♪ patiently, gradually, cautiously, the feds robert kaplan speaks to bloomberg in jackson hole ahead of janet yellen's speech at the symposium. japanese consumer prices fall for the fifth straight month, as pressure mounts on boj governor kuroda. accelerating costs, volkswagen will pay dealerships $1.2 billion for losses causu by diesel cheating scandal. ♪ a very warm welcome to the

program everybody. this is countdown. i am anna edwards. let us start with what is happening in u.s. interest rate markets. what expectations there are around the fed and around janet yellen's speech at jackson hole today in wyoming. i will pull, the work function of working at the probability of a rate hike factored into markets, the probability for september, 21 september, 32%. that is the probability of a rate hike, increasing to 57% on december both of those numbers have been creeping up, if you go we actually saw the doubling of the chances of september hike. they had been moving slowly back, suggesting that increasingly investors are factoring in the possibility at least of a rate hike in september. let us get the risk radar, waiting for janet yellen's speech and wyoming, 3 p.m.

london time. this is very are on various asset classes, msci asian-pacific down to percents of 1%. nearly two-week low. the dollar against the yen fairly flat, yen fluctuating in the wake of that japanese inflation data, coming in lower than expected, fifth month of decline. wyoming, andis in he will no doubt have a lot to talk about in terms of where his policy goes next to try and stop the decline in these inflation numbers. the dollar index down 1/10 of 1%, but it is headed for a weekly gain against the yen. increasingly as i said, factoring in increasing chances of a rate hike in september or by the end of this year, even if they are not forecast conclusion yet. 47.3, reflect on the barrel of crude. speculation we might get an .utput freeze at opec

talks next month that speculation continuing and markets, stopping the price from falling much further perhaps. certainly we are seeing downward pressure in the downward trading day. let us in the bloomberg first word news. here is shery ahn. shery: anna, thank you. consumer prices have fallen for a fifth straight month in japan, underscoring the central bank struggle at 2% target. food,excluding french fell by half a percent. now, this is the last reading and the key measure before boj and consider a possible policy revamp next month. russian president vladimir putin has ordered drills after german chancellor angela merkel accused him of breaking international law and ukraine, and she says nato will defend member states against attack. these daysand france try to progress in settlement of

treaty, but the situation in the security of ukraine worsened in the summer. every day, people lose their lives on the contact lines, especially the ukrainian soldiers. you can imagine that in this situation, it is politically very different to lift sanctions, of course we are working on that. we spoke with the russian and with the ukrainian president. we are in touch and i hope we will be able to present some progress in the european council. the son of a russian lawmaker has been convicted of orchestrating a global hacking bonanza, and what a u.s. prosecutor called one of the most prolific schemes and history. roman was found guilty by a seattle federal jury of stealing consumer private numbers from hundreds of retail businesses and online, hunted by the u.s. secret service for more than a decade before he fled arrest in the maldives.

volkswagens agreement to pay auto dealerships for losses skatingy the diesel she will cost about $1.2 billion, according to a person familiar with the matter. that will raise the vw settlement to resolve those lawsuits by regulators to $16.5 billion. meanwhile, the carmaker is still facing possible criminal news 24 hours a day powered by more than 2600 journalists and analysts and more than 120 countries, you can find more stories on the bloomberg at top . i am shery ahn. this is bloomberg. anna: let us stay in hong kong, talking to juliette sally about the trading day. we have been waiting for janet yellen all week, at least a week. the market noted for the day. down on the msci asian-pacific. anna, we are, seeing downward pressure mainly

due to the pressure we are seeing in japan, as you were saying at the top of the show we did see more deflationary pressure coming through in the japanese economy. cpi fresh food falling below estimates, down 1.5%. meandering during friday's trade, and we are seeing down trading with one hour left the government australia off by 131% and new zealand has closed lower by half of 1%. if you look at the shanghai composite, it is trading higher today. there is the collision that could be more curve into the property market that we have been talking about all week, and also activity in the financial market. but over the course the weekly shanghai composite has not done very well, down by about 7/10 of 1%. that will be the worst weekly decline in around five weeks. keepsay it will short-term liquidity ample and it's a liquidity at the moment is certainly at the right amount for the markets. we are seeing some good signs in

hong kong today, up 6/10 of 1%. i do want to show you some of the individual movements, the export trading business in hong kong has followed quite sharply, down by 4%. it is the worst performer on the hang seng. the trading volume has more than tripled in the stock is very much trading at the low value at the moment, compared that to da iry, the relative strength index currently above 17, suggesting overbought signals there. center, withight positive numbers today. up by 3.3%, saying they expect further profit growth coming through in 2017 as well. this is what i was talking about, that drop on the shanghai composite. not the best week for anna: juliette, thank you. there were some talks about whether we would see further action by regulators into china

around financial markets. we will see. thank you very much. fed policymakers have been making the case for rate hike ahead of janet yellen's speak at jackson hole. esther george repeated her view ugher rays are warranted. and robert kaplan told us the outlook for a hike is centering, but the fed it should move carefully. meanwhile, bloomberg columnist and former minneapolis fed president said he thinks janet yellen should change your message. >> we said rates should be raised patiently and gradually and cautiously. part of what i am thinking is the impact on the dollar, potentially destabilizing the effect on the rest of the world. it doesn't mean we should not raise rates when the time comes, but it should be patient and gradually, passionately patient

and gradual. >> i hope that chair janet yellen walks away from his time-based forecasts we hear time and again about the risk in 2016, how many in 2017, this is not a healthy way to mitigate monetary policy. anna: now, to end for our interviews from jackson hole symposium in wyoming. fed, officials including james dennis, robert kaplan, lockhart also on the agenda. annual here from jerome powell. simon french, chief economist at panmure gordon joins us. i wonder if we are all gearing up for working ourselves into two must expectations. i read a statement from bank of america zynga jackson hole has been a big market mover only 2010 when ben in bernanke said a lot about quantitative easing. what are you expecting? will we get any big signals?

