guy: welcome to "on the move." we are counting you down to the european open. i'm guy johnson; caroline hyde is out today. hiking in jackson hole. we will look at friday -- well friday's payroll numbers confirm september is a live meeting for the fed? the nikkei soars, kuroda faust to act decisively. but what is on the shopping list? and a bad week for the bricks. de la rue said makes a final stand in south africa as jacob

zuma loses a key ally. is that is for politicians good news for investors? good morning. less than half an hour away from the european open. it's a holiday in some parts of the united kingdom. london out today, scotland not enjoying the holiday, the rest of the united kingdom is. light volumes in certain markets. let's show you what's going on on my bloomberg this morning. i will start not with my gmm function, which looks quite interesting. let me take it to the wpi. this morning and let's not unlike what we saw in tokyo, a negative open for european indices. cac is called down, dax is called down. a softer start for europe. but let's go back to the gmm and show you what's happening out in asia. i direct you to this top corner. the nikkei is up by 2.3%.

why is the nikkei rising? it's fairly straightforward. word from yellen that rates may be going up; word from corroded that there may be more action from the boj. the yen is down against the u.s. dollar. these two are closely correlated, and equity markets are popping. it's the exporters, the car companies that are doing well over in tokyo. that is the story that is really we want to watch. as we work our way toward payroll, will happen? as we work our way toward the boj meeting, what will be delivered? we will discuss that throughout the program, but first let's get the first word news with christine harvey. christine: thanks. janet yellen's jackson hole speech on friday was hawkish enough for goldman sachs to boost the odds of a september interest rate rise. conversely, pimco said there was nothing of note in her remarks. trainers agree with the goldman

view, with the in private probability of action rising after yellen said the case for tightening policy has strengthened. forget helicopter money. the bank of japan may target financing closer to the ground with trains, hospital, power plants, and sewers. that is if you have some analysts who say they might start buying bonds of local government and public corporations that fund such project after the september meeting. a spokesperson at the boj declined to comment. the speculation comes as governor harold nico kuroda said at jackson hole that he will not hesitate to use monetary stimulus as he feels that is needed. the world's biggest pension fund has room or a japan stock shopping spree after the value of investments tumbled last quarter. the $1.3 trillion government pension investment fund would need to spend $53 billion on domestic shares to meet its target for the asset, according to news calculations.

stock holdings fell to 21% of investment the end of june. it's goal is a quarter of the portfolio. chancellor says the uk's vote to leave the european union is creating a sense of instability and will lead to big problems of policymakers mishandle the brexit process. the leader of germany's social democratic party also reiterated on: merkel -- on the lo event,g at a separate the finance minister said the british don't know how to deal with the outcome of the vote. a bomb has reportedly exploded at belgium's national institute for criminology. rtl, one of several suspects entered the site in the vehicle and detonated the bomb

close to the laboratory. the casualties of been reported. global news, 24 hours a day, powered by over 2600 journalists and analysts in more than 120 countries. this is bloomberg. guy? guy: thank you. a september rate hike by the federal reserve could be back on the table after janet yellen said she considers the case for tightening has strengthened. mike mckee reports from jackson hole. >> wall street got some of what it wanted from this conference. well she didn't put a timetable on it, janet yellen did suggest that economic data has improved enough that the case for an increase in the federal funds rate has strengthened in recent months. that led investors to dramatically raise the odds of a rate move in september, or definitely by december. stocks and bonds rose. others are backing the view. >> we are data-driven, but we are also patient and cautious. demand is weak around the world. other central banks are cutting

rates. we are below are inflation target and growth was 1.25% in the first half of the year. i think are cautious appropriate. >> still yellen cautioned that the outlook is uncertain; there is no preset course for rates, and where will go ultimately is limited. that means it is a question of what the central banker does to fight recession when rates are so low. that is the topic of this conference. a former fed staffer now at carnegie mellon proposed nominal negative interest rates, a controversial but intriguing idea. for on making the case encumbering nominal interest rates in the negative direction. central banks have the capacity to move interest rates below zero, which would have been impossible today. >> that is for the longer-term. monday morning the focus moves back to yellen and the data.the jobs report is looming larger than ever for markets now preparing for a rate increase.

