francine: the bonus pool dries out. draghi let's the data talk at all eyes on the eurozone inflation numbers. deutsche bank's ceo says central-bank side effects are hurting lenders. does the apple deal signal for the end of an era for business in europe? ♪ francine: welcome to the pulse, live from europeans

headquarters. we have a great show lined up for you today at 9:30 we bring an interview with the ceo of the world's second-largest catering company. we bring you the interview live in paris. we are getting some breaking news. we have a german and employment falling by 7000 in august. even in august, post-brexit, the german economy .s stronger than we thought the italian on appointment is worse than expected. on to the market. treasuries are set for their biggest loss since june 2015. we had a lot of hawkish rhetoric from fed officials. the dollar reviving. also that is weighing on metal prices paid oil swinging into the bull market. chinese shares leading gains an

old global equities. european equities gain 0.3%. you can see unemployment -- we will have to look at the participation rate. the unemployment rate is better than expected. let's get to bloomberg first word news. >> u.k. prime minister marks the end of summer. may and david davis have chosen to not flesh out in public details of the breakout from eu. investors and executives -- to define what she means when theresa may says brexit means brexit. donald trump goes to mexico today for a private meeting with the president. meanwhile trump is also due to deliver a speech today in phoenix. he is expected to lay house -- layout his proposal on

immigration. nine people are believed to have died at a nursing home in japan after a typhoon rocked flooding in the area. nhk says another woman was found dead in the region while three was missing. landfall, passed over the northern mark over the main island yesterday. global news, 24 hours a day, powered by 2600 journalists and analysts in more than 120 countries. i am sebastian selleck. back to you. francine: it is been over a month since the markets heard from mario draghi. updates will be watched closely ahead of next week's central-bank meeting. german inflation slowed in august. today we heard rices and france rose by 0.2% over the past year, slower than expected. -- we heard prices in france

rose by 0.2% over the past year, slower than expected. let's introduce my guest for the show, on financial year -- alternate julia -- antonin jullier. on the back of it is what we heard from the fed, the hawkish comments from the -- from stanley fischer. you play that against the backdrop. initial thoughts. europe is stronger than we thought it could be. antonin: the is his knee in will, lower rates -- we see signs coming out of the fed, potentially which may change that. if it weren't the case, he would've found indications and markets, inflation of dividend yields. because of the relative positioning. it is still too early to judge.

it is going to remain highly data dependent. the six or numbers are coming out tomorrow. it does highlight -- the cpi numbers are coming up tomorrow. it is raining -- it is raising questions. francine: bloomberg did speak to stand fisher. here are his thoughts on rates. >> central banks which are implementing them, there were four or five of them -- basically think they are quite successful and are staying with the approach. possibly with the exception of japan, they are thinking it through and they said they would come back to try and make negative rates work better. francine: is there more of a divergence between what central banks think they are doing and what they can do which is virtually impossible? the markets are

consuming that this is a banks have been reaching out to government on the physical side. .- on the fiscal side there are so many tools in the toolbox. if liquidity is needed, it would have to come through the fiscal route. one has to understand how it is affecting the market as well. onhave -- a negative impact possibility in europe and japan. i am not sure we can write off negative interest rates. they are not negative enough. it is going to be push and pull between fiscal versus monetary it -- fiscalary or versus monetary. we are running short on tools. one has to be ready to step in quickly if it were to slow down. francine: is at ecb running

short on tools? doesn't make it easier for mario draghi if the fed does hike? antonin: it is a little early. terms of p, yes, there been restraints on what they can and cannot by. that can be changed. if the dollar does some of the work, then it will make it easy for europe. it creates challenges for asia. europe has been benefiting from a weaker dollar. if we enter a new phase of a summer dialer -- stronger dollar, that could be negative for yen. , it will be interesting to see what china does. you yuan has been going weaker and weaker. going weakereen and weaker. they are allowing it to drift

very slowly at a pace which has not created a headline. if the stocks start accelerating again, that could be good for markets. francine: this is my chart of the hour. it brings it back to last year. you can see that spike up has to do a lot with china. the markets are so much more calm compared to just a year ago, where we had china. it is interesting you said that we have not paid that much attention to china. antonin: china was not just china. some of thes versus cpi numbers we have been seeing. it is costing and it has been crashing toward the downside. francine: antonin, thank you so much for your insight.

