>> waiting for yellen. markets are set for the fed chair's speech. minister seekign aid from terminally, as angela merkel meets poroshenko tomorrow. ash alert. a volcanic eruption threatens flights. a warm welcome to "the pulse" live from london. i am an edwards.

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 boe's 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 they're 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 take-up 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 would've 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 don't 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 nation's 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 cease-fire is unchanged from when he spoke to us on monday. that is you cannot have a cease-fire 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, i'm sure. let's 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. that's 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 let's 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. >> let's 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 low-cost carriers. so it is appropriate that easyjet is one of the leaders on this. they have developed a technology called avoid.

>> yes, we're 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 easyjet's 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 iceland's.largest place your eland's 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. it's called the avoid system. and it works. future, easyjet will not necessarily be grounded by interruption. there's 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. >> let's 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 e-mail 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 low-cost 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, re-analyzing 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." i'm an edwards. here are bloomberg's 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 world's 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 obama's top pentagon adviser says the group can only be defeated by tackling them in syria.

now staying on geopolitical developments, kurdistan's 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 self-proclaimed subdivision. how much would one of these houses cost? ,000.day it's around $250 >> wow. quarter of a million dollars. who splits his time between north and virginia hed northern iraq where founded american village. >> you can see most of the big developments in lebanon or turkey.

they start to move to do business and real estate. $6 million into this gated community and received another $10 million from a private lending arm for water and electricity. its andn an bloodshed hardly encouraged outside investment. the oil economy has developed supermarkets and high rises at an unprecedented rate. >> it oil companies are important to improve the economy, more so than projects i build. they can be bought by the staff or family members of the oil companies. this will create business to the area. >> today, many of the cities cranes stand still and construction projects have been placed on's. -- on pause. >> when isis decided to

attack the kurds, this is making people worry. people are starting not to invest in real estate. >> in 2012, his most expense of property sold for $600,000. snapped up properties hoping to rent them to families of oil companies. the war has left 10 homes unsellable and driven off 70% of the community's ex-pats. >> when they are leaving, for the last month everything has slowed down. cafe caters to far fewer customers. politicals needs stability to run. iraq should be stable, and then we will be boosting the whole region >> across this region, stability may not return for some time.

e iraqiill more on th4 economy when we come back. ofing up ash alert as one iceland's biggest volcanoes rumbles to life. stay with "the pulse." ♪

"> welcome back to "the pulse live from london.

that's bringing up to speed with some companies on the move today softbank is selling almost $4 billion in bonds to finance future investment after the company scrapped a merger with sprint. the war chest could be used to buy companies from yahoo! to dish network. --igroup learned less f earned less in japan then it's ceo. it made a profit of $12.9 billion compared with the total .5 million.n of $14 that would explain why the u.s. lender is considering selling its loan business. a judge has thrown out a lawsuit against bp by a whistleblower who claim the companies oil production platform was unsafe. the judge ruled the case was

ultimately about paperwork wrinkles rather than engineering shortcuts. makers have long valued chinese consumers for their appetite and willingness to pay. the fashion houses are finding their goods have become a tougher sell in china. caroline? >> yes, pretty fascinating, because china has been where it is that for the likes of hermes gucci.is vuitton and they have been opening new stores and cashing in on the buyer. for the first time, not even did we see this in the financial crisis, we are seeing discounts. we are seeing big discounts, particularly in july. ferragamolked into or went online shopping for shoes, 40% off. if you went into gucci and

wanted a shoulder bag in downtown shanghai you could pick it up for 30% off. dior had sales. some had some really rather doing, subtles ways of sales. many of these companies do not want to be seen discounting. how did hermes do it. you could get a dress for half price at an invitation only sale in a hotel. and you could not take any pictures. you also, if you wanted to pick up a cartier watch. well, you could. but actually go to a special store. it was all organized by wechat, the chinese version of whats app. youou are a loyal customer, got a message saying, come to

the sale. they are trying to do this subtly, but they are having to -- these massive discounts to get rid of some of their goods. people are feeling these things are too expensive right now. >> why on earth does all of this matter? how reliant are the luxury companies on the chinese consumer? >> statistics have been phenomenal. last year 1/3 of all luxury goods were purchased by the chinese. but slowly but surely, the chinese have -- are feeling good s are too expensive. you have the clampdown on giftgiving. but notably it is about 50% more expensive to buy at home than it is if you buy in milan. so the reason is you have got a 25% tax on imported goods. add to that a 30% consumption tax in china. this is a businessweek story.

