guy: welcome to on the move. we are counting you down to the european open. i am guy johnson alongside caroline hyde over in berlin. bring art hits the brakes. the fed governor urges caution in the last word before next week's decision. is it all over for september? signs of stability. both china's new and old engines come to light as factory output beat estimates. will the figures be enough to jumpstart private sector

investment? the big short pit we speak to controversial -- the big short. we speak exclusively to carson block. caroline: looks like we could have risk appetite out there for european trading. we are picking up with u.s. left off. we are seeing futures signaling an uptick. it does get the last word when it comes to the fed. that probability running back for a hike. with as start the day look back at what happened yesterday in the united states. caroline talking about sentiment. -- gain on the s&p 500 reynard really did the business for your pick -- you're connecting markets were soft yesterday. the dollar is a factor in all of this up .2%. onde trading on the w ti --

wti. brent is down trading on the 47.91. here is david ingles. david: thanks. let's talk china. the economy showing signs of a rebound after july's pickup. a rise of 6.3% in august from a year back. talking investment in retail sales exceeding expectations. the numbers build on other recent data. hillary clinton has said she is feeling so much better after being taken ill at the 9/11 commemoration. the democratic presidential nominee also said she has not disclosed a recent pneumonia diagnosis as she did not think it was a big deal. aftermments came accusations that she has not been honest about her health. she promised to release more

information about a medical history in the coming days to speak naturally roles bill clinton insisted that hillary is recovering. she was better last night before she went to sleep. she got a good night sleep. she just got dehydrated. hoffman is offering to donate as much as 5 million u.s. dollars to veterans if donald trump releases his tax returns and time for the final presidential debate. "-- to the mac and people, we must show him that we do value accountability and transparency." u.k. house prices edged .1% higher in august. as the property markets continue lackluster recovery and the shock of the brexit boat. prices fell half a percentage -- to morendon to

affordable areas. global news, 24 hours a day, powered by 2600 journalists and analysts in more than 120 countries. bloomberg. guy? guy: thanks very much indeed. a busy day for the fed rate debate and we have heard from both the central bank and private sector. it is timehart says for a serious discussion about raising rates. in the last fed speech before next week's decision, the governor dumped cold water on the prospect. >> the asymmetry in risk management is a new normal. councils prudence and accommodation. i believe this approach has served as well in recent months helping to support continued gains in employment and progress on inflation. i look forward to assessing the evolution of the data in the

months ahead for signs of further progress toward our goals. guy: from the fed. let's hear from the private sector. they had a different take. >> the fed has to maintain credibility. i think it is time to raise rates. normality is a good thing. an economy that is going to be going like this for seven years is a good thing. the return to normal is a good thing. the rate itself gets much more psychological attention than the actual economic effects of raising rates. to hear ashocked private sector banker talking about raising rates. just ewenon watt's cameron watt -- human cameron watt. mark, let's start with you. it could've been avoided if like the fed investors paid attention to the data.

one: there are two things, is jamie dimon is saying to the fed they should hike rates could another discussion on whether they will hike rates. outlinee continued to to focus on the data. the data has been clear that it is not compelling or cappelli -- or justify a hike right now. guy: in many ways we should pay attention to the data. ewen, it is a fair point. we did have this discussion about whether the fed should raise rate. a mere 22% for september. is it over at? ewen: i don't think there went to raise rates in september, guide. they are scared of the shadow the market. say -- a signem for december. the economy has been slowing

down until about three months ago. it is still growing but rather slow. it seems to have leveled off, maybe it is going to pick up which is white this functions on the implement level. isn't that slowdown -- is that slowdown going to stabilize? and -- caroline: i want to take it back to market. it was a great piece you put out today on the risks. he said it is all about inflation. markets are surprisingly interconnected. the neutral rate is lower at all of these points being laid out by the dove at the fed. what should we be looking forward for this week? think on all of the data, you need to look at the whole picture. some what are you that is mixed. -- some would argue that is mixed. for example, they like inflation, the most important

