anna: harvey has houston. rainfall cripples the core of the u.s. energy industry, sending gasoline surging to a two-year high. the boj governor warns japan's growth rate looks unsustainable as he pledges to forge on with an accommodative policy. corrects growth is excellent. -- we don't think it's can be sustained. growth is likely. anna: urges the som see to look beyond week inflation and

gradual plate -- gradual pace of raising rates. corrects inflation is not at 2%. before we move policy get to the gold otherwise we are going to be behind. driver, set tow to steer it's ceo out of crisis. ♪ anna: a very warm welcome from us in london, i am and i words. -- i am anna edwards. matt: imf miller. anna: talk about the united states and houston specifically. so much of the united states energy market, a landmark

hurricane, a landmark storm now earlys over texas area estimates of what kind of economic impact we might see here, 24 billion dollars. stay, howhe reins to long they keep falling is going to be one of the key questions. what has this done to markets? gasoline spread flying as harvey looms. futures are the same. oil steady but refineries have been flooded. more than 10% of the fuel making capacity. farcolonial pipeline, so from houston to the east coast of the united states it seems we have no word that it is not running as normal. certainly that would be one way that this crisis in houston will spread to the united dates in an economic sense. what is happening on the market? is really the focus

of commodity markets. around the world people are watching this story, writing throughout the weekend. they say the rain could last another 100 hours. a look at oil there is an interesting trade going on between brent crude. brent crude being the global benchmark. when someone says crude oil they mean wti, we see that trading down. that is most important for what is going on in houston. crude is a rallying $.17 per barrel. that is in interesting trade. could be an arbitrage play. you showed the soundbite from jackson hole. take a look at the dollar weakness.

this is one of the only currencies actually moving much right now. it is very interesting especially when you look at how much of the market is going to yen, you still see a gain against the u.s. dollar. we are ever closer to 1300. if we had gone over that, right now we're at 1294, people use gold, maybe they are using derivatives more than the underlying commodity. it is interesting to see it get closer to the possibility of closing at that number. the bank of japan's governor has pledged to forge on with very accommodative policy. also warned that his inflation time remains distant and the current pace of growth in the

third-largest economy. growth is excellent -- >> 2% growth is excellent but it can't be sustained. 100% growth is likely. gradually towards 2%. president has urged colleagues to look past interest rates. speaking on the sidelines of the annual retreat in jackson hole, also told bloomberg she expects one more but you -- one more before the end of this year. ofthe gradual pass normalization is really gradual react my argument of why you want to take on that gradual path is because we are in a more normal economy.

inflation is not yet at 2%. we have to move policy before we get to the gold otherwise we are going to get behind. -- uber's new ceo is using expedia's old ceo. they declined to name the person, saying they will employ -- inform. the u.k. prime minister on two fronts, european negotiators pushing theresa may to reveal her hands. toor announced yesterday stay in the eu single market and after it leaves the block.

global news 24 hours a day powered by more than 2700 journalists and analysts in more , you can findries more stories on the bloomberg at top . asia, plenty -- pretty flat here. the hand looking good in hong kong. high, alsotwo-year chinese stocks in hong kong trading at the highest level as well. bloomberg data showing 60% of companies on the hensing have reported estimates. australia, commodity prices, particularly iron or in singapore. technologies the strongest performer in the region. thanks to a number of broker upgrades. the defenseke in company for 6.5%. jpmorgan has downgraded after

earnings last week saying the for competition in the domestic market in australia. one of the worst performers in the region today. we are waiting for chinese banks to come through with earnings later this week. they all report wednesday. earnings have been pretty good. a lot of expectation for what the banks will deliver and whether they will for shareholders. underperforming the overall enterprises index and they are also trading under price-to-book value. >> thank you very much. floodwaters have been rising across houston as harvey continues to inundate southeast texas, pounding the fourth largest city with unprecedented levels of rainfall. two deaths have been concerned so for with the cost of damage

into the tens of billions of dollars, extensive damage to the u.s. and or she industry -- energy industry. good to have you on the program. why is the path of the u.s. so vital for the global oil industry? give us some scope around that. reporter: it is really the center of the u.s. energy industry. the channel is the largest refining and after chemical complex. the gulf of mexico is still a major production type for oil and natural gas. equal third shale in south texas produces one million barrels per day. 6 million cubic feet of gas per day. this is the heart of the petrochemical industry in america. -- a now a lot of visit lot of it is off-line and shut down. >> how has the infrastructure been affected so far? is a fitting still ok?