if this would be the much more academic event? simon: certainly, we got the agenda overnight, real focused on those negative interest rates. this morning, new monetary framework trying to look at whether the widespread use of inflation targets will go forward. but i think you are right. that the only real market moving elements of the whole day will be janet yellen's speech. the problem she has is the communication of what is very clearly a very divided fmoc. and you have a very hawkish statement, we knew that. and those comments from stanley fischer last weekend, but then much more cautious messages, recent history from the chair herself, but also robert kaplan, and that is for traders in a situation you cannot really know where janet yellen will sit. i think she will look to focus on the labor market, the degree

to which she can get wage inflation in her model over the next year to anna: 18 months. anna:a does seem to be the hawkish view coming in the most loudly. certainly last week and left we can come as result the work function on the bloomberg showing increasing chances, even though it is not anywhere near 50% of a rate hike in september, doubling those months and just a few weeks. we have a 32% probability of a rate hike in september. how does that fit with your expectation? simon: i don't think it will move this year. anna: not a november either? simon: i think we are looking at a september come november, december rate because the metrics, they are over elevated risks of moving too quickly. nothing outgrows in the u.s. against the backdrop of leasing banks across the world. i think the increased rhetoric from the hawkish members is the principally for reasons of

financial stability. this has been a more difficult to calculate. this clearly is a buildup to low,on hole, the legacy of negative interest rates is being assessed at the academic level at the symposium. and that is bringing in sharp focus and comments from fmoc members. whether they will be on the wrong side of history, when we judge in the years to come with the legacy has been in terms of maybeor behavior, the building up right now. anna: we quite recently talked about the risk that low interest rate environment poses, pushing people into riskier assets. how much do you think that is , thatinto patientce interest rates should not be as low academic leave because of the risk taking impulse the back and then generate? simon: there is a shadow looming over jackson hole, and that is alan greenspan.

as much for his management of the u.s. economy, the world economy, in the lead up to the financial crisis. subsequently, judging that period of monetary policy being currente, and the cohort of fmoc members do not what to be in the same position in the years to come, but when push comes to shove i think it will be those labor market indicators that will win out for meaning they will sit on their hands the rest of the year. anna: meanwhile, treasury markets, i like this graph, the benchmark 10-year note is a small since june. we saw in june a big spike in that rate because of the rather unexpected brexit vote. but with janet yellen's speech, going down to level we normally see on u.s. market holiday, on the one hand there is a lot of expectation, on the other hand you do the sense that a lot of people are just waiting to see

what janet yellen have to say today. simon: and even if we do get the big move, i would caution that we still have a fed's data-dependent.and we have the august jobs report that could derail any hawkish settlement from janet yellen. cast doubt into the sustainability of what has been a very strong job market, absent a single month data, which just put them off a may increase. and what you would expect is that the treasury moving today, it would remain highly sensitive, all the way through to the 21st of september. anna: in terms of the signals today and the very near term move, they have stephen england on the fx side, survey expectations around the jackson hole, what the market is pricing in as a dovish-signal. and this week he will telling me it is really important to detailed all what any of the fed officials are saying about the very short term, with what

they're saying about the very medium term. even if you're getting high signals, the short-term you might have a fairly dovish conversation about where rates will get to in the u.s. anna: and i think that is what has been driving dollar action last month, down 3%. those hawkish comments just now have not really moved the markets, and a really moved treasury markets.there is an element of the hawkish members of the fmoc the boy that cried wolf, these fairytales. and actually, the market no longer believes them and continues to do all the way up to 2018. disentangling the messages that come out of jackson hole, the long-term legacy versus the short-term trajectory of the fund rate will be the key element. anna: simon french, stays with us on the program. here are some of the economic data due out later today. it is a big day for

fourth-quarter gdp. france at 7:45 u.k. time. the u.k. and our and three quarters later. and we get u.s. growth numbers. still to come on the program, brexit breakup. german chancellor angela merkel says they need to work hard to overcome the shock of britain's vote early. and from jackson hole we get dallas president, robert kaplan negative rate experiment. any thoughts online payments. this is bloomberg. ♪

welcome back. 6:19 in london. 1:19 in hong kong. half a percent, outperforming the asian equity session today. let us get the bloomberg

business flash. here shery ahn. shery: anna, thank you. agreement to pay 652 u.s. auto dealerships for losses caused by diesel cheating scandals will cost about $1.2 billion, according to a person familiar with the matter. that will raise the settlement to resolve u.s. lawsuits, including those by car owners and regulators to $16.5 billion. meanwhile, the carmaker is still facing investor claims and possible criminal charges. posting second-quarter earnings that missed analyst estimates, as the pay-tv unit continues to lose money in france. the media company led by billionaires saw adjusted net income fall 3.1% to $187 million. vivendi says it also plans to cut costs by 300 million euros. position in st.