thing it is the core pc. in fourt hit target years. it is moving away from target. none of this is surprising. their preferred measures of data are not positive. like the rest of the pictures are fairly good either. guy: it we listen to the headline out of what is coming from the fed, yes, i take your point that we should be listening to all of those things . there are papers coming out from the fed and this stokes the argument, one we had a couple weeks ago talking about we are getting long in the tooth in this expansion, albeit a mild expansion did the fed needs to start -- expansion. the fed needs to start preparing for the downturn. is there a document that says what is happening at a headline level needs to be taken in the context of the biggest cyclical

story. the fed needs to think long-term and as a result, he needs to get more ammunition back on the rack so they can start repairing to cut again. i think that is 100% right . the big issue is they have missed the boat. there too late in the cycle to hike now. they need to re-examine the whole process with which they make these decisions. jackson hole is a part of that at all of the speeches all of us part of that. all of the speeches over the summer -- they cannot suddenly surprise without warning people that they are changing the whole approach. that would eradicate any credibility they have left. they may start examining the process, but they will warn people if they are going to change the process before they start hiking. maybe that is what they should do.

caroline: i want to bring it back to you. you mentioned libel. on my screen i am showing the wrap up and libel. we are no near 2008 figures, but the money market reform is starting to pinch in in terms of liquidity in the markets. the cost of funding for banks. how much is that in the fed's perspective? mark: i think it is in the minds. -- ewen: i think it is in the minds. look, the monetary conditions are not hot or cold. they have tightened a little bit. the debate about whether we are going to guess the growth has been going on for so long, is a bit odd. if it is going below -- if there is a below trend cut recovery --

below trend recovery, i think that is what libel is telling us. buts not going to crash equally it doesn't feel like it is going to take off. caroline: what do we buy? ewen: u.s. credit is the place to be. if you feel the yield curve, then the pickup and yield you get to compensate for you just compensate you for the risk -- compensate you for the risk. guy: ewen cameron watt will stick around. caroline: both china new and old engines come to life. factory output sales beat. we are in hong kong next. the big short. we speak to carson block of muddy waters about his latest short positions could we talk brexit in the markets.

-- positions. we talk brexit in the markets. this is bloomberg. ♪

caroline: hong kong. [indiscernible] if you're looking at the hang seng. a mixed picture if you're looking at trading. here's david ingles. david: thanks. let's talk about abn amro. the bank has announced that its

ceo will step down next year after he says he does not wish to complete his term which was set to run until may of 2018. the board has begun the process of succession. the nfl comes a day after the bank says it plans to cut as jobs.s 1375 ford intends to sell it driverless cars by 2025. the ceo says the goal is to bring costs down to make sure autonomous vehicles affordable. he says the plan is to start rightobot taxes for healing services. investors have not reacted. amazon boss is going head-to-head with elon musk's

spacex. announcing an ambitious space plan. his a blue origin is building a more powerful and usable rocket to launch satellites and people deeper into space. rocket is expected to make its first launch by the end of this decade. that is your bloomberg business flash. caroline? caroline: thank you very much. let's stick in hong kong and in --na because of the economy with retail sales, factory output exceeding economists estimates. the surge and property prices .nd data may not be sustainable let's go to our economic correspondence, enda curran. confidence boost for investors in china or not? enda: good morning. it is adding to the stabilization coming out of china.

i think we can draw that authorities have things back on the control. we are not heading toward that hard landing we thought we were at the start of the year. we look across the board, the number say numbers holding up -- the numbers say they are holding up. up,theless, it is holding factory and experts picking up. investment doing ok. that is the positive side of things. the investments we are talking about is being billed by the public and not the private sector. the economy is leaning on the government. china has a big reform agenda that has been pushed to one side. -- or whethers they continue to kick the can down the road? a good headline number out of china today. a big social problem we all know about, they are not going away.

