guy: welcome to "on the move." we are counting you down to the european open. i am guy johnson. caroline hyde is out today. this is what we are watching. crude recovery. optimism permeates the market. .he negative rate debate another big week for the japanese yen. the boj scratches its head. and a week of strong data sends

the pound higher. so we are less than 30 minutes away from the european equity open. it is friday morning. let me tell you what bloomberg is pointing us to. let's show you the wti function. you that not all lot is going to happen this morning. we are looking at a fairly flat story. not much happening on the equity front. it has been an interesting week. a lot of down days followed by a positive session yesterday. let's show you exactly what is .appening i think what you can take away is the dollar is backing up a little bit. a little bit of a move on the ,pside for the dollar index which has suffered so much this week. that is a story we will spend a little bit of time talking about. dollar, oil, a combination of

what is happening in the commodity sector. iron ore, gas, wti trading higher. .e had wti trading up the dollar index is rising. let's get the bloomberg first word news with christine harvey. christine: thanks, guy. john williams says he is for hiking rates and doing it soon. he warned that waiting too long risks high inflation or asset bubbles that would cripple growth. he is viewed as an important thought leader on the fomc. introduces a measure to deal with extreme price swings on its stock market. on monday, the company will roll out a volatility control mechanism for its largest securities. it will restrict its stock moving more than 10% during a five-minute period.

the u.k. financial services industry has reportedly given up hope of universal access to the eu and stable market. the city is now seeking a bespoke deal to trade with europe with similar but stronger ties than switzerland. representatives from the industry will present their policies to theresa may next month. u.k. betting companies have abandoned their pursuit of william hill after it rejected --ir 3.1 billion pound did bid. under takeover rules, they cannot make a hostile bid for at least six months until someone else does. german chancellor angela merkel said she backs lifting russian sanctions if conditions are propelled. she said that unfortunately, she has not seen the implementation yet. her comments came during a state election campaign rally in

germany. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. back to theet subject of the week emma the rally we have seen in crude. the bulls are back. is enable market, headed for its biggest weekly jump since march. speculation that major producers will freeze output next month. joining us now, joe wallace and allen higgins. how much of this week is down to what has happened with the dollar and how much is down to expectations of what happened? >> i think more the latter. it has all been about the jawboning. everyone the oil market was how you, even if they get an agreement next month in algiers,

it makes not a lot of distance because they are producing at a record low anyway. on the other hand, look at the market. this is not a thinly-traded market right now. i know we are in summer and not much goes on. if you count on the volumes going through the breadth and the wti futures contracts, it has been $1 trillion worth of trading oil. guy: have the saudi's were never had to be the central bank of the crude market -- remembered how to be the central bank of the crude market? they are not trying to manage markets. they are trying to manage opec. >> i suspect that a couple of statements from the oil minister could get you into a bull market, but yes. i think the short-term, their focus is keeping opec together. languageut tone and and having more diplomatic stance.

does the oil price go higher from here? >> very tough market to get right short run. the way we look at as an investor, there is evidence of that. about talking a lot supply. what is a bit of a surprise is oil demand, even in china. .emand and commodities is weak they are longer-term. and encouraging. stuffs the chinese popping up or are they actually using it? >> a little bit of both. there is a lot going into that. going, wetly it is

are constantly trying to find out. demand throughout this crisis has been taking up slightly. it is not off the charts. it is not accelerating. but it really has been a supply story. people forget there is demand. you can see it in the physical flows. some not a fraction of analysts mind. why did products appear to have a collapse? with thek what happens wellhead and the refined stuff. >> a lot has to do with grade. defending -- depending on the grade of crude oil, it tends to produce more. the consequence of that, you end up with a huge supply. particularly when crude oil goes into a refinery complex. you end up with a glut of products. most of the time, it will make its way across the atlantic.