he stays with us for the hour stay with the pulse. plenty coming up including a fresh face to france. speculation that the 38-year-old could enter the race for the country's presidency. we talk france. it is the $14 billion tax windfall that island does not want. -- that ireland does not want. the world's second-largest catering company -- this is bloomberg. ♪

francine: this is the pulse. i'm francine lacqua. let's get straight to the bloomberg business flash. >> bhp billiton shares are trading lower as one of the top producers is heading into a criminal investigation into last year's collapse in brazil -- last year's dam collapse in brazil. the company says it ceo will not get its 2016 bonus: the disaster. banks a bank -- deutsche -- the german magazine reported on its website that the considerations were "only of a theoretical nature." officials from deutsche bank declined to comment.

europe's biggest concert pretty firm are watching bonuses melts. stocks -- a row in that will pay bonuses in the past few years from barclays, deutsche bank -- has voted to file. the move by pungent shipping -- -- thesy and shipping company may need as much as $1.2 billion in cash to rollover debt in the wake of losses in four of the last five years. francine: france's economy minister has resigned and speculation that he will launch a bid to replace the president francois along -- hollande. >> i presented my -- i think them for having trusted me and

allowed to serve my country for two years, dedicated to the reconstruction of our economy. withine: let's get more caroline kanaan. -- caroline kanaan. don't know exactly his intentions because he is not counted himself a candidate just yet. had a presshen he conference. he touched the limits of the french system and he wants to regain some freedom in order to make some proposals. he has not decided yet whether these proposals will be in order to support the socialist candidate, including possibly resident owned or rather he would run solo against his former boss. francine: when you look at the way he positioned himself in the

conference, it was clear he stopped short of announcing he wanted to be president. he didn't seem to support the president. how park -- if you were to decide, do you know how popular he is. caroline: according to the latest poll is he is at 40%. this is quite high, but it is not the top choice for the french because [indiscernible] the mayor of bordeaux has got 43% popularity. the battle he is waging. and if you're -- in a few minutes, sarkozy will be taking the stage here at medef. francine: are these executives -- or the fact that macron made to be departing -- may be

departing? caroline: i was speaking with the head and saying this was bad news for business. he was in favor of tax cuts for companies. he was appreciated among the business community here. i spoke also with another ceo who told me he was really good for french businesses. macron one of the most business from the ministers. see a political person in france being far away from business and enterprise. macron was someone we knew with all of the issues -- from big companies to small company's, he was able to entertain ace -- entertain a conversation. good news. i don't know. caroline: macron was the guest

star last year it is expected to speak tonight, even though it is not want to percent confirmed. he -- his speech might look slightly different now. there.e: caroline connan he looked -- she will keep us up-to-date with anything happening. here with me this morning, antonin juliette -- antonin jullier. columnour viewers -- a where they say macron's only big gamble is the french want something new. that if you're in equities strategist must instill fear. either you are moderate like macron or donald trump in the united states. beenin: there has elections in a referendum without cuts quintus. -- without consequences. referendum with

elections in spain. germany in the back end of next year. is it making it more confusing? yes. we don't know who the candidate will be and where the crowd may go in the last minute. it doesn't appear to be quite investable in the early part of the debate. he makes a great headline that you can play on fear of people in the way it may go. francine: a bit like brexit. antonin: what he has done is try and screen for stocks where -- stocks which are priced. we are doing it for the u.s. to get a crack at it going into next year in france. that a good way to measure versus odds. to try and see if the market is

pricing for the rest is pricing. very few things you can do with them. when they start disconnecting which is not going to be the case in the u.s., there can be interesting trade opportunities. francine: how much do we think politicians in this world -- even if we have a donald trump presidency -- earnings as of gdp and the things are like that? or checks and balances which means as an equity trader you ignore? antonin: i don't know if we look -- ifas a top-down macro you look the best performers fisher, france is a very international country. about better industry versus another. to try and understand the programs of the candidates which industries are likely to be impacted. now.ine: thank you for

