francine: putin exclusive. the russian president tells bloomberg he is called that opec and russia will reach a deal to freeze oil surprise in algiers -- oil supplies in all tears. this employment number could support of that hike this year, but is the market really ready for reposition? lake e forum in kuomo. we talk about the upcoming referendum. this is bloomberg "surveillance." tom, a most interesting day, because we have two news

competing for the limelight. a great exclusive with vladimir putin, that it is also jobs day. people want to see the indication of what the fed will do. tom: right. 8:30, but on jobs at certainly the putin interview is front and center. there are a lot of different themes here, francine, not only what he said but what he didn't say as well. francine: right. and it was a two-hour interview so we have a lot to get through. let's get now to the bloomberg first word news with emma chandra. emma: for more on that interview, russia wants to compromise in the dispute with japan, that stretches back more than 70 years. at the end of world war ii, the soviet union occupied four small japanese islands. in an exquisite interview, vladimir putin says he wants to develop a long-term relationship. >> [speaking russian]

there is a discussion of this topic, and we did that, we met them halfway. withe past couple years, our relationship from the japanese side, we have moved forward. our partners are showing a willingness to return to the discussion . we are talking not about an exchange, we are talking about finding a solution. we're nearer to it. emma: he is meeting with shinzo abe at the eastern economic forum. tune in to bloomberg all day for more of our exclusive interview with vladimir putin, and don't miss a special report on monday at 12:00 p.m. eastern. florida has been hit by its first hurricane since 2005. he came ashore in northwest florida early today, with wind of about 80 miles per hour. it is expected to bring up to 10

inches of rain. georgia, the carolinas, and other parts of the east coast could be hit. leadersuela, opposition called it the biggest mobilization in the history of the country. hundreds of thousands demonstrated in the streets of caracas. they demanded a recall vote against the president. venezuela has been slammed by triple digit inflation and shortages of food and other goods. global news, 24 hours a day, powered by over 2600 journalists and analysts in more than 120 countries. i'm emma chandra. this is bloomberg. tom: thank you so much. let's do a data check. we will feed you the ruble along the way with this conversation. oil is weaker, 43.48. wow, that is a change on wti. incredibleanix, lack of volatility. day two of september.

the mexican peso is weaker, not near 19 but nevertheless it is my intention in the oil-based wrubel, 65.74. in the second section of this hour, i have a killer chart that explains mr. putin's popularity. francine: it almost feels like we talked today. i also took oil, although it is not coming up. i think the price of crude -- we are fixing it -- tom, it was mostly modest. it's a countdown to the key jobs report. as if by magic, crude. plenty more on the market throughout the day and plenty more on the u.s. jobs data. let's turn now to the big story of the morning, u.s. jobs day. our senior fx strategist is here with us. great to have you. you will be with us for the hour.

investors are a lot more hawkish. is it because they mean business or they want to reposition just in case? >> i think the balance of data has certainly been a little better. in that sense, it is not that surprising that they are keeping a september hike as a possibility. it's on the table. i don't think they are committed to it, but i certainly think the direction has been there, and many members of the fed want to normalize rates. they want to be in a position where they feel more comfortable on both sides. i think the balance is shifted to more hawkish, but i don't think september is a dead certain. and payrolls numbers, come what may, it will still be 100% in the bag. francine: which means that if we have a blowout number for u.s. jobs, it is in the bag. if it is worse than expected, do we believe august doesn't tell us anything? it's difficult to predict the number. >> again, i don't think the fed is putting all of its hikes on one number. francine: the market is.

>> it seems to be. in the market, what's happening is that we are leaving much toward sooner rather than later. if you look at the payrolls numbers, the balance of risks, given how the dollar has traded, i think the market won't knock on the strong side, to feel confident about september, but on the downside you need to get a soft number to see the dollar weaken. tom: dominic, one of the weirder moments of august has been sterling strength, up against an exceptional hsbc outlier call on weaker sterling. i want you to reaffirm that this morning. here is a chart that we did. the red arrow takes you down to the stunning hsbc call, with some of the gloom crew in that yellow circle and bloomberg consensus is miles away from where dominic is. reaffirm -- week sterling to 110.

>> absolutely. it's a structural case, it's about the current account deficit, about the broader relationship with the u.k. anti-eu and how that pans out. it's a long-term story about uncertainty. what we are seeing is that so far, nothing has really changed. we haven't left the eu yet; it will probably take at least two years, is not longer. i think the idea that we grind toward 110 is still very much in play for us. cyclically, nothing is really changing except a rebound in some of the data. i would say to be on balance, the manufacturing numbers yesterday, some of that could have been supported by the weakness in sterling. i think the big number we will get is the services numbers coming out next week, and if we continue to see strength in the u.k. economy, then people will want to buy sterling for the short-term. tom: quickly, is the current account deficit issue about a

deeper deficit, or a present deficit for longer? >> it's basically that if you have a current account deficit, no matter how big it needs to be financed by capital inflows. the u.k. capital inflows is around 7% of gdp, and that is a massive deficit whether you look at in the context of g 10 or e.m. so you need a lot of capital inflows to maintain the value. basically, is that with the current account around those levels, even if it shrinks, it is hard to justify all of those significant capital inflows. most of them come from europe, the very place where we are redefining our relationship. tom: dominic will come back. lots to talk about. a packed show. we will have experts, an interview with the president of the russian federation. coming up, our complete jobs day

coverage on television, on radio. william gross of janus capital, right after the report. this is bloomberg. ♪

francine: this is bloomberg "surveillance." tom, let's get straight to the interview of the day, the russian president vladimir putin, who sat down with our editor in chief for an exclusive interview. he began by asking whether his thinking had changed at all on oil production, now that crude is below $50. >> [speaking russian] well, we find that oil output -- i was mistaken.

