odintrg ucin pwifiwiro, fi hthatpsyow usur bs.ines u 'doe t eth dvery. ascomcbut t builbufor sssine welcome to "on the move." here is what we are both watching today. japan's government is set to announce the details of $273 million stimulus package. australia's central bank slashes rates to spur inflation and support the labor market. we are off to sydney for the latest.

wt eyedrops 22% from its june high. the economy stabilizes after running through $40. less than 30 minutes from the trading day. caroline, ticket away. caroline: -- take it away. play riskit is a down aversion. you will see we are down on the euro stoxx 50. we are lower on the dax as well. a significant drop in oil prices, concerns about the banks as well. shivers down the spines of investors yesterday. what about the potential for more nonperforming loans? japan, oil --out have a look at the aussie dollar heard -- aussie dollar.

stabilizing once again 10 the yen, money moving into the yen. get ¥7 trillion more in spending? are digging into that with our guests later today. the yield continuing to rise higher. have not seen much bond buying. still negative overall. it is all about oil. we are at the $40 mark. julie's: boilerplate is trading near $40 a barrel ahead of a weekly u.s. government stockpile do later. upsetting industry expectations.

hong kong stock exchange has canceled trading for the day. to shut. schools hundreds of people have sought refuge into very shelters. warren buffett has ripped into donald trump. speaking at an event where he hillaryaigning for clinton. he attack of the republican presidential nominee over a swipe he made at the heartbroken parents of a muslim war hero. how in the world can you parents to a couple of and talklost a son about sacrificing by building a bunch of buildings? buffett also challenged trump to release his

tax records. >> he can pick the place and i will bring my return and he can bring his return. believe me, no one is going to stop us from talking about what is on those returns. send the word to him if you will. juliette: the centers for disease control has warned people not to travel. pregnant women should take steps to prevent mosquito bites and the sexual spread of the virus. > that there is evidence of the potential for ongoing spread of zika. that is why we are taking the step of advising women not to take a trip to this area. this is bloomberg. much. thank you very toan's government is set

announce details of $273 billion tothis morning. the draft of the plan will include ¥13.5 trillion. let's get to our politics editor in japan. what to expect from this package? everybody talks about this $7 trillion, which is the money being spent in the economy. andy: the packaging cools -- includes [indiscernible] basically, it's been funneled into four different areas. once a help improve japan with its domestic situation. it has the largest aging

population in the world. a lot of my going into infrastructure. some money going to help companies, especially small companies to help mitigate risks from the brexit. few dig through the numbers a little bit, you will arethat the amount they going to spend this year will be 2.4 ¥6 trillion, which is about $45 billion that is the kind of boost we will get this year. we have a meeting coming up in followed by angs, press conference by the economy minister, at which we hope to find out a little bit more about what kind of concrete measures are in this plan. caroline: digging into the a foresighte us into the impact of the spending will be on the economy apparent

how much will actually drive growth, do you think? andy: good question. packages, which are pretty much an annual event in japan over the last decade or so, they have always helped boost the economy in the short term, pushing it out into a growth kind of period. .ut it is always short-lived ultimately, whether they are effective in any kind of long burst -- long-term bursts to seems to be rather unlikely according to the analysts we speak with. what people are looking for ,onger-term, this fiscal structural reforms that really make the economy more competitive and stand on its own two feet, while the short-term adrenaline shots, which this appears to be another one of.

manus: i don't think anybody could sum it up better than that. joining me now in the studio, it is julian chillingworth. 26 doses of stimulus, another one on the way. what makes anybody think this is going to deliver 2% inflation and robust growth in japan? julian: traveling will be better than the arriving. i think that what they government would hopefully be thinking about is bringing something more innovative into the package. but as your correspondent said, it doesn't look likely. this has been very well leaked leading up to the announcement. yes, there is a danger that the markets will be disappointed. they were disappointed on friday with the qa package. they could be disappointed again today with the fiscal package.

