con tact -- contract. >> i bought a cd player 11 years ago and it is still standing. do they last?

>> it is our attachment to the device. >> they do not last more than two years. >> devices lasted longer. >> i still have a walkman. was -- i found it when i was packing up the boxes. thank you for joining us this morning. we will have the story after the break.

>> turkey's ruling party is set to announce who the next prime minister will be. one -- recep erdowan is stepping down. >> the man on everyone's lips

right now is the turkish foreign minister. thes most likely to replace president as prime minister. even the outgoing president revealed him as the man who will take the post. he is a loyalist and is not --ely to challenge him to and his wish to be a powerful head of state. he is fluent in several languages and the focus was definitely on him. >> when is the new prime minister set to take over? bethe premier will have to elected party leader.

investors have been on edge due to uncertainty. is the deputyn prime minister will remain in charge of the economic team. this will be a positive move for investors. time will tell what changes he will make. they share the same birthday and that makes them both pisces like yours truly. we will see later. brie is the most popular french u.s. and russia.

>> what will the impact be of the russian and -- embargo? >> fresh milk from local farms kept at 30 degrees celsius. granite is added until occurred forms and then it is drained, sorted, and matured from 12 weeks. to make this french braid. -- to make this french brie. nearly every part of the process is done by hand. >> we could mechanize the process but that would change a recipe. we would end up with a different kind of cheese. the cheese we sent to the u.s. is made with the same process except the milk is pasteurized with the quality is the same. they employ 65 people.

resisted the threat of industrialized rivals but now there's a new problem. russia's embargo on some european foods. >> the impact of the embargo could the much more violent and quicker than expected. the price of milk has collapsed and we fear that this may last until the end of the year or even later. production0% of the is here. smart -- a small market. >> it is a small cheese and it was very easy to send. they could lose more than one million euros or 4% of his annual revenue. unless he can find a new buyer he will be left with a sour taste and smell.

>> facing the scrutiny of fans. what manchester united owners have decided to do. we look at the newspapers next.

>> welcome back. it is time for papers. where shall we go? i got a story today. it is this. it is the father of yoga. he wrote the bible on yoga in light of yogae and he has died at the age of 95. i have tried a bit of yoga. it is not for me. >> if you are a fan, not the best of news. they have taken $200 million out of it i selling the shares. debt cost have been 700 million. the costs are outstanding.

>> we need to make clear that -- >> this one is interesting. apparently many have been advised by the uae. you should not go shopping because you are at risk of being mugged or pickpocketed. they say it is dangerous. scotland yard has insisted that there is nowhere in london that should be avoided. advised citizens against what they called hazardous or less secure areas. >> hawkish hands.

a look at what is ahead at the fed. stay with us. ♪

>> many officials are ready for a faster rate increases as u.s. data shows improvement. >> manufacturing fell more than expected in august adding to risks the country will miss its growth target for this year. >> the european retailer said sales are down 1% and blamed for timing -- but make the timing of easter. welcome back. i am mark arden.

>> 7 a.m. in london. >> do you say i am convinced , willhe minutes we had they shift the gear stick in terms of rates? >> the perception is there more hawkish. asre are some being found less than. the federal reserve governor is the one man who dissented at the last meeting. >> we discovered there were more dissenters. thatny participants said

they may have to raise borrowing costs sooner than they had anticipated. the data is getting better coming closer to what the committee had said. gaining strength after several farce -- false starts and and -- and increasing vocal minority. he came out in support, a little more dovish. labor supply growth is a source of concern because it may contribute to a slowdown in the long run. underemployment made direct the economy down which may face a drag from housing and a broad-based slowing across emerging markets. >> maybe she will be dovish as

well. there is a view that the committee is more hawkish and she is more dovish. economists is that there is plenty of room. ae will move the speed to from a market moving exercise to a more academic approach which is what it was intended to be. she has got a bit of data which you can use this ammunition. we have had key wage and inflation data since the july data. up andmployment rate is there is no evidence live -- of wage growth. one of her measures you have been talking about. very important. --the under him underemployed. been out of work for 27 weeks. 33% of jobless applicants are in

that band but that is the debate which is in the new labor force them a in the new workforce. the economic models of history apply. you have technology improvements. that heenspan was right was 15 years too early. it is the new paradigm in terms of what technology can do. traders think there is a 52% [indiscernible] bonds are telling us where worried. >> we are in a better place economically in theory. -- the bulls have it which is if the economy is improving you raise rates.