true, remember where i set it up the top of my head. but maybe i should remember. i said that new deposits wouldn't be considered at the current oil price. strictly speaking, that is what has happened. but maybe surprisingly, our oil and gas companies are continuing to invest. in the past years, the oil had 1.5 trillion poin rubles, and right now the overall investment is 3.5 trillion in the past year. that's quite significant. our oil output electricity

production is increasing. production has declined a little , i think by about 1%. by the way, we are the world leaders in terms of natural gas, a global share of about 20%. in the export of liquid hydrocarbon, we hold the rating position. 30 the exports. -- third in the exports. but this is used to increase the hydropower. demand for gas has dropped somewhat. that's the result of a restructuring of the federation energy market. on the whole, it's in great

shape. >> you are going to talk to the saudi deputy crown prince. -- would you still be in favor of a production freeze, is the saudis want that? >> [speaking russian] aware.ar as i'm a very energetic figure, and we have struck up a good relationship. the man knows what he wants and knows how to achieve his goals. time, i think he is a very reliable person, with who we can reach agreements, and be certain that they will be honored.

it wasn't us who rejected the idea of freezing. they who at the last minute decided to change their view. repeat, ouro position hasn't changed. think about this. we believe that this is the right decision. the second thing is that everyone knows what it's about. if production were to be frozen, then everyone should do it, including iran. iran has the sanctions and it would be unfair, on some level. i think that it makes some

economic logic and it would be good to find a compromise. i'm sure everyone understands that . the issue is an economic, the political. -- but political. i would very much like to hope that several markets are interested in maintaining it. we will have to make the necessary decision. >> so you would be in favor of a production freeze, giving iran a little bit of leeway to do it they need to do? >> da. >> yes. francine: we will have plenty more from that exclusive interview throughout the program. let's get down to christopher weaver in moscow. they to speak to you. today was an important day, because we spoke to vladimir putin. run us through -- this was a two-hour interview. run us that the situation in russia at home. it seems that over the last three years he has been quite

belligerent outside to almost mask the trouble he is having a home. -- i told. at home. >> you can certainly see a more confident putin at this meeting because the situation at home is a lot more comfortable. the economy is drifting out of recession which should drift into growth. his popularity is over 80%. politically he is in a situation in ukraine which has been better than over a year ago. i think that confidence comes through, and the fact that it is a friendlier host country with china. there's a more assertive putin. francine: chris, what the omega of the foreign relations between the u.s. and what we heard from vladimir putin? he says that russia did not hack those dnc e-mails, but said it was in the public interest. then he slammed both hillary clinton and donald trump. it is unclear if he's endorsing

trump somehow -- what is the story? >> look, like the rest of us in the russian media, they are enjoined with an unusual election in the u.s., but the official position from the government is to stay neutral. you haven't heard any formal comments either endorsing clinton or trump from the ministration, and you won't get that. the position is to stay neutral, to deal with whatever administration comes in later. but it is quite clear over the last couple years, there has been a shift in the political relations between russia and the west, and i include europe in that as well. that position is not going to be improved for a very long time, of the administration here in moscow has been consistently clear about the fact that they want to differentiate themselves from what would be a difficult political relation with a friendly, open investment policy.

they want western investors does come to russia and stay in russia even though the political backdrop will be more difficult. tom: christopher, you mentioned the government. this is where the confusion is in the west. his letter putin a czar? >> people are certainly referring to him or in that sense, but it's probably not in a bad way. it obviously has connotations from the past, but when you think of czar, the makes key decisions at the top, but it is someone who was also keenly aware of what's happening to people and the economy. this is something that was not properly appreciated in the west until recently, that economy matters a great deal. the focus has been on geopolitical issues, but over the last year, we have seen those issues to some extent calming down, because they desperately want to see him step down in the financial sector sanctions. they need to access foreign credit and debt, because they

need to boost investment to restore growth. restoring growth back to that 3% or 4% level, this is something that he is now more focused on than any other issue. francine: thank you so much. chris weaver. tune in to bloomberg all day for more of our exclusive interview with russian president e region, and don't miss our special report. this is bloomberg. ♪

tom: we welcome all of you to bloomberg "surveillance." particularly we welcome all of you watching in russia. vladimir putin speaking with our john nichols. we will have parts about today. why is wider putin vladimir putin? there is no other way to look at it then dollar-ruble. it spans the history from after 1989, and of course 1992, the red is the massive uncertainty and instability. the end of 1999, where he steps aside. inin steps in, takes over 2000. and there it is, the remarkable stability of dollar-ruble. you have a financial crisis in the middle of the screen. then thetability,