jude medical, denouncing the security of the cardiac devices, in an effort that could be railing against purchase in the laboratory. the renowned short seller spoke to bloomberg about the move. >> this appears to be a company that for years has put profits before patients, when it comes to cyber security. and we think it is important a, to make sure that users are notified of the risk, b, the them publicly accountable. we think there is a very good chance that it is about to lose close to half of its revenue for a period that could be two years or longer due to device recalls. lost: uber is said to have at least one point two $7 billion in the first half of this year. according to people familiar with the matter, uebr reveal the

loss on a conference call with shareholders. driver subsidies are said to be the reasons for the majority of losses. uber has lost at least $4 billion in its seven-year history. toshiba says it is being sued for $120 million in damages by japan's trustee services bank over an accounting scandal. the company says it will book a provision in addition to the case, but the amount is undecided upon disclosure of any impact on forecast. and that is your bloomberg business flash. anna: shery ahn, thank you. angela merkel says the european union needs to work hard to overcome the shock of britain's vote to leave. in chancellor is serving, preparation for a summit of 27 eu leaders in bratislava next month, where prime minister theresa may will not attend. speaking in estonia, she said that britain needs to decide

what it wants of the bloc. angela: as long as britain has not submitted an application, as we have previous play said, we cannot answer the question of what kind of relationship we envision with great britain. and i think we have enough to do amongst us 27, dealing with questions about the future so that we can allow britain the time it wants to take to figure out what relationship it once with eu. anna: simon french, chief economist at panmure gordon still with us. we get a revised gdp figure for the last quarter, a bit awkward looking, 0.6% from april to june, broadly before the brexit though. o.6% is the expectation, that number will be confirmed. but the consumer story, how well it holds up is going to be key? simon: that is right because it has been unsecured borrowing,

retail sales that have really been driving the u.k. economy, boosting as they have been by falling energy costs and the historic strength, clearly those things have started to go in reverse of the referendum. you are right to look at this as a backward looking measure, beating the referendum. but we do get in the second release is the investment data. and actually, when you look at the material impacts of the referendum what that does to the business investment and sentiment going forward will be very material in three numbers, starting to provide a flavor of the kind of outcome for the u.k. economy, once it actually triggers article 50. let us not forget. we are not there yet. it is not brexit stage right now. and until that timetable gets laid out, actually we are really not testing the hypothesis of the damage. anna: not brexit. simon: nice. anna: a bit of a tongue twister.

help me understand the question, how does a slowdown in the u.k. economy take place? are businesses in the driving seat if they stop hiring? that is one thing. if they start firing, that is another. whatnsumers stop spending, is going to be the thing that triggers the real slow down? at the moment, the data is not bad. but a lot of economists are saying wait, we need to see more of it. simon: what we see in terms of business is being a shrugging off of the referendum result, and actually hurrying plans, while planning back little bit, this is not saying investment decisions have changed, because by most copulations we are looking at 2019 before we get a material change to the trading arrangement. in that timetable, if we get article 50 triggered around 2017 and that two-year period, and actually most medium trade and

horizons, in terms of what then drives that i think it is the clarity, next year, and if that timetable shifts you see a real clarity of migration arrangements, the access to free market, that we currently don't have. that will then drive materials. anna: where we might see decision-making, just putting things on hold. a lot of the sentiment data, that really moving into the european, as well. we have a german iphone number yesterday. german companies waking up to brexit. simon: shock factor of the result, but actual material output data has not really moved as people anticipated, continua trading as usual. panmuremon french, gordon stays on the program. up next, japan's consumer prices

fell and a faster rate last month than expected. we look at what governor kuroda might do next. he is in jackson hole with a great deal of the central banking world as they gather for that symposium. we will see what kind of pressure he might come under there. this is bloomberg. ♪

anna: welcome back. this is countdown. a live shot of tokyo. 6:30 in london. a new edition of daybreak is now available on your bloomberg and your mobile. on that function go. let us take a look at the top stories of made this cover. no surprising, featuring janet yellen and jackson hole, eagerly anticipated this afternoon at the economic symposium at wyoming. taking center stage later on as with our colleagues push for another u.s. rate hike, what we have been hearing the left, weeks or so. at godin some of the interviews we have been doing in bloomberg west 24 hours from jackson hole,

itself. the next story is volkswagen's latest charge in the fallout from the cheating scandal. the carmaker has agreed to pay about $1.2 billion to 652 u.s. dealerships, according to a person familiar with the matter. putting the total settlement in the country to $16.5 billion. is that the end of the story?perhaps not. daybreak focusing on the acquisition of assets and the sought after shale formation, interesting they're going after those assets. wti at 47.27. asian stocks declined as the dollar pared against janet yellen, that may or may not shed light on the interest rate outlook. nejra joins with the details. good morning. nejra: we are seeing a bit of a weakness in the asian session at the moment. msci asia-pacific index down 4/10 of 1%, falling as you say

