francine: counting the cost of harvey. one expert puts the figure at $24 billion. gasoline spikes as rain hits refining centers across texas. the boj boss warns japan's current growth rate can't continue and says he won't the following the fed or the ecb anytime soon. uber's new driver. the giant is said to pick expedia's ceo to steer it out of crisis. good morning and happy bank holiday monday. this is bloomberg surveillance.

it is a bank holiday. a lot of the data in the u.k. closed. the ftse is not trading today. i still want to give you a quick snapshot of what's happening across europe without the ftse 100. it is down some 0.4%. dollar-euro is the one i'm keeping an eye on for the week. maria draghi, the ecb president, refrained from talking down the euro. this is what i'm looking at. i'm looking at dollar. kuroda,peak to governor a fantastic interview by kathleen hays. crude oil, 47.43. we are seeing a little movement for gasoline prices. it could also impact the oil prices. let's get to the bloomberg first word news. here's nejra cehic. nejra: in the u.s., houston is

battling unprecedented rainfall following the biggest storm in the history of texas. the down for has crippled the core of the u.s. energy industry. gasoline has surged to the highest in two years. the president of the cleveland fed urged her colleagues to look past recent inflation data and stick to their gradual pace of lifting interest rates. speaking on the sidelines of jackson hole, loretta mester also told bloomberg she expects one more increase. >> monetary policy is still accommodative. the gradual path is really a gradual path. my argument of why we want to stay on the gradual path is because we are in a more normal economy. we have to move policy a little bit before we get to the goals

or else we are going to be behind. nejra: uber will appoint expedia's as its new ceo. he will succeed co-founder travis kalanick, who grew uber into a $20 billion annual booking business. man confirmed they've chosen a ceo, but declined to name the person. brexit talks resume today with the u.k. prime minister under pressure on two fronts. european negotiators are pushing theresa may to reveal her hand while the labour party has made a bid. announced that it wants britain to stay in the single market and customs union. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. by nejra cehic.

this is bloomberg. francine: thank you so much. the federal reserve and the european central bank may be headed towards the exit from super accommodative monetary policies, but the bank of japan is not about to follow. governor kuroda says inflation is so far below target that the central bank must maintain its policy. he spoke to bloomberg's kathleen hays. >> the u.s. inflation rate is fairly close to 2%. ecb inflation rate may be somewhat far away from 2%. economic and price situation in the u.s. is much better than the situation in japan. making balance sheet adjustments, or so it is

said. , they are somewhat behind, so they have not yet started any tapering. the fed balance sheet adjustment has not been considered at all. behind the eurozone. to 2%.rices are rising >> better than negative. >> in the last three and a half years, we have been able to buteve positive inflation, it is far away from the target. i think for some time we have to accommodative

monetary policy. yes, we are carefully watching how the federal reserve and ecb are doing. our monetary policy is for the japanese economy. since our inflation rate is still far below the target, whatever the ecb or the federal reserve do in coming months, we bye to address the situation our monetary policy. francine: that was haruhiko kuroda, the bank of japan governor. let's get more with izumi devalier. she joins us now from tokyo. great to have you on the program. thanks for coming in. governor kuroda putting in simple terms, japan can't really keep up with the current growth rate and he will stay a cognitive for a long time. what is your concern when it comes to japan? izumi: similar to the points

that kuroda was making, he also pushed back against this notion that recent second-quarter gdp growth in japan was near 4% annualized, very strong, but as the central bank stressed, this pickup in growth momentum hasn't been accompanied by price pressures. passedes haven't yet that through to resale prices. the disconnect between growth and inflation is something we are seeing across the world, but should be of concern for japan. francine: how would you score governor kuroda's, what he's done so far? he's gone beyond the bounds of monetary policy. do you believe it will work? i think it depends on end you define as the target. if you talk about achieving 2%