guy: looks nice. we also caught up with the elian's chief -- the allianz chief investment officer, who says that it could hinge on the jobs number this friday. >> i think if we get a really strong employment report, 200,000 plus, with much higher wage growth, they would find it very difficult to resist a hike in september. but that depends on getting such an employment report. guy: let's carry on the conversation. let's go to frankfurt, joined by the euro rates strategist. michael,. good morning. he's as if they get a strong payroll number the september is a live meeting. what is your take? >> i think he summarized argue pretty well,

still think that this december rate hike is the most probable one but obviously september is on the cards. it has become a live meeting. i think the speech of janet yellen wasn't a big surprise -- the only change was her saying that the case for the rate hike strengthened. it is much more important to hear what other investors said, and they essentially said that if inflation data is coming in strongly, then there would be the case for a september rate hike. and perhaps putting aside the economic figures, looking at the political agenda in the u.s.; there is also the case that september could be the preferred meeting, just because of the uncertainty factors which come in october in november with the u.s. election. but now the figures on friday are the number one thing to move markets. guy: do you think we could see a

hike in september and december? do you think both meetings could be possible this year? >> no i don't think so,. we think the path of rate hikes is very gradual, very slow. for us it is just one rate hike, in 2017, a very slow gradual process. figures,ck to the nfp what one former boss said: if it 0, we think the probability of a rate hike is increasing, however if you get a shocking report like it may, it is obvious that the probability of a rate hike will fall from a class. -- from a cliff. guy: i invite you show a chart for the audience, basically the front end of the u.s. curve to

hear and the probability of a rate hike in september. these two things are reasonably well correlated. let's talk about -- if we start getting into rate hiking territory, if we put september the pricele, how big do you think the front end of the curve is? >> for us, i think it's not necessarily the front. for us the sweet spot on the curve is rather the five-year part of the curve so our recommendation is to go short. selloffve a potential it's all based- on the nst figures, potential he , train going into the numbers

and we think it doesn't make a lot of sense to the long here, the five-year part of the curve seems very rich. we can also see some flattening, and we think it doesn't make a lot of sense to the long due to high yields. guy: a lot of money has been piling in from the bond market, a lot of money. we really are in spectacular territory in terms of pricing right now. how big a drop could you see? say that it was to change even a fraction; how big a drop do you think we could see? >> well, i think the drop in yields, that is not very due to highprobable. particularly if you look in the euro area. for us there is a two-year and five-year not moving at all, negative territory. the tenure part of the curve at -10, that is where we think it will be at the end of the year. i think it's very low volatile, and tell us we don't see a lot

of risks of the selloff. with these cpi numbers coming knowseek -- the market that any kind of uptick in inflation is largely driven by base factors from last year due to oil. i don't really think that the bond market itself is going to move higher. guy: we have to talk about that number in more details in a few minutes. the market is up .3 on that cpi number. some are suggesting it could be higher because of that base effect. cominga pickup and prices -- wht could it mean for policy? higher because of that base effect. coming up, the return of

inflation is the big subject. the bond markets tighten around the world. then we will deal with the open. we will be watching the luxury sector, pr pradesh sh soaring. and delivers us makes a final stand in south africa, zuma loses a key ally. what does this mean for investors? we'll talk about that. this is bloomberg. ♪

guy: 2:45.

the market is down by around one half of 1%. 7:45 in london, county down to the market open here in europe. london is closed today. let's get your bloomberg business flash with christine harvey. christine: thanks. the ceo of fiat chrysler sacc samsung electronics is a possible strategic partner. sergio marchionne's comments of it several from potential buyers. >> we have a very good relationship with samsung both as a supplier and as a strategic partner. i have a good relationship with him -- we share membership on the board and i have made no comments on samsung.

we didn't have an opportunity that has been looked at because we did not -- we have no interest in selling out for a strategic by. chief oil hit the world's biggest miner in the hosting a, sinopec huge decline with net income is down to $3 billion. the big three energy companies have all suffered this year. petrochina saw profit fall after they announced their first ever half your will. they see the global oil glut continuing prices are staying low. shares have jumped in hong kong trading after the chairman said on an earnings call that he sees a rebound for the company as early as next year. his comments came after the company reported the first decline in opening half oil's to the 2011 lifting -- listing.