up next, it is the $14 billion tax windfall to the ireland -- that the ireland doesn't want. this is bloomberg. ♪

francine: welcome back. let's get more on apple's $14.5 billion tax bill. ireland gave the iphone maker illegal tax break. they have vowed to fight the

verdict. biscuit more with jones hayden. -- let's get more with jones hayden. jones: that is certainly the message that the european commission wants to be sending. they were very strong yesterday and coming out with this action against apple. the eu competition commissioner was very forceful in saying that she is going to go against these companies and she wants more transparency in the tax system here. apple is the biggest scalp and what is a three-year program probe going against these kind of deals. francine: are there other u.s. companies that the eu is focusing on? amazon is. i don't know if they are going after google. jones: they haven't named google specifically, but google has similar tax arrangements here in europe, in ireland specifically.

amazon.com is one that they are going against in luxembourg as well as mcdonald's did those are two open cases that they are continuing to pursue. they don't know when they will conclude those but they are still out there. francine: i was surprised i woke up this morning very early and i read the newspaper magazines saying this was the end of europe. this is anti-european because it means that big companies will go and settle elsewhere for tax breaks. is this fair? well, that is one way to look at it. they are saying they are not try to discourage foreign investment companies coming into europe. in fact what they are trying to do is make the whole system more transparent, so that it is a fairer way. all companies get treated the same. that is the deal. it is a state aid case.

apple and some other companies have gotten unfair treatment and put other companies at a disadvantage. the ideal is to make it a level playing field. of course, ireland, you would think would say we are on board with that, but you have a national issue here and that taxation policy is done at the government and eu is coming in over top of that. there's contention that needs to be worked out. francine:, jones hayden, thank you so much. there is a million different ways we can look at the story could i wonder whether you would see it as a brexit angle? we did think the u.k. could have similar tax arrangements. or what are the implications? does it translate into equities? crusade.it is a buyers i would not say that is especially new if you look at

revelation over the years between u.s. and europe, europe has been difficult on business. the difficulty is not judgment. it is about regulation. is it a positive development for some of these companies? maybe not at apple generates cells about 15 billion in the euro bloc. versus 15.ber of 13 is it enough to do away with a block and miss out on a big economic zone? probably not. a it something which is it massive infection point? i am not sure i would call it that. francine: like brexit, we don't know, but it doesn't feel like it is self-destruction. antonin: we will find out in time. we just don't know. plus, i think some of these corporate have been able in time to -- themselves to new regulation.

that life-threatening? absolutely not. francine: antonin, thank you so much and we talked to the ceo of the newest member of the cac 40. this is bloomberg. ♪ . .

francine: welcome to "the pulse." live from bloomberg's european headquarters in london, i'm francine laqua. let's get to the news with sebastian selleck. sebastian: the number of people out of work fell to 7,000, beating economist forecasts. that consumption driven by a strong labor market may cushion the blow by the decision to leave the e.u. the end of summer is marked and she grabs officials for talks.

the chief brexit negotiator david davis have chosen not to flesh out in public in details of what they seek in breaking from the e.u. however, they'll face pressure from international colleagues, fellow politicians, investigators and executives to find out what she really means when brexit means brexit. donald trump said he'll travel for a private meeting. invitations have been sent to the clinton and trump campaigns to meet with the mexican president. trump is due to deliver a speech in phoenix. he's expected to lay out proposals on immigration after weeks of reports about whether he's moderating on the issue. and nine people are believed to have died in a nursing home in japan after the too falcon triggered flooding in the area. the national broadcaster n.h.d. said a woman was found dead and another missing. the typhoon is set to make

landfall since records began and pass through japan's main island. global news 24 hours a day powered by more than 2,600 journalists and analysts in more than 120 countries. i'm sebastian selleck. francine: thank you very much. the world's second largest catering company has more than 400,000 employees and operations in 80 countries and i'm pleased to welcome the c.e.o. of sodexo for his first interview and joins us live near paris. thank you so much for joining us. you have exposure to many countries around the world. you do have exposure to the u.k. will you suffer because of brexit? guest: well, good morning, francine. thank you for having me. of course we have exposure to the u.k. and it's a foreign country to our business, very big market, sophisticated