they want to see the interview -- they interviewed a 27-year-old female, a chinese girl. she is a marketing executive. she went traveling and said, look, when i was traveling in milan i could pick up a handbag 1,300, half the price she could get at home home. . that was the entire price of my travel. she could go traveling and by the handbag and come back wealthier than if she bought it at home. that is the problem of buying in china at the moment. it is something, really, all of these names are having to tackle. how do you lure the buyer in china? they are so crucial. , chinese demand for luxury goods rose 30%. in 2014, just 2%. back to you. >> thank you.

now back to one of our top stories. the rumblings of an icelandic volcano are threatening to force flight cancellations across the north atlantic, the busiest international travel market. this could be the latest headache for airlines, but how will the insurance sector managed the risk? let's ask our expert panel. gentlemen, thank you very much for coming in. your insurance policies cover passengers when they are traveling for deception caused by ash clouds. but not insurers -- not all insurers do that. >> we have chosen to do that because we know our customers expect us provide that kind of cover, not just in travel insurance but all of our policies. it is the right thing to do. the big learn from last time was that a lot of insurers and airlines -- it had a massive impact. people do not know what to do. so it gave us time to review our

policies. we reviewed ours and make sure -- made sure in our policies we have this kind of cover there. >> andrew, we saw many flights canceled last time around. many passengers stranded. what impact was an ash cloud have this time around? would it look different? insurers are constantly reviewing the policies that they have in response to the changing behaviors and traveling. and also their claims experience. so, last time round in 2010, we saw insurers pay around 70 million pounds because of the disruption caused by the closure of their space. this time, trouble disruption coverage is much more widely available. >> as an added extra? >> there is a range of choice in

travel insurance products available. some people want a basic product that is cheap and covers emergency medical treatment. some people want a more comprehensive product that they are prepared to pay more for and prepared to go with a recognized brand. >> does this apply to the annual policies? sdo some cover ash and some don't? >> you are more likely to have cover within a multi trip policy. they should check their policy to make sure they have cover before they travel. >> if you have trouble plants coming up over the next couple days, and you have not got insurance, you take out insurance now. would you be covered for ash if its in the policy? >> you would with our policy. it is wise to check if you are covered. >> that's interesting. so the distinction between amber

and red is significant. because you are assuming quite a lot of knowledge about the threat of an ash cloud on the part of the person who is traveling. >> that is why it is important to buy their travel an insurance when they book their trips. look at their bank accounts that they may have travel insurance with and credit cards. look at their valuable items. think about the level of cover they need. lewisl me about the john insurance business. because insurance is not something people associate with being high street retailers, an online retailer. >> what size of insurance business is this? >> it is small compared to other companies. we have several thousand customers and it is growing rapidly. doing the right thing by the

customer and what the customer expects you to do, is good for business. we have seen over the last year our business grow by over 50%. it is growing rapidly. >> it's interesting, andrew. john lewis doing insurance. of big brandt names deciding to offer insurance products. retailers of all varieties offer insurance. physicist trend we see in the insurance industry, new players coming -- is this a trend we are seeing? >> a lot of the big-name insurers will provide a product that is tailor-made to be sold by a particular airline or travel agent or tour operator. they will try to develop a product that matches that brant. >--- that brand. >> thank you for joining us. take a short break on

"the pulse.: " ♪

> > welcome back to "the pulse" streaming on your tablet, phone,

and bloomberg.com. it is time for today's hotshot. summer is winding down but not for these kite boarders who show off wind power. let's turn jim on biking. do not expect any of these riders to stay in the saddle very long. check out the backflip. finally, we end at the cliff diving world series event. the divers had to climb before taking the 27 meter plunge. now, there is a new breed of music festival making way to the u.k. where once british festivals synonymous with stodgy food, things have changed. caroline went to the wilderness festival where fashionistas, royalty, food, and foodies mixed with the real thing. >> a banquet cooked by a

michelin starred chef, fine wine, and plenty of civilized conversation. >> people are willing to spend ingd-earned cash on an amaz festival experience but also some top-notch food as well. >> wilderness is not like any other music festival. posh-stock.bbed this year prince harry and even think of eagle and governor mark carney. >> everyone participates together and it could be a lawyer mixes with an art student. >> wilderness is favoring a group that favors posh over mosh pit. they are willing to pay for the experience with tickets up to 160 pounds. a massage 50 pounds.