more important overall is the longer-term stimulus that they are try to inject into the equity markets through buying of atf's -- of etf's. you talk about the disappointment we have seen from the lack of quantitative easing perhaps being injected at the end of last week. the yields spiking higher on 10-year debt. we are continuing to see that market fallout. . yield is still in the negative territory. moves.cant once the market ramifications from all of this? are you anticipating another seachange move away from a terry policy and will we eventually get to the structural reform that seems to be needed? julian: as we just discussed, the monetary policy has been

falling short, particularly in japan. other methods are needed. and the fiscal stimulus being discussed at the moment do not look like the answer. longer-term, yes. a japanese of economy on the longer-term basis, we need to see some major structural reforms. know, it's all about consensusbuilding in japan and these things take a lot longer then investors have patience for in some occasions. consequently, i don't think is going to happen any time in the very near future. manus: take a look at this. this is the balance sheet. dollar-yen, going all the way back to 2011. helicopter money isn't going to get dollar-yen back to 1.25. do they need to shift the dial? what shifts the dial?

fromshifts the dollar-yen julian: from5 p.m. an equity perspective, it is very interesting. 25? 1.1i- julian: from a negative perspective, it is very interesting. we have seen money coming back that was placed outside of japan and obviously inflows. that in itself is going to support the [indiscernible] the yen has shrank offend, but it is not as strong as it has been in the worst of times.

caroline: i know you are looking optimistic at some opportunity in japan. up next, the big cuts down under. the rba slashes rates. we are live in sydney with the latest. plus, oil second quarter gain slip away as wti enters a bear market. we can england meeting, see the first rate cut in seven years. this is bloomberg. ♪

downine: we are going under now because the aussie dollar is up on the announcement of an interest rate cut. the country's central bank reduced the cash rate by a quarter of a point to a record low of 1.5%. michael heath joins us from sydney. today's decision was expected by most of the analysts we surveyed. but it was also expected to be a close call. what convinced of them to cut? michael: it was all about inflation at the end of the day. the data they came out last week was again week. but it had actually met the r.b.i. forecast for the second quarter. i guess, was whether it would be low enough to need another cut. in the end, it was too low. the basic problem with inflation

came out in the first quarter. it was surprisingly low. the central bank cut in may. one cut is not going to be enough to start to return towards the rba target. needs 50 basis points there. the currency, meanwhile, which might be the other thing to help with inflation, it is steady or even rising. interest rates are really the only lever that is available. in terms of are we the government side of the equation -- politically, stability, not really the first word to come in to mind. michael: it is the a position to assist, but no chance that it will. the accounting to determine whether who would have therety on parliament,

was a shock to the credit rating. anyone in office is terrified of being tagged as the party who lost the aaa credit rating. so the government is focused on deficit.y back the the chances of them spending money to support their economy and take pressure off of the rba between nine and absolutely none. this is a political imperative trying to save the aaa and not be the party that lost it. manus: nobody wants that my care. thank you very much, michael. moniker.s that -- nobody wants that moniker. thank you very much, michael. do you think we will see another significant rise of stimulus? the rba moving, what more do expect. where do you expect to the next round of cuts to come from.

i think that what might be interesting is whether or not the central bankers and the politicians are moving on to think perhaps outside of japan event that some form of fiscal required.ay be with. a new government in place with the u.k., that may be a theme running through cabinet meetings. increased infrastructure spending could be something quite interesting in this country. caroline: before we dig deep on the rank of england come i want to get back to the yossi. -- to the posse. it has claimed on the initial losses. the reaction to the interest rate moves have become smaller and smaller. we are higher on the aussie. dollar prior to the rate cut. is it not worse trying to play with fx anymore?

what do think they want to achieve by reducing rate cuts? can they inspire banks to lend that much more people to start spending? julian: as your correspondent said, i'm forcefully for the central bank, they've gotten the interest-rate lever to pull and not much else. it is evident the government is not going to step forward with any fiscal measures. they are quite limited. unfortunately, this rate cut was much discussed. it was i believe the final meeting for the chairman of the bank of australia, who was about to retire. i think this cut was expected. and currency markets reflected back that expectation. manus: i love the story we've got on the bloomberg terminal today. to spend as the world abyss.s free from the

. randy summers was right, wasn't he come in terms of stagnation and the policy response it needs to be. julian: it is not wrong to spend some money. obviously, some more fiscal stimulus could be interesting. manus: do you think this goes back to -- the debate we had in bali by a large number of financial -- people who are much smarter than i will ever be. real people never, ever, ever, feel the effective qe. pay rises in america, it is about a social bargain. if the social bargain is broken, you got a lot of problems. we won't talk much about brexit today, but you have to analyze why those people voted as they were. it was. with theaction government and they lost.