-- they have not gone away. ewen cameron watt still with us. ewen: i don't think it is good to pick up until the next political cycle -- it is going to pick up until the next little cycle. -- the next political cycle. we are seeing jockeying for position which is having an impact. from using pings -- giving the economy going at a reasonable rate is a policy priority. the fiscal deficit expands, the private sector -- it doesn't close down, but it still goes sideways. the economy is kept going until we are past the next stage of the internal power struggle. caroline: you feel this data is

secondary to what we should be looking for in terms of new loans, new credit. where are you expected that could -- expecting that to go? it is going but slightly more slowly. having been more pumped up. it isn't decelerating. what we're looking at is an economy like western economies. neither bursting out of the top or dropping through the bottom. guy: probably prices are going to worry. dissolution, big it depends on your first tier, second-tier. property prices only become a problem when they become a social issue it is not a bank credit quality issue. they are beginning to clean up their act in terms of raising capital.

there is a this lump of bad debt -- orbs all through lower activity. it is one or the other. my money is on a material fiscal expansion over the next one to three years. guy: we ticked the box on -- ewen: despite the strong inflows, the reform story in asia is a bit underappreciated. need -- needsuity debt. caroline: in terms of individual countries, your liking brazil, india -- you are liking brazil, india. where should you focus? i was told by mark mobius, concentrate on the currency, because the currency is the

guide to countries. india is improving. the new government is going to be aggressive on the rate strike. the equity market is starting to look quite attractive. guy: ewen, stay with us. caroline: now we are minutes away from the open. next we will look at the potential corporate movers including abn amro. the new seal on the cards as the old announced his plans to step down. this is bloomberg. ♪

caroline: 7:53 in london. a glorious berlin. temperatures are rising. where up on the dax -- we are up on the dax futures. let's look at some of the maneuvers -- some of the movers. the net income fee is looking strong good that is one of the numbers that is coming out. of thed rise to the tune percent to 4%. we see first half revenue coming in at $453 million -- 4050 3 million swiss francs. guy: we all know if you live in the u k there is a single market battle on the way. mark is under pressure. they are filling that.

-- markets under pressure. they are feeling that. it is all about the growth margin. gross margin remains a big issue for the company. caroline called softer on the back of that. caroline: some a mixed picture is coming up from abn amro. look up for that stock. there is a movement at the top. the chief executive looks as though he was to be stepping down before 2018 which is when his term was come to an end. 2017.l look to exit in the board in a rush to start the process of finding someone else to take his place. guy: we will talk about that later. the swinging doors of the banking management team continues to happen. we are expected a positive story in europe. we saw a solid close yesterday

in the united states, bouncing back. we're expecting european markets up by around .5%. the market opened his next. this is bloomberg. ♪

guy: good morning and welcome. i am in london, bloomberg headquarters. we are moments away from the start of european trading. what is the morning brief? caroline: brainard hits the brakes. she urges caution. is now at 22%y for a hike. is it over for september? china's oldbility, and new engines come to life. as factory outputs beat estimates. is it enough to jumpstart private investment? the big shorts. a controversial

investor. we get his latest call from zurich. is: let us talk about what happening with the markets. how will we open? we are expecting a positive start. we are expecting the ftse to be up i about .5%. this is monday morning. that was yesterday's session. brainard speaks around here and then we get the positive role in the u.s. european markets taking a little while to settle through. we are expecting more positivity. and the ca shouldc should be -- and the cac should be up. we expect it to recover aggressively. let us show you what is happening in terms of the breakdown around europe. this is the stoxx 600.

