>> boosting confidence, the town jumping -- british manufacturing sector fighting of the regular blues, hitting a 10 month high. >> deutsche bank shares getting a boost after the ceo calls for more bank mergers, reports of a fresh revamp. >> donald trump the government no amnesty for illegal immigrants after a meeting with the mexican president. a warm welcome to bloomberg . i am alex steele. caroline hyde joining me from -- bit of a riskttle on field, maybe because we have -- tt it is a wait and see -26 hours from the jobs number. caroline: stanley fischer says itis about the day to you --

is all about the data. china outperforming, that has helped the bid. >> italy and france coming in light, a mixed field across the globe. onhas a significant move asset classes. >> coming up, we will delve into all of that. take of america-merrill lynch head of economics joins us ahead of the jobs report. plus, why he says the fed should overshoot its 2% inflation target. >> 25 hours until the important jobs numbers, markets wait and see but we got global pmi's and a little bit of risk taken on. in the equity market, the dax off the high for the session but pmi cominga german in line with estimates and european banks seeing a huge

rally, the biggest three-day jump since july. a little risk, especially across europe. the fx market, the stronger -- the u.k. pmi coming entity 10 month high, the other story is still going to be the relatively stronger dollar, the dollar-yen 10369, now at a one-month high, the dollar grinding slightly higher. , the china pmi coming in almost at a two-year zinc,leading copper, tin, nickel, the base industrial metals moving higher but oil not participating as much, around a three-week low. sovereign market, yields backing up, u.s. 30 year yield coming up to basis points, a lot of issuance coming on over the next 24 hours from the u.k., spain, france, poland, that weighing on prices on sovereign yields.

u.s. equity futures points to a slightly higher open a you cannot imagine traders will take on big positions headed into the 8:30 print on friday. >> cautious trading, keeping track of the volume but we go around the world for bloomberg team coverage. from berlin to mexico. in london looking at some of the stronger than expected u.k. economic data. he is here digging into the report that deutsche bank said to be weighing strategic options. in hong kong, the latest on the improving factory data out of china. let's start in london with mark barton. strong pmi data, the pound is surging. >> sometime the chart is better than my golf or 1000 words from mark barton, u.k. pmi manufacturing, 2014 to 2016, look at this rise, from 48.3

253.3, a record rise for manufacturing in the u.k.. to 49 fromn increase 48.2, revised up to 48.3, what a turnaround in the u.k. manufacturing sector from those lows in july. now at the highest level since december. all of the gains in the last month have completely out shot the movements we have seen in the last nine months, 10 months, the big reason, you know, the decline in sterling, new orders arising and rising that sterling has dropped -- what we saw after the brexit referendum was a plunge in activity, a plunge in confidence, look at recently, a rebound in manufacturing in the u.k., the big one is bloomberg

intelligence, says monday, manufacturing is important but a big part of the economy is services, two thirds of the tonomy, in july we plunged 47.4, if we get a rebound in services on monday, he talked that the brexit was not as bad as initially thought really starts to gain traction. , all majorllying currencies falling against the town today. >> we want the town to state lower if you want to see exports continuing. lower -- european banks seeing a huge rally, the biggest one in three weeks, deutsche bank leading the charge. thatis due to reports perhaps deutsche bank would sell its asset management union, the details? >> a lot of chatter, as of

yesterday, a talk of a merger about aet bank, today potential sale of some or all of the asset management units, a unit that is small but very profitable and is growing in terms of revenue unlike the rest of the bank. you have to see sentiment around deutsche bank and big european banks, they are depressed and have been for much of the year, clearly a lot of pressure on ceos to come up with new ideas and offer more to investors to come back on these supercheap but super risky stocks. >> it is that idea that has led european bank so high, the biggest three-day jump since july, or is this a value trade, they are so beaten up, we are seeing a reversal? >> more of the later, banks have been seen as value trap because there is no good news to cling to, especially in terms of growth, pressure on the ceos with other banks such as credit squeeze, more radical revamps and overhauls, if the talk turns

to this direction to deutsche bank then it could spread to other banks. >> deutsche bank up 4% in the market today, thank you. checking in on the china data that was moving markets. let's discuss china pmi, i have a chart that confuses me quite a bit, this chart is of the official data china pmi over 50, that increased, the blue line the unofficial data, that decreased, which one is right? we are having difficulty -- can you hear me? having some technical difficulties. we will jump over to carolina checking on stock movers. into some big's moves we have been seeing in the banking sector, you're outperform are on the stoxx 600, closing 2%, outperforming the

banks, across every single country, the spanish moves, german moves, french, italian, comment bank up 6% on a tear over the last few days, so much talk over german consolidation, -- german report, we said big moves to the stoxx 600 in banks, now to the levels of pre-brexit. i want to get into at one particular spanish company, gas natural coming down to a 4% surge, higher than a few hours ago, all about private equity with a stake in the company to a tune of 20%, this would be getting a company that has its revenues in spain and latin america. a private equity company said to be looking to buy a stake of rexall. europe,this plays into some of the big players in terms

of business software are moving on what has been happening to salesforce.com, yesterday for the first time in three years we saw this company miss its estimates, down 7% in early trading and yesterday late-night trading, two cents better for the second quarter is the outlook, third quarter disappointing, the consensus was $.21 to $.24 per share. >> cloud computing supposed to be the hot sector, something to watch for. let's break down the china pmi data. i pulled up a church -- chart highlighted a disconnection between the manufacturing data, the white line is the official site of pmi which moved higher in august and the blue line is the unofficial data which moved below 50, which data point is right? >> predicting chinese economic data is not exactly an exact science, a bit of a global economy, highly controlled, the

important thing to note in this is that it is staying around the 50 mark which divides contraction and expansion. we hade of weeks ago, retail sales, industrial production, all missing estimate and the u.s. economy is in the doldrums and now pmi has increased more than expected, so a bit of upbeat about it, at the end of the day, the economy is stable, we have to remember that is highly controlled and things are not going bad, that is the important thing, especially for commodities. >> why are not things going bad, that leads us back to stimulus, production up, new orders up, domestic demand higher from the stimulus but the question is will we get more? >> we probably will because the manufacturing cycle kind of starts in august, especially for some commodities. get into theould

sdr, china will probably want to keep the economic data going pretty strong, at least until the end of the year, they do not want pressures on the you want, do not one volatility in the stock markets. everything seems to be going according to plan, a few pangs of -- birthing pangs as the economy moves from one model to the other. overall, things looking pretty stable if not positive. >> thank you. let's get an update on what is making headlines outside the business world. the first word news. >> donald trump has returned to form on his signature issue, immigration, in a fiery speech in phoenix the republican presidential candidate made it clear he wants to build a wall on the southern border of the u.s. and have mexico pay for it. he ruled out legal status for undocumented immigrants. donald trump: there will be no amnesty. statusnot obtain legal

or become a citizen of the united states. byyou legally entering -- not legally entering our country . >> earlier he flew to mexico city to meet with the mexican president, he says they did not discuss a border wall at the mexican president data said mexico would not pay for it. the british prime minister has set up the first ever redline for brexit negotiations, she wants to end the free moving to people coming to the u.k. from the european union and suggest she is willing to meet the eu single market is to accomplish that. the new brazilian president said the work is over, she was sworn in after the senate in pete the suspended president, her first job is to put brazil's economy back on track, telling the cabinet they will be spending cuts -- spending caps and pension cuts. this is bloomberg.

caroline? coming up, strong manufacturing numbers out of china and the u.k., are investors buying into the stronger data. ethan harris, bank of america-merrill lynch head of global economics on next. ♪

tom: --alix: this is bloomberg . you are looking at relative risk on, futures pointing to a slightly higher open, you do have a relatively flat 6100 but the dax moving higher, was higher earlier, off the highest of the other session but the better pmi out of the u.k. and china helping firm eight tiny

bit of risk appetite heading into jobs friday. the fx market, two stories, sterling surging higher, 132 against the dollar, you continue to have a stronger dollar against the yen, dollar-yen at a backupth high, a slight in yields by one basis point, you are seeing that across the board as investors rotate a bit into risk and oil flat at a three-week low. day, ae: happy pmi strong pmi day. strong manufacturing data out of china, the u.k., the eurozone, india, all above 50, getting a rebound in factory activity and with us is deep in harris the bank of america and religion head of global economics, do you diet -- by it? better datang at for a while, started off year

with people worried about global growth, the brexit was a bit of a shock, generally speaking the data has been a slight -- on a slight upward trend globally, we have an indicator called the global cycle which looks at trends in global growth and it has been improving for recent months and is above trend growth globally. the global economy is doing fine. the reason is because sterling fell, and china, -- in europe, a mixed picture, italy, france, horrible, are the tea leaves, if you dig deeper showing a slower global demand picture? ethan: i do not think so, the global economy is growing slightly above trend appeared in the u.k., you are right, what does this brexit even do, it's

somewhat has helped manufacturing because of the cheap currency, where you worry about the u.k. is about durable spending, all of the stuff affected by confidence, consumer spending on automobiles, housing, business investment, thanks affected by the company in the future, that is where we should look for the brexit shot, not in the pmi. alix: manufacturing 10% of the u.k. economy, really about services, similar in the u.s. caroline: look at that number on monday, give us a sense of the pound rallying today, will that debt the future performance of the u.k.? still a little bit, you have a weak currency, a cushioning effect, the currency cushionings job of the blow of what will be a tough environment for the u.k., the small rebound in the pound is a small impact, still a story of

manufacturing as well relative to the rest of the economy. digging in much more with the data out of the u.s. later. again,ounding the alarm bill gross saying negative interest rates turning assets into liabilities, pounding this --m, why ♪