hopefully, other governments are listening as well. yes, i think more has to be done. you have to feel -- people have to feel that they are be -- site -- that they are seeing some impairment in their lifestyle. for lots of younger people as well, they are very concerned. i suspect they will not be better off than their parents. manus: it reflect back on what christine lagarde said in the most recent meeting. more needs to be done to tackle the inequality in the backlash against globalization. spend a few dollars, euros, or pounds. julian, stay with me. we are counting down until they market open. potential corporate movers, it has been a busy day for earnings. bmw and love tons of warning on lufthansa bmw and warning on margins. caroline hyde will take you through the stocks to watch.

caroline: you have six minutes until the market opens. some stocks for you to keep an eye on. bmw not the biggest anymore. daimler stole that position. w numbers up almost 8%. they are coming in line. sales of the suv exelon doing well. x1 doing well.

we saw sales fall to the tune of quarter,t falling by a all due to swings in foreign currency. lufthansap an eye on as well. you've got revenue down 4%. second fat -- second half, it is going to get tougher for lufthansa. hard takingto be capacity out of the system. pension liabilities, that is something to keep an eye on as well. 10.8 billion euros in terms of pension liability for the pilots who have already resigned. full-year capacity, caroline,

that is going to be taken out as well. a little bit of a softer opening. we are waiting for shinzo abe. we are waiting for the sun to shine. this is bloomberg. ♪ [hip hop beat]

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♪ to the couch where you at? ♪ ♪ show me the latest medal count♪ ♪xfinity's where it's at. ♪ welcome to it all. comcast nbcuniversal is proud to bring you coverage of the rio olympic games. manus: good morning. this is "on the move." caroline hyde is standing by in berlin. we are moments away from the start of the european trading day. caroline has the morning brief. caroline: we are waiting on abe. japan's government is set to announce the details of a stimulus package. down under. australia's central bank slashes rates to a record low. we are live in sydney with the latest. wti dropped 22% from a june high. the commodity stabilizes after falling to $40.

will the supply glut processed? -- will be supply glut persist? manus, we've got concerns still surrounding the banks. plenty of earnings to get into as well. as we entered the earnings open, futures are down .5%. get onto wei on bloomberg. we will see how the markets are acting. deutsche bank, to leave th 50.ar-old stoc euro stock .1%.uro stock 50, down by surprise, energy stocks are leading the losses.

we can see energy stocks, down .5%, followed by i.t. stocks, down by .2%. theoverall, all groups are moving lower. i want to take a look at the 10 year gilt yields, see how this is opening up. it looks like we are up nine basis points on this. it is looking like about nine on my screen. we are at almost 78 basis points on this 10 year yield. let's take a look at some of these stocks that we are watching. i wanted to start with travis perkins. we have been expecting this, to see if there was any impact from brexit. we did get some comments here. there is more uncertainty after the referendum, says the company. but got a cautious start,

he does plan to continue to invest in businesses. but it is too early to precisely predict the end market demand. we got the first half after operating profits as well, down 2.9%. then, bmw as well. i wanted to show you that because we saw a second quarter profit rise of 7.9% as sales of the suv have jumped. finally, i wanted to bring up metro. here, we have quarterly sales and profits missing estimates. manus? manus: thank you. let's bring julian chillingworth from rathbones into the conversation. we're waiting for these headlines to come out from abe. it is interesting that you got the ecb sitting somewhere in the

middle, not just geographically, but in a policy perspective as well. what drives europe higher? there is a risk of contagion from brexit. >> indeed there is. we continue to be quite concerned that there will be some contagion and that the ecb again, has limited levers. and from a german perspective, i don't think the germans are going to be too keen on too l oose a monetary policy from the ecb. consequently, we shall have to see. translateeal grind to out the italian baking situation and that is not fully sorted yet. many of these things will limit growth, as well as the market. caroline: it is interesting, when you're digging into mrr this morning, some of the biggest movers this morning. today, ubs also on the lower

side. still no desire to be getting into the banking industry. where does look interesting at the moment, from a value perspective in europe? farther industry groups you are looking at, or is it all about individual names? >> to a degree, it is about individual names. also, europe is becoming more regional, back to the old way, whenever started in this business. people looked at europe as a single country unit. northern europe continues to be attractive. we have good companies there in a number of industries, even in finance. consequently, i think people will look to those countries across the european frontiers that can deliver. and those economies that are doing somewhat better. consequently, i think it will be in areas such as, to a degree, industrials. those with strong franchise