to a two-week low. japanese stocks leading the losses. we have been seeing some gains in china. of course out of the van we had that core consumer price number dropping to 0.5%, dropping a year earlier. that was more of a drop than expected. 'sally highlighting the boj challenge. looking at dollar-yen, yen looking at a decline on the dollar for the first time in a month or so. i can show you, i have taken this over five days of all that d10 currencies can you see the yen down almost 3/10 of 1% against the dollar so far on the week. sterling has almost a 1% weekly game, the first performer of the g 10 currency. and we had that second-quarter gdp number coming later. now, looking at the dollar, of course very much in focus ahead of janet yellen's speech later today. we are heading for a modest weekly game. the white line, that is the

dollar. a little bit of, down for a second day. perhaps after we had a federal reserve bank of dallas president robert kaplan saying that u.s. interest rates should only be increased gradually because of the currency impact on the rest of the world. this after hawkish comments from beneficial. interestingly, gold headed for a weekly loss. actually trading near a one-month low, thereabout. this is where we are seeing the concern about a rate rise reflected. if you look at the bloomberg you're seeing a 57% chance of a rate hike by december. and the chance of september has risen to 1 in 3. finally, i want to show you treasury, because we haven't talking about volatility coming but and the stocks etc. this is the bank of america gauge, accepted price swing in treasury, called the mood index.

going for a second weekly increase actually, popping at the end of a rising over the past four days or so. rebounding from an august level that was at the lowest since 2014. so, a little bit of treasury volatility coming in ahead of janet yellen the anna: thank you very much. for as and japan fell sixth straight month. jodi schneider in tokyo joins us. jodi, what to expect from the boj, the last set of data they will get before the 21st of september. jodi: that is right. given that the data was weak, there's more pressure on the boj to take action . we saw the core consumer prices, food,exclude preswe fresh we also saw overall prices fall. so again, this underscores this weakness. and the data, we have not seen

in themove since -- three years since governor kuroda took office -- we have not seen a change since where they were a year ago, even with the unprecedented easing the bank of japan has done. so, serious pressure. anna: there is pressure. he will be in jackson hole. and a lot of conversation about the low interest rates, the merit of negative interest rates around the world. what are economists saying about the outlook of inflation in japan? jodi: most do not expect we will see price gains, at least not in 2016. at least not while the yen is a strong as it has been this year. so, they are also not seeing the driver of inflation, really not seeing the reason for consumers to spend, and wages have been stagnant, so consumers are hanging on and really not spending. some say maybe next year we will see some games again, but

nothing in the near term is expected. anna: jodi schneider, our economy editor in tokyo. the worldrs around gather in jackson hole, wyoming for the economic symposium. dallasrg scopg spoke to president robert kaplan, whether it is working for japan. robert: negative rates might buy them time, that they might on margin help ease what they are doing. they are not a substitute for structural reforms, anti-japanese officials are painfully aware though structural reforms are not easy. how to increase the workforce, you know, user increase fertility or increase immigration, these are all very difficult things to do, and they lack the structural reasons, they try to get more women into the workforce. but i don't think monetary policy is going to address the key issues they face. they are going to have to ultimately come to grips with other policies to address these issues. anna: simon french of pamnure

gordon is the with us. i don't know if governor kuroda arrived by helicopter, but the pictures would have been up impressive. we have a chart that underlines that inflation challenge, japanese cpi, excluding fresh food, we saw that spike that was only. because of the sales tax simon: nowhere near that 2% target. and we have the headline data, price has declined, but you also look at the leading indicators in terms of core inflation, that fell back. core inflation has been a new story for governor kuroda, because core inflation excluding energy seems to have some echo of that sales tax increase factored in. but even that was quite poor in today's data. but also the tokyo data, which is a month ahead, that also declined. a run-up of bad news. the question of course is whether that leaves governor kuroda anywhere distance from

where he was yesterday, with a lot of pressure on him to move down the continuum towards helicopter money. and i think helicopter money sometimes is an unhelpful title for what it is, just a more direct way of providing monetary stimulus to households. they have gone through the financial system. that has not worked. they have gone through the corporate system, buying corporate debt. that is not working. there are legal barriers of course, and most, restrictions and clearly japan doing the right thing going to households, but that is just the continuum of direct monetary -- putting monetary stimulus into the veins of the japanese economy. i don't think monetary policy actually moves that much further in japan, down the continuum, it is absolute a legal change. driven by abe. anna: governor kuroda has said helicopter money is not in the cards because there are legal issues there. are you somebody who thinks that

helicopter money will be materially more successful in japan, than the negative interest rate policy has been? looking at the measure of the yen, on that measure you can say negative interest rates have not delivered b what the wanted. simon: helicopter money will put it straight in the hands of household. anna: when they say that or spend it? simon: see4 the economic environment is the backup to that. the backdrop is would have to be material to that, but one of the problems is of course that japan, despite being an enormous economy, is a price maker in a lot of markets and pretty much every world economy. and therefore, the most powerful thing that they could influence the decision would be external factors driving inflation higher, a change in policy from the federal reserve for more the actions ofs,

others are for more material to governor kuroda then the actions within the japanese economy. anna: i had a conversation yesterday were some suggested, as much as we talk about the challenges governor kuroda and abe face, the japanese economic situation, it seems in some people's views things would have to be a lot worse for something as radical sounding even if it is on the continuum for it to be introduced. things are as a battery to go down this route. simon: looking at the employment metrics, and actually things are not justify a change in the legal structure to deliver helicopter money. the issue will be the credibility of financial policymakers for what may be, and that is why robert kaplan is absolutely spot on. that helicopter money, anything on the monetary field by the time, but that time is rapidly running out. anna: you have to use it well.