market. and of course the brexit is a concern for me and europe and the citizens of the world. on the other hand, you know, i believe that the relationship between the u.k. and europe is so strong and so important for the worldwide economy and for both sides of the channel that, you know, i am very confident that politicians will find solutions to make sure that these relationships will continue and will continue to produce value at the end of the day, the european people and european customers. so it is a challenge. there is a time of transition, t i believe that with time and i think some good work, a good solution will be fine. and actually for us at sodexo

it doesn't have a real impact. francine: have you been speaking to your clients? i know you have contracts in the u.k. would a recession automatically mean certain contracts would be curtailed or would it just be more difficult for you to win further contracts in five or 10 years? michel: well, you know, we live in a world of change and i don't see -- i don't think that there is any part of the world we don't have any of those kind of challenges. so yes, we are a big contract in the u.k. yes, we have a big demand from our clients. but i believe that we'll be able to overcome these issues and that we'll find good solutions. francine: what is your take on france at the moment? sales fell almost 2% in the third quarter. will it get much worse from now? this was due to a number of factors including the terrorist attacks.

what can you foresee in the next six months? michel: well, the situation in france is not easy but i think there is a lot of potential. i believe that the tourists have been hit specifically in paris. we've seen a strong decline, you know, probably on average .n the year, probably 15% hopefully this situation will stabilize and over time we'll be able to recover the same type of volume that we had in the past. but for the time being and for this past 12 months, yes, it has been very difficult. francine: where is the one -- i guess i don't know if it's country or region that you see the most hope? we talked a lot about emerging markets and those have been under significant pressure. are things looking a little bit more upbeat there?

michel: well, you know, the emerging markets have been hit but for us, they present a fantastic opportunity because our business of service organization, companies, hospitals, education, institution, the potential in those markets is massive. but nevertheless, today probably the most dynamic economy in those countries is probably the indian economy. brazil has been suffering. we can see some signs of recovery right now. china is transforming its economy and we have a very strong business and you know, we're very confident but certainly india today is very dynamic. francine: thank so you much for your time, the c.e.o. of sodexo ining us live from the

business conference in versailles. we have breaking news and comes in the form of a tweet. this is a german newspaper saying the frankfurt airport terminals are being evacuated. now, this we understand may be some kind of warning, a security warning. we don't have much news at the moment but if you are due to travel, we know a lot of our viewers are traveling to and from frankfurt, do check the availability of our flights. we'll keep in front of it. it's just a tweet for the moment from a respected newspaper in germany, frankfurt airport terminals are said to be evacuated. we'll get plenty more on that and go to the desk to look at the political situation and what the business sentiment and feeling post-brexit is in france. let's get to more of this, to citigroup's global head of equity strategy is with us. we were speaking to the c.e.o. of sodexo and it's a good

barometer and spending companies have to do, feed employees. brazil is getting better, france is tough. how do you invest in equity that have such big exposure to the way we grow? it's almost out of their hands. guest: if you look at what's been working well in markets, it's driven by growth and clients have been highly selective on making sure they get exposure to sectors which have growth. technology, i.t., going to the previous subject, and expansion which has been driven by this earnings growth and will remain a screening or filter to continue to deal with in the coming months. from a global point of view, europe and japan look a bit more challenge sod what we've seen is bit more of a barbell type of approach where clients have been either buying the u.s., probably a bit more expensive, will grow most likely more than europe or

japan or have a beat of cheapness to the portfolio and then focus in the end. the mechanism there is -- the more important driver will be the dollar. francine: so that's the fed, right? antonin: and the respected central banks on the other side. francine: it goes to hawkish comments from the fed and a lot of people have been wondering that they're still data-dependent and looking at one interest rate rise and probably not two this year why we've heard is such hawkish commentary. is it to have dollar tightening do the job for them? antonin: it's about doing part of the job but putting it on the agenda to react if needed and also telling the world they have to move away from the zero ban to go back lower if there's a slowdown. they can't just stay just on the border of hiking. you could argue, actually, given the moves, some of the fighting actually already has

happened to a large extent for them. but yeah, it's probably trying to find goldilocks in the market. you don't want too strong a dollar or too weak a dollar or the euro-dollar in particular, around 110, 105 yellen is not happy. keep it in the middle and makes it easier to deal with. francine: the soup has to be just right. the global head of equity trading at citigroup. stay with us. lenty coming up. a guest shoots down equity reports. and data, we'll bring you the euro zone number. this is bloomberg.