that can go either way. there are many things we tracked . what exactly is going across the atlantic? what is that telling us about supply of individual crude grades? maybe i am going about this the wrong way and this is the chicken and the egg. can i read that oil has gone up and up and economic growth is doing all right and it is better than maybe the headline numbers are coming out? >> i think that is one way of looking at it. that would be in line with employment data globally. indiarkets like china and are increasing. there are specific factors that you need to look at when you look at oil. i think you are onto something. the global economy is in reasonable shape. , theu look at post brexit eurozone remained pretty

resilient. when you look at the data, that is not where the strong demand for oil is. but i think that is good analysis. guy: just to wrap things up, when i looked further out, does the market single -- signal that we have plateaued or that we keep grinding up? nobody is telling me we are headed back to 100 oil. >> that does not seem likely. broadly speaking, most of the market is thinking about $40-$60. $40 is where the pain gets unbearable and you end up with severe economic problems. $60 is where a lot of the shale starts to be potentially profitable. i think we have seen that in a downside. the rate count just keeps

coming back week after week. >> if you pull the graph back a couple of years, it is still down. guy: it was a pleasure. thank you very much indeed. stewart wallace is going to stay with us. is there a turnaround in wholesale prices? is it a sign of things to come? we will show you ppi charts. i think they are interesting. we will discuss whether they are. yen on a run. we will discuss why kuroda cannot make negative interest rate policy worked like druggie -- draghi. this is bloomberg. ♪

guy: 7:43 in london. .:43 p.m. in new york city jonathan ferro is my colleagues , probablyted states just waking up and brushing his teeth. let's talk about what is happening around the world. here is the bloomberg business flash. here is christine harvey. ceo will: viacom's

step down and leave the company on september 13, according to people with knowledge of the matter. they said the company board has approved an agreement after a month-long legal dispute between he and sumner redstone. chief operating officer todd dooley will serve as interim ceo and could take the role permanently. islionaire paul tudor jones demanding that his managers take more risk in their pets according to an investor letter obtained by bloomberg. it also says the legendary macro trader has boosted the amount of money he is managing to more than 50% of his main hedge fund's net assets. the moves are scheduled to shake up the business, which cut 15% of its staff this week. a spokesman declined to comment. inle has hit a roadblock making major changes that would connect its watch to cellular networks and make it less dependent on the iphone

according to people with knowledge of the matter. the tech giant still plans to announce new watch models this autumn. u.k. betting companies have abandoned their pursuit of william hill after it rejected their 3.1 billion pound bid. under u.k. takeover rules, they for ate a hostile bid least six months until someone else does. that is your bloomberg business flash. guy: thank you very much. ppi data out of germany shows a decline of 2% on the year. but bear with me. the is an improvement on may figure and slightly better than anticipated. are we starting to see a recovery in wholesale prices around the world? is this a commodity related story, a currency related story? let me run you through what is happening here. we will see whether something is

significant and worth paying attention to. the german number is at the top. that is the white line. starting to pick up at a less elevated level than we have seen before. this is china and one that got me interested a few days back. the u.k. currency story and the united states, which is not doing very much at the moment. , is this thes early stages of an inflationary impulse or is this simply commodity prices being on the rise and currencies have been slowly going down? higgins.ng in allen what do you think it is? is this something to get excited about? >> could be. early days. yesterday, we had nestling -- we nestle's results

in may. we have a long way to go. encouraging. the currency is only done a couple of 10. so commodities, yes. there is no real sign of it for the corporate sector. an we havee may see seen a lot of evidence of this, is that companies absorb any price pressure they are seeing. therefore, it does not hit consumer prices. do you think that is what we are likely to see? a margin strong enough would be able to do that. people think the only way of increasing earnings per share is increasing your prices. guy: not many companies have pricing power. >> there is inflation in the system, it makes real assets like equities attractive.

early days, good to highlight it. unfortunately, too much evidence in the corporate sector that there is no ability to have pricing power. guy: you look at five-year breakeven's in the united states, it is going to be broadly on target, around 2%. it is not as if there is a big market pricing move your. given that, the ppi is not likely to significantly decrease. do you think bonds are priced correctly? no inflation in the system. we will wait for janet yellen and what she says next week at jackson hole. are you think the bull market has it right? >> not really. it is extent -- expensive. remember when japan first went with the euro terms of rates and bond yields? we look back 10, 15 years on.