, 25s is bloomberg hours away from the all-important jobs report we get tomorrow, another read on the u.s. economy, will it be strong enough for the fed to raise rates in september. with us is ethan harris. the magic number that the fed says we have to pull the trigger in september or december? ahan: september, you need

strong report, well above 200,000, the consensus in our forecast is 180000 and the fed probably watches, a december rate hike is very likely, the stars are aligned, something has to go wrong at this point to stop the fed from hiking this year. caroline: what happens to the dot plot, generally --? ethan: the fed will go extremely slowly. there is no rush here they should be hiking very slowly. the fed should not be worried about a small pickup in inflation, not a big concern in this world where we have had low inflation for years. the hole exit path of the fed will be slow. i do not see any time of toughness. alix: at the heart is the inflation debate, this is my favorite chart, from a report

you wrote, the cpi that blue light and the white year the five-year form break even, it says as we see the cpi cried higher, the expectations are continued and lower, how does the fed bridge that gap? ethan: after years of fighting to hold down inflation, the problem the people do not leave the fret -- fed can rise inflation. can convince the markets and the average person they can create their target of 2% inflation is to get inflation up, they have to prove they can do it and they should not try to resist the rise in inflation. of 4%, 6%, what is your overshoot target and what does it do for inflation? ethan: i do not think the fed should be going back to 1970's,

we do not want to go down that path but a modest -- modest overshooting where inflation in that 2.5% which makes up for the fact we have been down at 1.5% for years and by going to 2.5% the fed gets ready for the next downturn, we will have a recession in the next three years to five years, they do not want to be at 2% in inflation when the recession hits because they will tumble down to the low inflation environment we have seen for years appeared if they want to plan for the future, they should be thinking about a modest overshoot. and: this debate is front center at the fed, charlie evans leading the way, wanting to wait until inflation hits that 2% while other fed members are more skeptical, yellen herself. fedline: where are the leaning, tort evans or a more hawkish view? ethan: they are stuck, a lot of

people saying the fed should raise their target but raising the target is a painful thing that requires a big internal debate, it could bring politicians into the picture complaining about what the fed is doing so they are reluctant to start down that path and they do not have to go down that path yet, inflation is still below target. over time, in the views of evans and williams and the others on the committee who are the more dovish people, they say oh overshooting the target some way makes sense but i do not see anything happening soon, the fed has plenty of time to wait and figure things out. alix: if they risk -- raise the risk premiums in financial markets? ethan: yes, higher inflation creates a little bit more riskiness but we are not talking about real inflation, we are talking about modest over to consisting with the normal ups and downs, the fed can still

stick in the long run that we want to average 2% and if we do that we have to be above 2% some of the time, presumably when the economy is hot and the load to present when the recession hits. -- below 2% when the recession hits. this is centering inflation around the 2% target. alix: great to see you. thank you. as reported, the inflation measures in the united states, fiscal stimulus was the wildcard, especially in the u.s. caroline: in europe as well, coming up, more about the u.s., donald trump declaring no amnesty for illegal immigrants in a fiery speech, we debate that next. ♪ ♪

>> this is bloomberg go and i am emma chandra. here's what you need to know this hour. a surprise from china's

manufacturing sector. it unexpectedly rose to the highest level in almost two suggestingecting -- the slowdown in because by flooding. the pound is giving a boost to manufacturing. a reached a 10 month high in august after work postponed in july was restarted last month. apple ceo is confident of winning the battle over taxes with the european union. the decision that ireland must billion dollars and taxes is maddening and disappointing, he has faith the right outcome will occur. that is what you need to know this hour. caroline: we will dig into the apple story more. we are in the green, risk appetite of bound after better-than-expected china manufacturing, u.k. manufacturing. we are up .8% and the banks lead the charge. we are currently up 2.8% in the

banking industry and every single bank is climbing. we are having the best day since july 12. nasdaq and ftse 100 held back because of pound strength. it is great today and your key best performer, up .8%. best day in a month for the british pound. u.k. pmi surged after the brexit caution. the official data from the government of china showing expansion more than expected. zinc is up .7% and the metals are on the up because of china on the down, wally continues to be brett -- brent. alix: today we turn to the morning must read and it is a morning must watch. according to bill gross heaping

low rates is a mistake. he spoke yesterday on bloomberg television. rates are ainterest hindrance to a growth purity they believe in the positive and they will continue to believe in it and i think that is part of the problem. as the other part is true that fiscal responsibility has been abdicated by most governments and we need some of that. where we are now, the rates pass has been lost and rates are at zero. if they can sink a little more was alwaysve, but i skeptical about a negative rates and i think they do more harm than good. gross fromwas bill janus. negative rates have been the theme for us the entire week. >> it really is and from the idea of corporate -- as i said

before this is in chapter 23 of an econ textbook. we have a generalization working within the economic model and there is a debate over complex models or simple models and guys in the real world like mr. gross with investments are saying, pay attention to the financial system which includes banks. alix: you have to see what kind of data point economists would need to see to say, maybe negative rates are not good for banks. points, they have many data points for september 21. they will get their data points, axis is the time function and what i hear person-to-person is the longer we have negative rate structures, things change and that is what i think the doctor alluded to.

you also have charlie evans coming out and saying they are making decision longer will keep it low and avoid a taper tantrum. >> this is the difference between economic schools. evidence is clearly out of the freshwater carnegie mellon school and he has more of a linkage to finance. it is interesting to see vice chairman fisher at 30,000 feet. the nuances of the debate are very rich. alix: that the bait also playing out within the fed. you have rosengren warning of higher prices and evan says, it is ok. i will forgo with that drama and theater. within the walk we saw

at jackson hole, it was chairman and dudleye chairman of the new york fed that will decide and they have to ask yourself if they are linked into the financial analysis or is it strictly about economics. alix: meeting them in the someone for coffee is saying yes, and negative rates are something we need to do in the next crisis. -- i read every word of his paper and i would say it is controversial. what is interesting about the paper is it was a huge economic exercise again with lots of finance and banking removed from the analysis. john cryan does not give a damn about economic analysis. i was the just he is fighting for his life. alix: we will talk about jobs tomorrow, but it is this debate

going forward. tom: the trip point is 150,000 according to bmp. asx: echoing bill gross well, anything above 150 he said that is screaming hike. 10 in from 7:00 until 10:00 a.m. for bloomberg surveillance. talking about immigration. to say acrossuch the board, whether the challenges europe faces, but the challenge to do with the refugee crisis. this is front and center in germany's mind where he has been speaking about refugees and other problems transcending national borders. this is all tied up with the u.k.'s decision to leave the eu. the pivot tomakes immigration and local elections and germany as well. chancellor angela merkel could potentially face a defeat or

lower in the polls this weekend. caroline: the anti-immigration party that seems to be following -- bubbling up at the moment is known as the alternative for deutschland. running neck is and neck with the anti-immigration party and her heartland. in this particular area of germany where she called home. i have to keep reminding myself exactly how to say it, the cdu could run can the can the election this saturday. a fascinating focus on the rise of the anti-immigration party. this chart shows how it has ramped up support in terms of august 2016 since may 2014. alix: it is the populism and the anti-immigration that exploded here in the u.s. as well with donald trump and bernie sanders. caroline: the anti-establishment in the u.s.

donald trump returned to form in out illegaling immigrants -- he is also proposing to build a wall on the southern border of united states and forcing mexico to cover the cost. nights i willhin create a special deportation onk force focused identifying and quickly removing the most dangerous, criminal, illegal immigrants in america who have evaded justice just like hillary clinton has innovated justice. caroline: for more we are joined by marty, bloomberg's senior economic editor of economics. what was your key take away from the speech? >> the key take away is that he

doubled down on his regimented, anti-immigration policies. he is going to try and remove 11 million undocumented immigrants in the u.s., pretty astounding. alix: the key though is that you had trump visiting enrique pena nieto in mexico that day just hours before and he came under a lot of heat for that. of an invitation that is extended to all candidates and nobody expected anybody to say yes. the trump that was down there was a completely different trump that returned and gave a speech. in new mexico he was talking about wages and the things we think about when we talk about immigration and economics and when he returned to arizona he was talking about crime. you over just talking about party andd the amd this is a problem you have an -- china has this problem,

europe has this problem, the u.s. has this problem. we need a young labor force to increase workforce participation and help pay social security benefits for the future. this is something all developed economies need. the problem these economies are finding is you cannot get the cultural -- past the cultural barrier to bring people into be the labor force. caroline: give us a sense of the -- howc infiltrates in much are the numbers coming into the psyche of donald trump? >> i do not know that he is that concern about the numbers and to the vast number that are going to vote in this election the numbers do not really seem to matter. the economic argument is pretty clear that the workforce in this country helped contribute to the well-being of the economy in general.