just quickly, simon, one other chart to show you. this is shadow rates, working out what generally is happening to the yield curve, this analysis come from the bank of new zealand, talking about the relative success or failure of releasingd ecb, yield. this chart makes a point of the japanese have not been as successful as the eurozone and driving down the cost of yield. is that something they could work on, tweaking the way they do negative interest rates to make them work better for them? simon: well, they could do it in terms of broadening the aspect class, expending the purchasing term.but that chart , the white line has been moved since the end of 2012, while the rest of the world, with the exception of the u.s., all on a journey. and also, even though the fed

has been sitting tight, treasury going down, dollar starting to roll over. the economic environment internationally it is moving against the pound. anna: we will see what we hear about negative interest rates, helicopter money at the wyoming symposium. simon, thank you for spending your time. net income,posted falling 3.1% to 187 million euros. let's get more on this from inomberg reporter caroline paris. how have changes in pay-tv affected the company? very difficult times for pay-tv businesses and groups. they have been losing as many as 300,000 subscribers in the last six months. the operating process should be less this year, as much as 400 million euros. the germans have been aggressively trying, and we

learned last night that they will cut nearly 300 million 2018 to try and make the number. it very difficult time ahead for canal who have been trying to resist the approach. overturning the group, changing presenters, cutting programs, changing management, and in fact a lot of the presenters are very popular programs, and they have decided to move to different channels. and with this new cost-cutting, we can expect more difficult times ahead for canal group. anna: you said they have been aggressive on cost, some have found it to be aggressive on strategy regarding m&a. looking at the ongoing battle between the vivendi and the italian company owned by that family, any updates there?

had new data, we last night. just to give you a recap on what happened the last time, the vendee may this offer to take full control of the pay-tv business. june, they decided to pull out of that offer. decidedly only wanted to buy 20% of the company. now they have filed legal actions against vivendi, seeking as much as 570 million euros in damages. we learned last night that the first few weeks of this legal action should not take place before february of next year, but time is running out. premium expires at the end of september. anna: caroline, thank you. a reporter in paris. let us move on. the son of the russian lawmaker has been convicted of orchestrating what a u.s. prosecutor calls one of the most prolific credit card trafficking schemes in history.

roman was found guilty of amassing consumer credit numbers from hundreds of retail businesses worldwide and selling the data on the internet. let us get more on the story from ryan chilcote. good morning to you. credit card crime sounds petty, but this was on a big scale. ryan: $159 million, with the prosecutor said the losses totaled it when they got in the maldives and 2014, they said his computer had credit card information for 1.7 million credit cards. overall, they said he had access to 2.9 million. in what they said he was doing was effectively putting malware on the point of sale systems at retail operations, usually pizza joints to be exact. and he would sell those on carting sites, where you can , gain credit card information using in some cases the nickname tupac. he got away with it.

it was a 10-year investigation going all the way back to when he was 23 and 2007. anna: until he made the mistake of going to the maldives. we're a lot these days about russia's government involvement in the connectivity. a state-sponsored connection, is that we are talking about? ryan: it is that appear to be. that was not one of the allegations made by the prosecutors, despite the fact he is the son of a prominent russian lawmaker, no one actually said that. we are seeing a lot of this. we heard allegations from democrats, the people inside the democratic national committee that there were russian hackers or hackers tied to the russian government behind the recent hack. the new york times has come out over the last week to say they were hacked, as well. this is to say to the fbi and investigators in the u.s. are paying attention. they say that russia was due meddle in u.s. affairs.

this is massive. just yesterday, apple updated its operating system, ios because it was being hacked. nso growth, the cyber firm out of israel, which is able to export three different vulnerabilities with your operating system.and basically , track everything you do on your iphone. definitely updated. this is something that is becoming, though it sounds fantastic, rather ubiquitous and commonplace. anna: we will talk about ge malto. ryan chilcote joining us on that story. coming up on the program, brexit breakup. merkelchancellor angela says the need to work hard to overcome the shockof britain's vote to leave. and if policymakers gather in jackson hole,, we will bring around up on what is ahead for

interest rate. and as mentioned, we talk about online payments in an exclusive conversation with the ceo of security firm gemalto. this is bloomberg. ♪

anna: welcome back. this is countdown. 6:51 in london. the future suggesting a flat open as we wait for janet yellen to speak in jackson hole, wyoming. the msci asia-pacific has been deteriorating. now down by 4/10 of 1%. angela merkel so the european union needs to work hard to overcome the shock of britain's votes to leave the eu. the german chancellor is currently touring europe, in preparation for a summit of 27 eu leaders in bratislava on the month. theresa may will not attend. speaking in estonia, angela merkel says that britain needs to decide what ties it once with

the bloc. chancellor merkel: as long as britain has not presented an exact location, we cannot determine what kind of relationship we envision with great britain. and i think we have enough to do amongst us 27, dealing with questions about the future so that we can allow britain the time it wants to take to figure out what relationship it once with eu. anna: meanwhile, revised second-quarter gdp is released to 9:30 take time. luminary figures released last month, which at the time the expectations. u.k. gdp growth surprised, rising for the april to june period. this was in the run-up to the unexpected vote to leave the eu of course let's not forget that. ,going us now is edmund shing, bnp paribas.