low 1% income stream. over the next 10 years, rates at zero. maybe the message in the market is that, in europe, rates have been zero for such a long time that even these pathetic small income streams, sometimes negative, are worth it. the u.s. seems to be further ahead of the game in terms of the economic cycle. you will see a rate hike in the u.s. december seems likely. yellen is in charge and she is cautious. yields, it at bond is 1% and that is quite rare. moment, do i take a look at the function which analyzes what is happening in the market and spits out a number of where the market thinks the probability of a rate

hike is? it seems like that number needs to be 70%, 80%, 90%. what is it going to take for that to happen? what will it take to get the market there? why would the fed raise when there is no inflation? wobble,rkets take it they tend to step back data indicates the employment market looks very robust. the underlying data underneath that looks robust. it will build a case, i think. provided that we do not have significant market models, i think we will see that probability increase. guy: what do we have coming up from -- for you?

we are minutes away from the market we will look at potential movers. .eep an eye on easyjet it could potentially be a takeover target. giant could beg splitting its business into different directions. the market opens, nine minutes away. this is bloomberg. ♪

guy: welcome back.

minutes away from the market open. let's talk about some stocks that will be on the move one is easyjet. the story in the u.k. papers, this low-cost carrier could potentially be a takeout target. up to bidy teaming for the business. the stock is higher this morning. toust want to bring in alan this conversation and talk about what is happening. we saw the hit because of brexit. it has changed the yield story surrounding this stock. why would this deal makes sense? >> just looking at the financials. let's say you can take it out higher. of course, you take it private and you save on the dividend yield. debt is so cheap today.

i think debt would be 4%. it almost finances itself. imagine the smart investment bankers are saying, look, because of the debt market and what this stock yields, it almost finances itself. i can see reasons why private equity would get excited about this from a finance point of view. again, stories doing the rounds in the paper saying that it will split itself up. people are looking to find value in companies. they are struggling on the top line and the bottom line. they are looking at the financing business, splitting them up. and any discount has got to be an obvious target. >> exactly. there are still very smart people inll-paid corporate finance m&a teams

looking at these kind of scenarios. where can we derive some value? and debt comes into it, the fact that it is so cheap. guy: the market open is next. this is bloomberg. ♪

guy: good morning and welcome. i'm guy johnson in bloomberg's european headquarters. we are no moments away from the start of european trading. here's your morning brief. crude recovery. es away 20% of its recent lows. but will the bowls be burnt again? as we cap another big week for the japanese yen, the boj scratches its head. corona make it work? and a week of strong data sends the pound higher. is there more to run? our guest says yes; consensus is no. we're expecting a fairly flat

market open this friday morning, but there are some interesting stories knocking around. we are expecting the market open to be 1/10 of 1%. keep an eye on a few. let's take it to the market open and show you what's happening as we see the market makers wake up, scratch their heads, figure out what's going on. rising, just in and out of positive and negative territory. the ftse is negative. we are expecting a flat open. gilt is opening as well. let's find out all the things we need to know with elliott gotkine. elliott: as you were suggesting, a flat direction. overall we are pretty much lower. it hasn't been a great week for the stoxx 600, down about 3% of the week. that has been about corporate

news earnings we have had in a number of companies. this is the picture. on the whole, slightly negative, but as you say, we are about that across europe. the u.k. is trading at this, the chart this week on the 10 year bonds. gilt is pretty much flat as well. giltield on the 10 year has been rising this week as investors have been looking to sell their bonds to the bank of england. it's a 60 billion pound program. t's ever so slightly higher at .33%. some of the stocks you alluded the world's largest shipping line. newspapers are saying they are looking at splitting themselves and two, to transport and energy. one of the most important

comments is that it's evaluating its option. moving on to other companies, we are also looking at the oil companies because oil cap back in a market although that is not necessarily being reflected in share prices. pretty much flat in royal dutch. and finally, taking a look at easyjet, talk in "the daily telegraph" that potentially the due to team up with their captive. august,t forget, it's some people are looking at things to write. perhaps we should take that one with a pinch of salt. but the market is giving a little bit of credence. guy: thanks. let's get allen's take on easyjet. the market is a little short, 5% short. stocks are up over the last

couple days, just try of 2%. is that the silly season? is their credibility to this? how much of a market read does this give me? >> if we were running a hedge fund that we put on some quick shorts after brexit, easyjet would have been a clear one, and the story would make us nervous enough to cover. yeah. i mean, if i saw the story that they were teaming up with some big private equity firms rather than an aircraft leasing company i might take it more seriously. i haven't read the "telegraph" you don't want to get called out. there is not enough of a mood yet. it's on the silly side. guy: ftse is absolutely flat. let's turn to another u.k.