yellow circle is where oil breaks $100 per barrel. dominic is with us. dominic, this is an amazing story that links directly to vladimir putin, doesn't it? >> yeah. when you look at that chart it really does tell a story. but it is worth remembering that we are in a new era. we have a floating exchange rate. the cbr can manage it to some degree, but the currency cannot flex more, it can strengthen and weaken in line with russia's fundamentals, and i think that makes for a more dynamic story and gives the economy that flexibility to potentially come out of this recession we has have seen. that has been a big flex point for the rest of the economy. francine: what is the one thing, quickly, apart from oil, that the central bank can actually do to help with currency in russia? >> i think with a have done in the last few years has been pretty prudent. when they have had to, they have

raised rates. that created domestic challenges as well, but really, they got to a situation where inflation is coming down. they are maintaining a relatively prudent stance. our view is that if the ruble strengthens to aggressively, they would step in as well to manage things that built their reserves. maintaining a prudent stance for now. francine: dominic, thank you so much. coming up, we speak with the former italian prime minister, arrigo lester. we will also talk about importing finance and whether italy can gain anything from brexit. this is bloomberg. ♪

francine: this is bloomberg "surveillance." let's get straight to the first word news with emma chandra. the: vladimir putin says

hacking of democratic national committee e-mails and documents was a public service, but was moscow responsible? he spoke with our editor in chief in an exclusive interview. >> [speaking russian] >> no, i don't know anything about that. you know how many hackers there are today. and they are so delicately imprecise. mark andleave their then camouflaging acutely, mark other hackers from other countries. an extremely difficult box to check. we did not do this at the state level. emma: to did more today for more of our interview, and go to miss our special report on monday at 12:00 p.m. eastern. hurricane hermine has weakened to a tropical storm.it

made landfall early today in northwest florida and pushed into georgia. the storm has wins at 70 miles per hour, that it is still expected to bring up to 10 inches of rain in the carolinas and other parts of the east coast. global news, 24 hours a day, powered by over 2600 journalists and analysts in more than 120 countries. i'm emma chandra. this is bloomberg. francine: thank you. italy is due to hold a referendum on constitutional reforms later this year, adding to uncertainty that the country has been facing in its banking sector. let's hear from italy's former prime minister, who joins us from the the forum in chernobyl, on the river banks of lake como. thank you for speaking to us. what does the referendum mean for the future political stability of italy? in como, the weather is very good today, it's wonderful. but some worry about the

political and economic weather, not only for italy but europe. you mentioned the referendum in italy. italy will host the referendum on constitutional reform, and i hope it will be approved in the referendum. i don't know when it will take place, but of course, it will create a lot of instability, and there is a big discussion around the elect or a low. rhw political -- the political instability, there are many worries. but they are linked to the hadomic situation, and we today the bad news of zero growth for the last two trimesters. that was not expected. this is why there are worries in italy, in europe. francine: what will the prime minister, matteo renzi, do if he loses the referendum?

isyou know, the referendum very important because of the constitutional changes. we decided to create a country able to decide to deliver, but it is not enough. it's one part of the big picture. it means economic policy at the european level, the national level. that have to add, the fact in this. period, italy is very much affected by the migrant crisis. in january, february, the european union close the agreement with turkey, and now this very summer, the vote of the migrants is again in the central mediterranean. migrants arriving here in the last six months.

italy is in trouble on migrants, and if you put together zero growth, migrant crisis, political instability, we are entering a period that is not the best. hope we can go out from this problem and we can overcome the obstacles. francine: there is also the banks. went willingly finally sort out its banking sector, which is really sending worrying signs to markets internationally? >> of course. cb stress tests had good results on the one hand, and one bad result on one bank. so there are many worries on this point. that these worries are focused

on one problem. for the rest, i am not in government today. i am out of politics, i am in service, teaching. i trust with the government does . clearly that the situation is under control, and i think we have to trust them. francine: they do so much for joining us. the former italian prime minister. you can hear in the background, a beautiful shot across the river bank of likake como, the most beautiful place in italy. we will have to get back to him. coming up, also from the river banks of lake como, we will talk to jacob wrinkle of j.p. morgan chase, live from the forum.

this is bloomberg. ♪

tom: good morning, everyone. jobs day later this morning. center, the international relations of the conversation with the russian president, vladimir putin. this conversation on the way to the g20 meetings. putin discussed the american political campaign. of course, the question was asked -- who would mr. putin rather have at the other end of that red telephone, given the geopolitical moment? mr. trump or secretary clinton?

>> [speaking russian] i would like to work with the person who can make responsible decisions. to implement any agreements we reach. it roughly doesn't matter. of course it is necessary to ensure the trust of the american people. they also have to have the political will to get these agreements. therefore, we never intervene, and try not to intervene in the democratic process. we will closely monitor what happens and wait for the results. and then we will work with any situation. >> can i push you on that? back in 2011, you accused hillary clinton of speaking to trigger the protests you are facing in russia at the time. by contrast, looking at some of

the things donald trump has set about you, back in 2007, he said you are doing a great job; in 2011, he praised your no-nonsense way. the next year he said you were his new best friend, then outsmarting the americans. i could go on and on. are you really telling me that if you can have a choice between a woman who you think may have been trying to get rid of you and the man who seems to have this great affection for you, almost bordering on the homoerotic, you aren't going to make a decision between those two? one would be a lot more favorable toward you. >> [speaking russian] no, i essentially already answered the question. are ready to offer any plan, and it depends on how the future administration is.