the unexpected vote to leave the european union, this data we are going to get today on the u.k. gdp story is backward looking. you shrugged at me. you don't care? not up-to-date enough for you? simon: exactly. interestingly, when you do look at the data for july, even looking at the retail sales survey from august, things are looking pretty good. and if you look at the economic surprise index, virtually, many a year which is interesting. because it told you that actually you can consumers seem to be shrugging off brexit, at least for the moment. anna: i had a conversation the last hour about chicken, egg, really manifesting itself in the economy. we have a lot from the commercial real estate sector about slowdowns, but we hear things are on cause rather than getting a lot worse. that seems to be what they're saying. in the conversation i had last hour was last year, when we

start to get more details, maybe when brexit looks like, that is when businesses are no longer causing, when they make decisions. that could trigger more weakness for the u.k. edmund: i think that is right. we want to look at that. that is going to be key. does that is going to be the consumer. if companies decide early next year that when they read the tea leaves of the brexit negotiation, if they decide is time to leave the u.k. they're going to pull jobs, investments out and you are going to see a much greater impact than the of seen so far. anna: simon french described as a pre-brexit, not actually brexit. like a phony brexit. edmund: that is right because we still have absolutely no idea of how it will proceed. we don't have any idea if and when will be triggered, we don't know when. we do know that we have negotiators in place, but they need to start negotiations with the eu. anna: edmund, let me show you

this chart here at the top. the correlation is the lowest in more than a year. the brexit factor, the pound no doubt in here, are your strategies around eurozone economic stocks, pound economic stocks, have the diverse drastically? edmund: welcome to some extent they have. it mayook at the u.k., be interesting to say this is not even the best representation. when i look at the 5250, the mid-cap stocks, more aligned, when we look there we can see a very direct effect from the outperformance of the economy in the short term and the outperformance of the 5250. the 5250 post brexit vote lagged, but actually it has come roaring back last few weeks, actually overtaking the upside. and if anything, that is what i find interesting.

sorry, the second thing i was going to say, europe is interesting. the banking sector. and in the eurozone, it is gives on going and down and down. there is no risk on the gloom in the eurozone. in, the u.k., to be like lloyd's virgin money, standard chartered performing very well. that is one of the big differences in the correlation between the two. questions post brexit. tempting?s low, but edmund: i mean them attempting only in the sense that you have negative yields, and you can pretty much get them in positive yield territory. but i struggle. obviously, we had a few weeks but it is not very big. and that is clearly a support, but are we going to get mixed details, probably not. inflation is going to rear its head. anna: and mark carney seems to

have ruled out negative interest rate. from bnp paribas stays with us. arguing the case for a rate hike ahead of janet yellen's speech later. we look closer at who thinks it is time to move. this is bloomberg. ♪

anna: patiently, gradually and cautiously. robert kaplan makes his case for a rate hike, speaking to bloomberg in jackson hole ahead of janet yellen's speech. the struggle to spare inflation. japanese isis fall. -- japanese prices fall. accelerating costs. volkswagen is said to pay u.s. dealerships $1.2 billion. ♪ anna: welcome to countdown.

i am anna edwards. that check of the features, what they are expecting to see. hour away from -- we are expect a negative open, the euro stoxx 50 down by 3%. -- down by .3%. that could be where equity markets have kicked in this morning. we all wait for janet yellen. sentiment to be the -- much expectation around this event, despite the fact that -- let's throw up the risk radar. we'll show you where we are in various asset classes. taking the edge of the asian trading session. asia-pacific is down .5% now. i have here the dollar index. the end fairly stacked.

it has been fluctuating on the back of the japanese inflation data. it was worse than expected. the dollar index is fair as well. it is still heading for a weekly game. the word function on the bloomberg and we are seeing increasing probability of an interest rate hike in the fed. it is hovering over 30% for the month of september and somewhere above 50% for december. holding above $47, less of speculation about what kind of output conversations we might get next month from opec talks. bond markets like this. the yield on the german ten-year is+++

year ahead of the jackson hole speech by janet yellen. let's get bloomberg's first word news. shery: and a, thank you. consumer prices have fallen 45th month in japan. underscoring the central banks struggle to spur inflation to its 2% target. -- fell by an estimated .5%. -- before kuroda and his board consider a possible policy rebound -- policy revamp next month. russian president has ordered snap military drills after angela merkel accused him of breaking international law in ukraine. she also said nato will defend member states against attacks. >> germany and france try to progress -- but the security situation in eastern ukraine worsened. every day people lose their lives between ukraine and

eastern ukraine, especially ukrainian soldiers. you can imagine in this situation it is politically very difficult to lift the sanctions. we are working on that. we spoke with the russian and ukrainian presidents and we are in touch and i hope we will be able to present some progress to the european council. the son of a russian lawmaker has been convicted. one of the most lithic credit card trafficking schemes in history. he was found guilty by a seattle federal jewelry -- federal jury of stealing credit card numbers from hundreds of u.s. businesses. he was hunted by the u.s. service for more than a decade for the 2014 arrest. volkswagen's agreement to pay 600 -- 652 auto dealerships followed by a cheating scheme