bygium, the gainers are up 0.4% -- 0.5%. at the moment, europe is up. expecting more than that. continental markets have opened up for bonds. we have also seen the 10 year treasury yields move lower today after the dovish comments from lael brainard. looking at the 10 year yields in the u.k. we are down by one basis point. this is just opening up. take a look at what is happening on the stoxx 600. yesterday, this was red across the board. green across the board now with health care stocks leading. i.t. stocks close behind up by over 0.6%. telecoms also among the top five biggest grip -- biggest gainers

in the industry groups. we start with two stocks that gad --me numbers, positive trading in the second half is encouraging. jd sports fashion interim dividend at 1.25. we will wait for that to move. ocado has not seen a significant impact from amazon fresh. on the day that amazon fresh said it was expanding in london, we saw ocado shares fall significantly that they said they expect to grow this year. third-quarter gross retail sales came in at a beach. -- at a beat. now, a bit lower right

down 5.2%. we wanted to highlight air lick air liquide. it is up 0.4% at the open. investors will be able to receive one new share her ei -- per eight they own. guy: the global bond selloff causing this morning. on the u.s. 10 year for instance, near 1.7 yesterday. the highest since the brexit vote. japanese sovereign debt has lost 9% this quarter. i bring you the japanese yield curve. check out the spread.

it has been going up. good news if you are a anchor. blackrock director of joins us. is the game changing? our central banks not -- now targeting the idea of the possibility of a yield curve? ewen: i think they would like to target the idea of a deeper yield curve because it has dawned on them that a flattened curve does not create an urge to lend. now, on one side, you do not want to give up on quantity. were a central bank are i would be reasonably happy with the way things are beginning to develop. there has been a great momentum trade. they are scaring up momentum trade chasing sovereign duration lower and lower. so far, we have seen a reversal of that and we have had this

before. in the spring of last year. guy: what are the unintended consequences of these deeper yield curve? think there are many negative consequences. more volatility of away from the financial sector. one would hope that the central that they had the wherewithal to with -- to withstand that sort of worry. caroline: give you -- give us a sense of your nation peripheral field. off ewen:. selling remember the debate is also about what the ecb will buy. , ands it changes its roles we are pretty sure it will change its rules and december. it will run out of assets to buy. in the higher of equation. wepite all of the talk,

expect it to be absorbing bonds. proper bond purchases, it was a record last week because they in therticipating primaries coming up, not directly. the ecb will still be there in support of the bid. caroline: are you worried about the leverage building up among corporate's? corporates? is this a concern that so many why --es are making hay while the sunshine? ewen: that is a good question. on the run side, the duration of the balance sheets have -- has turned up hugely. it is minimal. it is the corporate equivalent of the argument that governments should borrow more money now.

i personally do think this is a bit of a sea change is only only sothere are many competitors you can buy. buybacks have declined in volume in the third quarter as well. i am concerned. the equity is the cash flow left after you have service to everybody else. it is long-term rather than a short-term concern. will the corporations spend money wisely? we would like to see them spent more money on their own operations. guy: we talk about unintended consequences and central banking and failures of it and one of -- most notable one is that

they should be investing in productive capital. and that is not happening. is the unintended consequences of the policy that has been generated, especially on the long end of the week are. ewen: you have to wonder what the stock market is about when it pays back more in dividends and buybacks been it raises in new capital and capital investment on a consistent basis. i was taught that market is about capitalization for the growth of businesses. that mission has gone missed placed along the way. guy: thank you berry much indeed. it is amazing. caroline, we digress. caroline: we do a touch but it is a great debate to have. still to come, the big short. about carxclusively

since short positions. and later, we speak about brexit and the shortness of capital. this is bloomberg. ♪

caroline: welcome back to on the move. -- ultra high net individuals rather in zurich for

the summit. many cranny is there. -- manus cranny is there. manus: over half $1 trillion will be observed. a have come to listen to politics and markets. i have carson block, one of the speakers. of muddy waters research. you have a couple of it positions. you spoke with erik schatzker recently. are you still short? how sure are you? still short saint jude. we have never commented on the size of our positions. it is a meaningful position. we are still short. obviously, the next few weeks and months could see a number of

interesting developments in that story. manus: the cyber community is split between what you are presenting and what saint jude is presenting. i am curious. we expect to hear substantive information. you asked me this question a week ago, then my yes.r would be absolutely, and now with the lawsuit that saint jude has filed recently, whether we release additional information now or we do it as part of court filings, that is all to be determined. certainly, we will be releasing more information on vulnerabilities but in terms of part of thet is litigation or outside of the litigation, i cannot say at this moment. manus: let's talk about the