it means you have an improving economy. >> the latest health gauge was just released a little bit early. this came from the hsbc. about the numbers, if they were not -- they were not so good, were they? >> not really. an were talking about improving economy. this is one of the last things you want to see if you were hoping for a continuation of the trend of good eta coming out of china. 50.3, still expansion but a big drop from last month. it is short of estimates. we are still seeing a lot of

optimists. it is a preliminary number. said, you look at the set of data that has come through over the past two weeks. drop in credit draws. you see a lot of pressure on the property side. and youthat together will get a better understanding of the headwinds the chinese economy still faces. the final number will be in this region. >> markets have rallied but there is one group that has not quite kept up. that is the baby related stocks. why is that, what is that about?

back nine or 10 months . the chinese government said we are listening this one child policy that has been in place for 30 or something years. a lot of money went into a lot of a be related stocks. products, formula, diaper makers, what have you. on you onlye months have 3% of the 11 million couples which were actually qualified to have a second child . to apply to have a second child. the hope is these maternity wards would start filling up. you look at what has happened and you ask around and the reason is the cost. it is expensive to have a second child in china. 3800 u.s. dollars.

china is still a developing economy. that is roughly 42% of the average household income in china. these parents are single children themselves. we have an aging problem. isuarter of the population expected to be above 6010 years from now. was so much exuberance and it did not pan out. >> thanks a lot. posting a fall in sales with a later easter partly to blame. caroline hyde is here. how bad are the numbers?

>> they were worse than expected. it is not a pretty picture on either side. we have sales falling about number 1% overall. operating profit down 15%. the like for like basis shops have been open more than a year. sales did worse in the u.s. and the netherlands. they are you -- losing my can share. the bidders in a company called market basket. worth $3.5 billion. up for the to make

market share or is that an opportunity they are seeing in that network question mark >> they may feel that the trends will improve because of the moment it is not only -- it is also consumer sentiment and also price inflation. you cannot put up prices at the moment when consumers sentiment -- we're seeing prices coming down. the commodity food prices, we are saying lower growth and they are not managing -- they have not seen the volumes. intense competition at home and the u.s.. they are trying to improve the shopper experience particularly in the u.s.. 320 storesng around and they are managing to keep their margins and their measure of profitability stable despite this investment. they continue to say that we 2014.ave in

>> what is the light at the end of the tunnel? they are stepping up their internet offerings. >> it is a bit of a silver lining. up almost 19%. is a little bit of sales. andoutlook will look better there will be a better trend improving from all this investment. are not going to be shocked by these numbers. they have printed that profitability will come under pressure. what they need to see is this investment reaping rewards. getting people spending a little bit more and we will see how inflation goes. >> i wanted to get a sense of how big it worse -- it was.

240 billion so willmar -- walmart is bigger. in europe it is the fourth against. it is massive in europe but globally it is nothing. >> it does have 7 billion euros worth of sales each quarter. just soeography is fast. to try to go up against walmart you have to be specific about the geography. much these how retailers are saying opportunity. there are some european players. >> philip green is out there with top shop.

>> you have to put it to them, most of their sales come from the u.s.. giant food is up. coming up in jackson hole. chair is making her first speech as central bank chief at the jackson hole symposium. we take a look at whether she will be dovish or as dovish as investors expect. ♪

that beatng profit estimates advancing the shares to the most in a month. asia's biggest budget airline with a second-quarter quarter profit surged more than six times of that of a year earlier. bank of america's record settlement with u.s. authorities

opened the sale of mortgage bonds in the run-up to the 2008 financial crisis could be announced as soon as today according to two people familiar with the matter. the bank will pay $17 billion, one of those people said. awas plans torm add more jetliners. among their biggest customers are singapore airlines, qantas, and aeration. awas has more than 300 planes in service. yesterday's federal reserve minutes showed officials preparing to raise rates sooner than anticipated. this week's focus on the fed continues tomorrow when janet yellen delivers her first speech at the jackson hole supposing them as federal reserve chair. our earlier guests said the fed

has voted and it encompasses both. be -- we should not be too blown away by this hawkish tone. was that your reading of it or not? >> that is probably correct. minutes,at the fed they are four times the length of the boe. rex the -- the first time i read it -- was it really that hawkish? janet yellen will speak on this. it is an issue that has been

around for years. the whole issue of labor market participation was falling and it has fallen afterward. structural this is or cyclical, that is a debate. england has tried to focus on the slack and it is useless in terms of trying to pin policy. we have the bank of england 2015 is the year of policy debate when, not if and how do you play that in market terms. >> the bank of england is going first. -- whatteresting from we saw yesterday. if youeresting thing is

want to have this gradual and measured pace it might be better off going a bit earlier because the risks of leaving it longer are growing. currency is hard because you see from fundingving currencies toward one that is -- you're saying yields much higher. in the bond market as well. >> yields have been falling and we have equities rising. ist is your take, this bonds, not equity. >> it is dangerous.