if somebody says they want to work with russia, we will welcome it. wants to get rid of us, we will have a different approach. it is not clear who has more solutions. the thing is, -- i think that is a shortsighted approach. at the same time we have gotten all sorts of signals from all and that is the way it goes in the campaign. we will restore things later. fully, the level of responsibility that lies on the

shoulders of the u.s. i think that all this should be more dignified, more balanced. as for the fact that someone is criticizing us, all criticism is level by mr. trump as well. for instance that russia allegedly paid the clinton foundation. >> [laughter] [applause] >> does that mean we control the clinton family? ones.t even know which both one side and the other side are using it.

when someone says they want to work with russia, we will welcome it. >> one last question on donald trump. some people say he is too volatile to be an american president. you would be happy with him as an american president in the same way as you would be happy with hillary clinton. >> [speaking russian] can't speak for the american people. they are working in their own way. they are very smart people. understand --

trump is focusing on the traditional electorate, with average incomes, the working class. people that support traditional values. mrs. clinton is focusing on a different part. by trying to implement them in your own way. that is why they attack each other. in some cases, i wouldn't want to follow their lead. the u.s. political culture -- america is a great country and they have earned the right that nobody outside should interfere or comment.

who will win the support of the american people? they want to cooperate with russia. francine: a to our interview, and we will have more throughout the day. it's actually quite great, because they talk about brexit, russia and japan, g20. you have to go online to watch the full interview. let's get some reaction from our senior fx strategist. dominic, when you look at all the volatility and uncertainty, a lot of it is embedded in foreign policy and the u.s. election coming up. what does it mean for fx? we have low volatility at the moment and low volumes. >> yeah. with quite surprising in some respects is how low volatility has been across all fx markets, whether it is e.m. and g10, whether it is brexit, localized e.m. risk, or the elections. as we get closer to the elections, clearly we are going to see more noise. it will probably keep things choppy.

but i think it is a sign of the cycle in the market; everyone is quite cautious, even if they are optimistic, and i think that means a lot of these moves can continue to grind on. the rally can probably continue. francine: this is my chart of the hour. i did this for you. it's basically showing the dollar-yen, 12 months moving average. this is what we have seen in green, crossing below 24, forming a so-called death cross. itt this usually means, marks the long-term e.m. strength. is that right? >> i wouldn't necessarily equate it with a death cross, but when i look at dollar-yen, it really comes down to the monetary policy angle with the fed in the boj. that is probably the biggest driver from 2012. we have significant yen weakness. and now everyone is asking the

question, what more is the boj going to do? i can't see them doing that much. i just think that means the yen will continue to grow stronger. tom: this is an interesting mix. you grind stronger yen, the outlier call on sterling. i don't care about any of that. what is the u.s. dollar going to do? when you synthesize the individual, haired dynamics in, does it lead to a strong dollar, or the interview that francine did today? is a brutal strong dollar? >> no, i don't think it is a strong dollar, certainly not a big, cyclical bull run. we had that from the 2013 tillie 2015. now i think that is over. when you look at the fed, obviously going into september and people talking about hiking, it is very hard for them to keep hiking. they might hike once or twice over the next 18 months, but they aren't going to stop --

start hiking consistently and that is the way the in -- the dollar interacts. that double way any of monetary policy tightening makes it very hard, given the underlying growth story. francine co thank you so much. --: i wanted to jump in there is one headline that sticks out for mr. putin that is absolutely extraordinary. you have been out front on this, the idea that the euro area will shrink given brexit. brexit is not just about the united kingdom, it's about europe as well. francine: right. but the headline i picked out -- remember, there are also sanctions against vladimir putin , there was a complicated, convoluted and unfriendly relationship between brexit and putin with david cameron saying he is the one that benefits.

i don't know how much of what he but weing is rattling will have plenty more on that -- a great chat. for more in our exclusive interview with the russian president, vladimir putin, don't miss our special report on monday. this is bloomberg. ♪

tom: a crushingly busy morning for "surveillance." the conversation with vladimir putin, much more on that through the morning. job stay in america, a few other things going on. francine is in london; i'm tom keene in new york. right now, carl riccadonna quietly said, "i don't care, we will publish a bombshell." you guys came out, right? and said that there will be no september rate increase. >> right. we had the view that it is december for a long time and we did not sway. based on what we heard from terry yellen last friday, based

on virtually any scenario we have seen, the fed is lacking the confirmation that the economy is really exhilarating. september is too soon. tom: can francine and i leave now? >> have a good weekend. [laughter] tom: what's going to happen? is going to be an important report. will it shock? >> we have competing biases in the august employment numbers. disappointtended to relative to the consensus over the last five to 10 years, but over the last few months we have surprised consensus expectation. question.eal as long as we have something in the vicinity of 150-to 25, this is just more of the same. so the reason i say that this is less significant than usual -- every month we jokingly say it's the most important jobs report. year,as true earlier this

when we were heading into midyear liftoff. that wasn't the case. then we had the jobs stall in may, and we were worried the economy was rolling over. neither of those advocates right now. tom: francine? francine: the problem i keep on being told, august is so unpredictable. it's a guesstimate. so how are we going to see the fed make a decision on the back of an unpredictable jobs report? >> that's exactly the point. the said, there -- the fed, there's very little evidence that things are boiling over. if anything the economy is underperforming. because of that, the fed does not have the confidence at the september meeting. janet yellen tried to guide expectations in her jackson hole speech, saying that we are moving in the direction of a rate increase, but she was not implying september. tom: let's move in the direction