litigation. you have a lawsuit from think jude. do you still stand resolutely by the video? showeduld say that it the systems going into a safe mode. carson: that is a little bit funny. i think safe mode is nomenclature that saint jude developed a couple of years ago when it realized that some of its devices were experiencing major malfunctions through the merlin units. to formerve spoken st. jude's engineers and developers, none of them are familiar with the term -- safe mode. they know it as fallback mode. and it is not safe. it is a major malfunction in the device and it requires explants. , a third major problem party not be able to broadcast

signals at that device and cause it to malfunctions like that. refute that they have individual research that your assertions are not technically correct? carson: i think they have greatly mischaracterized the research. the research was limited. it focused on a particular picture in our report. what the researchers concluded was that they are unable to say whether we are correct. with the research to be clear, it concluded that there is no conclusion at this point. and that is actually a good thing from the perspective -- it validates that we were prudent in terms of the technical information we released. we were very concerned about releasing a how to manual on how to harm people. the fact that researchers like

the ones at research -- at michigan were not able to understand how we did this work, validated that we were prudent about what we disclosed. : we are next door to france. i know you have some positions there, any new updates on those casinos? carson: we are still short the rally casino complex. we are going to be releasing an update on casino and rally and companies in this orbit in the next one or two weeks. manus: have they made progress? will the report show progress? carson: they realized more in than theet sales market prices had been implying at the time that we published. but the these this remains the same. this company has so much debt at the parent level that the equity

value is far lower than where it is trading right now. where close to closing a position on casino? carson: no. it has been a challenging position. that is true. we have conviction that eventually gravity will catch up. manus: gravity will catch up. ticking time bombs in europe. are thee we -- where ticking time bombs? is it debt laden companies? i said that, i was referring to the companies themselves that have been piling a lot of debt on the balance sheet on the back of financially engineered -- or engineered financial statements. that is still the case. one of the major issues in interestinghas been

to us is that investors in europe are not doing the hard work of trying to dig into those financial statements and understanding the economic realities that lie beneath. meanwhile, companies are borrowing at extremely cheap rates and these pressures build up until one day, they become a problem. a 100 you launched million fund. carson: so that i am not marketing, there are a lot of legal strictures here in terms of performance, but in general, our strategy is an activist strategy. fund and wethat just launched a second fund on august 1. manus: carson, enjoy your day. and thank you for giving us that live update in terms of the short positions.

the viewpoint of carson block, cio at muddy waters. withine: manus cranny carson block of muddy waters talking casino and european stocks that look to be shorting. give us a sense of this deployment for this tactic? do you believe what we hear from carson block that european investors are not doing their work and getting underneath the lid of companies? ewen: i am not sure that i do agree completely. one factor is the disclosure levels are so much more detailed and granular in the u.s. than they are in europe. i think there may be some truth at the same time in what carson block is saying in that in some cases, there is a short route approach. but i think of what i know of european equity portfolio

management at blackrock and elsewhere, that lazy would be the last word that i would be applying to that. guy: and that is what he was saying, wasn't it? ewen: and this would sound like an advertisement but the way that credit is beginning to grow, it is forcing people to think about capital structures. the switch from bank lending channel to the market is increasing the variety. i would absolutely contest the idea that somehow or other european investors are lazy. i think that is open to debate. guy: i am sure you would say that. next, let's talk about the pension industry. unintended victims. companies with widening pension deficits. we will bring you that story coming up next. this is bloomberg. ♪

welcome back to on the move. ecb efforts to stimulate europe's economy are claiming unintended victims. companies with ballooning pension deficit. record low interest rates are making it harder for funds to develop their pension pots. ceos are worried about the impacts of the ecb policy. .on's officerewen

and they are worried. >> we have not had proper results. i hope for a return to more normal monetary policies. , is our: joining us now bloomberg reporter. i want to get into the this story of yours. give us a sense of the pension issue building. citigroup index showing the underperformance. >> the issue for these companies with a pension funds are rise -- ite the future pension varies based on bond yields. thelower the bond yield higher the pension liabilities of the company. now, the issue is spreading through europe. it is not the u.k. anymore.