that is not felt by a lot of the people who are voting for donald trump. alix: that really brings us to the broader implication. if we end up seeing any kind of donald trump policy coming into force, the impact on what it means for the u.s. economy. >> he says something interesting, which is true, which was that the emigration policy we have right now is designed for elites and i think that is true. what we have is a default policy because we cannot figure out how to do it better. we have a very cheap labor force that is undocumented in the united states. in our economy, you cannot rip families apart, and you cannot rip the economy apart. he saw this in alabama when they started more aggressively deporting people and they found crops were rotting in the field.

if you say no amnesty you have a huge problem because you have people here who are undocumented and who are part of the economy we live in right now. caroline: give us a sense of where we go next. we have heard of mexico coming out and pretty upset by what has been said by donald trump. >> the mexican people were very negative about the invitation and probably even more so today after listening to donald trump's speech. presidential in mexico city and he looked like donald trump in arizona. caroline: thank you senior executive editor of government and economics. a great roundtable and later today we will spoke to the mexican secretary of foreign relations. at 1:30 p.m. eastern time. alix: we are going right to

corporations and going to congress to get things done. it is seen as the biggest gains against the dollar among all major currencies so far this year despite a political shakeup . we will reveal the mystery chart and what that currency is next. this is bloomberg. ♪

♪ alix: this is a bloomberg go and i am alix steel in the hewlett-packard enterprise greenroom. the chief economist will join us , what is the job number to get the fed to hike? bloomberghere is your business flash.

apple ceo tim cook is confident in winning the battle of the taxes with the european union. he spoke about the eu decision that apple must pay ireland more than $14 billion in taxes. tim: it is maddening and disappointing and it is clear that this comes from a political place. it has no basis in fact or in law. unfortunately it is one of the things we have to work through. caroline: cook says he has faith -- apple will start spending billions back to the u.s. next year. a british factories have bounced back from a post-brexit slumped. a manufacturing reached a 10 month high in august that was much better than economists forecasted. for the first time in more than

two years gambling revenue has risen. casinos took in 1.1% more in august. new resorts attractive recreational gamblers and taurus. china's crackdown -- that is your bloomberg business flash, i am emma chandra. caroline: thank you very much. today, the story is the u.k. factory output reaching a tend i high -- 10 month high in august. us head of global fx joining now, today we need to speak to a man about fx, talk to us in the movement in the pound? bar as the number is self is concerned i think it was a shock and anomaly. as far as the fx are concerned, i am not buying into any selling strength right now.

manufacturing is a small part of the u.k. economy, just less than 10% of the u.k. economy abroad. secondly, a move in the pound was very abrupt in the aftermath vote which means there was a significant time gap for manufacturers to benefit from the lower pound and lower sterling. this is probably what is showing up in the data right now. i am still in a wait and see mode for the services pmi which i think will vindicate the outcome for the u.k.. alix: this also leading to pressure on the euro today and that moves into the euro-dollar conversation. is there asymmetric risk when it comes to the dollar headed into that number? vasileios: you mean the payroll number tomorrow? i did not really think that it

is going to be that much .mportant for the fx market we will likely see knee-jerk reactions, but on the whole i think the market as well as the fed pretty much made their minds up in that it is more likely 125 basis point hike. i think this is neither here nor there. what really matters for the dollar going forward is the path of the titan cycle. as far as i am concerned and not short on volatility, i see the daughter -- dollar on a decline from here. expectingyou are continued depreciation in yuan. we could see it hitting seven. is that a front and center story about you on depreciation rather

than dollar strength? vasileios: absolutely. i think there are two stories. it is the china story and the emerging market in a general. as far as the china story, it is important to know that we see further depreciation dollar child -- dollar china, but we see it being gradual and this will be soothing for the market because it reassures that the pubc has learned from previous mistakes and getting a better handle on monetary policy. caroline: are they handling fx too much? they seem to be supporting you g 20.yuan because of the vasileios: if you take a birds eye view into the volatility of daily fixing's, what was happening back in 2016, you will see the volatility fixings has

gone down significantly, meaning that is a -- it is more market-driven. as far as the effects in general, i think there will be plenty of their if -- differentiation going forward. , for example, or even turkey are likely to be laggard and some other bright spots like russia are likely to outperform. i do not think it will be uniform going forward. caroline: it has been great having you on, thank you very much, vaseleios gkionakis the head of fx strategy. jobs preview euro three charts you need to see, reading the non-pharma pay leads, that is on the charts next.

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." this is "bloomberg it is a story of pound strength today. up .8 percent, much better than expected manufacturing data of the u.k. how much does it matter? economy,service-based those numbers likely to be less than 50 by monday. china manufacturing data is helping, battles are on the up. oil is not getting a bid, down .5%. alix: what we can expect at 8:30 on friday. this deals with the adp and non-pharma payrolls. what you need to pay attention to is what happened in the last two months. adp has underestimated nonfarm payrolls by 96,000 jobs.

if you were to see that 177kting based on the number you could see nonfarm at 200,000 plus. bill gross looking at 150 -- 150,000 that would be a trigger for a fed rate hike. you also need to pay attention -- isn.fn the employment hiring, both of those moving relatively higher. at the white line in the adp was a large firm which hired the fastest pace since february. i think i got this confused, one second. adp nearly the fastest pace of hiring since february. what does it follow? do you follow the isn or adp which has been stronger in terms of the large firms hiring?

in terms ofide, estimates come a lot of the survey estimates for august over the past five years have missed. these blue bars are what the market expected and the orange bars are what actually happened. look at september 2000 11, 0 change versus last year. caroline, you are reading the tea leaves and it is hard to say, but this will be hard for the said. -- for the fed. caroline: that data will be tomorrow, a special interview coming. we will talk about the challenges in the u.s. market. ♪

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>> boosting confidence, the pound jumping the most in two weeks as the manufacturing sector fights off -- alix: deutsche bank shares getting a boost after the ceo calls for more bank mergers while reports surface he is making a fresh revamp of his own firm. caroline: donald trump declaring no amnesty for illegal immigrants after meeting with mexico's president. alix: i'm alix steel in new york along with my guest cohost caroline hyde. jon ferro and david westin are both off. you have a minute taker at the moment. it is all about the data. there is so much going into this. we got some big goings-on in

terms of european stocks. alix: fx looking at the dollar, but the sterling moved off that u.k. pmi a little bit of risk coming into the market i'll caroline: particularly with the banks il we have a better -- we have a special interview. -- the biggest insulin maker. lars joergensen be joining us. he has been at the company sense 1991. of the market, it will be about wait-and-see for the jobs number. it is global pmi day, getting a lot of data points and having risk on affect. in the markets. europe, of 5/10 of 1% coy. italy and france, a little weak.

european banks, the biggest three-day jump in july helping to boost the markets. in the fx market, the dollar and the pound. seeing the dollar search. in terms of the u.s. dollar, it is beating the drum towards jobs friday as we get the numbers. high,-yen, one-month continuing to push lower. in the commodity market really reacting. you are seeing copper, nickel, and zinc moving higher. crude down to a three-week low. bond market, weakness across the board. united states 30 year yield back up two basis points. a lot of issuance coming in from france and poland. again, not a lot of risk being taken. caroline: look at that backup in

yields and the united kingdom around the pmi data. great stuff. let's go around the world for bloomberg team coverage. from berlin to mexico city, we start with our top stories of the day. simon kennedy is here looking at stronger than expected t economic data. kevin cirilli has the latest on trump's plan for immigration in the united states. first, it is all about our brexit editor and the recent pmi numbers and whether they matter because manufacture is not all that important. we can talk about goods and make single axis of good spiral it will be banking and insurance that are really driving the negotiations. on the upside, a lot of people said employment would take a real hit from the brexit about

and it has proved the resilient. in part, due to the lower pound and whether that can continue to provide some insulation from the future of brexit shocks. caroline: still nowhere near pre-brexit levels, but it is creeping higher. how much do you think it feeds into mark arkin's view? mark carney's view? --when you look at housing perhaps trying to hold their line. really reflected in that. it is been a couple of that. it takes time for couples companies --it takes time for companies to pull back. we are still a few months away.

member market data showed fortitude in recent weeks. caroline: dallas simon -- that was simon kennedy. after he came off the crazy august, a lot of highs in the s&p. oliver joins us. it is the first day of september. not a great month for u.s. equities historically. >> also the worst month -- keep in mind that stocks go up. you have to take that with a grain of salt. it is historically the worst month of the year. wing us games are over -- a lot of things are over weighing us. there has been an interesting trend in the past couple of months were u.s. investors have been sort of taking economic data that has been positive and reacting positively.