asset, sterling. the contrarian call the morning. in case you haven't been paying attention, the pound is under a little pressure, slashed after a certain vote on june 23. it was a trading around 1.31. medium forecasts have it around 1.27. you think maybe the british pound looks to go a little higher from here. this week has favored your view. >> a little bit. if you like to be contrarian. if you look post brexit, commercial property has come back a long way. the funds have reopened or marks higher and sterling remains pretty depressed, especially against the euro and begin. when we look at real effective exchange rates, we see value in

sterling. when you look at the big mac index, you can see value in .terling the current account is a bit overplayed in our mind and it's all about capital flows. post brexit capital flows are relatively encouraging, whether you're talking about arden group or we have seen a little bit from the u.s.. our basic strategy is getting it right in the short run. we do run on sterling portfolios, and that is taking profits, whether that pem local debt, u.s. financials, sterling has had good return. for anybody out there who wants to play around on the bloomberg, you can find the big market index. go to the purchasing power option over here, and there you

go. there is the british pound. interestingly enough, japanese yen is the most undervalued, but inflation in japan is incredibly low. when you look at what market positioning on the pound -- it is so extreme, somewhat argue. the market is so short, you can if it were to, pop, wouldn't pop significantly higher? and -- but we expecting a bumpy ride, or will it just be a grind? >> i think you are right. i did mention the short interest on easyjet, big short interest on sterling. that reflects mainly hedge fund cta's. and today they are forced to be mathematically short, because when the trend changes, they go short sterling.

should sterling start to trend up, they will go long. we like the fact that there are so many short sterling. i never learned about that function. this is a new function. very good. that's a positive factor in short run. but we are bound to have a bumpy ride as we go through these brexit negotiations. there could be a few shocks along the way. but the longer-term investment our strategy is, we look to build up sterling position. for us, from the sterling basis profit -- in a year, it will look better. guy: can ftse underperform as a result of that? >> good point. the ftse 100 has had tremendous support from the weakness in sterling, clearly. for us, we are staying with the ftse primarily because of the scenario -- you have to start

questioning that, and interestingly, month to date, 250 has started to have problems -- there are signs of it coming back. -- asut it is interesting i read based this into dollars, the dax is plus 3%, ftse -1.88. there are peculiarities in both of those markets, and the ftse came back in dollar terms quite nicely, in some ways but nevertheless it is an income stream derived not in sterling, which changes the bottom line. >> if our scenario plays out, and we are talking probably over a year, then sterling has quite a significant rebound, and ftse is almost mathematically less attractive.

some of those dividend payments are directed dollar payers, for example. guy: stay with us. up next, we will break down the biggest market news. the yen tops 100 versus the dollar. we will go to mumbai, as well, as we await a decision on who will be the new r.b.i. governor. we are expecting the decision on who will replace him later on. still to come, privatization on the part of africa's biggest company. we will speak to the nation's richest man. we even get his take on brexit. this is bloomberg. ♪

guy: welcome back, you are watching "on the move." let's talk about the movers of the market. interesting stuff going on. a couple of things worth paying attention to. you would have thought that william hill below, because the people who are potentially buying it were walking away. however the company is out this morning raising guidance,. the stock is up nicely, full-year profit at the top and the range, which has taken it to the top of the 600 on mrr. back, up byeased only 9/10 of 1% at the moment. maersk is a story we are watching closely, up 7/10 of 1%. let's run you through what else you need to know with the first word news. christine: thanks. the san francisco fed president

john williams says he is for hiking rakes, too. he warns that waiting too long could cripple growth. although williams doesn't vote on policy this year, he is viewed as an important thought leader on the excellency. -- on the fomc. oil is set for its biggest weekly gain in march as it holds a study in a bull market. wti and brent have advanced more than 20% from an early august low. regulation is growing that major producers may act to freeze output. and the uk's financial services industry has reportedly given up hope of a universal access to the eu single market. according to the financial times, the city is now seeking a deal with different sectors to trade with europe, with similar but stronger ties. the paper says representatives from the industry will present their ideas to prime minister theresa may next month. /fail