exporters. we talked briefly about things like the brewers and things like that. that again, could be an area that could be interesting. said, certainas i financial institutions could look interesting in northern europe. manus: in terms of northern europe, we had a conversation yesterday about financial. but are you interested in the debt side of the conversation, or the yield? >> the yield is more interesting, but in this sort of environment, where we are in a period of low rates for longer, those companies that can yourate decent cash flows, will get a reasonable overall return in this low interest rate environment. caroline: julian, talk to me about mma? are there any bets you are

making in terms of the fx? we've just had a japanese a u.s. buying company today. where are you looking for mma at the moment? is it in fx? >> as an fx trader, i would say perhaps, medium-term, the u.k. looks interesting. you have to bear in mind, if you were a dollar or yen buyer coming into the u.k., unless you saw an exceptional opportunity, i would wait to see how the break the negotiations go personally. and this is going to be a long, drawn out series of negotiations. so, i think time might be on your side. you might see sterling weaken further as people worry about the uncertainty throughout the negotiations. likewise, in terms of the stronger dollar, you happy looking to see if you want to build your asian franchise out

-- you might be looking to see if you want to build your asian franchise out. everybody realize it is timing. opportunities will be modest for some time. in this slow growth environment, you want to pay the right price. that is important. not overpay, because you could then obviously, find yourself owning a very expensive asset that is not producing the return the shareholders expect. caroline: interesting that we have that mega deal going forward today. they hope to have the deal done by october 10. much more on mma and japan. julian chillingworth, staying with us. up next, we are talking oil. wti enters a bear market. then, countdown to super thursday. we look ahead to mark carney's post brexit plan. this is bloomberg.

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manus: welcome back. this is "on the move." let's get straight into those equity markets. we have the stoxx 600, down by 0.5%. we are waiting for shinzo abe to deliver his stimulus. if you dig a little bit deeper into the stoxx 600, commerzbank

is the most dominant. results misseder estimates, but without the fourth quarter revenue rising by 3%. that is a little bit of a shock for them. commerzbank, scrapping their four year target. profit missed margins under pressure. ba the upside, we have got b aviation up by 6.17%. but the dominant theme here is europe is taking a pause. we are waiting literally to see what the fiscal response will be from japan. that could set a roadmap for global equity markets. we now have your bloomberg first word news. reporter: manus, thank you. the hong kong stock exchange canceled trading for the day. and flights shut

were grounded. hundreds of people thought refuge in temporary shelters. warren buffett has ripped into donald trump, speaking at an event where he was campaigning for hillary clinton. he attacked the republican presidential nominee over a comment he made about the parents of a muslim-american war hero killed in iraq. >> donald trump and i have not sacrificed anything. how in the world can you stand up to a couple of parents who have lost a son and a talk about sacrificing? i ask donald trump, have you no sense of decency, sir? reporter: buffett also challenged trump to release his tax returns. >> he can take the place, any time. i will bring my returns and he can bring his returns. we are both under audit.

believe me, nobody is going to stop us from talking about those terms. send the word to him, if you will. reporter: the center for disease control has warned pregnant women not to travel to the so-called zika translation area in miami, florida. they also said pregnant women who live there should take steps to prevent mosquito bites and the sexual spread of the virus. >> this one investigation showed that in fact, there was evidence and is evidence of the potential for the on going spread of zika. womens why pregnant should not travel to this area. reporter: global news 24 hours a day, powered by 2600 journalists in more than 120 countries around the world. this is bloomberg. caroline? caroline: thank you very much indeed. let's talk oil now. oil is not treating your $40 a barrel this morning, ahead of weaker u.s. government stockpile

that a later. crude fell into a bear market yesterday over concerns that the global supply glut will persist. and exxon reporting earnings that were worse than what was expected. we have significant moves happening in the oil part of the equation. >> absolutely. we devour the data as they come in, don't we? this latest chart shows you how far oil has fallen. this is for context. what you are looking here is the wti price in the year. we have added three lines to this chart for you. three key moving averages that nymex has recorded. that includes your 50 day, 100 day, and 200 day moving average. we have marked this for you. that is your projection channel in red. the last time this happened was in november of last year.