100,00the chef's table, p0 pounds. >> a lot of the audience wanted to, just wanted to move on from hedonims and gettingm much more into healthy living and learning how to live. >> this is a lucrative business, but it is not without its hazards. >> today, this morning, the weather was beautiful. now it's kind of warm. it is going to rain at some point. rain.ow it is going to it is parting of going to festivals in england. >> caroline is here to give us more. you get some tough postings. do you have to wear gold trousers or neon jumpsuits? >> it is preferable. definitely face paint. more luxurious.

you are still using a porta loo but the showers are heated. and there were some themed restaurant tours. restauranteurs. hicks was there. you had some really high-end. instead of getting your average drink, you would get an ornate bloody mary. perrier had an entire champagne tent. actors acting in there. lots of jazz. at the same time, there were a million different tents. you could go for speeches, debates. >> the festival started as a music event, and this has music but it has a whole lot of other entertainment going on as well. >> there were headliners. you had burt bacharach on

saturday. and gregory porter, he was there. the music was brilliant if you wanted to go to that. if you have children, there were children's companies entertaining children. you had, then if you wanted to go for high end debate, you could go and watch matches. there were spas. >> you did not get muddy. lake, and nextm in a to the lake are these heated pools. the only issues is you have to book for things. quid, which is not that if you're looking at angela hartnett. you have to book early. if you wanted to be at the spa -- you don't win by just turning up. you are faced with rather long

queues. surprise that this seemed the festival of choice for the bank of england governor? disagree more the kind of thing you might find the central bank governor at -- this is more the kind of thing that you might find at the central bank governor. >> his wife is the sister of the park where it is held. they stay in the main house. maker was there. >> you were there. >> i was behind prince harry. there is a big valley. prince harry was there. he is much bigger than i thought he was going to be. i didn't clock mark carney. i would have wanted a selfie with mark carney. >> over prince harry. that speaks volumes. the first word is up next. for our viewers, second hour

of "the pulse" is coming up. angela merkel is expected in kiev. we will be talking back to school with a company that does internet schools. stay with us on "the pulse." ♪

>> markets have their clocks set for the fed chair's speech later today. merkel plans. she meets president poroshenko tomorrow. ash alert. a looming volcanic eruption threatens flights against busiest international travel arket. good morning to our viewers in europe. good evening to those in asia and welcome the those just waking up in the united states. i'm anna edwards live from "the

pulse's" european headquarters in london. also coming up, a festival where fashionistas and foodies mix. details on that story later in the hour. begin with the economic symposium in jackson hole, wyoming. yesterday our u.s. economics editor michael mckee caught up with kansas city fed president esther george and asked her about the impact 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 mandates there. we talk about the geopolitical risk and what's happening in the economies and other countries. we affect one another. >> as draghi said come on and get on with it already. >> no. mario draghi has it well in hand

i'm sure. >> esther george there. it will be very interesting. jon ferro joins me on the set. interesting. we talked about janet yellen is going to speak. draghi is going too speak too. what are his key messages going to be? >> which hat is he going to put on? is it going to be e.c.b. mario draghi or politician draghi? we have heard a lot of politics from him lately. this is an opportunity to turn around and say europe needs to reform. you look at unemployment there, around 12%, on average above 25% in some of these countries. if he wants to talk about the labor mabt in europe, i'm sure he has a lot to say, a lot more than janet yellen for sure. >> maybe we'll hear about plans

for quantitative easing, maybe we wait a moment. some kind of q.e. policy will come through according to him. >> when you speak to people and press them on that issue, it is not because the e.c.b. is going to do it now. it is because they think it will capitulate and things will get so bad they will have no choice. they are talking about an asset purchase plan, perhaps asset-backed securities. not even a plan now. they don't look close to it at all do they? q.e. is almost unthinkable. > we have they see ltro's. we have to winter and see what impact thed loans that the e.c.b. gives to banks on the condition they lend them out into the real economy. pouring cold water on that idea. they are not going to be the

success some had hoped. >> the condition for it to work is the credit demand hasn't been there. draghi says things got less bad in terms of demand but that is really not very good. they are hoping credit demand picks up and the supply will be there. you have the asset quality review and the stress tests. are banks willing to end more? i think it is very interesting what kind of pickup we see. >> janet yellen is going to be there not talking to economists this time. it seems that the guest list has changed once again. a number of it rations. back in 1947, it moved later that decade to jackson hole, the initial one was in 1947. a real chance for those who worked in central banking to talk to each other. it again got a much bigger audience and all of wall street wanted to go and it became a place where central bank