inflation, i think the boj still has a long way to go. japan has definitely made progress towards escaping from deflation, and under coronas watch, he is correct to say that before we had average negative price growth, that is a modest positive now, labor markets have strengthened quite a bit under his watch. i think he can claim some modest success. wascine: governor kuroda saying that the yield control program was working quite well. is he right? izumi: i agree with that. especially when yield curve control was first introduced, it was followed very quickly by a sharp run-up in global bond yields. that led to a concern that the boj bond buying was going to ratchet out of control. holdings isboj bond

already quite massive, the boj -- kuroda is correct to say that less bond purchases are needed. they have quite a bit of ability to maintain that ceiling on the bond yields target. i think a bigger problem is what happens if there's a very risk to pull that threatens bond yields below the floor. that is a challenge that kuroda hasn't really had to face yet. that is definitely the bigger concern at the boj. you look at the worldview, when it comes to interest rates, you have janet yellen and mario draghi dealing with very similar things, having inflation and growth somewhat out of sinks, and it seems exacerbated in japan. what can he do more? izumi: to be honest, i think there's not much that monetary policy and the central bank can do alone.

one thing is that we need to be a little more patient. i do think we are starting to see the tightening labor markets result in higher wage pressures, especially for part-time workers. to get to higher inflation is going to require some more time. i think the other key pillar is fiscal policy. one of the reasons why the economy has done well over the past year is because we've had less fiscal headwind. i'm not saying you need to do a big fiscal party, but i think it would be important for the fiscal authorities to hold off the temptation to tighten too early. francine: we have a question from one of our viewers, saying, why is he so optimistic about cpi? is he really optimistic or is this part of his psychology of forward guiding inflation in the hopes that it picks up more? izumi: that forward guidance

thing that you mentioned is definitely part of it. since kuroda became the central bank governor in 2013, he has always been the biggest cheerleader and optimist on japan's growth and price outlook. i think the central bank is genuinely quite optimistic on the dynamics of the labor markets. the prospects for wage growth. i still think they have faith in the phillips curve. markets think that is dead. the boj still believes there's a connection between labor market tightening, wage growth, and prices. francine: thank you for joining us. stay with "surveillance." back to the brexit talks. the labour party changes tact. where does this leave prime minister theresa may? hurricane harvey may have been downgraded, but gasoline hits a

two-year high. this is bloomberg. ♪

francine: this is "bloomberg surveillance." let's get straight to the bloomberg business flash. nejra: china is creating the world's largest power company as the merger of chinois group with one of the nation's biggest power generators has been approved. the new company would have total assets of $271 billion. wonder hotel development fell after chinese media reported that its billionaire chairman and his family were stopped at an airport. the real estate and entertainment group denies an

article and other reports on the travel ban. buy strugglingto australian broadcaster 10 network. the deal saves 10 network from collapse after the new york-based media giant pledged immediate financial support. 10 has crumbled under the cost of buying programs from the u.s. has reportedlyr appealed the verdict that sentenced him to five years in prison. on friday for bribery, embezzlement, and perjury, accused of funneling millions of dollars to a friend. it is the harshest sentence ever given to such a prominent korean figure. that is the bloomberg business flash. francine: brexit talks resumed today with theresa may under pressure from labour in the e.u.

negotiators are pushing her government to give more details. the opposition party has made a dramatic shift, announcing it once britain to stay in the single market and customs union for up to four years after leaving the block. let's get more with daniel gros from the center for european policy studies. what does it mean that now labour is getting in the way of negotiations? it seems that at the moment, whether u.k. should be ready to talk with the e.u., it is negotiating amongst themselves. daniel: that is actually true. nobody in britain really new one brexit was going to mean. the silent majority is reasserting itself. people wanted to have control, but didn't want big economic cost. therefore, trying to stay into the single market and the customs union makes sense as a

policy goal. francine: you live in brussels. you are at the center of policymaking in brussels. really as put together as a lot of people say, or as much of a mess as the u.k. is, nothing has been done like that before, everyone is trying to fight the right angle? daniel: yes, but for the time being the e.u. are in a comfortable position. they were just awaiting what the u.k. was going to say. if theresa may and the opposition come with a similar message, then maybe divergence within the e.u. 27 will also appear. how do you want to give them access? how do you want to keep them in a customs union? details are going to be important. divisions can arise. francine: the third round of negotiations start today.