francine: just getting breaking news out of frankfurt. we understand certain parts of the terminal had to be evacuated. we managed to speak to a spokesperson, the operator of the frankfurt airports and they're saying a lot of these measures are precautionary only because a person entered the air site area before security checks were completed. looks like someone snuck in and they're putting the protocol in place in case this happened which means the frankfurt border police are now ordering all passengers at terminal a to recheck in. these are precautionary measures and not sure whether

it means if you're traveling via frankfurt whether you'll be later and one you could call your airline to check. for the most, the latest we know, it's only precautionary measures. there was earlier confusion as is often the case in these kind of environments it may have been a bomb threat but it was one person who entered the security area before being properly checked in by security. markets, flat this morning. let's head to the bloomberg for a check. >> stocks in europe are set for a second consecutive mark and hasn't happened since may and 1/3 of one percent. the biggest monthly increase by february earnings expectations beat estimates for the first time in a year. that's why banks performed so well this month. the dollar has done well, best month performance, first gain since may. this is the bloomberg dollar spot index and the gauge of the dollar against 10 of the leading peers and the fed is

believed to be more hawkish when it comes to the timing of the next rate increase which leads me to the performance of u.s. treasuries. this is the bloomberg u.s. treasury bond index in the last 12 months. this month we're on track, the u.s. treasury market for the worst monthly performance since june. last year janet yellen and the fed chair and a course of officials set the case for interest rates had strengthened. the yield on two-year notes, the most sensitive monetary policy climbing in august by the most since november. the spread versus 30-year yields, the narrowest since january of 2008. the fed fund futures, 34% because of a tighter policy at the september meeting. the probability climbed to 42% after yellen's speech on friday in jackson hole, the probability dropped to zero post-brexit and shows how things have changed in recent months. i thought as we were talking about the fed and how it's

impacted various asset classes, we look at how it's impacted the emerging marketplace because the emci is set for the third monthly gain and is the longest winning streak on two years on speculation u.s. rates will climb at a pace slow enough to sustain investor demand for risky assets and is up 2.8 this month, the investors factoring in the feds will hike by the end of the year. back to you. francine: the stocks at deutsche bank is higher and there is a possibly rumor of a merger. however, jon shot down reports and bankses in germany have not been consolidated and there are still too many banks in the country. guest: looking at germany in particular and using them as an example haven't gone through the consolidation and spain seems to be moving that

direction and the u.k. is going the other way, promoting newer banks to emerge and spinning off some banks from the bigger banks. within germany, there are in my view too many banks. francine: that was indeed john cryan speaking. europe is in the spot light this morning for another reason, investment bankers are watching their bonuses melt. according to data compiled by bloomberg, a rout in financial stocks this year have wiped more than $2 billion in deferred shares that were paid as bonuses at barclays, deutsche ballgame and u.b.s. for more we're joined by steve who wrote the story from citigroup and we'll not talk about bonuses at citigroup. great reporting. it's a bloomberg exclusive so i urge everyone to check out your story on bloomberg.com but the general message is that european banks are cutting bonuses yet again.