governors made announcements on policy. >> the federal government thinks they are going to take it back to the 1980 niece terms of jackson hole, they have not got a chance. there is a period of suggesting new monetary measures. they are talking about tightening. you have not got a chance, especially when you frame the monetary debate around the labor the event me analyzing -- she is going to talk about the labor market. not a chance, anna. >> thank you. let's move on. now over to ukraine. world leaders negotiating to ease tensions. this as merkel meets poroshenko in kiev tomorrow. joining us now from berlin is tony who can take us through the

latest on this story, the latest on the crisis in the ukraine. they are seeking a merkel plan? plan? like a marshall what should we read into that? >> that was buzz word we heard from the ukraine's prime minister. clearly the ukrainians or the government in kiev has high expectations for merkel's business, which is her first since the crisis broke out. the context is of course that everybody is looking to merkel to sort of ease ukraine's way into the europe if you like and also to help stabilize the economy. >> tony, angela merkel is going to be going to ukraine shortly. why is she going and what is the significance of a visit now? >> i think it shows that she is clearly ramping up her game in

terms of german influence in the region. it has been a very difficult balancing act for her for months. she has had all kinds of forces tugging at her including the german business community which wants to do business with russia. germany can't send in any soldiers, that is obvious, but it also wants to create peace in the simplest terms in europe. who else but merkel if you like to try and ensure that she has europe's biggest economy and she has the most influence over the situation there, if she chooses to wield it. >> what kind of role is she trying to play here then in trying to come up with a settlement for this conflict? >> well, germany has been trying to provide the diplomacy, if you

like, for sometime now. not merkel, but her foreign minister. so she can't really offer very much and she -- even the germans have been weary of saying they will mediate. it is more of a matter of trying to somehow get the two sides -- this is russia and ukraine, together after this conflict which began over ukraine's wish to move closer to europe erupted into for all intents and purposes as a war, not on europe's doorstep, but not that far away. >> what does it mean now that russian have been crossing over into ukraine. that is news this morning. >> as we know, this has been an ongoing game. it has been sort of the waiting game for quite some time. if it -- if it now goes ahead

and it presumably has been cleared by the red cross, that is a small sign of maybe some easing. merkel's visit on the one hand and a meeting by ukraine's president with russia's vladimir putin is supposed to take place next week, which of course would be a kind of summit designed to maybe ease the conflict. >> thank you. joining us from bloomberg news in berlin. we're bringing you live pictures from the russia/ukrainian border there. let's move on and talk about travel or a lack of travel. airlines are on alert as a volcano rumbles tonight. it is just the latest threat to the airline industry. flights may need to be canceled. what has happened then that prompted, we have an orange

warning now with regards to what could happen, an orange alert from the icelandic authorities. >> you had a number of earthquakes happening along the rim of the volcano. this whole volcano is under an enormous grasher. -- glacier. there has been seismic activity for years but it has been thousands of earthquakes over the last few days. whether this will rupt in an eruption, all of that is under question. you could have an ash plume or you could have other smaller eruptions around the glacier maybe. we'll have to wait and see what exactly will happen. >> the industry says it is much better prepared than 2010 when we is that you big distrouppings the airline industry. what kind of disruption might we see this time if we see an ash

cloud then? >> in 2010, that was 100,000 flights that were canceled. less than a year later you only had about 900 flights canceled when you had an eruption in icelanded a that time and it was actually a more significant eruption. you will see something on that scale. airlines can look at charts and look at data and they can look exactly and see where the ash is its most dense. >> it depends on the size of the eruption and the weather, which way the wind is blowing. >> they can tell within hours. they will say this, you know, this airport -- won't want to fly into that airport. there are certain places, they are treating it a bit like weather. easyjet is carrying extra fuel on their flights to iceland in case they have to turn plane around if there is an eruption. that is exactly what they do if there is a thunderstorm.