and from then on, it slid all the way down to $26 a barrel by the end of january. as you said, we are looking for those signals to see what happens with oversupply. we have news coming out of iran that he decision on a new oil contract. in terms of what the format is going to look like and how that will apply to international oil companies. as they make those deals, that is expected on wednesday. a good push iran forward to their target of about $50 billion per year in investment and infrastructure. so, hopefully more supply down the road. manus: thank you very much. julian chillingworth, the cio of rathbones, joining us now. oil is back in a bear market. it has been difficult to sustain the momentum. there seems to be a shift in

thinking on oil at the moment. julian: yes, we saw inventories building in the states over the last month or so. those were not taken out during the dry season. that could have been a morning that we were in for a tougher time. some of nigeria's problems a result and we are, at the moment, not seeing much of a problem with supply. but as we know only too well, it is a finely balanced equation and it would not take much to supply sidese app again. but i think in all honesty, it will be very volatile over the next three months. caroline: we can see a pick up, echoing the falloff we can see in prices at the moment. now, it seems to be picking back up again.

it is unsettling, where the price is going. i want to bring you another chart because this is what is happening in terms of the share prices of the major oil producers. in the purple, you have got shell and then, bp. where are you implying that these stocks will go? is it time to buy? is this an opportunity, given below share prices we are seeing? >> if we deal with the rig count first, a lot of onshore activity up.he states has picked with the shale situation, it is easy to switch back supply. at this level, or slightly higher, it becomes quite attractive to do so. oil majors more generally, i think the oil industry, as we know, has been through a very difficult time.

there has been a fallback in obviously, cash flow. that has led to a number of the companies looking to restructure their balance sheets. and so consequently, this restructuring for all the majors will continue. they are all, one way or another, sellers for assets. obviously, prices, i suspect -- those assets will be quite low. manus: you've got the s&p 500 in the blue -- sorry, you got the s&p 500 in the blue, yup. when there is this divergence, we lost 40% of crude in july. we saw these kind of diversions divergences in the middle of 2015. when you have these divergences,

there is a 3% drop in the oil market afterwards. there is ultimately, going to be this big hole, this big vacuum, in terms of supply. does this relationship bear fruit for you? >> in the last year in particular, the oil and energy markets have moved closely, hand in hand. we his the good rallies out of most of the major equity markets -- we have seen good rallies out of most of the major equities after the brexit. caroline: julian, thank you very much. julian chillingworth, staying with us. up next, it is a big week for the bank of england. what measures will mark carney deliver on thursday to blunt the brexit blow? we discover next. we also await details on japan's

fiscal stimulus package. we will bring them to you as soon as they crossed the bloomberg. this is bloomberg. ♪

manus: welcome back. this is "on the move." one of the main events this week comes on super thursday. after living rates unchanged -- after leaving rates unchanged in

july, rate estimates could be revised lower due to uncertainty caused by brexit. traders are pricing in a 95% chance of a rate cut. julian chillingworth from rathbones is still with us. it is very unlike carney not to be ahead of the market. but he showed us his reflective side, i think. how reflective do you think he will be this thursday? >> i also said there would be a rate cut. so, we were both wrong. i think it is fair to say it always worries me when 95% of the economists think there is going to be a rate cut. but i think carney wanted to wait for further data. the pmi data we had out yesterday was not particularly good. we have had other surveys post bnrexit that have suggested the economy is a little bit more mixed. i would not be at all surprised to see the cut, but he might

wait another month. manus: hold that thought, let's bring you breaking news coming from japan. these are the headlines. japan's increased fiscal spending to revise the government gdp forecasts. they will spend 7.5 trillion yen to up the gdp by 1.3%. this is through 2017, spending 7.5 trillion yen. that is pre-much i in line -- that is pretty much in line with what the market forecasted they would do. increased fiscal spending, as i said. budget, to total 13.5 trillion yen. so, a total of fiscal and loans will come in at 13.5 trillion yen. 7.5 trillion yen of that will be

for spending. japan's economic package totals 28.1 trillion yen. that includes loans and cost. let's break it down for you again. strengthening, 102.07. the headline figure, 28 .1 trillion yen, pretty much in line. they are trying to up gdp by 1.3%. i guess on "countdown" was that you would need something four times that. >> as we were talking before, unfortunately, there is not enough of a wow factor here to get the markets excited. it is back in line from the headlines, at least. i suspect markets will be disappointed. terms therefore, of