good news is kind of bad news for equities and risk sentiment. even though you have this shift where investors do want to see a stronger u.s. economy, those expectations for good numbers are there. you have to remember, the biggest winners of the year of the company said it well throughout the first six months. any kind of hint those rates will come sooner could continue to lead air out of those higher dividend paying companies. the dollarlooking at heading into jobs friday, but the asymmetric risk -- more potential downside? have is hard because we not had these two forces that are still very much active in the market. eventg out which way the is going to turn depends. you have at this shift where people want to see stronger

economic status and get into the stocks that are going to do well in the event of a gaining economy. but there are still a lot of bullish positioning. if you look at contracts on the s&p 500 and volatility, we have seen a tick up in volatility expectations. but you have still plenty of room to introduce risk into a market that has been very quiet and has not gone anywhere. that is the potential for the downside at this point alix: thank you very much. we have individual stock move are starting with salesforce.com coming out with earnings after the closing bell. down big on poor guidance. revenue outlook falling short. this is all due to too much competition and the lack of sales we saw last quarter mostly in the u.s. it is a different story for the gambling names. a 20e got macau ending

months love -- 20 month slot. ump. tesla, the up company must repay bondholders by $422 million in the third quarter. they will also need to raise additional capital by the end of the year. tesla has burned $3 billion in cash since late 2014. from individual movers, but the theme, you got pmi and waiting for jobs. caroline: exactly. the pmi really feeding into european trading. we have seen big moves in the united kingdom. outside with emma chandra for first word news. >> apple's ceo says they will stop sending overseas cash. -- ade the comment >> we pay the 400 to ireland.

we paid 400 to the u.s.. provisioned several billion dollars for the u.s. for payment as soon as we repatriated. and right now, i would forecast said repatriation to occur next year. >> he is confident that apple will win its tax battle. he called it meddling that the eu will that apple must pay more than $14 billion in back taxes. british prime minister has sent out the first of brexit negotiations. she says she wants to -- she suggest that she is willing to leave the eu single markets to accomplish that. the supreme court is refusing to --ise the id requirements

that lawmakers intentionally estimated against minorities. news 24 hours a day card by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. caroline: thank you very much. coming up, a special interview that you do not want to miss. joergensen giving us an outlook in the industry and steps up to his big role. .his is bloomberg

♪ caroline: this is "bloomberg ." an caroline hyde. novo nordisk announced ceo lars joergensen retired by the end of the year.

the company is the largest insulin maker in the world. the united states is it largest market. lars joergensen took the hound and the drugmaker's stock has risen in revenue. that has quintupled. shares are trading down in denmark this morning. lars joergensen is the incoming ceo of novo nordisk and he joins us from their headquarters in denmark. shares down a little bit. where do you go with the company? what is your key priority for the future? lars: my key priority is obviously that we need to do well in the u.s.. a headfacing a bit of wind but we have a strong portfolio in recent products we are launching and we are quite comfortable that we can get back to high growth in the medium-term. i canne: at the moment, show you the world went your stock prices have. you have been the apple of

europe. you're outperformed the rest of the market but share prices have come off of their eyes. hi -- what cang you tellh the investor based about the breath of fresh airs. ? were external candidates considered? lars: are german -- our chairman has considered interim candidates. when you look at the opportunity we have right now, we have a quite broad portfolio of next generation product that we are going to take to the market and that will get the growth back on track. caroline: overall, the industry and your company has been dealing with pressures from kiefer drugs. either you discount your drugs or you lose market share. what are you going to do in the next six to nine months to help that? lars: i think it is more complicated than that. the growth in our industry is based on innovation.

we have a portfolio of innovative products. on the older generation of products, we are facing price competition, but we can increase pricing. and based on data profiling, phonics being -- products -- alix: if you are able to increase prices, does that -- how does that not wind up hurting your sales? many of your sales is geared toward diabetes. how easy is it to increase those prices? lars: we are not increasing prices. when we launch new products, we had a clinical profile. we get a slight premium of the products. it is a strategy of launching better products. caroline: are you looking outside of the world of diabetes? farm well, we have a bile -- we have a pharmaceutical in

the growth hormone area. within diabetes, we are diversifying. we have an interim business. we now also are moving into an adaptation area two diabetes. we are increasing our diversification, but staying close to what are the core areas and core competencies. jon: from diversification to digital, how are you looking at the new world of digital health? will it inspire m&a? lars: we have teamed up -- we have other partnerships that have not been disclosed. we strongly leave that this is an area in the diabetes care area. when you look at the number of patients, by adding better thinkce to physicians, we that can do an important job so people can get better control.

it will benefit our business. alix: the next question goes to m&a. volume has been relatively low in western europe for m&a to grow a diversified. what companies may you have to buy to do that? lars: as you see, the strong portfolio we had is based on --connected to -- it is a profitable way to go. we have to look to the outside and see what kind of deals we can do. you should not expect that we will do large-scale m&a. we have a very strong, organic outlook. but we will complement our own portfolio -- riskyou got some political in the united states. ahead to theok

outcome of the election in the u.s.? we have seen over the years whenever there is an election going on, there is a lot of focus on pricing. i think that is the case now. that it wills take have a massive impact short-term, but it is really difficult for us to be very specific on what the impact will be. caroline: give us a sense of where you are going. what is your key trait you want to employ as chief executive of novo nordisk? how will you change your day today? lars: clearly, i will be much more engaged with customers and patience to make sure to have a good feel for how we are doing as a company. i have been at the company for 25 years and have been responsible for strategy for the last 10 years. for me, this is the next step

and i feel quite comfortable to deploy continue the practices i have so far in my career. caroline: we wish you all the very best and we hope that you will come back and see us. lars joergensen is the incoming ceo of novo nordisk as a wave goodbye to lars sorenson. phenomenal to dig deep into this particular company. alix: coming up, bonking bill jobs or more,000 will cement the fed's rate hike. that is ahead. this is bloomberg. ♪

♪ caroline: this is "bloomberg ." i'm caroline hyde. all eyes on the job report as

investors want to know if the number will give the fed enough confidence to raise rates. bill gross gave his estimate. bill: certainly, with the employment number, we saw the gdp number nfc employment numbers hit 200, i think that cements it. i think the market would be less certain with that. caroline: joining us now to discuss this is senior economist 150 on friday, is that enough to pull the trigger for a rate hike? >> caroline, i don't think so. we cannot just look at the headline number. there is so much information at comes out of the employment number that you have to dig into the details. average hourly earnings, the unemployment rate. you have to get a solid report. had septemberfed

as a target for the rate hike, they would have signaled that it jackson hole. alix: a portion of that will try to jump on the market being higher. it is really job growth versus gdp. gdp really lacking that job number. -- how does itap reconcile itself? >> we have had to get up to speed on these academic concepts of potential growth and the natural rate of interest. the reality is, there is not anonymity on the part of the fed as to what these pieces of data mean. clearly, there are traditional hawks out there. we are in data-watch mode. caroline: how much does the dollar play into the fed's thinking. every time the dollar scales higher, we see a retrenchment away from a rate hike? >> the dollar is very important. it is one of the top risks to

the u.s. economy in the next year. last year, we had a 20% appreciation of the dollar, and it really did hit. our manufacturing sector what we have to realize is that sector is in the green shoes of a recovery, and the dollar is vulnerable to a significant shift in said height rate fed hikeons --fe rate expectations. you have to see an significant swing and if petitions to move the dollar from here. alix: are we in the scenario where we were in august where the fed signaled a september rate hike in the dollar moved in anticipation that caused ultimately -- that cause volatility in china. was that specific to last year? >> it is on the table. fed watching as the new reality show and has been the breakout hit of 2016. we have all been locked into

this data-dependency, and we have been here before. the fed is setting up for a december move. a lot can happen since then. breaks it, the chinese equity market move, evaluation. while we keep our eye on your fundamentals, we are unable to international events. that is a reason to go in september because you have three weeks of uncertainty if you wait for december. there is a portion of the fed that seems to be in that camp. >> that is one of the problems. there is not a consensus voice coming from the fed leadership. if we get some blowout, amazing september number -- it will be 200 plus, unemployment rate significantly lower, we need the whole package, but if we get

that with a pretty bow on it in the market moves, if the fed sees the green light, maybe. alix: it is the perfect scenario, right? you have everything in line. they still need perfection. laura, good to see you, senior economist. thanks for joining us. we had dan saying that you don't need the blowout. caroline: can i go back to laura's fed watch, the dream watch, i could see it on netflix like a show to watch. great stuff. thank you. coming up, we are talking lending. this is bloomberg. ♪

,l ♪ caroline: this is "bloomberg ." i'm caroline hyde. a quick check on the markets. it is pmi day. look at the stoxx 600, adding 70 billion euros.