>> they are worried they might have to deviate from their flight plan. absolutely. easyjet for example is also -- the low cost carriers were some of the worst affected in 2010. they led the charge here and added technology they have been putting on the plane. they have it poised to test. they actually want to insfal it on maybe about 10 of their planes next year and they could arrange their fleets if there was a volcanic situation they would use those planes in that particular area. that allows the pilot traveling towards ash to be able to see it, infrared technology, u.s. military technology and it would allow the pilot to go fly up, down, change course. >> easyjet saying they are still monitoring it getting all the data from the icelandic authorities. we'll wait to hear. very interesting conversation available online. thank you very much.

that is what could be a disruption. still ahead, the hawks swoop into jackson hole. will we hear a dovish keynote address from the fed chair? we're counting down the hours for janet yellen. more on that next. ♪

>> the interest rates in all country are going react to the fed. we're going to get blamed. janet yellen will get blamed for it. you can't beat that. whatever the fed does will have effects elsewhere. there are some countries where it may seem appropriate to start the exit now but there are many now, england is probably one, but there are many others like to e.u. and japan where this is not time for exits. they don't want to exit. but to some extent, i don't exaggerate it because they make their own fortunes but to some extent they are going to get dragged by the fed. >> that is princeton university professor alan blinder. fed president janet yellen will speak later today. we're joined by nick beecroft. interesting news coming from the

professor there. talking about other central banks being dragged along the the tail wind, if you like behind what the fed does. when we do see the fed decide to move on rates, does he have a point? will there be upward pressure on other banks to increase rates? it doesn't seem likely in certain parts of the world. >> there are certain currencies that are tied to the u.s. like hong kong where there will be an immediate, automatic effect. but i don't think that will be so pronounced at all in let's sigh the eurozone. they can't afford to raise rates, you know as far as one can see. i don't think that effect will pertain to everywhere, no. >> what going to be your key focus out of jackson hole this year? >> subtle shifts in rhetoric, isn't it? it is very interesting, if you study, rather sadly, i have, the change in tone from the

immediate post fomc meeting statement that we had in july to what minutes actually say. i'll read a little bit. on one hand there was a hawkish comment after a meeting the likelihood of inflation running below 2% has diminished but they balanced that by saying reaning of market indicators remains significant underutilization. canceling out the comment on labor market indices by saying conditions have moved notably closer, those viewed as normal and underutilization, their views on that may have changed before too long. i think studying the minutes, you can see the shift towards the hawkish side and i think today, the market is really not expecting that. yellen has been so dovish that it would be a surprise if she says something remotely hawkish.

i think that is more of a danger for the markets. >> do you think the balance of views on the fed and if we are starting to see more hawkish clients coming through for certain members, is that going to be at the front of her mind as she sets out today, do you think sbhel deliberately dovish to taken to hawks? >> no, i don't think so. i think she thus far has reflected the mood over the whole committee, not just her own views. i think she will have to do that again. eeb in her congressional testimony said that broader measures of market utilization have -- improvements . >> slack in the economy will be something she focuses on. to what extent, what will we learn do you think about how the fed is measuring that? which measures are they looking at? which measures of unemployment are telling them how fully employed the u.s. is? >> yeah. they also see presumably less

slack because the fed's staff reduced their estimate of potential g.d.p. growth which leads one to assume less slack. they are looking at job openings. they are looking -- one good measure, the unemployment rate, which is simply continuing claims divided by the workforce. that is now at a post recession low. so that is looking good. >> where are you looking for tightening and when are you flooring tightening to transpire? >> i don't think it is going to be dramatic. i think the market is a little bit behind the curve and we could see tight i.n.g. in the first half, maybe the first quarter of next year. ending up higher in terms of rates than the market is currently pricing. >> coming quicker than market thinks and then moving faster? >> california. so a steepening is d -- yeah, so a steep seasoning what we will look for. >> emerging markets riding a

roller coaster when we first heard ben bern talking about the -- ben bernanke talking about the stimulus for the u.s. economy. >> i think that was a shock reaction. i don't think we'll see such pressure on emerging market currencies as we did then although i think there will be greater dinchings. dinchings. >> when look at draghi, some say he will steal the limelight because the economy in the eurozone is struggling still. the g.d.p. numbers showed there was no growth. later p.m.i. figures showed that perhaps there was a little bit of growth in the last months but certainly below estimates. what is the ebt effect going to be? talking to politicians? is he going to be talking about his own house? what monetary policy changes lie ahead?