where we go for playing japanese stocks -- i know this is something you have written about. appetite?ou see the completely in line when it comes to the fiscal spending. >> i think you can, dare i say, almost separate the japanese stock market from what the government is doing to a degree. you have had quite major corporate government reforms in japan. the companies generally are much more of a mindset to be shareholder friendly with increased dividends. you have got obviously, having said you can put the government to one side, you've got an etf buying program, which is supportive as well. you have got a lot of money in the next new year's, i think 9 trillion -- you got a lot of money in the next few years, i think 9 trillion yen, that will

be entering the market. manus: julian chillingworth, rathbones cio, thank yo ufo joininu for joining us. up next, we are live from japan to break down abe's stimulus package. this is bloomberg. ♪

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the move." it is a down day, a little bit of risk aversion creeping into the market. .5%.toxx 600, off by all eyes are still waiting on the fiscal news coming out of japan. let's get over to the individual movers, plenty from the earnings results. caroline, i am starting with one of the biggest gainers on the stoxx 600 this morning. it has risen the most since march, up 5.5% at the moment. we have some numbers, pretax numbers coming in. the company also said it is

well-prepared for the u.k.'s referendum on eu membership. on a bit of a positive spin eu membership. on the downside, we have metro and commerzbank, two of the worst performers on the stoxx 600. metro reported sales that missed profits. the german retailers planning to split into two companies next year. these numbers today, perhaps underlining the urgency of that plan. and if we look at commerzbank, that is down 5.5% at the moment. forecastrapped its target for this year, forecasting a drop in earnings, adding pressure on the ceo to lower costs further. caroline, manus? manus: nejra, thank you. let's check in on some of the

japanese assets. we are waiting for the official confirmation of any stimulus. i can tell you this. you have the dollar-yen appreciating ever so slightly. mr. yen told us yesterday, helicopter money is not going to help. up marginally. everybody is literally poised and waiting. we saw a little bit of a backlash in terms of the overall demand. jgb's hit levels we have not seen since april, in terms of yield. are we hitting the end of the road in terms of that drop in negative yield? withokyo bureau chief is us. he will fill us in, in terms of the official confirmation we are waiting for. the headline number is 28

trillion yen in terms of actual spending. is that going to be enough to move the dial here? reporter: no. i think 7.5 trillion yen will not be enough. the actual spending from the government, including loans, is expected to be 13.5 trillion yen. but, as you know, we expected to see the spending. half of that is expected to focus on infrastructure, which means the building of the high-speed rail and cruise ship ports. the actual spending will not happen immediately. for example, with the high-speed rail construction, that will not happen for another couple years. the spending that is going to be approved today is for a segment that will connect the final bits of the rail. we still have not been able to connect the initial bits.

the spending is likely to trickle in slowly, but again, is that going to be enough to change the overall economy? i would be very skeptical. thoughe: it seems as investors have been waiting and backing off from the bond market at the moment. the jgb sales are not doing as well as in previous rounds. yields are back up. what are the people on the ground talking about? are the frustrated with the government or monetary policy? who are they calling on to take some kind of action now? >> i think the market basically expected the boj to do more than what it delivered. but if you look back and think, what actually can the boj do, i think they did what they could at this stage. we know they will be reviewing the effectiveness of monetary

policy at the next meeting. at this moment, anything is possible. it is very hard to predict what the boj would do. it looks like the market has discounted further cuts to negative interest rates, for the purchase of jgb's. knowing the surprise element that kuroda favors, i would think it would be a little bit premature to assume it is completely off the cards. kazunori, our tokyo bureau chief, thank you. let's keep it on japan. joining us now on set is our deputy chief economist, sean miller. we are waiting on these official confirmations. and the size and scope, one of my guests said 7.5 trillion

yen does nothing to shift gdp by 1.3%. it will take something much bigger, but it does not sound like that is something abe will deliver. >> we are still waiting to see what the numbers are. theyou know, let's assume new spending is bigger and frontloaded. is it going to make a difference to the japanese economy? no. fiscal stimulus is not going to work for the same reason that the bank of japan's qe policies are not working, which is because there is a loss of confidence in abenomics. whether you are looking at household spending, credit growth, or savings, there are two messages. one is the economy is weakening. number two is, on the back of consumers and companies that are turning more cautious. what this means is the