how do officials figure out who they are negotiating with? do they talk to theresa may's people and figure out how they want to deal with labour? daniel: there is one iron rule in european diplomacy. you talk to the government and only to the government. they are the people who sit in front of you. maybe you talk a little bit on the side to see what the opposition thinks, but you negotiate only with the government. francine: what do you see as the most difficult point? part of it may be the irish border, where we heard from david davis, asking for flexibility and imagination. or is it the e.u. nationals' rights once the u.k. leaves the e.u.? the kindt depends on of brexit we have. if you really have single market access at least for a transition period, then we have three or

four more years to deal with it. the same applies to the customs union. on the european side, for the time being, they are asking, show us a concept which can actually work. if it can deliver the seamless border that we want to have, then i think people are going to be open. u.k. hasime being, the not shown any concrete approach. francine: do you see a lot of concern in brussels about the u.k. crashing out, leaving without a deal? has receded concern a lot. really representative only of a minority. with labour coming out clearly in the form of a very soft brexit, people are fairly confident that even if negotiations last a long time, at the very end, the default

solution might be, let's keep the status quo for another few years. francine: wonderful. thank you so much, daniel gros. up next, counting the cost of harvey. one report suggests the bill could be as much as $24 billion. gasoline spikes. we have all the details next. this is bloomberg. ♪

francine: you are watching

"bloomberg surveillance." floodwaters have been rising across houston as tropical storm harvey continues to drench america's fourth-largest city. gasoline has surged as the wider impact of the storm, which has shut more than 10% of u.s. feel making capacity, becomes evident. let's get more with yousef gamal el-din. do we know the extent of the damage? >> we are still trying to ascertain the scale of the devastation. fuelwe do know is 10% of making capacity in the united states, 2.2 million barrels a day of refining capacity that is off-line. pipelines have been closed. that is disrupting the flow from west texas crude to the new york harbor. that very much still happening. the question becomes, what happens now? gasoline prices are likely to

continue rising because you are looking at three additional days of rain. we've put up what exactly this means in terms of the spread to wti. what you see here is your line in lieu, your gasoline futures, which tend to move with wti. that is broken up completely with gasoline futures soaring. that is traditionally a pattern that happens with some of these storms. barclays did point out, don't underestimate the impact this storm could have on the u.s. energy industry. francine: a lot of the pipelines were closed, which means some of the crude is stranded. how quickly can you put it back on? is it a matter of days or even hours? >> it is not that easy.

in terms of getting the right equipment and the right labor, it could take weeks, even months. if the rain continues with the same kind of severity and there is extensive damage, there's no quick fix. the absence of refinery activity is going to impact the demand for crude, which is why you are seeing this juxtaposition. gasoline futures much higher, but not much happening with wti and brent. francine? francine: thank you so much. up next, japan's economy is slowing, but don't expect it to last. more from our exclusive interview with governor kuroda. this is bloomberg. ♪

so we need tablets installed... with the menu app ready to roll. in 12 weeks. yeah. ♪ ♪ the world of fast food is being changed by faster networks. ♪ ♪ data, applications, customer experience. ♪ ♪ which is why comcast business

delivers consistent network performance and speed across all your locations. fast connections everywhere. that's how you outmaneuver. francine: you are watching "bloomberg surveillance." let's get straight to the bloomberg first word news. nejra: in the u.s., houston is unprecedented rainfall

following the biggest storm in the history of texas. the downfall has crippled the core of the u.s. energy industry. gasoline has surged to the highest in two years as flooding inundate refining centers along the texas coast. the president of the cleveland fed urged her colleagues to look past recent inflation data and stick to their gradual pace of lifting interest rates. speaking at jackson hole, loretta mester also told bloomberg she expects one more increase before the end of this year. >> monetary policy is still accommodative. the gradual path of normalization is really a gradual path. my argument of why we want to stay on that path is, we are in a more normal economy. inflation is not at 2%. we have to move policy a little before we get to the goals or else we are going to be behind.