>> i wouldn't be surprised to see him putting more pressure on governments. he was harping on that repeatedly in the post meeting news conference. italy must be front of his mind there. i think for that. this awkward number we're seeing at the moment, italy's economy is the same size where it was when the euro started. such a disaster. so i think you'll be focusing on that. interesting, going back to a point, the blinder was making about the link between u.s. monetary policy and other countries, you could say that if the fed tightened, that puts even more pressure on the e.c.b. to loosen, to get some counterbalance to help the european economy and get the euro down, which is what draghi wants. >> if the fed starts to tighten neighbor e.c.b. doesn't have to do anything. >> we'll speefment >> thank you very much for joining us. as we head to break, let's bring

you more live pictures from the russian/ukraine border. the first truck turnovers russian aid convoy has started to drive into eastern ukraine. these trucks here to enter ukraine. just looking there at the border crossing. live pictures. we will be back on "the pulse" in a couple of minutes.

>> the symposium very much a focus for investors. janet yellen speaking later today. a.c.l. what will she say about unemployment? what will she say about that? what will draghi have to say about the euro? you see it there. far away from where we saw it in may. the summer is kinding down but not for these daring kite borders who show us the true meaning of wind power. don't expect any of these riders to stay in the saddle for long. cliff diving in portugal. the divers had to do a bit of daring rock climbing before taking the 27-meter plunge into

the atlantic ocean. a ll ahead on the program, boom town goes bust. details later in the show. ♪

>> welcome back to "the pulse" live from bloomberg's european headquarters in london. i'm anna edwards. let's get to our bloomberg headlines at this hour. investors are waiting on crews in janet yellen. she speaks from jackson hole wyoming later today. as stocks from the u.s. rose after housing and manufacturing reports showed strength engine the world's largest economy. after several delays, the first russian aid trucks have begun

crossing into eastern ukraine. they are all marked with red crosses and all under the international control of the red cross. the trucks have been inspected to make sure no weapons are getting through. hamas is said to have killed 11 palestinian informers after israel killed three commanders. israel is vowing to target more hamas leaders. israel's defense minister says forces will continue to hunt down and attack hamas leaders. chuck hagel says the militant islamic state poses an iminnocent threat. they have an incentive to conduct a major terrorist strike against the u.s. or european targets. meanwhile president obama's top advisor said the group can only be defeated by tackling them in syria. now let's check in on where the markets are trading this friday. here is jonathan ferro.

>> this is what the market looks like. ftse 100 down .5%. dax down 0.3%. before today, we were up around 2% on the equity benchmark. right around 2% would be the biggest weekly gain since february. despite those hawkish minutes, at least that was the perception from the federal reserve, everyone expecting a dovish speech from fed chair janet yellen. saying she will respond in force to any early rate hike cause. hsbc says she will emphasize undesirable slack. slack, slack, slack. everybody thinks she is going to be dovish. for that reason, b.n.p. paribas takes a different view. they say any hints of hawkishness.

that will have a bigger pact. they remain short euro/dollar. mario draghi, the e.c.b. president, how does he go to the party? on the one side of things, he has a political message. he wants france to reform. he doesn't want the pressure on him to be to do more. he wants the pressure on the politicians to do more. on the other side, the trend on the euro is lower. that's a big call. back to you, anna. >> see you in 25 minutes. of course it will be time for "surveillance". tom keene joins us with a preview. no doubt you are thinking about what janet yellen is going to be telling the markets. wall street is not invited this year to jackson hole, is it, tom? >> no. janet yellen a big speech today at 10:00 a.m. morning eastern time and on to the 10:00 hour where we hope to hear from mario draghi.

mike mckee saying there was a wave of rain yesterday across we willd eat theons and bring dr. us are kin of deutsche ank. a record high yesterday for the standard and poor's. we move on to the summer of of the t for much western woled. the execution of james foley. we'll talk about the news overnight from iran and what the response should be of the united states and what our foreign policy should be as we go to the

presidential election of 2016. >> fascinating conversation to ook ahead to, tom. worrying about overevaluation of stocks and geopolitics and now the possibility that there could be a volcanic eruption in iceland. >> i haven't caught up with that story. where is that? can planes still fly over eastern iceland? >> yes. at the moment there is nothing to worry about. there have been many rumblings under the ground. i'm been assured here by people that should know that the army industry in a much better state to cope with that. now over to the middle east. kurdistan's capital has been the boom town in iraq with billions of dollars in the real estate sector in recent years. the threat of his almost aic