-- is everything still ok? >> it is going to be a couple of days before he find out if there has been real damage. everything so far has been precautionary. of the production in the gulf of mexico has shut down. half the production in eagle for. the real story is the oil refineries. you have more than 2 million oil capacity off-line, more than 10% of the total in the u.s.. that is why gas prices are going high. those refineries from oklahoma, while prices go up because refineries around the world want to produce more gasoline to send it to new york. the oil refinery shutdown is shifting global markets worldwide. interesting.

how long is this severe weather supposed to last, because the wind was one thing but that is not really the story. reporter: that is the saddest part of the story. as flood ridden as houston is, it is showing no signs of letting up. the national hurricane center is saying the eye of the storm may even shift back over the gulf of mexico where it could re-strengthen and strike southeast texas again. they are not even close to being out of the storm yet. >> think you very much. joining us from houston, really appreciate your reporting this late into the night. now, the cio of credit suisse. very good to have you on the program this half hour.

we are covering storm harvey because it seems to have transfixed investors, those on the bloomberg. we've been talking about the impacts on the markets. impacting some and keeping investors waiting to see where this goes next. is this something that materialized on your investment horizon? >> what has been going on in commodity as well as markets is certainly going to have an impact. on,ything has been going even more supported than they have seemed for a wild. -- are we online? shery ahn -- anna: you carry o. >> story. -- sorry. yellen, they janet

certainly confirmed the view they will get more of the same which is policy. that is very much because monetary policy is a victim to its own doing. it does not easily find its way out of the situation. of the day whatever you want to call it, good for markets. good for liquidity. risk from him down across the board. matt: what do you think about the idea of rolling back regulation? we think about rolling back relation is good for the market, the point made by yellen and draghi, this time of accommodative monetary policy it might be a little bit dangerous to roll back date -- regulation too much. it is not the quantity

that measures it is quality that matters. you find the same in regulation. banks have been place with over 100,000 new pieces of legislation, each and every bank around the globe area whether that was too much or too little can be disputed but certainly not every one of these 100,000 pieces of legislation were of the same quality. the trip will be whether we can a check toward -- mario draghi made meaningful points of reference here. ofinst the backdrop demographic aging especially in the western world, the world needs to step up either in terms of productivity growth which is innovation that needs to be delivered by companies, or in strengthening the framework and institutions across the global

trade. a very instant -- a very important sign from the times were a lot of talk about mercantilism and protectionism is making its rounds. anna: those are the things discussed at jackson hole. away from the nuts and bolts of monetary policy. another issue at the moment is the potential for shutdown in the united states of government because of debt issues. a busy week for treasury auctions. some of those around the 29th of september deadline, critical. how concerned are you for the potential of shutdown in the u.s. and are you seeing signs of nervousness in treasury markets? think we have been there before. we know the system in which the united states works, the risk

for government shutdown is real but the risk of the u.s. to default is likely -- unlikely. whether or not there will be a government shutdown, markets will. the shutdown will be for no longer than up to two weeks. a last-minute midnight solution will be found. matt: a to discuss with you. the cio of credit suisse here on the program this morning. up theup, japan notches longest run of growth in more than 10 years. sustained?pansion be we will bring you his answer in an exclusive interview. this is bloomberg. ♪

♪ you arere in berlin, looking at live pictures of the palace -- the letter, i feel like the weather is always amazing there but maybe it is just over the palace. some divine intervention keeps the storm clouds away. speaking of, the bank of japan governor has pledged to continue with a very accommodative monetary policy, as he warns his inflation target remains distant in the current -- and the current growth looks unsustainable. he spoke at jackson hole. >> not rising so fast. europe,.s. and in inflation rate close to 2%. in japan, inflation still 0.5%.