they will be talking a lot about that at jackson hole. they have created something that was right. equities are rising and bond yields are falling. out latera is late -- this morning. and china data. ♪

>> welcome back. we still have with this simon smith. from europe.pmi's i presume it is not a pretty picture. francis deck making --france is stagnating. >> pretty negative at the moment because we saw that flat gdp rating before the potential impact from ukraine sanctions. it is difficult to spend it getting any better in q3. inare seeing pmi's weaker manufacturing and services. within that you are saying that with companies as well. within that you are seeing deflation emerging.

we are in negative territory. it is not a pretty picture. if you -- as you talk about yields we are in a different picture. ago andhat over a year that was a much more liquidity driven thing. >> we had a conversation with joseph stiglitz yesterday. predicating you are your trade on, what is driving your thinking as you look at things? >> a lot of things. can the ecb do more, not really. lose andis likely to the dollar looks pretty dominant. it will be -- not be falling out. the ecb has done all they can.

this was being talked about. the central banks thought you would never create a single currency. >> we know it is not perfect. so if you look at the progress made between 2010 and now, in a to make it work longer-term. nothing will happen and that front in the next five years. sterling has been wobbling but i still think there is still some legs and sterling as we move toward that rate hike view. simon smith.

hp returns to growth as the silicon valley veteran reports a rise in sales. our meg whitman's turnaround plans having an effect? .

> welcome back to "countdown." i'm manus cranny. there is dollar over the past three months. we're at an 11-month high. some say the dollar has moved too far, too fast. it is overboard. t is an 11-month high on the euro/dollar trade. mario draghi must be relieved as

he goes to jackson hole with that. that view in terms of where we go with rates, in terms of p.m.i., that is going to be important. in terms of the commodity currencies. china missed on their p.m.i. data and that is causing the aussie dollar to come down. the flash p.m.i.'s come in at 50.3 down from 51.5. trading off its lows of 92.60. -- .9260. >> these are the bloomberg top headlines. the federal reserve has released minutes from its last meeting. it shows members of the fomc are uncomfortable about the central bank's forward guidance. many members believe they might have to raise borrowing costs

sooner than anticipated. the chinese manufacturer gauge fell more than analysts forecast in august. the preliminary purchasing managers index at 50.3. the estimate was 51.5. there are concerns that china will miss its growth target this ear. the decision came hours after islamic militants released a video showing the beheading of american journalist foley. david cameron returned from his vacation to discuss britain's response and french officials also met to weigh their options. >> infineon has agreed to buy international rectify for about

$3 billion in cash. a man who knows all about power . nagement is hans nichols what are they buying? >> the semiconductor business. i know you never leave the heat on in your home, but in the future if you did and you wanted to control that with your smart phone, the computer in your phone will have a semiconductor in it. they want to provide those chips and have them be low power. this is all about cost savings and energy savings. infineon also gets something important here. they get real estate and may get a little silicon valley cred. they get something that is california-based. here is what the c.e.o. had to say about it in terms of the real estate. it is very important for us to be in the u.s. and close the highly innovative region of california.

international recollect fire does that. - rectifier does that. manus, it is $40 per share. that represents a 51% premium on what they closed at yesterday. both boards have signed off. this is done and dusted. ba varyia gets a little slice of silicon valley. >> usually somebody will suffer in terms of jobs or structural reorganization. what do we reckon? >> infineon has hinted there will be job cuts at international rectify. that is easier to do because some of the chips they make can already be made. they already have the scope, the scale to make them at the germany headquarters. you expect to see some jobs not necessarily shift but some jobs as they look for consolidation some job losses in the silicon

valley area and more production here in southern germany. manus? >> hans, thanks for that roundup. >> no wonder silicon valley is old guard. caroline is here. >> meg whitman is the c.e.o. >> and chairman. >> how many quarters of sales declines? >> this is the first in 12 dwhars we have seen any hint of sales growth. the first time in three years basically. sales up 1.3%. >> she must be relieved. >> she must be relieved but how much of this is a one off or short-term fix? it is p.c. sales that have done particularly well. that has helped intel and microsoft numbers this quarter. it is all about -- >> what about demand? >> probably economically driven, united states businesses are

willing to invest in their own infrastructure. also ps because microsoft has stopped supporting their -- its previous windows system. therefore all the old computers had to update. you're having to invest in new computers because of this microsoft move. >> the other divisions were not so good. >> and p.c. sales probably won't continue in this better than expected deterioration. tablets are getting far more popular. the consumer still wants smart phones and tablets. hey don't want p.c.'s. .1%. w growth of only they have services. that is a service. the software is almost half of their sales.