state has put these ambitious expansion plans on hold. >> just a couple hours from the iraqi conflict zone sits this small slice of american dream. kurdistan's first subdivision. >> how much would one of those houses cost? >> stimed around $250,000 to $2300,000. >> wow. a quarter of a million dollars. >> yes, between the land and the construction costs. >> he is a occurred who spends his time between northern virginia and northern iraq. >> you can see most of the -- developers in -- even in lebanon or turkey, they start to move to do business in real estate here. >> he and the european partners sank $6 million into this gated community and received another $10 million for water, sewage and electricity from an

independent arm of the u.s. government. back then, iraq and its sectarian bloodshed hardly encouraged outside investment. but in recent years, the economy helped him develop supermarkets and high-rises at an unprecedented rate. >> most of the project, they have been -- by a staff member or family members of these oil companies. this is also going to create cash and business to the area. > today many of the cities cranes stand still and production projects have been placed on pause. >> this is -- makes the people worry about their economic situations. the people start to not invest their money in real estate. expensive h most

property shoulder was $600,000. they are hoping to represent properties to families of oil workers. at least 10 homes are unsellable and -- > when they are leaving, everything slowed down. >> the cafe here caters to fewer commerce leaving him to debate kurdistan's future. >> business needs some political stability to run. iraq should be stable and then we get a boost. >> across this region including kurdistan, stability may not return for sometime. >> to bring you up to speed with some company news this morning. softbank is selling almost $4 billion in bonds to help finance

future investment. this comes after they scrapped a merger with sprint and t mobile u.s. less from running a bank in japan than its global salary last year. $12.5 million. they could explain why they are selling the consumer business. a judge has thrown out a $256 b.p.. lawsuit against the judge said it was about paperwork wrippingles rather than engineering shortcuts. now let's talk fashion. luxury good makers have long valued chinese consumers for their appetite and willingness to pay for luxury.

their good have become tougher to sell in china. caroline is here with details. how tough to sell are they? >> to the tune geerting discounts 30% to 40% coming from the name that was previously doing so well. opening stores in these glamorous neighborhoods of china and now we're seeing feragamo having to knock off 40% of a certain type of leather shoe. it was off by 40%. if you walked into gucci in downtown shanghai, you could pick up a shoulder bag for 30% off. christian dior is doing it. what is interesting is so. subtle ways and means these labels are trying employee. they don't want to back bargain name. they want to keep up their allure for being luxurious and high in price.

herms, you can get high-price dresses but only if you were invited to a sale. if you want to pick up a cartier watch cheaper, you might receive a whatsap message. you can snap up a watch for a cheaper price. so sales on the sly perhaps. what about the for the luxury sector? why does this matter so much what they are doing? china? >> i think it shows nervousness. china last year was 1/3 of all of their demand for luxury good. it is not good they are not able to -- things while in china. there are a couple of reasons for this. there is a crackdown on gift giving. also it is so much more expensive to buy in china than it is abroad. that is probably why many of these luxury good have stores in

china. you have a 25% tax on imported good and a 30% tax on consumption. this is what puts it off. about 50% more expensive than in china than outside. because of all of these taxes. they have interviewed. a 27-year-old marketing executive said it is cheap r for her to buy tickets to fly to milan and fly to paris and stay there and then buy handbag than play double that in china. to spend in china is so important. back in 2011, 30% of how much we are seeing chinese demand grow by luxury good. this year is 2%. >> coming up on the program, a new breed of music festival where fashionistas and foodies mix. that's after the break. ♪

>> welcome back to "the pulse" live from london on bloomberg television. school is almost back in session and the latest education technology is transforming the way we learn. our guest co-founded the ed tech company fire fly while he was still a student. today his products are used in more than 250 schools and he joins us now. welcome in. is it an internet for schools or is that part of what it does?

>> it is essentially a system, a learning platform that allows students, teachers and parents to create, share and learn. a teacher can go online and create his work or set of homework and feed straight through to the student's phone whether they are in school or from home. >> where are you seeing appetite for this? in the private sector in the u.k.? obviously they have more money to spend on it or perhaps they do. >> we started off with private schools in the u.k. but actually in the last year, 75% have come from the state sector. we have seen an massive increase for demand. >> what about internationally as well? >> it is a going part of our business. 10% of our bids currently. -- business currently. >> when schools want you to decide something for them, do they want something broadly the same or do they have a different

need depending on the school? >> we try to make it as flexible as possible. schools and teachers are very different and they have different challenges they face. we put a lot of work in the system making sure it is flexible. >> give me some example s of how it is used then. what is the best way that your technology is being used in schools to make sure that children have access to learning materials once they get home? >> just to give you a very personal example, we created the system when we were at school and we were two student who is saw the internet taking off. we could not get the information online. we wanted a place we could go to get access to that information as students and so we built something that made it much easier for teachers to do that that is what students and teachers are using it for today. >> you set this up along with your colleague, i think, your