some difference between your us -- u.s. and europe. prices are not rising. here there is an inflationary strong among leaders. to be cautious in prices. ist the companies are doing they are heavily investing equipment and so forth. changing to reduce

content. -- cost has not been rising. they are not required to raise their pricing. -- gdp growth has not happened in the years. -- in years. something has changed to a degree that inflation matters so much, if you have the growth. >> two things, one, growth is good but i don't think growth can be sustained. growth, we can attain next fiscal area of growth, difficult to obtain.

this is somewhat unusual. this growthre about can be sustained in the coming years. that is one point. second point, yes prices are we arefast that if satisfied with more than 2% maybe faced with a recession and so on, of course impossible to address the reducing short-term. necessity to have some sort of

for -- room. >> what do you mean by policy room? >> the central bank could reduce rates by about 4%. there is no way to address the situation by way of traditional market. to hugeto resort quantitative easing program. anna: that was the bank of japan governor speaking exclusively with bloomberg. the cio of credit suisse is still with us.

thank you very much for sticking with us through the program. i want to ask you about japan. talking about the inflation target, achieving that. do you see japan as having to push out further into the future the date which it meets the inflation target? >> absolutely. i think you have got it right there. is any guide we should be prepared to patiently japanthe central bank of to push out into the future. we have been here before. in the 1950's, 1960's in the united states the federal for 15 was similarly years. what we have seen now in japan as much as the united states and europe has not even lasted that long. expect more of the sane and the rhetoric to change according to where the economic cycle as. matt: i want to bring it to

europe as you have recommended people continue to buy portugal, ireland, italy greece, and spain. why do you think those stock markets are going to continue to fare well? >> these markets have seen a great part of the rally that the eurozone has experienced so far. that may have a cumin -- a few common reasons. they are faced with a deep prices a couple of years ago which investors feel is over and done with. they got the benefit of the doubt in the first half of the area -- year. the second half of the year, consider shifting, taking some profit here and some of these very impressive rallies and diversify your assets more in upsides suche see

as telecoms and health care. anna: thank you for joining us today. the cio of credit suisse. gearingy in the u.k., up for the first trading day of the week. this is bloomberg.

yousef: welcome back to "bloomberg daybreak: europe." it is 7:30 in the morning in berlin. it is 1:30 in hong kong. you can see the weather visibly worse than it is in japan. that is typical for hong kong. it is a bank holiday in the u.k. and across the rest of great britain. let's check in on the other markets that are trading. for that we go to nejra cehic. nejra: we are all here on this u.k. bank holiday. asian markets at this point in the morning.

you are seeing a trade quantitatively overall gaining. hear what i'm showing is the china money market overnight rates. -- here, what i am showing is the china money market overnight rates. some others have taken over since then. that is what we are getting in terms of equities, no huge gangs. jackson hole, we did not get any pronouncements on monetary policy from janet yellen or mario draghi. here is what the bloomberg dollar index is doing, jumping to its lowest since january 2015 on friday. it is thing there, converting, we saw the euro hit a fresh time, going above 119 as mario draghi did not push back on the currency strength. a close eye on crude oil. gasoline futures surging because of hurricane harvey. oil is still in a bit of a

gridlock. w ti is edging slower in today's session, staying below $48 per barrel. what we saw on the data is short-sellers listing their bearish bets. wu can see what a tight race ti had been in. that range from february. anna: in addition -- a new edition of daybreak is available. let's take is look at some of the stores. the cover story is bracing for impact, oil traders face a wild -- iss the markets digest a causing unprecedented flooding. the storm halted a fifth of crude production in the gulf of mexico. as we head to the top of the program, how long there rankings falling.

matt: it looks awful and looks set to do can did -- set to continue for three or four days. that tragedy could get even worse. next up, janet yellen in a mario draghi warning against dismantling postcrisis financial rules that president trump has named for stifling u.s. growth. we spoke with this early in the program. in jackson hole, the fed chair urged regulation rolled back be modest while the ecb chief says loosening them now would be dangerous and the reason is accommodative monetary policy already stands and they are concerned that no regulations with such an easy level of monetary policy would encourage more bubbles. anna: maybe in a global financial architecture, it seems to get the headlines wrong. finally matt, daybreak focuses on the brexit.