global news, 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. this is bloomberg. guy? guy: it certainly is, thank you. a busy week for the market, among the most important moves of the week with the yen crossing the $100 mark. this study was published yesterday on negative interest rates in europe versus japan, concluding that european data is positive enough to suggest that rates are having a stimulative effect. but there is little evidence of the same story over in japan. tohave made a little chart run us through what is going on, and like corona is old cross right now. basically, it's a tale of two nerps. we like the title, but we aren't sure why. what you saw were negative rates work for both of these for a while. it works for mario, worked for kuroda, and we saw and we flipped dollar-yen. we saw euro-dollar, and

yen-dollar both moving in a negative direction. divergence saw a starting in february. the euro stay fairly flat. the yen went up like a rocket. why? what's going to happen next, and what conclusions can we draw from all of this? let's get back to alan. what's going on here? >> don't ask me the hard ones. january, that was clearly risk off. in the risk off environment you tend to see yen strength. we looked at the index and the yen has some value, contrary to what people think. it just goes to show that interest-rate differentials are not the only game when it comes to currencies. money fromto earn trading interest-rate differentials, you are

absolutely swamped by these moves. the lack of capital flows from japan is a real answer. from here, who knows? dollar-sterling, is easier than dollar-yet. guy: what's interesting is that the flow data suggest money has been flowing out of japan really aggressively, but the financial markets have been the prime reason why this has happened. this is in some ways of financial market story for the japanese. and financial markets -- have they concluded that actually, it ain't working? the doj has run out of ammunition, the boj is done. we have in japan finally reached the limits of monetary policy? >> yes, you do see raw flow, but dollar-bondsas hedged, it is way too risky.

there have been less flows than you might think. we have gotten to see the softbank arm flow going on. just low inflation is so embedded in japan, and so long-lasting. it is very different. guy: is the market signaling that druggie -- draghi -- they're improving, their beginning to look better. has he actually managed to deal with the problem of this deflationary spiral in a way that the japanese never managed to do, and therefore it became embedded? >> three years ago in jackson hole, when they first mentioned what we talk about all year, five-year falls. in the first fell below 2%, he was quite forward thinking. whereas in japan many years ago they weren't looking at that. i think there is some evidence that you are right, but mario has been ahead of the curve

and focusing on building deflation pressures. it's only recently after multiple years that japan has become aggressive. guy: thank you very much. up next, who will replace the r.b.i.? an announcement could come as soon as today. we live in mumbai. this is bloomberg. ♪

guy: welcome back. you are watching "on the move,"

20 minutes into the trading session in europe. let's talk about with happening in emerging markets. alan, the cio is still with us. you like yen trade. >> we do like it structurally, both the labonte perspective, one of the few areas where you can get a decent yield, and despite concerns the credit quality and debt levels are generally lower. and from an equity perspective, especially in the larger companies, there's a very good value in them. rates in the u.s. are going up modestly. guy: this is the portfolio effect in some way. you were buying assets he would normally own, and that comes with a risk story that gets attached to it. >> e.m. equity is -- guy: this is relating back to our previous conversation, with

negative rates, half the world debt now in negative territory. it .2 in the direction of a yet debt. and you know that comes with more risk, and that is the question you are asking yourself. you're comfortable with the risk. >> more so in dollars and hard currency, especially from the sterling base. the windfall gains it had in em local, sterling, brazilian rail. the double whammy is sterling coming down, currencies going up. a double positive rather than a double whammy. story is probably a big part of it priced in, but in dollars, if you are looking for a source of income, it is still the place to go in our view. guy: south africa, brazil, russia, big markets.

russia markets currency going up. similar stories around the world. you don't have to dig very deep to be concerned about some of the issues. was about some of them were oversold, and therefore writing the tail, or is it actually the negative policy or the fundamentals? may be there is actually a story here, that they have to take a more pragmatic, pro market view of the world? talking local investors, we typically by active funds and we do get involved in the dollar market and that is more where we are in terms of direct investments. we have directly bought russian dollar bonds, post the issues we had in the ukraine, they proved to be spectacular investments. generally the fed will support

it, but giving investing from , the returns have been spectacular and local em funds are up more than 30%. i think it is time to take profits on that. guy: let's talk about india. the rally in indian bonds is something we are watching carefully, but at the heart of this is what's happening with the r.b.i. when are we going to get a replacement and he was a going to be? we are joined now from him by. umbai.m mo when we finally going to find out who it is? >> you will get it as soon as i did. we have been waiting for the next couple weeks. we know that the governor is going to be stepping down from office in september. a bunch of names being thrown around, leaving the list is rajeet patel.