of a bloomberg chart. unemployment. why are we so miserable if that chart looks so good? >> because it is understating the amount of slack remaining in the labor market. absolutely it is moving in the right direction. we have seen some very linear decline over the last several years. nonetheless, over the past 12 months we have seen an extremely stable period for the unemployment rate. that the client seems to have trailed off, hovering right around 4.9%. we haven't seen a period of stability like that since 2007, before the recession. tom: we have to go to francine. francine: tom, when you look at the jobs data in three and a half hours, should tom be buying dollar or euro? >> when you go into this report, i think it will be biased toward the dollar. that feels how it will be trading. that's about the timing of the

next fed rate hike. when you are thinking about when they will raise, going into this, at 150 or below expectations but solid, a lot of people will think, they could still go in september if not, december. but once you get there, once you have had that hike, it's not so bullish. that it is about how many hikes we will have. seven or eight one or, two? later down the line it becomes more dovish. tom: dominic, thank you. that outlier call on weak sterling. thank you so much. an important call on a weaker -- no september meeting. ♪

♪ it is a critical jobs day for janet yellen.

have a representative from j.p. morgan on our labor economy. not endorsein will secretary clinton or mr. trump. he is shocked at their shock tactics. and it is september. it is all about the dollar. jacob frenkel in this hour. this is bloomberg surveillance from our world headquarters in new york and francine lacqua in london. what an extraordinary day. vladimir putin on brexit in europe was fascinating. francine: you have to have a smile when you hear vladimir trump andting donald hillary clinton on shock tactics. john mickelthwait had that interview with mr. newton. -- mr. vladimir putin.

now saying that russia and the u.s. are close to a deal on syria. tom: john mickelthwait is in the surveillance time out chair. the last question -- will open a be the samevechkin hockey player? monday ofogramming on his conversation with the president of russia. now, with more, and our first world news. that interview, economic sanctions are limiting trade between russia and the u.s. and the eu. now he is looking towards china. spoke with president john mickelthwait in an exclusive interview. >> we have reached a new level of preparation. we are working on a joint space

program. we are working together on a helicopter. we're working on an airplane. we are cooperating on machine building and high-speed rail. timber processing and a atomic energy. we have already built a nuclear power plant. tuned in all day for more on our exclusive interview with vladimir putin. by its has been hit first hurricane since 2005. it came ashore early today with winds at about 80 miles per hour and it is expected to bring up to 10 inches of rain. georgia, the carolinas, and other parts of the east coast could be in for deadly flooding. invalid -- in venezuela, the biggest mobilization of protesters.

they are demonstrating and demanding a recall vote against the president maduro. -- venezuela has been slammed with shortages of food. global news 24 hours a day powered by our 2600 journalists in more than 120 countries. this is bloomberg. tom: let us go to equities, and bonds. and to our guests. futures are up for actually. oil weaker over the last few days. west texas well under $44 a barrel. peso, 18.79, a weaker peso over the last few days. putin, wef mr. threw up the ruble. isncine: you said all there to see. treasuries fall and dollar

advancing. back to the u.s. jobs report -- it is shaping expectations for the timing of a rate index sending stocks in europe higher 0.5%. tom: we have bill gross later. alan krueger will be with us. right now, we synthesize the markets with robert and joining house call,original head of economics for j.p. morgan. you guys were way out front on a nude dampened terminal -- on dampened terminal rate. week supply side 1.5. has fallen below there are two conversations going on, one is about eight

data dependent fed and the second is about a fed talking to us about equilibrium interest rates, gold, which is about the path of policy. that part of it is where the neutral rate matter so much. tom: september rate hike? >> not our call. tom: bruce? >> the fed opened the door to the possibility of a september rate hike but i don't think the data will support that. why have we seen a much more hawkish fed? do they want to reprice or help the markets it reprice? are they trying to strengthen the dollar? >> this is not about dollar policy. i think what the fed has been telling us is that the necessary conditions to consider a rate hike is when the economy stands

on firm footing is feeling like it as been established. there is a consensus by the committee on this and now a willingness to talk about rate hikes. the sufficient condition is that inflation is moving back to 2%. there is a much more diverse opinion by the fed. much less of a consensus. we do not think we will get there by september. but we feel the fed is considering making a rate tight by the end of the year. francine: how do you see this hawkish fed? have been miscommunicated in the past or are they actually turning more hawkish? is it markets realizing or is the fmoc becoming more hawkish? >> we think it is more helpful to think about this in terms of risk aversion.

this ine thinking about june and then unemployment numbers interrupted that process. the fed does not know exactly what will happen around the u.s. election. there is a referendum in italy. a lot of things can happen between now and december. if we get a decent payroll number, you have three months of a moving average. they may say -- let us get this over with. the risk aversion would be to let the rates move up a little bit. tom: bring the chart. i made this yesterday. there is a four-year presidential moving average of output per hours worked. bordering onity is 60 year malaise. is this a carter malaise? >> i think we are in the midst of something quite structural. -- there is a fundamental story about

technology doing less to help us. storyis a fundamental about us not investing for many years. 15-20 years. and a fundamental story about government, lack of infrastructure, lack of commitment to immigration, to regulation dynamics. all of this suggests that this is a structural force that will stay with us. the important thing is that the drop in productivity growth has been implication on productivity growth. it does mean we are getting tighter. we are almost at full employment. is dollarperience compensates for whatever the malaise is. traded dollar. on the left. long and you bring these moves here, we are nowhere near historic strength on the