will cost about $1.2 billion according to a person familiar with the matter. it will raise vw's settlements that include those by car owners billion.ators to $16.5 meanwhile the carmaker is facing investor claims and possible criminal charges. global news, 24 hours a day, powered by 2600 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top . i am shery ahn. this is bloomberg. anna: thank you. juliette saly has details of the asian trading session. the markets worse a little bit as we go to the session. many asset classes, we are waiting to hear if we get any clues from janet yellen later. juliette: very much in this holding pattern. it has been quite the week for asian investors. in europe and the u.s. everyone waiting for janet yellen. is she going to say anything

that is going to be market moving? we have seen a bit of a downside , particularly in japan. the nikkei closed the session off the worst part of it stays, down 1.2%. the deflationary pressures still shown in japan, down for a fifth consecutive month. stocks, although the yen is fluctuating and holding around that 100 to the dollar. in austria, not a great fission -- not a great finish. it is now holding at its lowest level since august 5. the regional index on track for its worst weekly loss since around june. it has -- in terms of people waiting to see if it is going to be anything hawkish from janet yellen. she'll be selling out of those asset classes? in terms of china share market, is a pretty good day today. we still have an hour straight left.

over the week, the shanghai composite is down .7%. that will be its worst weekly loss.- it's worse weekly there could be more restrictions to curbing that financial activity that we have been seeing coming through in markets. in hong kong, a couple of stocks to watch. a second session of very solid gains. it has received two broker upgrades. the worst performer on the hang seng down by over 4%. it is trading below its trading average at the moment in terms of where we have seen it over the past few months. dollar yen, 100.48. pretty flat. you can see that fluctuating movement. what we have been seeing from inflation -- from investors, everyone in a holding pattern ahead of janet yellen speech anna: -- speech. " juliette saly, thank you.

policymakers have been making a case for a rate hike ahead of janet yellen's speech in jackson hole. >> the most recent meeting, i did express my view that i thought it was time to continue the process of normalization of interest rates when i look at where we are with the job market, when i look at inflation in our forecast, i think it is time to move. >> i hope that chair yellen walks away from these time-based forecasts. we hear over and over again from the committee about how many increases are we going to see in 2016? how many in 2017? this is not a helpful way to communicate monetary policy. x rates should be raised cautiously -- >> rates should be raised cautiously. i am thinking about the impact on a dollar, destabilized effects. it doesn't mean

we shouldn't raise rates but it should be patient and gradual. the path should be gradual. anna: you can tune in for our interviews from notable voices coming out of the economic symposium at jackson hole. berg speaks to fed officials including dennis lockhart. shing fromus, edmund b.n.p. paribas. right to get your thoughts on the jackson hole. are you somebody that has high expectations? interest rates directed in the u.s. or about longer-term story about how high interest rates get in the u.s.? edmund: i think she'll be rather guarded. i do think our economy expects and interest-rate hike this year. we would expect a little bit more information around that in the short term. reference the employment market being relatively strong. -- not a lotlose

of slack left in the economy. however, i think there will be -- it will take a long time. they are going to go very slowly, very gently. i think the -- yellen still wants to emphasize the fact that she would prefer an inflation overshoot than to risk the economy at this point. anna: the chances are we get a little more dovish. edmund: hawkish for the short-term. any increases are going to be very gradual. " bank of america was saying that jackson hole has only been it big market -- when ben bernanke talked about quantitative easing. -- this graphic from my colleague talk about how there is markets are primed for yellen. -- boost in the past four times

on the past six you can see that it was did stock markets. the expected here a lot of positive messages, the strength of the u.s. economy. this may reinforce people's views that u.s. can continue to see better earnings. that is going to be what pushes the s&p higher, rather than anything specific out of jackson hole. anna: i pulled up the chart because it is a nice b.n.p. paribas one. they love addict index. basically two ways of looking at the same thing but exit -- but suggesting those this is quite high around stock markets before this event. is that something you go along with? we have seen a lot of breaking up of the u.s. indices behind nasdaq. we only just recently joined that. there has been a lot of optimism

based in. that might be one of the things that will hold investors back. expect toot want to much from jackson hole because people already pretty bullish. if anything, it is a bit more contrarian. anna: you are looking for a hike this year. by the end of december or the 14th of december, the pricing -- the market is pricing in 57%. what takes that higher? we have had a lot of hawkish signals from the fed over the past few weeks. edmund: i think clearer to medication from janet yellen. there may be discord among the board of governors but janet yellen is in charge. she decides. a little bit clearer to medication. --clearer communication. if we continue to see unemployment going lower and signs of inflation.

at the moment we'll see signs of inflation -- if we see that spreading to other areas within the u.s. economy, then markets will react. anna: one of the other topics negativeussed is interest rates, helicopter money, how experiment told central-bank policy has to become. are you a fan of negative interest rates? either in the way they are applied in japan or the ecb? edmund: unfortunately, they are not having the desired effect. oh point is saving us to do so -- the point of helicopter money still-- people are seeking cash even at negative interest rates. anna: if you gave the money, wrote checks to them, with a then save that?