this is after attacks in china continue to weigh on the italian luxury goods maker. that your bloomberg business flash. guy: think you. whateturn of inflation, central banks have been trying to do with little success through their unprecedented monetary policies. but now the titans of bond investing are predicting a uptick in inflation, so what would a pickup in inflation actually need for policy and more immediately what would it mean for the bond market? we are joined now out of frankfurt -- let's turn our attention to the cpi number out of the eurozone. -- what happens if the number is higher? all, we are in line with consensus.

slightly lowera but it is largely driven by if we havemoves and , there would be an high in the number this week and i think the market really knows how to digest this. if you look at core cpi at 0.9%, that's very high in the number able and we think it the will be at 0.9% again. i think the market is not really driven by those inflation numbers this week. guy: why are some expecting a return of inflation. if you look at the wholesale data, ppi numbers, you are starting to see a pickup th ere. ablebut there are some big guyt

there in the bond market beginning to say, actually, we think inflation might start to rise. maybe we see an uptick in the eurozone as well. have we bottomed out here? is the only way up for inflation? -- in't think think the power of inflation is upwards trending, but i also ,hink if you look at the ecb they are pretty much in line fine inflation will be for 2017, 2018, well below what the ecb would like to see. i think as long as these numbers stay where they are for a longer willd of time, the ecb keep on doing its qe program.

but essentially a think that is stressing markets and i don't think it's starting high inflation. guy: ok. a couple quick questions. do i keep buying eurozone bonds? if i believe that, if i believe the ecb will do more, despite where pricing is, despite how many bonds are negative, do i keep buying? >> that is exactly the thing. we are not very bullish on the euro area government. i said before that bond yields should stay in negative territory. so you really have to find the pockets not only of liquidity, and slightly higher yield, that could happen if you go into other markets within the euro , where you could move up in quality and to aaa rating.

you still get a better compensation on this. right,ntually you are the appeal is clearly not very big. guy: data heavy with us. michael spies. still to come, product shares a surge as the luxury remake or predicts a rebound. details on that, next. bloomberg this is bloomberg. ♪

guy: 7:54. minutes away from the market open. i would focus today on what's happening in the luxury sector. prada surged massively today, because the numbers on friday were terrible but the conference call was positive, talking about a pop coming fairly soon. the stock has actually really gone for it. 12.87%. it will be interesting to see what the rate across looks like when we get into the european trading session. maybe what we do see is a pop and other luxury sectors, and it will be interesting to see whether it works its way through. in terms of what else we are watching, let me take you to my terminal, on to what is happening. at the moment, london is closed today. it's a holiday in the bulk of the u.k. the cac is called down half of

1%. similar to the dax. futures, andk your it will take you to that fair value number. a lovely day in frankfurt, market called lower. ♪

guy: welcome. i'm guy johnson at bloomberg's european headquarters in london. moments away from the start of european trading. let's walk you through the morning brief. hiking in jackson hole. d decisively. but what is on his shopping list? mabad week for dille roussef and jacob zuma. is bad news for politicians good news for investors? 25 seconds away from the market open. london is closed, futures are pointing negative right now.

will be interesting to see how the luxury sector does, prada left out in hong kong trading. will that cross into the other luxury stocks? let's show you what's happening with the market open. we sold off into the close on friday. there is how the market makers get warmed up. obviously is closed, because of the national holiday. we are anticipating that we will see a fairly often open -- it looks like the market makers are a little sluggish this morning. let me take you to this chart, the imac for western europe. if you want to see what's i have skewed, this on the market cap.

germany is off and as you can see the u.k. is closed. smaller markets are following suit in the dutch market isgermn off.he u.k. is i would use the market cap just to secure regional breakdown and give you an idea of what the stocks are doing. let the run you through the sector story. of where the losers are coming through, financials are off, but energy is also one of the big losers, down by around one half of 1%. it's a busy week for the politicians, talking about what's happening in the markets with germany very much in focus. went to a chancellor brexit summit in germany is also in regional election mode.