the banks lead the charge. a lot of talks on consolidation. the dax up 4%. the pound topped. pmi manufacturing coming in. nine pence of a percent higher on the british pound -- 9% -- 9/10 of a percent higher on the british pound. alix: if i'm a rate for second quarter, not was down 6/10 of 1%. that was worth in the read before that was down 5/10 of 1%. productivity front and center for the difficulty the fed is having raising rates. danny fisher talking about that yesterday with tom keene. initial jobless canes -- jobless claims coming in. it was down more than estimated. you sort of have a different view of the job market. you have initial jobless claims

grinding lower and productivity grind weaker. , this was thests final read in the second quarter, actually up 4.3%. the more companies have to pay for workers, the higher their labor rates rise to. ed. d. will they have to start firing workers? caroline, you are looking at market reaction for s&p. not even up a half of a percent. we did see a slight pop on the yields. topic in the u.s. political race, but this week, the focus has been on immigration. unveiled his immigration policy yesterday in phoenix after meeting with the mexican president earlier that day. trump doubled down on his nativist rhetoric calling for no

amnesty and building a wall. have a listen. mr. trump: we will build a great wall and mexico will pay for the wall. cirilli joins us on the phone from mexico city. how was it taken by the crowd, lots of cheering, but hard for the mexican stew here. a lot ofyou know, people on the ground at mexico city were confused as to why the president of mexico would even invite donald trump to visit with them, and then of course, we saw yesterday during that remarkable press conference, a much more statesmanlike donald trump in demeanor. north toer, he went up phoenix, arizona, ground zero, if you will, of the immigration debate in the u.s., and he presented a much more aggressive rhetoric position any policy

speech that we are used to hearing. alix: kevin, what was the rhetoric on the ground in mexico against the president? it seems that people were unhappy that he invited resident trump, excuse me, slip of the tongue, donald trump, to speak? one eightpeaking to of the president of mexico, and i asked her, windy to all even find out about this visit? she told me that they had found out just the night before. so clearly, both the senior campaign, the trump as well as mexico, this was a very last, tightly guarded meeting. and so, i think, this is the president and mexico that faces very low approval ratings and delivering his report of the mexican congress. from his perspective, what more does he have to lose? trump's perspective,

it gave him an opportunity to show independent voters undecided voters in the united states who are disgusted with the choices for president of both hillary clinton and donald trump. it gave him an opportunity to present himself on a world stage to allow those voters to see him in an environment on an international stage with a global backdrop. and then hours later, proving again that he is not going to quiet himself on the immigration issue. alix: kevin, thank you very much for joining us. kim is politics reporter. later today, we will be speaking to mexico's secretary of formulation. you are looking at the dollar peso, shooting holler -- chewing higher than the dollar today. we have to berly, shifting our attention from politics to global markets. we can to our morning meeting as we look at the key banks that are focus.

he joins us now. we have seen a strong manufacturing data out of china. so much in the world to be focusing on. i love your statement -- join the great migration. we have to get into the magic marker debt, you say? [indiscernible] caroline: well, what do we get into it? is it about china, mexico? >> we think that some of the money that came to emerging markets because a migration has

been happening very strongly during the third quarter, but it has been a little indiscriminate. it has gone everywhere. if you look across countries, it is been very low. we are thinking now is the time to start focusing on selections. were of the places you want to be? there you have to see where the reforms are advancing and where growth is advancing. all non-emerging markets are made equal in that sense. caroline: we can certainly see that the great migration has been occurring, not only in bonds, but equities. i showed you the rampart we had as of late in the emerging markets asset classes. that dollar strength pushing down on the overall emerging markets fx. how much are we going to see movement and currencies? should you be exposed to merging market currencies at go >> you have to be exposed. be are still facing the fed starting a cycle.

that could be support of the dollar. [indiscernible] we are focusing on income civility. we are looking at dispersion that we show very low in spreads. it is not low in gains. currencies are a place of relative value. caroline: fascinating speaking to you. thank you very much, indeed. time to join the great migration. from emerging markets to commodities. the commodity super cycle is over. the question is, who is going to lend commodity companies money? banks are scaling back as to how much cash they land. -- an stanley cutting its

it is a big trend in energy, but in the diamond industry. prices are down 20% for diamonds since their 2014 high as banks run for the hills. standard chartered exited its $2 billion diamond financing business because it was too risky. that created a big opportunity for other types of lenders. john mitchell saw this opportunity and raised $1.5 billion to start the fund that lens to the diamond sector. they join us now. gentlemen, great to get your perspective. why now? they are getting out of the dimon lender business. why are you getting in? >> the decline in prices has led to a lack of profitability and balance sheet corrosion. this is one of the reasons why banks have been pulling out. there are several other reasons and the midstream sector which

is wholesalers, distributors. they all have typically had a lack of transparency. toy have also not conformed regular accounting standards, which goes back to lack of transparency. but most importantly, there is an oversight -- government oversight in thinking regulations -- banking regulations. starting tos are address capital adequacy and market, liquid and stress testing. dimon companies are not in this framework. banks are pulling out so we created a risk mitigated framework that primarily lends on collateral, which banks do not like collateral-rich companies. they prefer it now over the new banking regulations, cash flow

rich companies. atx: when you take a look your terms, your regulations for banks, but the yield of what they will ask for is less than what you charge. what are the terms jack go >> we charge a higher interest rate from a normal traditional bank. alix: can you give us a ratio? plus 3.5. plus 11. n't too many solutions. we physically take possession of the collateral. alix: heidi ma midstream -- i am a midstream diamond company. give me money. is that what we are talking about? >>. yes. requirements. we do b2b.

our framework is very risk mitigated. we look at the credit and check market references. but we look primarily at the collateral which is quite safe even with declining prices. you will never see more than 10% to 12%. alix: you take a look at the future, at some point when the commodity autumns, it will plot them way --it will claw themselves higher. do you feel these midstream companies will pay up for the flexibility of the cash, or go back to the banks where they pay less but have more military issues? >> they will continue to come to us because our solution is not just lending. when the diamonds are in our possession, we also help with marketing solutions for borrowers. while it is in our possession, we help with distribution and the complete on the channel approach to tb, e-commerce, retail so they are not as

getting liquidity, they are getting inventory turn and increased probability. that whole solution is the reason why i think they will stick with us even when commodity prices come back. you are looking to raise $2 billion, who did you raise it from? >> the race it from specialty finance companies. unfortunately, we cannot disclose the names. have backers who experience and acid-based lending and see the opportunities in the industry. alix: the banks who were shot out of the diamond industry, are they coming back channeling loans through you? >> we are in discussion with industry banks and they want to see one year of operations nco remark -- one year of operations and see one year of framework. fascinating transition. not just diamonds but oil as well. thank you very much.

caroline, i am hearing this from the oil guides, too. caroline: especially they are not so white -- they are not quite willing to lend. we have got market reactions. we want to be bringing you what is happening with the u.s. jobs data. stronger slides in terms of the labor force. up goes the yield in the 10 year. up goes the u.s. dollar trading near session highs. today, going back up at the moment up 10th of 1%. all eyes on less than 24 hours. counting down to the jobs number out tomorrow. deutsche bank shares getting a boost after the ceo calls for more bank mergers as reports surface he is making a fresh

revamp of his own firm. this is bloomberg. ♪

mexico's coming up, secretary of relations at 1:30 eastern. here is your bloomberg business flash. russia sees no deed for an oil production freeze. according to the energy manufacturing, they will talk to produce is it prices fall. leadersions and other will get together to talk about other issues. british --

it's elementary committee says the government must set strict timelines. more than one million volkswagens were found with -- 5% gift cards are available. new apartment are hitting the market or 2016. contractors to buy are down 21%. this is bloomberg. alix: thank you. we have stock movers ahead of the opening bell. is one ofmmunications them and will be added to the s&p index replacing emc. the assumption is a lot of the indices will have to go in and buy the stock. on the downside, campbell soup

really struggling down at 4%. up raising did wind its dividend by 12%. the blame was failed to fresh organic foods calling that every a disappointing for the company. the other company retailer 13%.co is down a whopping they fell by 5%. profitsed its full-year by one dollar. now they are looking to make four dollars a share on the high end of its range. it is a brand that makes dockers and they blame the shift. we are waiting for jobs friday and the market a touch risk on. the retailer space still struggling. caroline: it is struggling. the way that the banking market is a rallying into that jobless

number, shares of deutsche bank, check it out. they are moving higher. after reports that the bank considered the sale of all of its asset management business. now, this is a story rumbling on in terms of consolidation. deutsche bank we organizing itself. is that what is stirring this? >> it is been a bit of a rebound. it is a lucrative turnaround in the banking sector. any hope that john cryan, the ceo of deutsche bank will deliver a tougher turnaround plan. that is exciting. caroline: talking about peculation, over the weekend, there were reports that he could be getting together with leaders on how they see deutsche bank going forward. >> there is a lot of talk of

everything from selling some of the asset management business. there is also talk with a full on merger that is being seen as unlikely to happen. any possible likely consolidation is an attempt to squeeze more cost cuts out of a bank that is in dire need of filling that capital gap over the next two years is pleasing investors. caroline: how has the debt market reacting to this? we saw the stock starting to pick up and people becoming more relaxed about their ability to repay as well. >> for deutsche bank, a fixed income bank, the credit market remain open and the city seems to be flowing. at the moment, it is very benign. the revenue outlook is not great , but the business outlook is tough, but as long as credit markets stay calm, that should give the bank time to adjust. caroline: we are seeing the banking sector really rally. are there any other driver that

could be wedding the appetite? that is part of it. in terms of the equity rally and evaluation of sectors, banks of the cheapest sector in the world right now. investors are looking for any reason -- this is a yield environment where you are looking for any kind of risky event that has not been completely overpriced. banks of the obvious candidates, that's why they are moving low. thank you very much indeed. great real digging into the banking sector. we have much more coming up. alix: how are u.k. banks stacking up against their european peers? we will show you the battle of the charts. i will show you. this is bloomberg. ♪

♪ alix: this is "bloomberg ." i'm alix steel. time for battle of the charts.

i'm taking a break for battling, so lisa will kick things off. lisa: i will talk buddy tale of two years. leverage loan saw the biggest withdrawals from the asset class. this year, everybody is coming back. you can see here, this is the flows from the biggest loan etf out there. this year, it has been pretty green. money is coming in, over $1 billion of inflows have come into this fund so far this year versus $1 billion of outflows last year. this shows how people are more concretely feeling like credit quality is continuing to sort of be steady. and two, people are looking at this and saying, rates are going up. we are going to get more income. this is a very hot asset class. alix: i love that. all tying into the leverage loans.