no bank holiday for the u.k. team. u.k.'s divorce settlements for leaving the eu. angela merkel warned that britain must take its obligations. obligations.ts bosomworth.s andrew great to have you on the program. let's start with the topic of the u.k. and we will broaden the conversation for the rest of europe. how do you look at the elements we see on the brexit story jack of the opposition labor party and u.k. saying they want to stay in the single market through transition, maybe four years. some people are asking whether this means we might see the united kingdom try to stay in the union and the single market. how significant of a development is that? are notthe developments

taking the discussion as far as taking another referendum. it is good to shape the form of the agreement that will be agreed upon in the months ahead. the signals from the labour party and what also has been taking place hence that we may be coming toward an outcome somewhat toward where norway had. there is a sovereignty over some areas, agriculture come immigration. rulesk. is playing by the and in terms of the eu's rules, paying in its contributions, but it doesn't have a seat on the table when decisions are taken. if it does go down that route, economically it is good for the u.k. and the other side. it is a bit of a.

has what ithe u.k. has before but it doesn't have a vote. matt: getting to the norwegian model may take some years here, it could be in the long run. angela merkel over the weekend commented that we are just at the beginning of these negotiations. how do you price in the likelihood that they are not finished by march the 19th. -- 2019? reflected in the we call the premium over brexit. that leads to these discussions about interim solution that might government -- might government trade relations into a final agreement. uncertain premium reflects that therehe risk will be a heartbreaking trade and therefore the consequent will be more harsh on the u.k. we see that in lower guilt

fields. anna: i wanted to ask you about that. i am looking at a chart of the euro against the pound. a lot of conversation has been whether we are going to see parity. what is your expectation? has that been overdone? there's some pretty strong fundamental reasons behind this move. the way things are heading in terms of the negotiations and suggesting that weakness is going to be may be permanent. that depends on what the exact outcome is. , theetter it is for trade more likely sterling get recoup some of those losses. andrew, he is going to stay with us. we are going to continue because there is a lot going on. bank holiday or not, a lot going on, especially outside of the u.k..

this year's summit wrapped up with a focus on defending post crisis regulation of the financial system. that is not all. mike mckee sat down with cleveland fed president. she gave us her take on a path forward for the fed. >> monetary policy is still accommodative, so the gradual path of normalization is really gradual path and my argument of why we want to stay on that path is we are in a more normal economy. inflation is not yet at 2% but we have to move policy a little bit before we get to the goal or else we are going to be behind. there is some risk that if you wait too long, you could find yourself in a bad spot. i would not say i am an advocate of higher rates. keeping onocate of this path we are taking away from the accommodation that we needed to put in for the great recession. it is aftermath p >> you think

the risk of higher inflation is greater than the risk of higher rates having an effect on the economy? >> there is a number of risks out there. we have very strong labor markets and we have seen that overtime. it is not just one suddenly improving labor markets and growth has been maintained at a little above 2%. that is very important because we have had a lot of shocks to the economy and get the economy has proven to be really resilient. inflation has not yet gone up to our 2% goal. we have had a couple of weeks of inflation reports lately. the prescription drug plan prices and data plans, so again i expect inflation to remain below 2% in the next couple of months or so. eventually rise up toward our 2% goal. that is my forecast.

to be consistent we want to have accommodation being gradually removed. >> is there anything that would cause you any change of your view? >> one of the key factors in the inflation forecast is inflation expectation. so far, i think they have been very stable. that is a very important factor in the inflation forecast. >> your own indexes have been moving them. >> the kind of moving down is not significant. i would be worried if the inflation numbers were telling us that demand was falling off.

again there are some firms that have been able to increase prices with -- which they have not been able to do for quite some time. they're moving up, albeit gradually. anna: that was the cleveland fed president speaking to michael mckee. cap macron succeed where other european leaders have failed -- can macron succeed where other

european leaders failed? this is bloomberg. ♪

matt: welcome back to "daybreak: europe." here. friday five -- 7:45 about one of bank of japan's governor -- bond yields its ever-present, the regular purchases. critics say the program is not sustainable and must be modified . in an interview, kuroda told kathleen hays that yield curve control is working well. control, welled

introduced last september has been working quite well. rates inide interest europe and the united states, japanese interest rate has been .ery flat around 0% control has been well. second point, of course, the major channel of monetary easing lower interestgh rates. targety -- quantitative ago.troduced as qe4 years we are starting to reach adduce

-- to reduce interest rates substantially. after four years of our experience, we found that it may be better to directly target long-term interest rates instead of excessunt purchase. stick to the target.