he has significant experience in the central bank. we have another who has his hands dirty in monetary policymaking. the other names, the chief economic advisor, the vice-chairman at india's leading policymaking bodies, the chief economist at world bank. -- have a bunch of names india's largest bank is also the now, there isht no clarity on the front runner is, but the markets anticipate the name to be announced by the market as early as today. guy: quite a long meeting taking place to make a decision. they are making it clear that they are in charge. yes, and the new governor has

a couple challenges. one is inflation. they see a sudden spike to over and india is also moving toward inflation targets and a new monetary policy will be set up. the new governing charge will have to operate in this environment. the second one -- new delhi will be extremely important. guy: great stuff, thank you. waiting for it to happen. let's wrap things up, 26 minutes into the session. we will be continuing the conversation on bloomberg radio, our guest will be joining manus cranny and mark barton. we will get into the issues in more depth. coming up, we will get back to that oil story, oil now back in

bull market, speculation really driving the story. we will carry on the conversation. this is bloomberg. ♪

guy: will come back. 30 minutes of the trading day, let's see how things are shaping up. as a picture of market at the moment. we knew we were going to be kind of flat, probably not as negative as we have priced in. the dax is seve down. softer this morning. yesterday was a little bit of a bounce. let's get the stock stories behind the move, elliott gotkine has the details overall,a down market but i want to highlight one of the standouts, william hill. theye yesterday's close, got a potential offer and a

threw in the towel and trying to buy it, but they also said that it has had a pretty decent bump in the second half, and operating profits will be on the high-end of estimate. it is the highest gainer on the stoxx 600. oil,econd-highest is dutch a company which is saying it has revenue declining in the first half with the same period a year earlier, and that cash flow is lower. the biggest decline are, aegon. shares down on the 6%. the company has got a dividend and shares are lower by almost 6%. guy: the payout is affecting aegon. would you walk away from $8 million? a former deutsche bank risk

officer is refusing a reward from the fec, which would be in recognition of him blowing the whistle on the lender for overvaluing derivatives. but in turning down the money, he says the regulator should have gone to senior executives in the case rather than putting shareholders on. we're joined on set with the details. what message is he trying to communicate? is he being dogmatic or pragmatic in terms of changing something? >> well, it is unlikely that something can change at this point, but he is clearly a very principled individual. he says he was looking out for shareholders all along, and that the sec should have gone after the invectives involved rather than making shareholders pay up, presumably who were the aggrieved party to begin with. the bank was in stating its financials correctly. guy: is no money going to be

paid, or is some money going to be paid? . [laughter] that is yet to be seen. we are going on a column he wrote, so i'm sure there are some details. ex-wife having some claim -- guy: they are not completely off the hook. >> rate. -- right. the overall reward, there are potentially other whistleblowers sec may stillhe have to pay up something in this program, which was started a few years ago to encourage this was a blowing, paying out a percentage of the reward. is this the profile of the kind of person who would low the ris whistle? >> well, he saw this as his responsibility to make sure things are done appropriately, and he thought that they were not.

certainly, a very principled individual. he wants things by the book, and this is a very complicated situation. you are valuing not just the derivatives but the risk payback so it was notives black and white. guy: has anything changed? >> yeah. deutsche bank had to pay the fine last year. a number of seen cases over the last year -- has the way the business operates changed? i am looking at silver lining for him. >> i think it has. there are more controls in place , but also these types of trades are far less common now they were in 2007 you just don't have the size of the derivatives books he had back then, this becomes less of an issue based on how the business has changed

more broadly. guy: great stuff. michael moore, on the whistleblower story. let's shift gears and talk oil. holding afterare entering a bull market. it was a very short bear market on speculation that we could have a production freeze. saudis started talking about the possibility of a production freeze. we are little softer today, the brent contract down by around half of 1%, 48.19. maybe you are entering an area where oil continues. our next guest says he can see the freeze happening. he is a senior equity research analyst, great to see you. what have you made the recent moves we have seen? >> you referenced the potential

for an agreement coming out of the meeting n.l. cheers. -- in algiers. there was speculation in the oil markets proceeding that and i think we are seeing something here. anything, the margin is telling us it should be lower. guy:s the saudi are managing the market. >> they are very effective central bankers. guy: haidi when you see a short like that, you only have to get a few words out in the market moves. >> absolutely. guy: because for a while, they weren't able to manage the market. wire they able to do it now? >> the big difference is that the fundamental imbalance in the market is much smaller than it was in 2014-2015. the fundamentals are overwhelmingly bearish, and the commentary is not nearly as negative. guy: ok. you would be short on the market again. >> in the near term i would be.