meanwhile the german vice chancellor said over the weekend that the chancellor "underestimated" the challenge of integrating the million migrants. joining us now, citigroup's euro rate strategist. the german political story is really beginning to ramp up now and we are starting to get the lines drawn between the parties with migration front and center. should the marketing and attention to this? is there something that could happen in terms of the bond market, spending? what is the story? the marketright now impact is relatively in the middle. she had to fight a lot of criticism and then yesterday she got the criticism from the vice

chancellor. but in my opinion that's nothing new, particularly the criticism of eastern european countries and the fact that we have criticism coming from the vice chancellor which is also the political leader of the socialist that is political noise establishing itself before elections and i think all eyes has to be on the investments this could be- above 20% with the social democrats waiting. if it was about to get more then it and get to 25% might become very challenging to find a coalition agreement whether it was the grand coalition or not, it is getting more complicated.

this could have implications for thisgermany in 2017 -- could also went on the bond markets but i guess that the impact from this political noise ort the elections coming up not as big as central-bank policy meetings or action. about thell talk meeting after, but let's focus on european politics. do you think europe will have a single voice? do you think europe is together? it seems as if the major building blocks on which europe is constructed are starting to fragment. worldve a very different and you haven't got the european conversion going up for their budget problems.

when i look at europe as u.s. investor, what should i see? thatu rightly point out you're probably is not in the best shape when it comes to political agreements, definitely -- there can be disagreements on refugee policy. i think the major point for bratislava will how we will stand the u.k., and it is quite to be quiteerybody, harsh, to save that they can to , just to makeing sure that we don't have the , coming up with referendums that could lead to a further break of the european union. at this point, i guess

politicians understand that it is important to seek with one voice when it comes to things like the refugee crisis. i am not really sure that a common agreement is made easily. guy: i come back to this question about u.s. investors. they are still very nervous about what's happening in europe. i don't see any reason to invest in equity markets. they are little more sanguine when it comes to the bond market. looking externally into what is happening in europe, how invested do you think this is ?> >> i think it is all about alternatives. europe mightcale, still look more interesting than emerging markets at the current stage. it probably makes u.s. investors

stay-at-home and domestic markets. euro area, i think the economic outlook is very sluggish. the political outlook is not the best. i can understand that a foreign investor is not very keen to invest at the current stage. guy: michael, you will stay with us. we want to talk about the ecb. we will keep talking about what's going to happen in the eurozone bond market. could the ecb be another big buyer? what does drive you do next week? what does he signal? what does he give us a clue about? we will talk about that. we will talk about this watershed in germany. stern tones over britain's planned exit. how did an early election pitch go down? plus, the big freeze. an opec output agreement hinges on a poor relationship between

but isd saudi arabia, the ground for market share to enticing?that's ahead . this is bloomberg. ♪

guy: welcome back, you are watching "on the move." let's talk about the stock story around europe, a mildly negative day. london is out. it does have an effect, but the markets are a little softer. patient, tokyo are all very

strongly overnight. this is the stoxx 600, the market ranking. they are all losing ground by nearly 3%. let's get you caught up with the first word news. christine: thanks. janet's jackson hole speech on friday was hawkish enough for goldman sachs to boost the odds of a september interest rate increase. conversely, tim: says there was nothing of note in her remarks. they say that market implied probability could tighten policy. a bomb has reportedly exploded at belgium's nastily -- national institute of criminology north of brussels. one of several suspects detonated a bomb close to the

laboratory. no casualties of the reported. singapore has stepped up its fight against the zika virus after conserving 41 locally transmitted cases one day after reporting its first infection will stop the ministry of health said it will have close contact with those who were infected 34 have fully recovered with the majority of cases occurring around construction workers. global news, 24 hours a day, powered by over 2600 journalists and analysts in more than 120 countries. this is bloomberg. guy: thank you. after five weeks of silence, the european central bank president is fine 34 have fully recovered with the tuning policy expectations. data will bee of inflation, but there is plenty

of other data we will be digging through. let's get to citigroup's euro strategist, michael spies. michael, let's talk about what we think is in draghi's head right now. we will get a little bit of data this week. what is shaping his thinking, the think? -- do you think? >> i don't think the data coming out this week are going to it'se the figure -- important thing that we have to manufacture, all this pointing obviously -- ink think he is straining to get it think he is i trying to think about what he can do in terms of qe, and that is the way he will operate it.