the issue has already head home in the u.k. with the shares of companies like tesco. companiesve throughout europe particularly in germany bringing this up as a more important issue in their earnings. they aresaying that critical on ecb policy and this will be harmful for the policies and their shareholders. guy: this is a business you are in. you see this on a daily basis. how much would a steep yield curve make on this? 100 basis point rise in the u.k. gilt yield would give most of the deficit of the u.k. companies. the other side of the coin is it for lifemportant insurance companies. in continental europe, much more savings for people.

long-terming every savings contract around. guy: give us a sense of the underperformance. index thatp has an ofcks this and it consists 13 european domiciled companies. they are the companies in europe with the largest pension deficits as a percentage of market value. that has been underperforming. since it was conceived at the beginning of 2014. massive underperformance. in 2013, and you go back and compare the performance when rising, it was outperforming. investors are noticing this. i have been speaking to investors that say this is something we ask about. this was not on our radar before.

now when we have company meetings, we ask about this. i wonder if mario draghi is paying attention to this. coming up, we will hear from royale. ♪

guy: welcome back. we are half hour into the markets. how are things shaping up. we have a stoxx 600 that is up. not as strong as earlier projections predicted. flat in london, trading at the 67 level. health care up, technology also. basic resources are what -- are why we are slow in london. assetrting with an management firm out of switzerland. shares hitting a record high today, up 9% at the moment.

atst half revenue coming in 453 million swiss franc. the stoxxerformer on 600. second best performer is uniper. this was trading up yesterday as a spinoff from e.on. we are at 1062 at the moment. 10.30 yesterday. valuing at the company at 3.8 alien euros. second day of trading up just over 3%. moving on to ocado. worst performer on the stoxx 600, down 9.5%. it has not seen significant impact from amazon fresh. these shares sell on the day that amazon fresh that it was asked and a london perhaps on concerns of competition. it also says it hopes to grow.

perhaps why we are seeing this shares fall is that it did and ite its estimates did say that it continues to see pressure on margins although it did say that it is well-placed to absorb the margin pressure. worried about the size of its average basket. great roundup. switching our attention to france. france's most powerful woman. the energy minister. the u.k. has every right to take the 18e in deciding on billion pound project. in an exclusive interview, she discusses her country's upcoming election and its future in the european union. taken upision has been until now. discussions are going on. expect ahat we decision?

what we need is a good decision. it is stabilized. >> argued disappointed that theresa may has been quiet about it? >> she has the right to take her time and decide what is best for her country. the moste considered powerful woman in french politics at the moment. are you the only one able to save the president? not say that. for each member of this the point, it is not to speak about the next election. >> does that mean that it does not matter who will be the candidate of the left? >> at this moment, no. >> it doesn't matter.

it doesn't bother you that much. question i am answering now. >> how is brexit playing in french politics? on the far right wing, there are discussions of frexit. >> not at all. we cannot imagine that. i want to answer that. frexitdon't think a referendum will ever happen in france? the french will gather around europe. caroline: the french energy mission royal -- the french energy minister royal. start with the elections. i loved your points. you are seemingly the most

powerful woman in france, and she said, yes. talk about the encouragement for the president to declare herself a key -- to declare himself a candidate. >> she had to because is about that because he has not officially declared himself yet. his speech on terrorism was considered a pre-campaign speech. he will make a decision by december hoping that the opinion polls will be more in his favor. she has become his most loyal ally. some even call her the vice president of france. in 2007, remember she was herself a presidential candidate and lost against nicolas sarkozy. and so, the couple split she watched the campaign from far away.