-- now the signal coming out clearly from the board and more important he the backers of uber

is that it is time for a more period wheree bloomberg can consolidate its business model, if expansion and prepares for an ipo. stevenson there for us in tokyo talking about the new uber ceo. from over we go to french politics. manuel mccrone -- emmanuel macron will attempt a push to stall the refugee crisis, bringing together heads and leaders. .aroline connan on in paris could this be a decisive summer -- summit to stem the flow of refugees across the mediterranean? caroline: the meeting in paris today is to try and became just

try and replicate something similar to turkey last year. the migrants route from the balkans into greece. more than 100,000 refugees have come from libya to italy crossing the mediterranean, at least 2000 of them have died. even though the flow of refugees has float -- has dropped over the summer due to very strict controls from the libyan coast guard. italy really wants to find a solution to these flows of refugees. emmanuel macron is trying to take the diplomatic lead in this. theady in july he brought two libyan rivals together in paris. this is not well received by italy because italy was not invited. this time, italy will be at the table of negotiation.

however it might be difficult to replicate what went on in turkey because of the lack of a real strong central authority in libya. anna: good morning peter we are gathering together these leaders took but the refugee crisis and other matters. pressing the issue of cheaper labor from eastern europe trying to make changes. we saw him on a tour of eastern europe last week. what did he achieve? caroline: he kicked off his european tour by visiting some eastern european countries and by attacking the polish prime poland wasaying " doing social dumping but not trying to reform the rules of these workers." these workers they come from poland to western europe. macron an issue that tackle at-- wants to

a time when he wants to push through his labor reform back home. this is his final stretch of the labor reform. we are going to have details thursday. the first to strike is planned for september 12. -- 63% of thes is french have no confidence in macron's reform. matt: caroline, thank you so much. talking about the summits that are happening in the french capital today. let's get back to andrew bosomworth. he is still with us. while we are on the subject of this summit, andrew, let me ask what you think about the german election. merkel is over there, she is going to make a push with

schaeuble forgetting africa involved and help stem the refugee crisis. is that crisis going to affect her here in the election? is it the diesel scandal going to affect her in the election? does merkel just get confirmed as chancellor for the fourth time in a row? andrew: the subject that will be discussed at the sermon -- at the summit, immigration, is a very important topic in the debate. in particular, a subject taken up by the right of center parties. yes, that is very center to the debate. i don't think at the end of the day, it is going to largely swing the outcome. we might see the afd come into with adesbank representation of just over 5%. in terms of what the polls are showing, what the debate is among the two big parties, as

the merkel's party is pushing the stability and their solutions on immigration are a continuation of their stability policy. anna: what prospector you see for eurobonds in any form into the future? when we have seen the german elections, the major parties do not back eurobonds. what role can that play? of the nearerms future, europe -- eurobonds cannot have any possibility of coming to fruition at all. it remains a central question from the monetary policy side, how do you conduct monetary policy you don't have a risk-free asset in this huge region? we have to be a little patient. the united states was not built

in a few days. it took a long time before they came to a federal structure. europe is gradually moving in that direction. the science that we see in terms orstrengthening the esm creating a european stability fund, representatives of the euro group, these are all increment steps within the bounds of not changing the trading that is taking us in this direction. as long as we are on this route, things ok -- i think things are ok in europe. matt: he seemed to be optimistic about the path forward for your. currency, bones are yielding like 0.4%. why are investors hiding in bun ds if they are so positive? andrew: we scratch our heads