dollar. will we see this next year? >> i don't think so. to get that level of strength you need high interest rates. in the 1980's, the dollar soared. ronald reagan and real rates. we don't have either of those pushing the dollar higher. we have gotten the cyclical move out of the dollar. it is not clear that we will have that much more of a move as we go forward unless the fed were to find that it is drastically behind the curve, inflation is surging. we don't think that is happening. tom: i don't think that is happening either. this is great. we will have these guys for the hour. and more from john mickelthwait and vladimir putin from vladivostok. on negativeng rates. capital, wejanus

will do that just after the jobs report. this is bloomberg. ♪

francine: this is bloomberg surveillance. tom keene is in new york. let us get more from the exclusive interview with russian president vladimir putin. he sat down with john mickelthwait in lot of us that. he asked the president about the hacking scandal in the dnc. the president denied meddling in the race. he vowed to work with any administration willing to work with them. >> i do not know anything about that. you know how many hackers there

are today. they can leave their mark at the necessary time and place. it is an extremely difficult thing to check, almost impossible. is that really important? does it even matter who tracked this information from the democratic headquarters? the important thing is the content that was given to the public. there should be discussion about that.

i want to tell you again, that i do not know anything about that and at the state level, russia does not know anything. the campaign headquarters [indiscernible] . penetratetand that to you need toters have a finger on the pulse. get the specifics of the policy in the u.s. think this is

time that everyone should come clean about it? russia is trying to hack america. china is trying to hack the u.s. everyone is a hacking one another. when of the purpose of the g20 is to come up with a new set of rules so this can be a more ordered foreign policy. >> i think that it would be better for the g-20 not to get involved. formed as a forum to discuss economic policy. influence economic policy, that is clear. but if we have squabbled -- squabbled, or serious issues, we will work with the g-20 agenda.

on then, instead of working issues of finance, we will endlessly argue about serious problems or other world problems and there are plenty. it is better to find other venues and forms to discuss that. the un security council for example. will have much more of that interview today and into monday as well. bruce from jp morgan is with us and rubber. bring up the chart that brings up why vladimir putin is vladimir putin. vladimir putin steps in informally. the blue circle is a rough approximation of his takeover. stunning wrubel stability was had. modest financial crisis. we go to further stability and finally oil breaking $100 a barrel.

he has been hugely successful with what the russian people want most which is stability. >> he has but if you think about that timeframe, there were extraordinary periods of dollar-wrubel weakness. inflation numbers have been single digits. occasionally spiking up into double digits. but relative to the old days, a much more emerged market than it used to be. tom: jp morgan has a wide mandate here. is russia place where jp morgan can do business and where you can do good economics? do you know what the data is? is there a sense of doing business as usual with the embargoes and the other issues with ukraine? russia andsiness in we will continue to do so. i am not an expert. tom: is london going to move to

moscow? is that the likely brexit outcome? >> we have coverage throughout the world and in russia and we are comfortable that we can do good work there. there is no doubt and you can talk about the u.s. and everywhere else, but there are issues around the quality and availability of data. it is an important point where into a world where the emerging markets become more important, data becomes an important issue on how to understand what is going on. francine: i need to push back. if you look at the russian economy, it is stable somewhat but inflation is rampant food prices are through the roof. this is a political system that puts vladimir putin in power and he is consolidating that power. maybe that is why he is looking at foreign policy. the people in a certain

sense. argue thatt mean to the russian economy is performing extremely well. tom's point was that there is some relative stability in its economic -- external economic relationships relative to 20 years ago. inflation has been an upside problem. it is one of the few economies in the world where nation has been under pressure to the upside. the economy is struggling. if you look at another commodity -- economy like brazil, you have to suggest that the russian economy has come through this adjustment in commodity prices and export prices then a brazil has. in that context, they are more stable. francine: when you look at foreign relations and the way that vladimir putin has acted, is it easily explained given the

collapse of the price of oil and the troubles that the russian economy has been through? >> i don't think there is any doubt that there are economy has gone through a huge recession and there is a tendency on the part of policymakers to shore up their support in other ways. 1.i want to make is the russian economy is going to do decently better over the next year. the commodity price shock is fading. some of the hit from the sanctions will be fading. one thing we have to be careful about is that we do not want to look at current economic and drive that view without an underlying structure. it is dependent on commodities. it has huge issues on structural reforms. this is still an economy that is ailing in important ways. francine: thank you so much. tune in on bloomberg all day

with our exclusive interview with vladimir putin. and don't miss our special report on monday at 5:00 p.m. u.k. time. this is bloomberg. ♪

tom: good morning everyone. francine look while. tom keene in new york. bruce cashman and rubber are with us. robertp the chart -- and

are with us. bring up the charge. chartould never show this at j.p. morgan. this is the mail that i get from listeners. the real inflation that is out there. this is the pain people feel on real wages. >> it is not there. we have had a huge hit for the economy over the last 10 years. we have been living with lose labor markets -- loose labor markets. now, it is starting to show signs of moving up. indicatorsone of the moving up less but it is moving up. the real chart you should be putting up there is wage growth less productivity performance. the issue we have in this economy is we are starting to heal and labor is gaining