now she is backing the government. they call each other several times a day on every subject. she is the only minister who is allowed to publicly criticize a decision by another minister like she did the foreign minister. him.ay be able to save 2017 may be the first battle they fight together. , and youn all of that have talked about how hand in glove they are in terms of policy, in order to make it a viable opposition, what did she need to do to make it a competition? >> her priority is to get everyone to ratify the paris agreement. that is her baby. the legacy she wants to leave behind. we had a breakthrough last week with the u.s. and china agreeing

to ratify it on the side of the g-20. butce has rectified it brexit is complicating things in europe and the eu now needs to ratify it. she wants this to happen by the end of the year because she is running out of time before the next elections. may have a harder time because as you heard, she is saying that theresa may is taking her time on this project in the u.k. and finally, she is trying to get private investors more involved in the fight against climate change. last night, she was speaking in the task force on climate related financial disclosures. she said at the moment more than half investors do not view the climate as a financial risk. guy: thank you.

caroline out of paris. will speak to, we howard shore about brexit and the future. this is bloomberg. ♪

40 minutes into your trading day. let us get you caught up on the business flash. has announcedo

its ceo will step down next year. she does not wish to complete her term. ofwas scheduled until may 2018. the advisory board has now begun a search process. after the a day company has announced it plans to cut jobs. driver less cars in 2025. anplans to bring costs down up to make autonomous vehicles affordable. the plan is to start with robot taxes. in 2021. investors have not reacted favorably to ford's new vehicles. -- amazonsht jet

jeff bezos is announcing an official -- in a vicious plan. organization is wanting to build a more efficient rocket. he expects it to make its first launch by the end of the decade. that is your bloomberg business flash. in an upbeat assessment, the uk's brexit david davis begins at the country can leave the eu within the required to your time limit will also cementing a new trade relationship with the block. he was speaking in the house of lords. hearing, you had a witness call into question whether we could complete this

inside two years. what we are trying to do. and i think we can. but the simple truth is we will have to be nimble and fast and responsive. not worry about tying our shoelaces together. u.k. economy has been in focus since the brexit vote. the cpi data out at 9:30 a.m. u.k. time. we are expecting inflation numbers to pick up. what will be the drivers? many are thinking petrol. >> petrel is one and food is another. expectingforecast is 0.7 percent. take a look at the forces forging u.k. inflation. we start with french. this is thefar -- price of brent falling and this

is u.k. cpi. as the price of oil has fallen, so has inflation. until it picked up a little bit at the beginning of this year. yearis in part because the on year comparisons in terms of inflation are falling away and we are getting a pickup in the price of oil and the price at the pump. that is half the story. we look at the pound. that is the blue line. you can see right here, the pound beginning to fall. long before brexit. we see the pound start to decline. middle of last year. we did not see inflation skyrocket that we begin to see it moderate its decline. finally, where will we see that? in one subset of cpi which is food price inflation. you can see it falling here. it went into negative territory. and then the pound weakens and

cpi is kicking a long here or food cpi is kicking a long here. it really takes off here at brexit. there is a two-month lag time between input food price inflation and what we see in the supermarkets but what this tells inflation -- how we are going to get there. laying out the charts. we are joined by howard shore. the company has more than 9 million pounds in assets. pro-brexit camp. you are going to tell me that everything is great? in the u.k. economy is delivering? howard: the upsides and the downsides -- the downsides were over exaggerated. anyeconomy is absorbing

impact of brexit in the short-term well. and i am looking forward to eating in the long-term. what are you expecting to happen next? nothing has changed. we have a weaker currency. those are the positives. when do the negatives kick in? some were threatening that we might have a weaker currency and now you're saying it is a benefit. guy: some would say that we would see a run on the currency. we have not seen that. and the current account would become a bit of a problem. that has not materialized. but we are in a positive environment. when you talk to the manufacturing sector able to you that. they have become cheaper. but there is a lack of access at the moment. howard: we will keep our access. billion trade a

year. we will continue to buy their goods and they will continue to buy our services. caroline: how do you expect the financial services to continue? howard: i cannot speak for the butish government obviously i cannot imagine any government coming back and saying -- we will continue to take freely all of your goods in europe, your tomatoes, wine, your you're all of oil without restriction. but you will put some kind of buying ouron services by saying that we cannot sell them. it is not a question of terrorists but access. accessld you give free to someone else's goods if you don't have free access to your services.