too. we look at treasuries read around 2% given the strength of growth in the u.s.. i think markets are looking after the the period ecb has stopped its asset purchase program, and what the economic growth profile and the inflation profile will be. months, go forward 24 by which time i would expect the asset purchases to have stopped, we are looking at a slow economy in terms of growth and given the currency strength, maybe a lower inflation. that is maybe why we continue to see lower yield levels on bunds. there may be a risk premier. anna: ok. andrew: that is a small part of

what we are observing. anna: andrew bosomworth joining us. up next, as harvey continues to inundate texas, we will bring you the latest on the rescue efforts. this is bloomberg. ♪

matt: harvey hits houston. unprecedented levels of rainfall cripple the core of u.s. energy industry sending gasoline surging to a two-year high. kuroda's caution. the boj governor's warns that the -- very accommodative policy. is different but we don't think 4% growth can be sustained. matt: meanwhile cleveland fed president urges the fomc to look

beyond weak inflation and stick trey radel -- stick to a gradual rate. >> we have to move policy a little bit before we get to the goal or else we are going to be behind. driver --ers new uber's new driver. expedia ceopick the dara khosrowshahi. ♪ matt: welcome to "daybreak: europe." good morning. i am matt miller from the german capital of berlin at anna: checking on the futures than this morning. it is bank holiday in the united kingdom. then i mention that, matt? .orking on a bank holiday

we are expecting to get weakness coming through on the euro stoxx. stoxx 50 down. mixed,arkets pretty watching for the impact of hurricane harvey, pressing it in. it is really in the fx market that we seem to be seeing the jackson hole optimal. matt? matt: i am seeing some interesting arbitrage because of due to her can harvey. if you take of the crew trade, you see nymex it down. that is the west texas intermediate light sweet crude that is so important in houston. , brentbal rinse mark crude oil trading up tencent a barrel to $52.51.

crudeering which kind of they move in and out of those pipelines. take a look at the dollar down. it is down against the pound, against the euro, but it especially -- but especially against the yen. also interesting because cronus comments. i want to take a look at gold. there.l seek gains looks like it is getting closer to that big round number. it has enclosed. anna: let's look at the bond markets. a great story about how the treasury trade has got a little data to look out for. bond traders will be looking at what we are getting out of the united states. later we get pce numbers out of the u.s. and the payrolls number. we got to see issuance in treasury bills is get close to that deadline, september 29.

the u.s. story but this is what we see on the futures and elsewhere in europe this hour. matt: i want to get to singapore because we need to get a check on the bloomberg first word news. we go to juliette saly. juliette: matt, the bank of japan's governor has pledged to forge on. speaking exclusively to bloomberg, kuroda warned that his inflation target remains distant and the current pace of growth in the world third-largest economy looks unsustainable. excellent, but we don't think that growth can be sustained. inund 2% growth is likely this amount of growth, inflationary through graduate every is 2%.

juliette: the president of the table and fed has urged colleagues look beyond inflation speaking on the sidelines of the fed annual retreat in jackson hole, she told bloomberg that she expects more increase before the end of this year. >> monetary policy is still accommodative, so the gradual path of normalization is really a gradual path. my argument on why want to stay on that path is because we are in a more normal economy. inflation is not yet at 2% but we have to move policy a little bit before we get to the goal, or else we are going to be behind. juliette: in germany, with four weeks left in the election campaign, the leader of the democratic party has leveled his harshest criticism yet at angela merkel. brexit talks we knew today with

the prime minister under pressure. that as european negotiators worked to reveal her hand. labor announced that it wants britain to stay in the you can -- in the eu's a single market. a proposal that will delight u.s. leaders. global news, 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top . it is been a fairly positive session in asia and we are seeing the nikkei closed flat. the bloomberg dollar index hits that 2.5 year low. in hong kong, some very solid buying on the back of good results coming through on the hong kong earnings calendar. the hang seng trading at may 2015 highs along with chinese stocks listed in hong kong and australia closing lower, really hurt by the route we have seen

in the iron or contract we have seen. in terms of's we have been watching in detail, api technologies rising to record highs in hong kong. it has received a number of growth upgrades. korea aerospace rising after blackrock increased its stake in the korean defense company to 6.5%. -- qantas is one of the poorest performers. i was missing some of the store earnings we are seeing in the hong kong and china space. we are waiting for the four big banks that are reporting on wednesday. you can see them all on this chart. this redline is what you see