government, even if they went from massive fiscal spending, they are going to find they are in the same dilemma as the bank of japan. expenditurent multiplier will be significantly weaker than what was anticipated. caroline: it is fascinating. in your notes, you bring up the huge debt load japan is driving up. we are currently at 241% of gdp. the debt load already, very high. at what point do we start to see this affect the asset desirability? will we see people move away from the yen, which is hitting session highs today, because they are no longer seen as a haven. >> eventually, yes. the bond market is correcting as

we speak, but not right now. their reality right now is, if anything, the bank of japan with its qe policy, judging by what we have seen in terms of growth on the monetary base, which has slowed significantly, it is rising by 20% compared to 30% a year ago, the bank of japan is running out of assets to buy. so, an issuance of more debt finance spending what help the bank of japan meet its commitment of purchasing $80 trillion in assets. think demand, i will stay high simply because there is a short supply. foreign investors, that is another matter. manus: there is one of those shocking statistics in your notes this morning. turn the first quarter, the debt

was running at 241% of the gdp. the japanese government bonds, that is. ctionve this optioau overnight in japan where we saw yields climb to the highest levels we have seen cents march. -- we had seen since march. is this because of a lack of confidence in abenomics? >> i would say say. the pick up in bond yields is reflecting the fact that investors are realizing that qe is not working, abenomics is not working. the bank of japan is running out of bonds to buy. at the moment, if you look at government securities in the bank of japan's asset base, it is 87% of the asset base on the balance sheets that are government bonds. since abe came to power in 2012,

the bank of japan's holdings of government securities has risen by 230%. so, you are reaching the limits. you can't forever keep purchasing $80 trillion, unless the government is going for more fiscal spending and issuing more bonds. this is what i mean. the government and bank of japan are working hand in glove. the people that are suffering are the japanese men and women on the street. they are getting killed with lower interest rate returns. and we have got higher taxes at some point to look forward to. and no wonder, they are turning cautious. that is what i mean by a lack of confidence in abenomics. sharmila, it has been wonderful having your point of view today. some breaking news coming out of japan. the chief cabinet secretary is speaking in japan at the moment.

there we have it. more demonstrations of the government working hand in hand with the bank of japan. the yen, extending the gains on on the yen6% coming up, we will discuss the impact of terrorism on tourism. lufthansa ticket sales are down for a second quarter. we will take a look at the numbers, next. this is bloomberg. ♪

caroline: welcome back to "on the move." 43 minutes into your trading day. cubicles watch on the oil stocks because we are beginning to see the -- keep a close watch on the oil stocks because we are beginning to see the wti weaken. we are seeing concerns about the glut continuing. nymex crude at $40 at the moment. keep watching also on what is breaking in japan. we understand the japanese economy minister is now talking in tokyo. we will bring you any headlines coming out of those discussions as to the breakdown of the fiscal spending we have set to come in japan. for now, let's get you up today with your bloomberg business flash. reporter: caroline, thank you. bmw second quarter profit rose 7.9%. carmakersy

earnings climbed to 2.7 3 billion euros, above the 2.67 billion euros expected. metro reported third-quarter sales that missed estimates. to 13.6 sales fall 2.7% billion euros. at the same time, earnings before taxes dropped by more than 50 million euros to 154 million euros. says earnings have depleted by 35% in the second quarter as record low interest rates eroded revenues. the second largest business recorded an operating profit of 203 million euros, which interpreted t contributed to a e

in the world. that is your bloomberg business flash. manus: thank you very much. just a couple of lines coming in from japan. they will not be doing wasteful public works, and this has been one of the great concerns. we were afraid it would be railway's to know where. so, this is the first of a number of lines coming through from japan. ishihara says they will not be wasteful on public works. more details to come as soon as we get them. we are tracking this all across the bloomberg. so, let's turn our attention now to the inter-continental hotels group. remainssolomons says he confident. >> in europe and turkey, we have had some really tragic incidents.