caroline: give us a sense of what has happened. the bank of england bringing out support for the market. do you think it was indicated? -- do you think it was vindicated? wasn't the right move for the bank of england? theas it the right move for bank of england? howard: it was the right move to quiet markets. yieldsyields -- gilt have come down. whatank of england knew they had to do and they have done that. guy: did the government know what they had to do? it seems chaotic. howard: the idea that they do not have a plan is ridiculous. guy: really? you say you know

the outcome of negotiations unless you have already negotiated them. upfront with say categorical confidence what the outcome would be? guy: it would be nice to know the starting point. it would be nice to know where here is. howard: there are only three main drivers. do we have free access, a passport? are we a member or do we have free access? i think we're playing semantics. do we continue to play --to pay in money? is there a freedom of movement of people? they've voted -- they voted brexit because they did not want free mood him -- free movement of people. now we have two drivers. my view would be that we continue to pay in some money.

caroline: how do you believe the justice system should work? berlin, many are feeling that if they do a loud the u.k. to back away from the freedom of movement of people, they will have to swallow a justice system based in europe and apply the rules. is that something you and the public can swallow? howard: can you explain the logic of that. caroline: it is not for me as a journalist to discuss the logic that they are putting forward. to askuld allow the u.k. away from the freedom of movement of people he does they understand that is what's one vote. on a paper in germany says the flipside they feel that moving away from the rules of the eu, if you are going to have freedom of access of markets, you will have to follow the eu

justice system. howard: i think the whole pure accuracy within the eu and the people that support the eu infrastructure in ideal are out of touch with their own people. i think you will find over the next 12-24 months, particularly in the german and french elections coming up next year, that these issues will be major issues in their own countries and that freedom of movement of people is not actually very well-liked in germany or france. in fact not much better liked than it is in the u.k. far from us having to adjust to make compromises, i think you will see europe move more in our direction. howard, thank you very much indeed. howard shore will stay with us. , we will continue

that conversation and the earnings numbers are out. --howard repairing preparing? he sounds fairly optimistic. this is bloomberg. ♪

guy: welcome back. let us bring up japan. that we havery from tokyo. the boj is considering a change of the maturity rate. it is looking to give itself

some more flexibility. you're seeing the back end of the curve flattening out a little bit. this has not been the market story over the last few days. the story has been that the boj would focus on the front end and curve. the let us bring back in howard shore from shore capital. revenue grew 5.9% to 13.1 million pounds. and asset management maintained its upward trajectory. -- how has its been over the last couple of months? howard: in our statement we said that in the first half both main operating divisions grew in a difficult environment. of the a demonstration

ability of the business to grow more rapidly when the market is unsettled. the investment community has quickly adjusted and the business community is starting to adjust. guy: when you look more broadly at what is happening in the world like central banks and raising rates and the boj, what do you think we need to see from an asset management point of view? howard: the main driver for markets will be what happens in the u.s. over the next 12-24 months. uncertainty in the presidential elections and i spent much of the summer in the u.s. and people there think the economy is a great -- is ok but not great. post theerned that election, the market could become vulnerable. guy: thank you, howard shore. caroline: great to have you on

the short. discussing all things brexit and the future of your fonts. let us have a quick look at what boj.ppening with the japanese bond yields falling on the back of that news. this is bloomberg. ♪

>> september falls as the rush to raise rates as fed governor says the rate hike fades further. china's factory output and sales beat as investment studies. is policy support working. and inflation expectations. we get the u.k. numbers for august and a half hour. hour.ust in half ♪ mark: hello, welcome to "the pulse."