here, the hang seng china enterprises it all four of the big banks trading below that index. also trading under price to book value. we're waiting to see if they return some strong dividends to shareholders like the energy companies have done. anna: juliette saly joining us there from singapore. the latest on what has been happening in houston. this landmark event, the storm to storm to hit the united states since 2004. they are dealing with incredible levels of flooding in the united city.'s fourth-largest we have a chart that shows houston gasoline spread flying. this is the into we are seeing at the guess market. this spread into something of a story for the us economy as a whole? a big test for president trump. brzeski.ng in carsten

this a very specific story around the impact we are seeing in texas from this hurricane, the storm, but could this be something that is material for global investors? continues ine rain the fourth-largest city in the it's astates? carsten: horrible thing, they have definitely have a lasting impact -- they hardly have a lasting impact on the economy. in the medium-term, it is rather positive for the u.s. economy unless we would see there are energy resources destroyed for a long while. matt: what do you think we are going to see happen -- or wipe you think we see this kind of arbitrage happening with brent

crude up and wti down? what difference does that make? now it is short on arbitrage driven by the fact that there might be short supply shot coming from the u.s. the supply destroyed affected by the disaster which is the reason we have the small price differences, but i don't think it is something to last. anna: away from the immediate impact, the broader conversation after jackson hole around -- jackson hole didn't do much with monetary policy. she was saying that we don't want to get behind. that is why a gradual pace of increases in rates is likely. what do you expect from the fed? another rate hike

toward the end of this year and only a few more next year. the fact this year, you all had corroded on the program. it shows a central banks are still in the dark -- you all had crawled the--kuroda on the program. it shows central banks are still in the dark. it makes it so difficult, not only for the fed but also for the bank of japan to see if they can remove stimulus. we are not even talking about moving it toward tightness. we had one hedge fund start to pull investments of the u.s. over the weekend because the concern that president trump really is not leading very well, at least in that hedge funds managers that's hedge fund managers opinion. are you seeing a real effect on investment on maybe even bonds because of the residents activity? -- the president's activity?

carsten: i don't see a withdrawal of investment. there was a big hole at the start of the year. we haven't seen anything coming yet. the u.s. economy is in a very mature stage of this business cycle. investment.ds more it's investment just if the investment is not coming, the political situation, this would rather argue for a weakening of u.s. growth. then the u.s. would probably have reached the end of a very long business cycle. anna: what is the risk of a drama surrounding the possibility of u.s. shutdown later this month early into october? there is a great story, research suggesting bond vigilantes are not going to be the story this time around and we have to watch

the equity markets for any fallout. what do you expect? carsten: there is a potential for drama. when you listen to congress members, i think it is clear we would not give this government shutdown. there is a willingness to quickly increase the debt ceiling in the u.s. it is in no one's interest to get this government shutdown and to harm the entire u.s. economy. that is why the stock market has taken a lot of down payment already on the trump trade. for thee would get disappointment of political chaos in the u.s., no investment program at all. yes, it would be hard for the fed to continue with rate hikes but it would be a clear damper for the entire u.s. economy and also for stock markets. brzeski, he is want to stay with us.

we are going to talk about what is going on in japan and this continent. still focus in the u.s., floodwaters have been rising across swaths of houston. pounding america's fourth-largest city with unprecedented levels of rainfall . two deaths have been confirmed. the cost of damage likely to stretch into the tens of billions of dollars including excessive damage to the core of energy industry. dan, why is this part of the oil so vital to the global industry? how it's used in affecting the global situation? u.s.'suston is the largest oil refinery. the gulf coast as a whole contributes about half of america's oil refinery.

the gulf of mexico is a major contributor to oil and gas production, although not nearly as much as it once was as of the shale boom it's speaking of shale, south texas is where you had the eagle ford that produces an million barrels a day. write in this region where tropical storm harvey is a dumping gallons of water is a some of the most important energy structures, not only in america but also globally. anna: how has it been affected so far? the colonial pipeline is one of the things we need to watch because that is a way we could see the fx of this transmitted up the east coast. i would colonial, however thinks developing in terms of the type line infrastructure? dan: we have not heard anything about the colonial pipeline, so figures crossed that it is still doing well.