caroline, top it. caroline: i have to raise might game if i can take on lisa. today is a theme of the u.k. outperforming the euro. pmi numbers coming in stellar. i want to focus in on u.k. banks beating european banks as well. the white lines are priced to earning ratio for u.k. banks. look at the surge, up 12 at the moment. pricedre they evaluations coming in for the european banks well below creeping above nine. the point here is ss -- is fx. the pound has weekend and helped pmi data, but also helped banks in terms of valuations. they are soaring. i want to focus in on that. i was surprised amid all the brexit turmoil we have these international banks, hsbc in particular rallying and leaving the european banks better. alix: good points.

i am going to go with lisa because this is an underappreciated story. sorted -- sort of the hidden risks. that is leading to bets in the market. if that unravels, what are the risks behind it. sorry, caroline. great job. coming up, what number will push the fed to move on rate next month? that, andomist on bill gross says 150,000. this is bloomberg. ♪

minutes from the

opening bell in new york, this is bloomberg . i'm alix steel. caroline hyde is from london. caroline, futures firm ever so slightly here in the u.s. but oil starting to roll over a little bit and we are counting the drums to jobs friday. alixcaroline: the number comingt expected claims. caroline: the real mood today was in the fx market. we have all bases covered for you today. we will set you up for the big number that investors are watching for you. steve ricchiuto will be joining hour,that later on in the mizuho securities. the key number bill gross says we are looking for. some breakingave

news. this only comes once every three years. bank of international settlements is giving the report on global currency trading. dropping to $5.1 trillion a day. that is down from 5.4 trillion, but that is actually pretty resilient. the turmoil, retrenchment's of the banks post crisis, we are seeing some relatively strong fx trading volumes. yuan on the ascendancy. now accounting for 4% of all daily ethics volumes, up from 2.2%. meanwhile, the key take away for those in the u.k., the retrenchment of london as a powerhouse to fx trading. will he get worse as brexit happens? let's have a look at how the asset classes are performing as we get on breaking news in terms of fx. numbers are relatively outperforming.

we have to keep a close eye in terms of the mood of -- movers on the british pound. the ftse is flat. meanwhile, on the downside, the yenilian real, and a deeper once again. alix, you were talking about oil. down about 1.5%. gold down .3%. lastly, we are seeing a selloff in u.s. 30-year debt, after we got that breaking news from the u.s. jobs number. we only get it once every three years. the bank of international settlements and volume of currency trading dropped to $5.1 trillion from $5.4 trillion. this shows how despite challenges in the markets, the fx market has stayed resilient, above the $5 trillion mark.

.ur fx reporter is here with us why is this report so insignificant for investors? itthis is a landmark number, gives you a sense of how big this financial market really is. this is the world's biggest financial market. tosee it dropped from 5.4 5.1 is pretty significant for investors. when you talk about the size of the market, mom and pop want to know how big the fx number is, this is the number that we use. alix: the interesting part was where you are seeing fx being treated. it was london and europe, but asia now seeming to gain market share. indefinitely, the renminbi is huge, doubled in terms of its market share. that has been significant. the major powerhouse centers of fx trading have retrenched with these numbers, so that's interesting. it shows the industry has been very resilient given the

challenges it has faced over the last few years. caroline: talking of challenges, we have to look at what the united kingdom currently faces, concerned that it may not be a financial capital post-brexit. it shows the euro and london as a powerhouse stepping back. >> it's interesting, london has been the center of exchange trading or many years, has definitely held its ground in there. but a lot ofising, the major firms are based there. even after the price rigging scandal we saw with foreign exchange, even after we saw ,anks pay billions in fines this industry has still managed to maintain its resilience. we also saw the huge crisis last year which crunch profits for many companies. we also saw a regulation, which has helped to create profits. yet, it still seems to have maintained the volumes. trader, i getfx

this kind of report. what does this mean to me? >> i think they will be encouraged. sniffllion is nothing to at in terms of the decline, but some are worried that the decline would have been even bigger. think it shows there is substantial business that still needs to be done. corporate transactions still need to happen around the world. there is still a huge baseline of business that needs to be done in foreign exchange. caroline: and maybe some bank are looking at the hong kong market? >> the indications from these numbers, trading of the chinese currency is continuing to grow, moving up a table in terms of importance of international trading. for sure, it looks like the wind is blowing that way. caroline: thank you. we have some phenomenal moves coming in terms of fx trading. we only get it once every three years.

alix: talking about fx, we are seeing big moves in the market. sterling up on a stronger u.k. pmi data. still seeing some dollar strength in the market. dollar-yen front and center. a higheruity market, open on the s&p, up by just one point. jobless claims coming in lower than estimated but you had a lower revision for second-quarter productivity. as well as higher unit labor cost. margins in companies front and center when we get the jobs number tomorrow. for more on what is happening in the market, abigail doolittle is here in new york. mark barton is in london. >> absolutely, we have gaming casino stocks moving higher in the pre-markets. resorts, mgm,wynn

and las vegas sands. macau gaming revenue rose four the first time in 27 months, beating an expectation of a decline. all of this provides evidence that the long-awaited turnaround in fundamentals for these seniors could be happening any time. as for another stock trading higher, charter communications. up sharply in the premarket on news at the company is being added to the s&p 500, replacing emc on september 7. the reason the stock is higher, according to paul sweeney, in general, when companies are added to the s&p 500, it forces investment managers to buy the stock. it is also a symbolic coming of age. passive funds will be into

that. and again doolittle, thank you. mark barton in london taking a look at european stocks. the stoxx 600 off of a session highs but european banks are on a tear today. mark: what a three-day session. we have risen 6.5% in the last three days, the most july 12. today, of a further 2.5%. the stoxx 600 wiping away its post-brexit losses, earlier reaching the highest since may. we have to talk about commerzbank, deutsche bank. extending gains on it analyzed the sale of part of its asset management business. it is exploring options to revive profitability. senior managers are meeting this weekend to debate their options. they may adjust its financial target.

according to people familiar with the matter, deutsche bank exploring this merger with , focusing on internal steps. card --t to turnover pernot ricard. they reported a drop in sales. shares up by 2.5%. and the blockbuster piece of economic data, u.k. manufacturing pmi, a record jump 50.3.8.3 in july 2 that is the most since december. we know the reason why, the weak sterling. changing their economic forecast for the coming quarter? that is the big question after today's number. caroline: i may be more of a

malibu girl, but you know my tastes. now for an update on the markets outside of the business world, emma chandra. >> donald trump is try to reassure supporters he is not wobbling on the issue of illegal immigration. in phoenix, the candidate outlined a hard-line plan that ruled out and trustee for immigrants who came to the u.s. illegally. he also made it clear there will be a wall between the u.s. and mexico. >> we will build a great wall along the southern border. and mexico will pay for the wall. >> earlier, trump went to mexico to meet with president enrique pena neato. trump says that he did not discuss who would pay for the wall, but the mexican president told him that mexico was not pay for it. 12,000 migrants have been rescued in the mediterranean ocean this year. that is an unusually high number.

now italy is the main entry point for migrants heading to europe from africa and the middle east. brazil's new president says the worst is now over. michelle tanner was sworn in after the parliament voted to impeach doma recess. cabinet thats there will be spending caps and pension cuts. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. i am emma chandra. this is bloomberg. alix: we are looking at what august auto numbers really say. are we at peak cars? theyook is confident that will win their core fight against the eu. this is bloomberg. ♪

alix: this is bloomberg . i'm alix steel. what is moving yields higher here in the u.s.? nonfarml about the productivity report that we got earlier today, down .6, which means unit labor costs rose .4%. chiefricchiuto, mizuho's security economist, i will get your job taken a second. unit labor costs climbing. that will make your job a lot harder in september. >> without a doubt, the fed has some interesting things to look at in september. the reality is, the fed is facing a difficult dilemma. you have a situation where unit labor cost is up. but corporate earnings growth is slowing. we know corporations are being squeezed. it's only a matter of time before operations transact to that squeezing of profits into laying off workers. a toughe to have

balance. the current signals are maybe that they should be raising rates. the outlook going forward is maybe it is not time to raise rates. caroline: so september, is alive? >> the fed has made it clear, every time the market goes into one of these positions where they say they will never raise rates again, or they will raise tomorrow, the fed wants to be in the middle. september, ifieve they are going to raise rates, it will be used as an opportunity to go out and set the stage for the december move. i don't think they want to be in the position of outright surprised, unless the payroll number tomorrow is on the real upside attentional. you heard a lot of fence be talking about how they are nearing their mandate on employment, even inching toward inflation. stan fischer on monday talking about productivity, that is the weakness in the economy. the backup in yields today, what was that about? >> you have very different camps

in the fed. you have the stan fisher cap, we are falling behind the curve, and then you have other people like evans, a few others who are saying, we are not going down that path. we have to think about what we are doing. monetary policy is not having an effect. and we have a fundamental change developing in the economy, which is the more important point. we are focusing on what the fed will do. the reality is, the markets have tightened a lot for the fed. spreads have widened up dramatically. what is more important is why we are in the position we are globally. long in this expansion without any real inflation popping up? what is going on fundamentally? in a worldis, we're of excess supply. and that is changing. that is why we have bullard coming out saying, no rate hikes. we don't know where we are going.