bargaining power but companies are not able to generate the productivity growth to go along with that. that is not a problem right now but in the future. tom: 10 seconds. we need to get back to normal inflation before we can start to worry about high inflation. tom: this is a real treat for me. join us.nkel will he is truly original in foreign exchange research. the former governor of the bank of israel. to italy for a conversation with professor jacob frenkel. this is bloomberg. ♪

francine: this is bloomberg surveillance. we have been talking a lot about our interview with vladimir putin and how he spoke about

inflation and foreign policy with the u.s. and syria. tom: the wrubel is showing -- ruble is showing the instability. this is a chart i did not expect. help me here on russian gdp. the blue circle is the advent of vladimir putin in may of 2000. what an extraordinary slope to economic growth. is it all oil induced? commodity prices were an important factor. keep in mind what we had happening in the 2000s was a powerful move of capital into emerging markets which russia benefited from and emerging market demand overall was also very strong. there was a strong phase that lasted for about 6-7 years. when you look at that, a lot of

it was driven by forces that do not reflect underlying strength in the economy. once that commodity cycle has --ed and the cop bital capital flow cycle has faded the russian a company -- russian economy is not doing that well. tom: almost west family and relations with europe, they buttress up against poland. what do you see in those currency dynamics? we always look west from: to europe but: looks east -- but poland looks east to russia. >> flexible markets. free label markets. the ability of capital to move around freely. even within the eurozone, you lot spain which has done a on the reform side leading growth. france and italy are not performing well.

you are seeing that across the whole area with countries that you mentioned including poland and hungary where the reform process has been more robust and countries are responding. the reforms are coming from the government. from a market perspective, how do you marry the policy to the economy? that theit tells us politics are not as important as we think. if you get the reforms right, you get the economic performance. i think we are seeing that in spain and hopefully we get some further reforms in italy and that moves forward also. sometimes, we overestimate how important it is. an acting prime minister. a parliament and policies are moving forward. the important thing is when the policy reforms took place in the 5 years.

they did have a sitting government and now they are enjoying the benefit of that reform process. francine: thank you. let us go to the bloomberg first word news. >> in that interview, vladimir putin made clear that he is not taking sides in the u.s. presidential elections but he does not care for the tactics of either candidate. he spoke with john mickelthwait in an exclusive interview. : after all, the shock tactics of both candidates. each in their own way. they are very smart people. >> tune into bloomberg all they

for more of our exclusive interview with russian president vladimir putin and do not miss our special report on monday. has made landfall in florida and is now pushing into georgia. is expected to bring 10 inches of rain. and the carolinas and other parts of the east coast could be in danger of flooding. global news 24 hours a day powered by our 2600 journalists in more than 120 countries. this is bloomberg. from the forum is professor jacob frenkel. he is with j.p. morgan international. professor jacob frenkel, thank you for joining us. i want to go to brexit. guest telling us

the current account deficit dynamic of the united kingdom is key. you are one of the experts in the world on this. are you concerned about the depth or the duration of a current account deficit in england? the current account deficit that is too long is not sustainable. in contrast to the original doomsday prediction, the world has not gone under and europe has not gone under. i believe that what is happening now is the start of the realization that europe needs the u.k. capital markets at least as much as if not more then the u.k. capital markets need in europe. i believe and hope that common sense will prevail as negotiations move on. i look at negative

rates, stanley fischer was quite adamant. it has been an interesting and important experiment. do you agree with the vice-chairman that nations should continue to study negative rates, do negative rates, and distribute them more across their societies? with stanleygree fischer about issues that are of great interest. it is an interesting experiment. i do hope that it will not picture ofneralized the world's financial markets. negative interest rates are not healthy for the financial system. and low interest rates are also not healthy for a sustainable financial system. we have had very significant -- monetary policy all over the world has been

productive saving the world from a deep recession. now is the time to agree that monetized policy should not be the only game in town and interest rates should aim to be normalized and that is where we should move. with jeani spoke trichet earlier and everyone agrees that this should not be the only game in town. sot needs to change central banks are not the only game in town? when you start as the only game in town, you are the savior. but over time, these things that are not sustainable cannot continue forever. everyone recognizes that the name of the game for the resuming of the economic growth

and the increased productivity which has been a long-term problem cannot be solved by monetized policy. structuralre policies will fall in. because of responsibility of the central banks, they have been acting but we should not overwhelm them. they are not equipped to be able to do what it takes to improve productivity. discussion was focused on education, training. that is the name of the game. -- ooking we have seen also a lot of thinkers around the world talking about the changing mandate for central banks. we have talked about the changing mandate of the 2% target for inflation. need to think about

central banks differently? everythingto reset we know about what they can do or can't do under mandate? i did not hear each word of the question but if you were talking about the mandates of central banks, the nature of the economy has changed and the mandate of the central bank accordingly has now extended price from dealing with stability to also deal with financial stability. if you are focusing on financial should realize that the success of the central banks can not only be judged on arresting inflation but also in terms of securing the security of the financial system. zero interest rate will not secure the financial system. it may create problems and

disconnections between the real economy and the financial economy. you are the heritage of the university of chicago. our guys like you paying enough attention to the financial and the banking system? economists working in a economists working in a vacuum? >> absolutely. arerun of the banks critical for the functioning of a modern economy. that is one of the points we need to keep in mind all of the time. when you have uncertainty in the framework, when you have are changing the business model of the financial

industry where you put insurance companies under tremendous we have to recognize that without financial systems that are healthy, your economy will not grow. if you want to have growth and employment, you must have strong banks and a well-financed banking system. tom: jacob frenkel said but i am not allowed to say. he is the chairman of j.p. morgan international. coming up, we have much more on jobs. growth orre on wage lack thereof. bill gross saying there is still growth in the study of negative rates. we will have bill gross after the 8:30 a.m. job reports. this is bloomberg. that is a gorgeous shot.