there is a think greater understanding of what brexit is likely to mean, particularly for poor countries like germany? >> i'm not entirely sure if it is understandable, what brexit means for core countries, particularly as we all don't that --now what it is the negotiations could take two years. that means it could take longer and we don't really know what's happening. obviously the only thing we have learned is that we have this political uncertainty and also the political fatigue which can to the referendum and also to the fact that people don't want to follow further integration. i think that is something that pops up in many european

guy:.ies do you think he is prepared to wait until the end of the referendum before making his next big move? we haven't talked about this but nevertheless it is an event that could almost be as big as brexit. >> we are definitely of the opinion that it is one of the big political challenges until renzi isand if matteo not successful with the referendum there is a risk of resigning then you can go to 160 basis points. he will be metnk with such political uncertainty. if you did then he can always argue to wait with further

elections coming up. it's the month, where he announces the whole qe program will be extended by an becauseal six months that kind of profitability -- it would mean that loans get a bit more attractive for european banks. we also think that at a certain point in time, he has the amenities to get a bit more buffer when it comes to scarcity, which he already faces in the german bond market. renziiesguy: how the ecb reactf lost it? we talk about what's happening in the italian banking sector.

how would the ecb react to all of this? do we fully understand the reaction function ahead of this vote? they will justk ask for -- they can to do a lot. they will continue to buy b tp's, that's for sure, and it's obviously helpful to have it at very low levels. but i don't think that he can do a lot about this political uncertainty. last week at jackson hole, if you listened, he said we are delivering, but there has to be support coming from the politics, not only from the structural side, in the italian banking system is still not in the best shape and something has to happen. it's not only structural reform of political reform, political stability, and that is something that he can't ask for, and he

will just continue to do his job. it is been great to have you along the ride. thank you for taking the time. michael spies, joining us out of frankfurt. up next, the brics hit a wall. south african and brazilian businesses. dilma's impeachment trial draws to a close; she takes the stand today. this is bloomberg. ♪

guy: welcome back. let's talk about what's happening in south africa. wealthysion by a indian family close to jacob zuma to sell all his businesses is the latest indication that his grip on power is slipping. he has been in the headlines on and off all year. the announcement on saturday comes as a police investigation to the finance minister. we are joined live. they clearly know the political story is in south africa. they are very close to him. we know that, despite her denial. are we signaling that he is losing power? >> good morning. certainly it is an indication of that. one of the people we spoke to certainly calls it that.

they say that the president may even be a lame duck at this point. the local elections saw the ruling party lose a significant number of votes, and as we head off to what is the national elected conference for the ruling party next year, the amc does seem to be separating and seems to have a lot of factions. dwindling, power is perhaps it could affect their decision to leave their shareholders in fin south africa. guy: a lame-duck, let's explore that. there is no indication of the moment that he is going anywhere. what you are indicating is that maybe people are beginning to say he doesn't have any authority anymore. how does that leave south africa? >> well, regarding the analysts i spoke to, he mentioned specifically that, yes, he thinks the president's

that position is made clear by the fact that he hasn't yet made any moves with regard to the finance minister, who is set to be perhaps put to a test in the weeks coming, but we don't know if that is certain. but they some rumors, are all questions about what his power now is. there is a grapple for power happening within the anc heading into the national elected conference for a new president for the ruling party next year. the local government elections did not help the situation one bit. people are saying perhaps we need fresh blood, to look elsewhere. jacob zuma's power is certainly beginning to wane just a little bit, according to a lot of analysts. they will be an interesting time, but i think he will continue to try to hold, to firmly grip power for the next couple months, but it doesn't look as great. guy: great, thank you very much