out in the gulf of mexico, about a quarter of production has been shut down. companies such a down about half of the oil reduction there. the big story is oil refineries. a little bit more than 2 million barrels a day which is about 12% of the total in the u.s. has been shut down, precautionary right now. they want to make sure it is not going to get damaged during the storm and release violent chemicals. that is weighing down on wti crisis because that oil comes from oklahoma to houston. that is what is setting guys prices higher -- setting gas prices higher. to colonialhappens pipeline, that means less gasoline going up the world's deadlineh production -- oil production pipeline. matt: dan murtaugh joining us with more on the story

developing. it is going to continue developing. up next, what is the future for japan's super stimulus monetary policy? we will bring you our interview with haruhiko kuroda. this is bloomberg. ♪

anna: it is 8:20 if you are over with matt miller in berlin. it will be a little weaker at the start of the day. features suggesting we will be weaker because it is a bank holiday here in the u.k. this is where the euro stoxx 50 has is opening up at the start of trade.

it makes picture coming in from the asian session. the asx over in australia down. the shanghai composite up. we've got unchanged on german bonds right now. get a bloomberg business flash with juliette saly. juliette: uber will appoint expedia's dara khosrowshahi as its new ceo. he will succeed travis kalanick who grew over into a $20 billion declined to name that person saying the board will inform employees first. expedia it didn't immediately respond to requests for comment. opec has posted an increase in profit.

that is amid better earnings from its chemical business, as well as a more -- a narrower loss. cbs says a great divide struggling -- led by lachlan murdoch. the deal says 10 networks collapsed after the new --k-based media biased faced to keep it running. bloomberg business flash. matt: juliette, thank you very much. the bank of japan has confirmed it will maintain its super stimulus policy for some time, even as the fed and ecb head for the exit, or at least get ready to her speaking exclusively to bloomberg, hurry to grow to assess inflation is so far below target that he has no choice but to carry on. chris the u.s. inflationary rate

-- >> u.s. inflationary rate is 1%y from 2% but it is above so the economic price situation in the u.s. is much better than the situation in japan. now [indiscernible] it is said. come clear somewhat behind the results. , and,ave not yet started [indiscernible] considered at all. behind eurozone.

their prices are rising. a negative. [laughter] >> in the last 3.5 years, we have been able to achieve it isve inflation, but far away from 2000 target. for some time, we have to continue this important monetary policy. yes, we are careful working on the resolve on how the ecb is doing. the monetary policy is for the japanese economy. whatever ecb does, we have to address this situation by our monetary policy.

anna: that was the bank of japan governor haruhiko kuroda speaking to bloomberg. carsten brzeski is with us. thanks for staying with us. we had a governor kuroda talking about thing very happy about the growth rate in japan but saying it is not sustainable. how sustainable does that look to you? he says they need to remain with the same policy results? 6% growth in japan -- we had 6% growth in japan. the issue is, you heard kuroda talking about the inflation of .5% it japan is an aging economy which offers the same structural challenges as the european economy. i would not argue that japan is behind the eurozone. the eurozone will continue to

see lower inflation rates, namely german by structural factors, aging, digitalization which is putting downward pressure on pricing and wages. growth rates are not sustainable. they have to continue with the accommodative policies. d have to remove a little bit of stimulus like the ecb is planning to do. matt: the judge's speech was almost as anti-climatic as of the mcgregor-mayweather fight. when do you think will get details on the taper? carsten: september. i think there will be the start, the next ecb meeting. seven september will be the next ecb meeting. i expect for them to give the

typical hence. anna: carsten, we'll look for that. i knew matt miller would get in before the end of the program. matt miller stays with you. ♪

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manus: you are watching bloomberg markets, this is the european open. first-rate of the day and the first type of the week. but it is closed for a national holiday but i'm still here. i am guy johnson in london. matt miller is in berlin. tropical storm harvey continues to batter texas. sounds like a lot of money. could the damage and a helping u.s. gdp growth?