it depends on the other macro economic environment. in mikio: it would have to be structured in such a way that you cannot save -- edmund: it would have to be structured in such a way that they cannot save. it. is the only way to do anna: other things that might come up, the negative interest rates. terry say for its. targeting -- explain this one for me. i have been wrestling this. why are we having conversations when sentiment around the world are struggling to get to their 2% inflation target? edmund: to give them more leeway. that.as simple as the federal will rule that out. we cannot make no one across the world -- what need have we of a higher target?

inflation plus gdp. you should be talking a combination of inflation and economic activity. anna: we'll see what comes out of the symposium. edmund shing, global head of strategy of b.n.p. paribas joining us on bloomberg. olivier piou about online banking and all things digital security related. this is bloomberg. ♪

anna: welcome back. this is countdown 7:18 in london . the next meeting of the u.k. gdp for the second quarter as we run up to that. 132 or so. let's get the bloomberg business flash with juliette saly. juliette: anna, thank you. volkswagen's agreement to pay

652 u.s. auto dealerships for losses caused by diesel cheating scheme will cost $1.2 billion. -- to resolve u.s. losses to include those car owners and regulators to $16.5 billion. the carmaker is still making is -- is facing investor claims and possible criminal charges. -- that missed analyst estimates. continue to lose money in france. the media company led by vincent lori saw adjusted net income euros.1% to 187 million carson block has taken a short position announcing the security of its cardiac devices in an effort that could rail the companies -- the renowned short seller spoke to bloomberg about

the move. >> this appears to be a company that for years has put profits before patients when it comes to cyber security. we think it is important to make sure that users are notified of themisks, but to hold publicly accountable. we think there a good chance it is about to lose close to half of its revenue for two years longer. this could be due to device recall. -- the allegations are absolutely untrue. abbott declined to comment. lost $1.27d to have billion in the first half of this year, according to people familiar, uber revealed the lost during a conference. happen to be the

reason for a majority of the worldwide losses. that is your bloomberg business flash, anna. anna: thank you very much. jim alto -- joining us now for next of conversation is the company's outgoing ceo, olivier piou. great to have you on the program. looking through the details, which sectors have reported the best growth from jim alto. the government programs that seems to have reported strong sales growth. that tellsl us what us about where growth is going to come from in the future. olivier: government program is resting well because a majority , passports are simpler. payment is also in double digit growth as technologies being adopted in the u.s. and in many parts of the world and on to

avoid the traffic [indiscernible] counterfeited credit card. global. problems are everybody is taking actions. fraudyou mentioned credit . i want to ask you about a story we have been covering here today . the conviction of a russian lawmaker's son for the trafficking of credit card data. -- big a threat is the legal is the illegal buying and selling of credit card data? is this something still on the rise despite the headlines? is this something we are still seeing growing? olivier: i am not sure it is growing. it is aportant is conversion of credit cards to plastic and magnetic stripes -- it is much more difficult to

counterfeit cards it when you -- what was surprising for a long time is the u.s. had not adopted it. it was a large market which would ask -- which was exposed to fraud. [indiscernible] visa with a chip [indiscernible] anna you mentioned the several security threat and that was clearly case -- anna: you mentioned these severe security threat and that was clear in this case. how difficult is it for your customers to take on those threats from other parts of the world? olivier: i think it is a fact of life that the internet is global. protection needs to be good -- needs to be local.

enterprises need to secure their own access to the resources, whether they are online. banks and the merchants need to , -- if the thief is in your country or someone else, yes it is harder to get them. at the end of the day, it is the reputation of a merchant cannot be compromise. businessevery [indiscernible] -- we have very good solutions. cardsr they are credit [indiscernible] everybody is happy to use the ,loud and on to get efficiency but you need to control who is accessing. anna: your confirmed that you -- interested in acquiring

there's been a lot of reports that you have been bidding there. why sell to gemalto? what do you offer that the others do not? industrywe are very and solutions. you're right. private equity of a very financial solution. we comply to the process so i cannot comment. it is clear that it is a fantastic opportunity to create a super champion in terms of digital security. we're very company three. -- we are very company three -- complimentary. anna: are you confident you will win? olivier: not confident, because it is by education. the question will be more in the saffron board what are the

priorities? is it more industry solution or financial solution? i know you are going to retire from ceo fairly shortly. what should the priority be for the takeover? prerogative -- what i'd like is we have planted together. we support the longtime, it is a very organized process. we chose someone from inside was been my right hand man. guaranteed productivity of the strategy. the world we operate in is changing. 20%.ew our platform plus sure achievement so i am he will set the new course. plenty of growth.

anna: ok. olivier, think he so much for joining us. emphasizing a new course -- thank you so much for joining us. joe -- emphasizing in new course. that is it for countdown. this is bloomberg. ♪

manus: you are welcome to on the move. it is 7:30 here in london. it is 8:30 a.m. in frankfurt. where counting down to the start of it -- we are counting down to the trading day. here is what we are watching for you. full circle jackson hole. the fed, kaplan and george make their case for a rate hike ahead of yellen's big speech. the deflation situation. japanese consumer prices fall for the fifth straight month as treasurer mounts on the boj -- as