school friend. while you were at school. you set it up with your friend at school then you put it to one side and went off and did another job and came back to it. >> we finished school. we want to university. studied different things. listening to our teaches. the business had been built up part time and got to a size where we could see real opportunity to take it forward full time. we have been doing that the last our years. >> what -- how fast are you growing now? >> we double every year the past four years. we're on trook more than double. we have over 250 schools using the platform. and over the last 18 monthses, we have grown outside the u.k. and into the international

market as well. >> technology changing way education takes place seems to be a big scene now. do you feel you are at the center of a big scene when you conversations with investors, for example, do they seem as if they are already onboard with what you're doing? >> definitely. what is fascinating about this area is it is really beginning to grow. if you look at a classroom today, it looks in many ways like a victorian classroom. it is an industry where technology has an opportunity to disrupts. >> is that a destabilizing sort for many schools? do they know where to go with this? >> i think so. with the failed technologies in the past, we have recognized they need help with making the changes. teachers need help. we have put a lot investment into helping schools. >> thank you very much for joining us. great story. founding partner of firefly.

from working hard to playing hard, there is a new breed of music festival weigh waves in the u.k.. food. th mud and dodgy caroline hyde packed up her at the present time and went top the wilderness festival. with chefs and plenty of civilized conversation. >> people that are willing to spend hard-earned cash on not only an amazing festival speernings and amazing music and facilities but also some topnotch grub as well. >> wilderness is not like any other music festival. it has been dubbed posh stock for the celebrity crowds it draws. this year prince harry and even bank of england governor mark carney. >> everyone participates

together. it can be someone famous with a lawyer mixed with, you know, an art student. >> willederness is capping an ever growing crowd of festival goers who favor posh over mosh pits. and they are willing to pay for the experience with tickets up to 160 pounds. a massage, 50 pounds. if you want a seat at the chef's table, 100 pounds. the pennsylvania festival attracted 30,000 people this summer. about twice as much as last year. >> a lot of the audience wanted to just wanted to move on and get much more into healthy living. >> this is a lucrative business but it is not without it hasards. >> today for example this morning the weather was beautiful and now it is kind of warm but not so beautiful. it is going to rain at some point. you know it is going to rain. that is part of going to festivals in england.

>> caroline hyde, bloomberg. >> caroline tells me gold trousers are essential. we will take a short break. coming up, will yellen disappoint? investors anxiously await the fed chief's speech later today. ♪

>> welcome back to "the pulse," everybody. let's check on the currency markets. his is euro $. jonathan ferro joins me onset because we're looking at what is ahead for the day. what to watch and the one thing that is to watch is janet yellen and mario draghi. actually draghi doesn't say much of any import at all because he is happy with what's happening on the currency front. we don't want to get in the way of that. > over the last five years janet yellen but bernanke before her, the role of being the fed chair, is the most powerful person in the united states. forget the president.

some might argue against that. the same in the eurozone. draghi has been more impactful than merkel. he came out and solved the european debt crisis by pushing yields so far down by that speech in london four years ago. these are two massive speeches today. here is the challenge. jackson hole and the fed may want to reduce it significantly. how does janet yellen go to the party? base case scenario, very dovish. what does draghi do? i think that is an interesting one. does he want to stop the euro from carrying? certainly not. at the same time he wants to put pressure on the french. they are the cusp of recession. these are two very important speeches and i think they will be really important as well. r >> they will be very well analyzed over the weekend and next week. thank you very much. that will do it for "the pulse." keep it here on bloomberg television. "surveillance" is up next from

new york with tom keene. you can follow me on twitter. i'm at annaedwardsnews. he is at jonathanferro tv. we will be here next week. see you then. ♪

he will speak, forcing them between the grand tee tons and a

hard place. the s&p drive show record high. and well, ferkt the bonus, used to wall street scream on compensation, it blinks. this is friday, august 22. let's get to a brief, can i do a surveillance correction? i said grabbed tetons, but it's grand tetons. >> you were sounding like you were from boston. >> i was sounding like an idiot from the east. cost hit the ng new low yesterday, have to deal with deflation. that's the issue over in europe. earnings here before the bell, got basically foot locker. no you're struggling. >>di