unfortunately, that is something we have had to deal with in our industry. but the reality is, people continue to travel. two of our greatest markets are the u.s. and china. we have seen an increase in profits and we have upped our dividend by 9%. so, i think having the balance of our business across brands and child of these really demonstrates -- brands and geographies really demonstrates our strength. caroline: the more we see these events taking place in europe, is it starting to linger longer in the consumer psyche? >> i think it is too early to say. paris is about 25% down. so, clearly, that has lingered, the regional businessin f france has been quite good. but in the medium to long-term, people will travel. and i think for a business like

ours, where we are so diverse, from a financial perspective, we can still continue to demonstrate a very resilient business model. now we are going to be returning to ryan chilcote. you will be breaking it down on the travel sector for us, ryan. give us your outlook on what we have been getting from the numbers. said thef lufthansa company is working on optimizing their investment plans. has this particular quarter felt the strain in terms of terrorism? ryan: let's kick it off with lufthansa. lufthansa is really dealing with the strain, in part because of terrorism. they cannot pay those pension liabilities. so, their attention deficit keeps increasing. at the big issue is the outlook and that is dampened by terrorism.

the bottom line is they make the most money from people flying from the united states and china to continental europe. and they are not going to places like france right now. ,o, in -- so lufthansa expects their profits to double in the second half of the year. this confirms what analysts already thought. this is the analyst rating for the lufthansa stock. if analysts think you should buy the stock, they give it a five. if they think you should sell it, they give it a one. when you get a rating as low as we have right now of 2.4, that is very negative. in fact, it is the worst rated that lufthansa has ever been. more than that, it is the worst rated stop in bloomberg's

world index out of 27 different companies. this is not great news. ceo says lufthansa's the company is looking at optimizing their investment plans. meanwhile, the stoxx 600 is down by 1%. bmw actually beat estimates this morning with a 7.9% gain in profits. for more, we are joined by the bloomberg cars reporter. give us the breakdown for vmw. it lost its lead in the global luxury market race, handing it over to mercedes. but they are still saying they want to remain number one in sales this year. can they achieved that? >> it is not really clear at this point. it is important to point out that they lost the lead during the first half. and they do -- they want to remain the leading luxury automaker this year. i guess, sometimes these

definitions can change a little bit as things go on. and they can certainly, as a company, emphasized how profitability is really the most important thing for them. this year at least, they don't really have any obvious blockbuster cars coming along. the next one that is up for renewal is the five series of the sedan, which is coming next year. caroline: we will be watching and how for the suv, they are manipulating, bringing out these new rangers. thank you very much indeed. we have got to get back to japan right now. we still have breaking headlines coming out. .6%yen, at session highs, stronger versus the u.s. dollar at the moment. clearly, the dollar is losing versus the japanese yen. we really are hitting these session highs with the japanese yen. at the moment, we are continuing to see ishihara talking to

reporters, saying it is important to quote rate with the boj. there you have it, the government working hand in hand with monetary policy. we will be talking more about this japanese news after the break. this is bloomberg. ♪

caroline: welcome back to "on the move." dax adneye on tehe

50.he euro stoxx getust over half an hour we u.k. instruction pmi data. in.e are earnings coming there is also personal income and spending numbers out from the united states. we are joined now from bloomberg first word strategist richard jones to dig into what is lying ahead. will we be getting a trickle through affect from japan? richard, what should we be focusing on? it is interesting, we should be getting that u.k. data. richard: i think the data is going to be pretty interesting today, caroline, because we had flash pmi's released on july 22 for manufacturing and services, that we did not have the

construction sub index included in that. so, today's data gives us the first look at the impact of brexit on construction pmi. i think that is something investors will be looking at. construction is probably not as important as manufacturing, and certainly, not as important as services, but because it is the first book, we will be looking at it quite closely. manus: this is a strengthening in yen. are they going to be able to turn the dial on that? richard: investors have been looking at this for the most of manus?ave a dayen't they, selling the fat. caroline: richard, it is always a joy having you on. what to look out for from the bank of japan and u.k. data, coming up. up next, we have got "the pulse. " to look at that u.k.

construction data we were just talking about. meanwhile, stocks trade lower today. and as we said, keep an eye on deutsche bank and credit suisse. the ftse 100, down .6%. this is bloomberg. ♪

>> all eyes on and they. we have -- all eyes on abe. could this time be the charm? cut down under. the australian central bank cut interest rates to the lowest ever. route? --al the only is fiscal the only route? crude reaching $57. ♪