it brings us back to refining margins being weak. that means demand for crude oil is going to be down the next couple months. as we look at the fourth quarter in 2017, i am more bullish, because i think the market is coming to balance at that point. >> people talk about the production freeze -- i am scratching my head. it's a production freeze but at incredibly elevated levels. it will begin in august. does that help the market at all? i would expect the saudis to reduce production, simply because their own seasonal demand for air conditioning goes down. guy: that's part and parcel for what we are seeing. how the politics play out in all of this. are we at the point where the saudis and arabians are looking for something? >> there is still a lot of

acrimony there but what's encouraging is that iran is now producing a level that is similar to before sanctions in place. they are both producing about as much as they are comfortable producing. guy: when you look at the contract table, it shows you the market coming up, leveling off. is that the kind of area -- >> i think it will be significantly higher. the futures curve is more of a risk management tool. oilink the price of crude is going to be much more driven by declining, non-opec production, continued increases in demand, and essentially the market will recognize the fact that there is no spare capacity. it is probably going to be mid 2017. i think that sets the

stage. guy: so the bigger hughes recap go significantly higher. >> i think it will. i think it will take a $60 price -- guy: but you see is going north of that. are we just going full circle? are we going to be basically putting them back into that -- >> i think the market needs growth in u.s. production to balance. it doesn't need the level of growth we saw in 2013 or 2014. guy: we get back to balance, where do we go from there? i relate it back to the economics. you look at where inflation is, they are telling me that inflation is that target here. very little inflation expected. relate that back to the oil story for me. >> what we have seen in the oil market is significant deflation. in terms of cost.

that has had the deflationary effect on the price of oil. but i think the oil market is not pricing a level that will encourage investment. that will be necessary to bring in supply. guy: i am trying to understand where we go, in the medium-term. where does that and? are we going back to -- when i look back at the charts and i look back to where we are, those 100 still look like an anomaly? >> i think it looks like an anomaly, but not by three or four standard deviations like it does today. i think the oil market can balance somewhere around $75-80 five dollars over the long-term. i think we have simply been three period of relatively low

demand growth at the same time that u.s. production was growing at an elevated rate. price,are in a $75 oil that is the happy medium where the u.s. can grow. guy: thank you very much. we willp on the show, talk about the brexit effect on u.k. property. we will talk about the outlook for house prices. this is bloomberg. ♪

guy: welcome back. let's talk about property, u jour.a subject did yo the data shows the appointment of a new prime minister have provided the housing market with some reassurance in recent weeks. we will get some details from the head of the u.k. residential research. good morning. >> good morning. guy: let's exclude the brexit data and the month that surrounded it. has anything changed significantly? >> if we take out from our sentiment index, with such a drop in net brexit month, we are seeing some recovery. but actually from before brexit to where we are now, there has been a noticeable drop in how confident people are feeling. guy: the month on month data is

probably less useful, but a lot of time frame -- >> we're still only two months in. months be a couple more before we can really make a year on year comparison. guy: in terms of what you guys are anticipating, what are you seeing? >> what we are seeing is continuing, but there are many factors in different parts of the market which are having an impact. in london, central london, the market is still absorbing the changes that have taken place in the past couple years. in the urban, regional markets, you have strongholds by macro imbalances the between supply and demand for housing. we haven't gotten of housing, not enough new homes. guy: so -- given the supply demand story, and yes, there

have been tax changes, and maybe we need to absorb that -- but the market tends to take a shock, move on, rebalance, and the trend tends to resume. nothing has changed in your mind that seems to suggest that the bigger picture, the longer-term trend has changed? >> the underlying trend of supply/demand imbalance is still there. there are still low mortgage ises, but what we don't have economic clarity of where we are going in the next year or two. once we know what we will do with the eu, that will become clearer. i think it will be september or october before we get a clear picture, because at the moment we are in the summer market, which is quite cyclical and seasonal. if there is anything the government could do, should do,