guest: what we're seeing here is new rules that were brought in last year from the e.b.a., the regulator for the whole of europe making sure that at least half of any bank's compensation is deferred and that a majority of that is paid in shares to align a banker's long-term interest of the institution, if the bank performs well the share price usually will go up and if it hasn't it will go down, especially at credit sweet we've seen falls in their share prices more than 40% and therefore all the paid bankers receiving in shares are devalued by the same amount and have wiped approximate $2.5 billion in the collective pools of barclays, swedity swiss and u.b.s. francine: the bonus usually paid the beginning of the year it won't necessarily drastically fall? stephen: it would do if they cast in their vested shares but have to keep them a minimum of

three years and in the u.k. we have harsher laws moving it up to seven and you can have the pay taken from you up to 10 years down the line. francine: is there a difference between the european banks and u.s. banks in terms of play structure, there's not a level playing field. stephen: there's an advantage at the moment for u.s. banks in terms of how much they can offer their employees in cash in their bonuses as compared to the fed stock options but there are efforts underway in the u.s. to bring the rules under more alignment but you could argue if the u.s. banks were on a hiring spree there would an lot of european bankers looking to move over. francine: one more thought on consolidation. we forget we talk about banks sometimes per se but they are a transportation mechanism. how much do we know about consolidation? names are being branleded about but until there is one regulator it would be very difficult to have two big banks merge. stephen: exactly. you look at the enormous task regulators have to keep an eye on the institution the current

size they are taking today's news, for example, putting together a deutsche bank or commerce bank and one of the other banks, the institution, the result would be almost like the hbsc and jp morgan lesms, too big to fail and we encourage banks to shrink back a bit. francine: it's tough being a bank, no growth, negative rates and difficult to make money and you have to downsize. the share prices of a lot of the banks have fallen so much, is there a point they can only go up because they've cut the cost and they start to be in better shape. antonin: there's basically value in them. they're still presenting headwinds and i think you listed most of them. the one i would add even more in europe is the capital need. so if you think of consolidation, there would be a logic of merging to try to handle some of these capital

needs. so can it be an underlying trend to the sector on a european basis? most likely. but to the point made t would be more the bigger ones consolidating the smaller ones. the willingness of regulators to let another big bank build up is quite low. francine: it could be systemic so it's easier to build capital but then you become a bigger risk not to society but to the system. antonin: and without commenting on specific deals it would be the bigger ones buying the smaller ones and the bigger ones being asked to chip in a bit after pot to recap the sector. francine: thank you so much. the global head of equity trading tragedy and bloomberg's stephen morris. we preview the day ahead in the u.s. and get the employment figures ahead of job data friday. plus, donald trump heads to mexico to talk immigration and meet the country's president and then he talks immigration, phoenix.

it will be a wild ride. this is bloomberg.

francine: let's get some final thoughts with the head of equity strategy. antonin, we went through various parts of the world in literally 60 minutes and started by talking about volumes and volatility and the kind of interlinkage between

that. how do you make a marriage with the risks coming out in the next six months? antonin: it feels like it's very pronounced low volatility over the summer, albeit the last few years we had some pretty big surprises in august. if you look at the terms and structure of volatility, we're extremely low in the front, quiet for now but extremely steep as well. the market is clearly discounting affirmative risk on the agenda. as much as volatility looks slow to hedge medium term to longer term risk is actually quite expensive. francine: i did a simple chart i thought was like playing because we had so much volatility because of the china rout last august and you're talking about hedging and how this feels different. do you believe we can spike back up quickly, for example we hear something disconcerting at the g-20 or if brexit becomes messy or if something goes not according to plans?

antonin: if you look at all the classes they've all been trading on low volume titles, bonds, f.x., credit and so on. if one of them starts moving and bonds is the most important one because of the positioning, o.f.x. because of g-20 the end of next month, that could destabilize the market. francine: what would move bonds, central banks, anything else? antonin: inflation, growth expectations and possibly repricing. we've been talking about 50%. we've been there many times in the last few years. is it another head fake or actually being confirmed? these will have indications on rates and so on. between g-20 and u.s. elections, b.o.j., there is enough ahead of us to justify more market volatility. francine: thank for you staying with us, the global head of equity trading strategy at citigroup. "surveillance" is up next, tom

keene joins us next. we'll be talking deutsche bank and commerce bank and talk negative rates on the back of an excellent interview with stanley fisher yesterday. ♪

>> bonuses. wiping more than $2.5 billion from bankers' bonuses. and bonds are set for their biggest monthly loss and the dollar strengthens. will multinational -- this is bloomberg surveils. i'm francine lacqua. tom keene is in europe. -- is in new york. and euro area august