for bringing us up to speed. let's turn to one of the other brics, brazil this time. brazil's impeachment trial heading into its final stage after three days of witness testimony. it has deepened divisions amidst those debating whether to remove the president from office. let's go to bloomberg's e.m. reporter, philly be venture to. walk us through what we are likely to see. will we get in this final session? this tends to be a very intense week for brazil's political history. we had a very intense week in saturday,session on which is rare to have in the country. today we are expecting to see rousseff going to the senate, the first time she will defend herself in front of the senators, the brazilian media,

the whole world, trying to prove that she is in innocent within this process. people are very, very, very nervous. rousseff, her supporters are going to be there. people are expecting the brazilian former president, hermine supporter since the beginning of her political career, he is expected to be in the senate as well. things will be very tense and intense at the same time. credibility been damaged by the charges against him? how was that playing into the story? >> well, that's a big discussion in brazil right now. there are reports in the brazilian media saying that he went to brazil on friday last reportsthere are many

saying that they tried to convince senators to vote against the impeachment. being same time, he is allegedly accused of wrongdoing. it's just a big discussion in the country, whether this is going to be a fair process or not. those that are against the impeachment, they are basically saying that the vice president is attempting a coup against her, while her critics are saying that she did allegedly defraud fiscal accounts in order to have a clean fiscal account in the past few years. of her firstear mandate. this is a big discussion right now. we are expecting the voting to happen in the next few days. intense.g to be very

guy: it certainly will. thank you very much. up next, we will be talking about japan. yellen and kuroda, the big impact on the market. london is closed today. a lovely bank holiday. ♪

guy: welcome back. day.nutes into the trading how are things shaping up or down? the markets are softer. london is out today because of a national holiday. the tack and the dax -- the cac and the dax are down. yousef: -- frenchake a look at the train maker, they just won a contract to design and build 28 high-speed chains that trains -- trains for amtrak. if you have ever been on a amtrak, that is $2 billion in

shares. companyint cards, a whose shares have been rising. looks like some investors are having a rethink. london petroleum up this morning. there is the green. mostly red out there today. what is us talk about going on in terms of the central bank story that continues to dominate the story. the pledge to deliver more monetary stimulus. hole,ng at jackson president corroded says there is ample space for more using. by jodioined to schneider. how should the market be interpreting president corroded comments -- president kuroda's comments? what clues to we get at jackson hole?

>> he gave us some interesting clues in his comments particularly in the way that he worded them. he said that there is no doubt for moreample room using in all three dimensions meaning the negative rates that he had put in place earlier this year as well as more asset purchases. this seems to be saying to some of the analyst who have been saying lately that may be the boj is out of policy room and they have run out of policy options, he seems to be saying the opposite. room andlenty of options and we want hesitate to use them. some analysts also said today that what may occur is that we may be looking at purchases involving public corporations and local governments for things

like trains, rail systems, and hospital systems because governor kuroda has repeatedly said there will not be helicopter money or direct purchases with the fiscal stimulus that perhaps there will be some other kind of asset purchases. guy: how does this fit in with what is happening strategically? we have a strategy review of the meeting. how do these -- how do the macro and the micro fit together if you get what i mean? >> yes. one of the things he underscored in his comments was the fact that they were looking at further his right away and the policy review which was announced last month -- analysts we have spoken to save they think it is more likely there will be policy action next month with a review.

the review does not stand in the way of that and the governor it seemed to underscore that in his comments at jackson hole. guy: could we see a change in the inflation targets? whether or not we need to completely rethink what is happening in terms of inflation targets and a higher number being required. did not seem to indicate that. he seemed to be using the inflation target as a way to say that they would continue to act to try to me that. -- to try to meet that. weak inflationk, numbers. the cpi number fell for the fifth straight month, back to where it was when the governor took over. they are weak and he seemed to be making the case that the week inflation numbers are a call to action. let us carry on the

conversation. is the professor at the university. good morning. or good afternoon. let us talk a little bit about what we learned at jackson hole. what was your take? we heard from the governor talking about decisive action. what does decisive action look like? >> i think he is really running .ut of his magic in the sense that he did not clearly mention that he has ample room for negative interest rates to go further and he hinted at further buying of etf's. that is exactly what he has been doing. think thatoblem i the government is trying to understand is that the ball is in the governments court instead

of the boj side. however you want to reduce demand through easing policies, it has to be accommodated by the understanding of the fiscal policy as well. they have to go together. the fact of the matter is that there is quite a limitation on what the boj has done so far and from here onwards, he does not have much of a card left. i think he is starting to are inand that his cards his hands. opportunitye the for him to influence fiscal policy? jodi schneider was just talking about how he could purchase local government bonds, company bonds are associated with infrastructure. he could force infrastructure spending by making this happen. could this work the other way around than it is meant to? >> what is interesting is that all targets of structural changes.