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francine: new york is asking me if summer is over in london. probably. the daily grind. tom: that is a beautiful shot. francine: but it is still cold and not sunny. tom keene is in new york. treasuries are falling and the dollar is advancing. it is all about the countdown to the u.s. jobs report. that will be shaping the timing of the next fed rate increase. let us get straight to the bloomberg business flash. >> samsung has announced a

global recall of its large screen galaxy note seven smartphone. the batteries can catch fire. people will get a replacement. the samsung recall comes a week before apple is scheduled to introduce a new iphone model. fiats in mission rules. the italian transportation ministry said they did not use in missions -- on their cars to -- homend in missions sales in hong kong have risen to their highest levels in months. in february. developers have been offering discounts of up to 18%. that is the bloomberg business flash. us alongrt is with

with bruce, chief economist at j.p. morgan. such aefore have i seen fed affected jobs report as well. what is great about it, there read in your weekend note from j.p. morgan is the outrageous comment -- ignore the docs. -- ignore the dots. take the time to to roll through the many months of this chart but bruce, you have said ignore the dots. >> the fed is engaging us in a conversation about what is changing in the structure of the economy. they are talking about different types of objectives here. in that environment, it makes it difficult to pay close attention to any specific guidance they are giving us. muchthere is too

conversation including stanley fischer recently. is there too much conversation? don't think so because what matters to understand the fed is their guidance. the conversation is opaque. it cannot be translated into a data dependency which is what we want as a roadmap for knowing what the economy will do and what the fed will do. and there are different opinions from the different members of the committee. there is no consensus on where we are heading. we do not have consensus even at this desk. i asked myself many had tohat if you opposing views, it makes it you smarter. you don't know the direction. if you are sophisticated, having

different points of views, should make you understand the thinking more. we are moving towards a more empty way of thinking. here in the u k, we have various members but they choose them with different expertise. is that a good thing or a bad thing that the fed does the same? >> it is a good thing. especially when we talk about the regulatory environment and the banking environment. ,he more the fed can bring in not just academics but people with practical experience in different parts of the economy, it is a big positive. they are dealing with non-cyclical issues. longer-term structural issues. theng some expertise -- staff has that expertise. but thinking about what negative rates would mean for the banking industry and how that would affect the financial section are critical. at the why mark carney

bank of england and various people at the fed want nothing to do with negative interest rates. they realize what impact that would have on the financial system. having that level of expertise at a time when there is so much uncertainty about what monetary policy can do and can't do is very valuable going forward. francine: thank you. tune in to bloomberg all day for more of our exclusive interview with the russian vladimir putin president vladimir putin and on't miss our special report monday. this is bloomberg. ♪

tom: never a boring summer as we stagger into fall. grand central station is to the left. we greet a three-day weekend in the u.s. we will have important coverage of the vladimir putin conversation. look for that in the 12 hour of monday. francine look off -- francine lacqua is in london.

bruce, as you know, economics is the grinding out daily of reports. nobody did it better than your colleague, robert mellman. watching froms his home in the berkshires. he was an amazing colleague appeared tom: the crucible of friday afternoon. lousy.fee is everyone is out the door and you guys are at the desk grinding this out. how do you put together a report? >> we are working on a global report that is 85 pages long each week. we are spending an enormous amount of time to get something that is coherent and comprehensive. thursdays and fridays are heavily driven by that process. absolutely extraordinary

how this gets made. it keeps us smarter. we need to get smarter about jobs. what will you look for at 8:30 a.m. ? get a payrollwe somewhere near the consensus, you have to think about the three-month moving average being somewhere in the 225 or higher range. that is near the upper end of what we have seen during this cycle. that is something the fed will be focusing on. report.eaken the they start looking at some of the now casting reports. the atlanta fed has a good handle on the gdp. even the new york fed estimates coming up close to the percent. there is a consensus growing. isve stanley thinks there

eight chance for -- francine: give me a sense of the optimal level for a dollar -- four dollar. >> if we are right, the dollar as itind a stable path has for the last six months. what is important is the stability is partly about a fed guiding us on a shallow path. news inflecting better emerging markets and on the global side. a stable daughter -- stable dollar is important. thank you so much. we will continue this discussion through the morning. at 8:30 a.m. this morning, bill gross will be with us.

we do this report for you. when 03.58.ker come , 18.77.can peso has ourkelthwait conversation with vladimir putin . thecine: i really enjoyed vladimir putin interview. he is blasting both hillary clinton and donald trump for their tactics. and a brexit. the gorgeousity of new york city. ♪

, anne-on-one with putin

interview you will only see on bloomberg. >> the home stretch of the jobs report. the final leg of the race. s when to raise interest rates. >> an oil company looks good as prices fall. pioneer outperforming crude. a special welcome to you. welcome to bloomberg go. i am alex steele. fromohnson joining me london. happy friday. jobs friday. there are disco conversations in the market. the fed wants a hike. other, it has to be blockbuster for them to pull the