i tend to be more in his camp. caroline: we had a splurge of pmi data coming out across the board. alongchalet expansion with india and the eurozone, united kingdom him. how much do you read into those numbers? >> i am not a big pmi person. i think the data is often manipulated by expectations more than fundamental reality. look at the divergence in the eyes of numbers and the production numbers in the u.s. they are going in opposite directions most of the time. i tend to look more at the actual industrial production numbers. they are not showing any signs of acceleration. the real data they are measuring are not. it is not having an acceleration globally. caroline: what about the dollar, how much as that penned in the fed? were to raise rates,

the dollar would go up sharply. the front end of the treasury curve would have a hit. back towe would be where we were in january, to a lesser extent, as the fed would lower their terminal fed funds rate. it is not just raising rates that matters, it is how they couch it. in december, when they raised rates, they said they would keep going until they hit 3.25%. this time, they will catch it around 2.5%. it will have an effect on the curve, but not as much as it did in january. tomorrow,ing into there are two schools, the fed wants to hike. the number does not need to be blockbuster. the other one is, who cares about what the number is. you hike, you don't, it is really just the longer-term neutral rate coming down. which camp are you in? >> the latter, the payroll numbers are less important than

the market want them to be. sot is why the fed has been split, why you're getting such mixed messages. i am in the can that this is a fundamental transition in the economy. not paying attention to it is a critical mistake. alix: thank you. chiefricchiuto, mizuho's economist. ford's august light vehicle sales were down 8.8%. the estimate was to be down 8.2%. you have the lincoln and ford and sales up, but overall, sales were down. car sales have been holding up the economy, a huge bright spot, but a lot of chatter if we are at peak car sales. we will get more of those numbers as gm comes out in about 11 minutes. caroline: we will also be talking about apple. it's big tax fight. tim cook says the eu is focused

on tough taxes and it is not fair. this is bloomberg. ♪

alix: this is bloomberg . i'm alix steel. tune in all day friday to watch our exclusive interview with vladimir putin. don't miss our special report on monday at 12:00 p.m. eastern. apple ceo tim cook is confident the company will win the battle over taxes with the european union. he spoke with the irish broadcaster about the eu decision. >> it is maddening, disappointing. it is clear that this comes from a political place. it has no basis in fact or in law. unfortunately, it is one of those things that we have to

work through. eventually, that, what is just and right will occur. i do not believe the journey to get there will be all roses, by any means. there will be as inflows, but i do have faith that the right outcome will occur. for more now, our dublin bureau chief. they that the right thing will occur. faith that ireland will appeal, when will ireland decide to appeal? at the is happening moment, the cabinet will meet tomorrow to discuss the matter. some of the less lenient members of the cabin want parliament to be recalled to discuss the issue. i think parliament probably got the appeal. we may see a decision by this time next week that there will

be an appeal, i would imagine. caroline: irish public opinion, is it in line with what we heard from tim cook? you have a lot of people on the streets saying this is the world's richest company, we are try to help them save 13 billion euros that could be used for hospitals, roads, pay down the national debt. on the other hand, we have from companies like ryanair that said that ireland does not have a chance to get this money and that they should tell the tax commission to get lost, and should help apple as much as they can. it is a big split on this issue. caroline: how are the politicians responding? >> the mainstream politicians, the two biggest parties, are backing an appeal. the concern is the independent members of the coalition.

for them, it is difficult to justify affording this to the biggest company in the world. fore lawmakers are looking a little bit of political cover from parliament to say, we've fought the good fight, but parliament said we should appeal it. that is what the delay is to the overall decision. caroline: i keep on pushing it in this direction, but this is not just about apple but the other companies that do business within ireland. do we know anything about investigations potentially going on with the eu? >> we know there are no other actors -- active investigation going on by the eu into any other tax affairs from companies based year. we know that that is not the case at the moment. ireland is saying, no company has a sweetheart deal. 12.5%is no issue around rate.

other companies benefit from that. at this point, we have no sense of any other investigation being undertaken. that is not to say that it couldn't happen, but the commission has a lot to go on with its 13 billion judgment. will be coming over the next three or five years, so i would be surprised to see any other investigations coming forward. caroline: thank you. taking a look at asset classes before the market opens, futures are a little weaker now. the dow jones, s&p futures relatively flat. the dax giving up some of its gains from the morning. backup and yields for the two-year. the open is next.

caroline: this is bloomberg . i'm caroline hyde. moments away from the opening, we are flat on futures at the moment. currently seeing an upward trend

in europe. the banks leading the charge. the best day since july 12. deutsche bank consolidation talks, the dax up a quarter percent. take a look at the ftse, down .3%. the british pound towering higher, hurting exporters. and we haveringing a bit on the pound of the u.k. pmi, a bid on the aussie dollar, a bid on the metals. meanwhile, oil trading lower, down by 1.6%. we are neutral across the board on the indices. snp flat, nasdaq basically flat. the s&p was higher in early trading, but we got higher costs.al -- unit labor stocks losing any kind of momentum that they had. no major positions being taken

headed into jobs friday. caroline, oil rolling over a little bit. down almost 7% on the week. the latest news is that russia says we do not need an opec freeze. if we have oil around $50 a barrel. taking a shine off of that. in terms of individual names, salesforce taking the crown for its stock down by about 4%, weaker outlook, revenue falling short. a lot more clout competition and weaker sales in the u.s. removede quarter, bmi the stock from its top picks list. a little bit of headwind, lots of competition. salesforce feeling the heat. to round it up with campbell company, down 3%, missing earnings. revenues were in mind, but

earnings on the high end at $3.09 a share, cents below consensus. they did raise the dividend but not enough to support the stock. caroline, you have breaking news? caroline: look at gm at the moment. like ford, we have a miss in auto sales. u.s. sales falling 5.2%, the estimate was 4.9%. living up to expectations. 17.2 million units being sold in august. .8% as we rampp up into the open. show you pmi. we have china in the 50's. so is india and the eurozone and united kingdom. all showing expansion when you look at the pmi numbers in

august. look at the white line here in the united kingdom. that is why we saw the british pound search of .8%. is the global economy on track? is this a blip? how much do we read into these manufacturing numbers, particularly when the u.s. and the u.k. are so focused on services. we have u.s. isn coming up in about a half hour. looking at the move that we have been seeing in the last hour of seeing. two-year yield, a backup after we got some of that data yesterday. jobless claims lower than estimated but unit labor costs rising 4.5% in the second quarter. is concern is that inflationary, the fed may be forced to hike sooner rather than later. longer term, that is a story about weaker company profit and the trickle down to the job market. it focuses your

attention on tomorrow. less than 24 hours until that big number comes out. as bill gross was saying, you only need 150,000 and the fed should hike. here in london, we are joined by cell and -- simon ballard. in new york, we had vincent cignarella. and we also have a oliver renick. let's start with simon ballard to dig into the credit story. give us your take ahead of the jobs data. >> we are keeping an eye on the pmi data coming out. the number tomorrow, some speculation on how strong it will be. worst-case scenario for credit, a week number. a positive number underscores the strong fundamental story coming out of the u.s. economy potentially. whether it is september or december, if you look at the fed , you woulde pricing

think it is 2017 pricing. we are heading toward longer-term rates but a marginal increase. from a credit perspective, that is positive. alix: under one day until the jobs number. bill gross saying 150,000, the fed will have to hike. what is the risk for the dollar tomorrow? >> there is a risk to the downside. august tends to miss, a big month for revisions. the labor survey had a difficult time transitioning the labor day weekend, back to school issue. i've out of the last seven numbers have missed to the downside. the good news, a great takeaway for the dollar bulls, it tends to be revised up with the next month data. potential for dollar risk on the downside, but the bulls will tell you opportunity to buy, looking forward a month ahead. renick, theiver

market seems to be trading higher ahead of the jobs number. how are we digesting the numbers that came out today? >> the market has been a tight trading range. whenever that happens over the course of a month, we have not really been going anywhere, only a 1% move. which way is anyone's guess at this point. and has been a transition into a lot of the cyclical sectors that do well on the back of positive economic data. at the same time, a lot of in terms ofexist momentum over the past six months in the safety area, so plenty of room to move downward. overall, we have been in this position, looking at economic surprises, doing well, staying positive in the u.s. beenis where stocks have able to keep all highs, stay close to it. you look at that chart, the purple line shows these cyclical groups doing better over the past month. the blue line shows utilities.

which one gives here will be interesting to watch. alix: simon, i wanted to touch on the treasury market with you. the backup in yields, is that a response to inflation creeping in, or is this just purely trading around the fed and the jobs? >> i think it is trading around the jobs. a small move puts you ahead of the number tomorrow and speculation for this month's fomc. it is noise around the numbers rather than anything else the vacant. if we continue to drift higher, if inflation pressures continue to be priced into the market, certainly the high-end yield market will take a hit. we have seen a dramatic flattening of the u.s. quality curve for much of this year, people chasing yield further and further down the spectrum. cane get yields rising, you hit that boat you are searching for in a more defensive stance.