what the government is trying to do is put the markets of focus and people's focus into the longer-term problems. although people are asking for short-term solutions. that is one of the things -- the infrastructural changes. the transportation related issues. and a lot of work related environment issues that they are trying to make a transformation. this is an area where they have to start spending on it. the boj is hand in hand with the government. market recognition of these things will take a lot longer and i don't think the market has the patience to wait for these things to bloom. i think this is where the boj at ahe government is discrepancy because the markets patience is too short for that. rate is dollar-yen trading at 102.

to your point about the market looking for shirt -- short-term action. is the power with yellen or governor kuroda? >> i think the former at this point, definitely. abe-f the things that economics was successful is that japanese exporters florist. they would go on a spending spree along with a wage increase. that would solve the problem of the cpi. it is not working. if thed help greatly at the leadorters of the economy would florida should again and restart investment. that is a cycle the government is wishing for in the short-term. guy: how do you think things will play out? you are a professor in the university. if we doo you think --

not get a decision about the fed -- by the fed to hike in september, how is the market positioned do you think? strengthened and we get a disappointment in the fall, the japanese spending sentiment would really start to diminish. that would be a negative knock on the other part of the economy considering the japanese economic structure still relies on largernitially japanese exporters. it would have a profound negative impact on the japanese side as well putting a lot of negativity or a halt on the scenario that the boj and the government are thinking about. guy: thank you for joining us.

it will be interesting to see what the impact of this typhoon -- potential he on another major typhoon hitting the country. the second in almost as many weeks. stay tuned or that. up next, we will go back to germany as angela merkel prepares for the bratislava eu summit next month. the vice chancellor says instability around the brexit could cause big problems. that story is next. this is bloomberg. ♪

guy: welcome back. is 8:42 a.m. in london. let us get you a bloomberg business flash. christine: the ceo of fiat chrysler says samsung electronics is a possible strategic partner. his comments come amid in buyers ofrom several the cars component unit. >> we have a good relationship with samsung as a supplier and as a strategic partner. i have a good relationship with him. membership on the board of exeter. i have made no comment on the samsung deal at all. that it is an was

opportunity that has been looked at by a variety of other people. interest inve an just selling it. it has strategic value to us. christine: nippon airlines has as part ofn turbine its investigation into the engine of the boeing plane. the move comes after the airline canceled more than a dozen flights since last year. the broken parts damaged other sections in the engine when they snapped off. sales have jumped in hong kong trading after the chairman said on an earnings call that he sees a rebound in the company's earnings as early as next year. as weak demand in china and terrorist attacks in europe continue to weigh on the italian

luxury goods maker. guy: it has been a busy week for the german chancellor who completed her tour around europe. she still has a few stops to make. germany also has regional elections coming on sunday. sayserman vice chancellor the brexit is creating a sense of instability. let us go to brussels. daniel gross. good morning. so much is going on, how important is bratislava? let us start with that. what will be the central subject , brexit or migration? they will be talking about both of them. brexit is more for friendly talks to ask themselves what should we do if the u.k. takes a certain approach to the

negotiations. since that is not known, all they can say is that -- we will wait until the u.k. makes up its mind and we will act accordingly. there isgration, already a lot of initiatives on the table. they have to implement them so they cannot say much more other than to say that they think there is a problem but it is under control for now. all they can do is wait and implement. guy: how unified is in europe on both subjects? you make it sound so simple. there seems to be some key divisions in both areas. surface, you will have the germans who say -- let us wait and the french will say and some of the smaller that theywill say will be punished for getting out and we shall push them out as quickly as possible. that is more for public

consumption. there is very little that can be done at this point. is really in the political system of the u.k. sharpvisions are really in the migration issue. bratislavae lucky in if they can at least maintain the semblance of unity and 10 agree at least that they implement what they have decided so far and keep their fingers crossed on turkey because that is an area where they can do little more than wait and see how the situation in turkey unfolds. guy: if this is a wait and see situation, why is angela merkel running around europe and speaking to as many people as trying to talk to a semblance of a policy on both subjects. it looks like she is in the form of trying to get a consensus.