those division show little or no growth. it is a geopolitical risk in eastern europe 3789 it is fascinating this u.s. company is feeling a -- effect. >> the much bigger argument. it is peppered across everybody's results. what else is she going to do? i know she has cut jobs. a huge number of jobs. what else is she going to do? is that still -- cost cutting is what she is going to do? >> still trying to trim costses. she has managed to turn what is ne of silicon company's oldest companies. since 1939. they managed to start to bring it back to profitability with new products. she has to breathe new life. try and fend off new competitors. they are coming up against all

of these competitors. 3-d printing is an interesting move. they are trying bring new developments and patents. one is how the cool down your data centers. i was out last night with tech investors and some start-ups. it is a huge problem. they feel the energy consumption is going through the roof. it is property attic. basically you're -- problematic. it is ironic. here comes h.p. to the rescue. these are basically their most powerful computers. financial models. the ones that create complex designs. very exotic thing called water. they are managing to remove heat using a water system within the very computer. it sounds risky.

>> what if you get a leak? >> exactly. some of these high-tech gaming computers have the water running much closer. they are keeping the water away from the expensive -- we have never seen this before. it is a $4 billion market they are tapping into trying to reduce the overall electricity spend of these companies that have to spend a on data centers. it is new research and development. i think this is a short-term gain in terms of p.c. sales. that's why the shares didn't move any in the afterhours trade is because a basically numbers came in line, but before, everyone knows that it was a particularly good or not a very painful course. >> sales with pluses before them. >> before we can -- the turnaround. >> thanks, caroline. we're going to look at what the

fed had to say last night. chief market strategist at i.g. group, brenda kelly joins us after the break.

>> time for today's company news. bank of america and goldman sachs are planning to boost salaries for junior staff by at least 20% this year. bag of america raises would apply to junior staff in trading and investment banking globally. goldman sachs' raises would apply in the u.s. offices. wall street is hoping to head ff defections. uber, the sharing application may face additional setbacks in germany as other cities weigh blocking and dusseldorf agrees with hamburg that drivers need a taxi driver's license because they are doing so to turn a profit representatives for the city said. infineon, germany's largest chip maker agreed to buy rebt fire

for about $-- rectifier for about $3 billion in cash. >> the market we'll be watching today's p.m.i. data from ermany, france, the euro-zone. brenda kelly joins us for a look. hi, brenda. >> hi. >> so after the disappointment of last week's g.d.p. data, what new light will today's p.m.i. data shed on the euro-zone economy? >> we're expecting it to remain at the 50 mark. if you look at the p.m.i. over the first six month s of this year it did not represent what the growth was. we can't separate r for the time being. i feel the effects of these russian sanctions and the bite out of the german economy has yet to be reflected. that might come to pass in the

composite number today. >> that means that mario draghi will have more of the spotlight on him tomorrow when he addresses the jackson hole symposium. q.e. , i know it is the most boring question in the world but are we closer to it, outright q.e. or not? >> i think we will get q.e. we're seeing peripheral bond yields falling. i think it has been priced in a little bit too quickly. mario draghi is -- we want to see the june policies actually take action beforehand. you also have the ltro's taking place in the first tranche in september. i think maybe the market, even if you look at the euro/dollar, it is a little bit oversold and we could be looking far short

squeeze on that because i think the markets are getting ahead of themselves at the moment. >> one of the stories that we're running this morning is that u.s. exchange rate pulled out $1 billion in july. overall redemptions about $3 billion. the most in two years. when you swhee the clients are doing, is that representative? are clients pulling back? we have a correction in the dax. are you seeing people scale back? >> i think there is a hint of that. volumes are not there by any stretch of the imagination. you're seeing a difference in the u.s. equity markets. a capping in europe that we're seeing. while the u.s. powers ahead, it seems that the russian and geopolitical tensions are keeping any real -- at bay. >> is that what is keeping -- we