there are changes coming through, seeing tax changes, there is no anticipation it gets unwound. >> not that we see. that we do see a stratified market. some properties are very top of the market. down throughter the rest of the property market. purchases instrong the market -- anybody who wants to buy a home -- guy: sure, but in terms of cash disproportionally -- there's a bigger mix of foreign buyers within that strata. >> the london area and particular has always been attracted to the global marketplace, but in the last two years we have seen the rise and return of domestic buyers. i have afraid it has had another one. guy: ok. when we think about what's going

to happen a little bit further forward, how much is dependent on the city? we had a story in the financial times talking about how u.k. banks will not get access to the single market. that will only encourage senior bank executives. how are you factoring in those trends? >> it is something we do regularly. we look at everything that could have an impact on the markets, london, and that is something we are monitoring. the chancellor has been strong in saying he wants to get access to the city. it's a bit of a totemic thing. if it is still confidence, if the city can be reassured it would have access to the eu -- guy: anecdotally, as you walk around the offices in london and elsewhere, what are you hearing? what are your negotiators

feeding back into what you are getting? >> in london, we are seeing the brexit magnifying the trends we talked about before. there's a little bit of renegotiation. what we are also seeing is a drop in demand, that that is being matched by a drop in supply. everyone is choosing to wait and see, see what happened september or october. you have that in balance of remaining because you have a drop in supply and demand and they are matching each other. guy: great to see you. the head of u.k. residential research. for more on the brexit fallout, stay with bloomberg. we will have the weekly show of "brexit: what's next?" today, we will speak to the ceo of heathrow. up next, a bloomberg exclusive. south africa's richest man. he weighs in on the brexit felt and what it means for business. this is bloomberg.

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guy: welcome back. you are watching "on the move." south africa's richest man says the brexit vote was a mistake. with a net worth of $7.7 billion, he says he is ho impressed with how the government pulled itself together. britain's town and

spoke exclusively about politics and global influence. >> there are lots of things that everybody should be concerned about. the obvious one being this apparent split of terrorism, obvioustalism, the disillusionment by the electorate in some of the developed companies, the so-called political elite, those are worrying factors. you see what has happened in the u.k., the possibility that there may be a president trump in the united states, all the problems that europe is experiencing. compared to us we have our difficulties,, with which i would much rather deal, then with some of the others. i happen to be in the u.k. a week or two after brexit, and what was very impressive was how

short a space of time the brits managed to steady the ship. new prime minister, new ministers with apparently excellent credentials, and making the right noises. the ship is sailing. we are looking at common knowledge, at acquisitions in the pacific areas. backed, equally new as operations not only in the u.k. but in france, in germany, and in china. -- point i want to make there is no anti-south african or african bias. in fact, the very opposite. we as a group are committed to south africa. we are afro optimists. we believe that this country and

in fact the continent both have a great future. but it is africa you have to get into with, and you have to understand that it is american and not a splint. guy: the chairman of steinhoff international, speaking exclusively to bloomberg. we're joined from johannesburg. we don'tis is the guy know a lot about. give us a lot of history. he is a south african, a lawyer by training. south africa's richest man, the second richest on the continent. basically he has built his business is and his career on retail, but specifically at the lower or affordable end of the market. companies is the

largest food retailer in africa. another big success of his, discount household goods, he was than $5old for more billion, and that transaction made him the largest a name with which we are becoming increasingly familiar. guy: great start, great interview, great to get him on our air. thank you. stay with bloomberg television. up next, it is "the pulse." today it is brexit day. we will be speaking to john holland came, joining us from heathrow. the ceo of heathrow airport. infrastructure investment is a big subject.

ferro ande story; jon i will be on bloomberg radio. wrapping up what has been an incredible week. this is bloomberg. ♪

francine: oil advances from august lows. keeping his mojo, billionaire trader paul tudor jones wants to make riskier bets as he faces his worst performance since 2008. and, buying british for now. the pound rallies on u.k. retail sales and job market resilience. well the good news out last summer weather? we speak to heathrow's ceo. welcome to "the pulse" live from bloomberg's european