is that domestically focused policymaking on her part or is she trying to act like the leader of europe? daniel: it is both. she is trying to keep the eu together and it is in personal interest. part of her popularity is that she is acting like the leader of the eu. divisions in the eu will get papered over. on brexit, it should not be too difficult. on migration and the refugees, it is exceedingly difficult and that is why she had to make this tour so she can try to maintain some sense of unity in the next summit meeting. guy: what is keeping your together right now? the u.k. is talking about leaving and will leave but what is keeping the rest of the

eurozone together? 19th said spain had not been punished for its misdemeanors and it comes to the budget. is a silentseeing death of the rules-based approach put in place for the eurozone. what are the implications of that is the case? this is something that politically cannot be acknowledged. we have several big reports that say the rules for economic governance within the eurozone should be strengthened and more should be done but this is mostly talk for public consumption. the eurozoneng together is the feeling that after all, right now, the euro is working. we have a strong european central bank which tries to keep the economy on an expansionary path and people think this is something we should keep. at the national level though people say let us do what we

want to do without interfering too much. we will have to see where this common of national and interests come together in the long run. guy: is that a sustainable policy option? the question marks really go to the question of the transfer union. no one seems to be suggesting that that is a sustainable solution. it is more sustainable than many people think for the simple reason that most countries now are on a pretty solid footing. even italy which has domestic debt problems but this is by italiant financed savings. eu area with an common currency, and a common banking area that there is no

need to have a big pot of money that can be distributed because every country can basically pay for itself. wonder if of people that is something that is ultimately sustainable that as you say, europe has a way of muddling through. daniel, always a pleasure to see you. thank you for your thoughts. oil declines -- over a stabilization deal. stay with us. this story is next. this is bloomberg. ♪

guy: welcome back. let us talk about some of the highlights for the week ahead. a busy week. later today, angela merkel speaks at an election rally. the german policy is deftly heating up. wednesday, eurozone inflation. the most important piece of data out of the eurozone this week. thursday, manufacturing pmi data. we round out this week with the payroll number out of the u.s. what will happen? will we get details in terms of the probability of a rate hike? one of the things that is on the mind of the oil market right now, crude oil is declining and mid doubts of a freeze at the

meeting next month. joined by yousef with the chart of the hour. yousef: pressure in the commodities complex on the back of a strengthening u.s. dollar. $47 a barrel. what is happening with the upcoming talks in algiers among we havebers and as discussed, we are getting additional feedback about where we are. we have comments from the iranian oil minister saying they would not agree to a freeze unless they reached pre-sanction production levels. let us look at what that might shape out to be with this chart right here. you what is happening with the iranian oil production at 3.5 5 million barrels per day last month. that is your line in yellow. that spike is a 26.8% spike so far this year.

we got comments from other members as well. including the ceo. he says if this is the rhetoric coming from iran, it dims the prospect of any agreement. we also got comments from theysts at barclays and said iran is the key in this puzzle. i has been sending mixed signals. the reality is that the market will discount the outcome of the freeze talks. because of compliance issues, more than anything else. even if you have an agreement, getting everyone to be in line with those expectations will be a different story. guy: great stuff. thank you very much indeed. on the markets. to show you what is happening. london, closed for a national holiday. not a single stock in -- territory. ore overtion to iron

the next few days. interesting, trading up at about 0.5%.

-- >> the bank of japan stands ready to use. kuroda says he will not hesitate to unleash further stimulus if needed. south african selloff. the gupta family exits the businesses in the country. is the power slipping? we discussed that with colin coleman. -- we discuss that with colin coleman. ♪