look at the s&p. wo points off record high. you look at bond yields, obviously lower. who is right? >> that is an excellent question. >> i'm curious. what is your gut feeling when you look at it? >> i think we had our tiny correction in the equity markets. i think it might be the start of something bigger. i'm not going to be as bearish or dramatic as that. i feel the pullback we saw over the last couple of weeks and the extreme buy and the dips reaction that we had is possibly a little bit overdone. i think the bond markets might be ahead of the curve in this one. >> bank of england. lovely piece on the bloomberg today. carney still has the hub of the

m.p.c. on his side meaning we won't see a rate hike. it will happen obviously but not so soon. do you concur or are you in the camp that november we will see the rate hike? >> i still am. i feel that the first -- the new three members of the m.p.c. have probably not necessarily stepped up just yet. there is a risk they might do so. i feel that the .25% increase is probably a little bit excessive. i think if they want to get the chance to be gradual and effective, it will be a smaller rate hike. >> is it meaningful? you don't go 25 points. you go 10 basis point. >> 10 is nothing more than a token saying we're having a think. >> that's what i'm thinking.

it would be a token scenario. >> do you buy that? >> i do to a point. there is a certain flment banks that nobody wants to be the first to return to normalizeation. what is that going to be? lower than what it was in the last rate hike cycle which was 5%, 5.5%. >> this is the biggest issue that i have with the guidance, forward guide france the u.k. which is ok fair enough. the point about it is they started the forward guidance and moved to -- the slack in the economy. there is a form of diluted forward guidance. the issue is they keep saying that we are united. that it will be a gradual approach. they can't keep using that kind of approach to it. >> i don't think so. i agree with you absolutely. i think there is the feeling that because inflation is there, the reason inflation was below

expectation it takes away the possibility of a rate hike. wage growth is a lagging indicator. how often do you get to a rate hike? once a year maximum? >> they say they will raise rates before wages. a similar chat, isn't it? more and more debate about with when the next rate hike should be. we need to get on with it. there are similarities between two federal banks. >> that is exactly it. the euroo zone looks to be slowing down. in the u.s., of course, they still have -- are in the midst of q.e. that will need to end. i suppose threat markets return to a degree of normalizeation where there is not this bunch bowl there and then i would say march or april of next year we will see a rate hike but i

believe bank of england will be first. >> we'll leave through it. 10 minutes from the start of today's equity trade with the euro-zone flat lining. stay with us. ♪

>> you are very welcome back to

"countdown." i'm manus cranny. we have jon ferro. mark barton. they were giving me a very hard time in that commercial break. let's get back to markets. >> it was warranted. >> absolutely. >> let's give france a hard time. >> p.m.i.. >> we don't like french much. >> i don't think people like french data. the bar is low. will they trip? the forecast coming in at 49.6. everybody positioning the france situation versus germany. they have dropped their budget deficit targets. growth this week. >> for me it is not about france vs. germany. it is about france vs. the e.c.b. everybody is taking this bad news and good news. draghi has been talking politics as much as he has been talking monetary policy. >> italy once again and france

saying you need to make the structural move. > draghi barely talked about monetary policy. 60% to 70% of his speech was about politics and reforms. if he felt so strongly about that, hardly doing himself any favors. it is a real stare down now between monetary policy. >> the last couple of days -- >> listening to some of the noise coming out, hearing some nobel laureates talking about the breakup. perhaps some countries should think about leaving. that discussion is still happening. bond yields are lower. who cares? it is a mess. people are still discussing these topics. >> see you next. "on the move." he'll be hosting that. p.m.i. data from france at 8:00.

germany at 8:30. manus and i will be back tomorrow night. see you then. ♪

>> welcome to "on the move." i'm jonathan ferro joining you live. we are just minutes away from the start of european trading. it is almost 8:00 a.m. in ondon. here with me now is manus cranny and caroline hyde. manus, let's start with you. >> the view is that the fed may well be moving towards a more focused stance. let's see what janet yellen has to say about that issue. here in europe, we're waiting for a sweep of purchasing managers, indexes. how they come out will dictate the direction of the euro.

we'll wait and see what those are. p.m.i. in china also missed. below the estimate of 51. at a three-month plosme caroline? >> manus. thank you. no cheers for the world cup from retailer. there is not enough to improve the supermarket performers. the u.s. shoppers are proving lackluster. is there light at the end of the tunnel? ahold tries to paint an optimistic view of future trends. wyle be back with more on the food giant data. >> some french economic data. france p.m.i. comes in at 51.1. the estimate was 50.2. that is the beat on services. manufacturing though the bar was low. 47.8 was the estimate. 46.5 is where p.m.i. fa