then you will start to see a steepening of the performance versus ig. ofoline: give us a sense where you're analyzing the moves ahead of the jobs data. i think you have a chart for us as well. >> basically, we are looking at anywhere between the 150, 160 range, one standard deviation. anywhere in that area, which would be a miss, is on the small side. that would be looked at by the markets as to say not so negative. anywhere tour the top end, hitting the range, would be extremely positive, considering the real potential for an upward revision next month. you would have to miss significantly below 150 to see the dollar take a major setback. i think we could see a small setback but the bias among traders right now is to be buying on the dips. it would take a substantial move

lower for the dollar to take a substantial hit. it is interesting, we heard bill gross say 150,000 is all you need. is the market buying that? >> it is ballpark, but the real question, i would have loved to have heard what stan fisher thought the number was. alix: like he would give it to you. [laughter] he has put a lot of emphasis on this number. he seems to be very willing to pull the trigger. the question for me is really number on the downside. one is the number that would give them a re-think that moving in september or december is not likely. i think that would have to be a substantial miss, like we saw in may. that may push them not to december, but they seem to be itching to go. alix: dan maas came out, nonfarm payroll surprise. strategists put

that together. basically, what that says, in the last seven august numbers, five out of the seven were below estimates, only two above. if you miss with this number tomorrow, depending on how deep the miss is, you can take heart in the fact that in a growing economy, revisions tend to be higher. in a slower economy, revision 10 to go down. it is just the new wants of the labor market trying to gauge labor. if we miss to the downside, not by a lot, the good chance we will hit the number by next month. headingiver, we are into jobs friday, we got the eco-dated today. futures are higher in the markets are relatively flat. at what point does the productivity unit labor cost and a peak margin scenario become more important than how many jobs we are adding? >> it is pretty important.

the matter what metric you look at to look at how corporate's are strained on the balance sheet, whether cash flows versus outlays for dividends, bypass fax, that type of stuff, if you're looking and debt levels versus cash -- a lot of things that show that companies are getting strained. part of that will come from better wage growth. it will come from productivity. when you are looking at how companies are able to keep their margins at the very high levels they have been. there is a lot of that information that we will get from this economic data. ultimately, when you look at the stock outlook, it is hard to a very negative response. so of course there has been a move in the short-term to some of the cyclical areas, where if you have a miss, that could be bad. if you have a big beat, that could be bad or some of these companies that do well in a low rate environment. but the only place that has been beaten by stocks is the emerging markets over the short term. people have funneled money into

those lower valued, lower metric companies outside of the u.s. if you get a rate hike, that will destroy that trade a little bit and maybe some of that money will come back into the u.s. alix: thank you so much, all are erratic and vincent cignarella. caroline: we have to keep our eye on corporate as well. u.s. automakers have reporting sales for the month of august. americans have been in a car buying binge for seven years. manufacturers scaled-back discounts last month. did sales suffer? and bloomberg's editor in chief has just finished an exclusive and rare interview with russian president vladimir putin. tune in all day tomorrow for this exclusive, and monday, two in for an hour-long special report coming to you at 12:00 eastern. this is bloomberg. ♪

alix: this is bloomberg . i'm alix steel. tune in all day tomorrow to watch our exclusive interview with russian president vladimir putin. caroline: quick check on the markets for you this trading day. 15 minutes into the markets open. let's see where the u.s. margin -- majors are performing. up across the board but only tentatively. cautious trading ahead of the jobs number tomorrow. autos reacting to those auto sales numbers. abigail doolittle is in new york. morning, we have shares of cnn trading higher after the

optical networking for many put up a mixed fiscal third quarter. they offered light guidance for the third quarter. one was going on was less bad than what investors had expected. had guided down 30%, so there was lots of caution going into the corner, with one analyst this morning telling our team, these results suggest that while the environment is soft, not as bad as people were expecting. also trading higher at the open is ali bargain outlets. they put up a rocksolid quarter, according to piper jaffray. they beat estimates and raised there for your guidance nicely. than 50% is up more this year, pointing to one pocket of strength in the beleaguered retail sector. alix: there has been a lot of attention on this week's u.s. jobs report. before that, we get u.s. auto sales for august. lord, down 8.8%.

let's dig into that part of the economy. u.s. automakers have underperformed the s&p since the start of the year. ford shares have fallen about 9% 0ven with the redesigned f-15 pickup at full production and selling pretty well. look at the discrepancy between the smp and automakers. the f-150 is indicative of the truck over cars trend. regular gas prices are still relatively low, and that has helped to create the divide with trucks. we can show you that divide between cars and trucks. the orange line is truck sales, the white is car sales. you can see how trucks are leading the way. part of this has been about financing, key to these record sales gains. the average amount financed for new car loans rose to nearly $28,000 in the fourth quarter of 2015, the highest level in february -- since the fed began tracking the data in 2008. the issue, this has some

concerned, like jp morgan's jamie dimon, who said the auto market is actually overheated. out, the view points greater credit intensity of sales, then at any other point in economic expansion, you have not seen a kind of credit growth since 2006. consumers seem to be paying for an increased portion of those auto sales with borrowed money. big loans going bad, a very conversation within the debt market. in sato's have been a big driver spending, and consumer spending has been driving gdp, that leaves some economists worried. caroline: we have to digging into those numbers. thick andrs coming in fast. nissan auto sales all in 6.5%. this is a big miss. expecting an estimate of down .6%. fiat chrysler, also seeing a

rise, but not as much as expected. another key miss. u.s. sales rising 3% for chrysler. dig into this with keith norton, our auto reporter joining us from michigan. give us a sense of what we should be reading into. month than expected, and it was supposed to be a slow month to begin with. fewer discounts out there, so sales are down. what is most troubling is you are seeing those big trucks not selling as well as you would have expected in this low gas environment. series was down 15%, the silverado down at gm. that was the big surprise, truck sales have softened. caroline: give us some of the other key breakdowns, what they pick us up into september. is this somewhat seasonal? >> what we may see his greater

discounts, but there is some tension. automakers are dialing down the discounts and dialing up the profits. average transaction prices are still going up. they are making a lot of money off of these cars they sell, even if they are not selling as many of them. they don't want to give up the profits in favor of the sales. you are also seeing luxury suvs doing well. cadillac, lincoln mkx was up. buyers are buying cars that are higher-priced and more luxury cars. alix: does that mean that we are not eat cars, just peek trucks trucks?cars, just peak >> it is still a pretty strong market. the expectation is this month will come in at about 17.2 million, which is strong, but well off the 17.90 last month. alix: keith naughton, thank you.

gm and ford are still up in early trading. coming up, it is bloomberg markets with vonnie quinn and mark barton. jobs friday.ward speaking to a guest as treasuries slum, even as the economic data is not coming in as hard and fast as we went have hoped. labor market data doing pretty well, but when you like it auto sales, productivity number revised lower, you have to ask, and we will be asking, will the fed raise rates in this environment? we also speak to the cfo of pernod ricard. sales in asia are down 9%. we will be asking gilles bogaert how the company will take half $1 billion worth of cost out of its balance sheet in order to help it along. they will be spending more money on advertising, trying to reach

the emerging middle class. then we will have a little bit of fun looking at the latest innovation on wall street. hacking traders in motion. how that may be the future of trading. alix: vonnie quinn, thank you. jobs for no break from us. up next, the big number markets are waiting for this week. we will tie you what key indicators will be important to watch in tomorrow's u.s. jobs report. this is bloomberg. ♪

alix: this is bloomberg . i'm alix steel. jobs are coming in less than 24 hours, but in a few minutes we will get ism here in the u.s. withel mcdonough is here us. it is bmi day. what can we expect? >> the u.s. isn is what we are

looking at. new orders have been strong, we think it will remain relatively robust. with jobs tomorrow, we will be looking at the employment component of a little more closely. says 150,000 is a trigger for the fed. what does bloomberg intelligence think? >> for september? we think september is not an option. we are looking at december. we think it will support december but we don't think there is anything coming out in this job report that would support a september hike. things have really stalled out over the last nine months. >> the fact that we have had job growth, the unemployment rate has remained steady, could be a sign that we are getting closer to full employment. when you factor in wages are starting to rise, that is a positive sign. alix: why has gdp not caught up? jobs growth, and that will eventually support gdp growth. you have a spread between the two now. that is not sustainable.

we think gdp will come back up, not that jobs will follow. alix: michael, great to see you. bloomberg intelligence chief economist. we are five minutes away from the ism here in the u.s., one day away from jobs. caroline: will we have a beat like we did with the u.k. and china? euphoria coming out of the markets right now. we are looking to the ism a few minutes away. thank you, caroline hyde, for joining me for the week. you are looking at the snp right relatively flat a few minutes into the session. john mikel swayed just finished an interview with vladimir putin. all day tomorrow we will be discussing it.

this is bloomberg markets on bloomberg television.

vonnie: we will take you from mexico city to paris and london and geneva. doolittle has breaking economic data in the u.s.. the irs and manufacturing number out for the month of august and it is below 50 at 49.4 -- we have the i.s. m manufacturing number. it's well below the number for july at 50 to six. ism manufacturing is a mess and we look at the majors. this is a chart of the i.s. and over the last three years. not numb -- not much of a reaction. will be tracking this throughout today to see if there is something of drag.