nejra: uber will appoint expedia's as its new ceo. he will succeed co-founder travis kalanick, who grew uber into a $20 billion annual booking business before scandals forced him out. a spokesman confirmed they've chosen is ceo, but declined to name the person. brexit talks resumed today with the u.k. prime minister under pressure on two fronts. european negotiators are pushing theresa may to reveal her hand while the labour party has made a bid to lure critics to its side. it wants britain to stay in the single market and customs union for up to four years after it leaves the bloc. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. i'm nejra cehic. this is bloomberg. francine: thank you so much.

the japanese economy expanded for a sixth straight quarter. gdp increased by an annualized 4%. the bank of japan governor is warning that it cannot last and the economy needs accommodative monetary policy. he spoke to bloomberg's kathleen hays at jackson hole in wyoming. in the u.s., and in europe, inflation rates are actually close to their target. close to 2%. in japan, the inflation rate is still 0.5%, far from our 2% target. betweensome difference u.s., europe, and japan. waves are not rising so fast. that is true. .ut prices are not rising

there's some kind of .eflationary mindset strong among business leaders. to be cautious in raising prices. what companies are doing is, investing in laborsaving equipment and so forth, and they are changing the laborss model to reduce content. increase,me wage ,abor cost has not been rising so they are not required to raise the prices. >> but they are doing well.

gdp growth of six quarters in a row. you are succeeding on growth. maybe something has changed. does inflation matter so much? japanese households like low inflation. >> two things. one, 4% growth is good, but i don't think 4% growth can be sustained. around 2% growth, we can obtain this fiscal year, and even in the next fiscal year, growth to 2% may be possible to obtain. 4% growth is somewhat unusual. this'm quite sure that 1.5% to 2% growth can be sustained in coming years. second point, yes, prices cannot rise so fast. imagine, if we

are satisfied with lower than 2% economy may be faced with recession. then, of course it almost is impossible to address the situation with traditional monetary policy. is below 0.5%,te interest rate continually low, that is necessity to have some room for they monetary authorities. >> what do you mean by policy room? crisis, that england the european central bank could

reduce interest rates by about 4%, but japanese short-term interest-rate was already zero. there was no way to address the situation by way of traditional policymakers. resort to huge quantitative easing asset purchase program. francine: that was governor kuroda speaking to our kathleen hays. let's get more with richard jones. he joins us now from berlin. thank you so much for joining us in the u.k. what did you make of what kuroda was trying to say, first of all, what he's done, he believes, has .orked . richard: i think the most interesting is what he was

saying about the deflationary mindset in japan. this has been long-term and problematic for policymakers there. its is what the ecb had been fighting against and what the fed have been fighting against. i would say what corona has been saying is that perhaps the ecb have been a little more successful, but it is still taken hold and is very strong in japan. that is the challenge for the boj, to try and shake up this mindset. muchine: there's only so central bankers can do if you don't have that structural reform coming through. that is true in europe, in japan, and in the u.s.. if you look at the u.s. as well, there was big expectations that we would get big fiscal stimulus from the new administration in

tax cuts and infrastructure spending. mario draghi has been talking about this for years, that central banking cannot be the only game in town. it does require some thinking on the fiscal side and the monetary policy side, and for a long time monetary policy has been doing most of the lifting. francine: i have a great chart thanks to hillary clark, the queen of charts. this is tracking real gdp compared to some of the survey median estimates. governor kuroda basically said the trend of growth can't continue as it is. does that make you worry? richard: i think it does. it goes back to what governor kuroda said about the direct wake of the lehman crisis, where the fed had room to cut rates and stimulate the economy. if this growth isn't sustainable, and the boj is

throwing the kitchen sink at it, what is next? that is what markets are asking. with rates not nearly as high as they were in previous cycles, to cut them again. francine: governor kuroda's term ends in april 2018. when do we find out who, if anyone, will replace him? richard: i guess the timeline is , they do have a little bit of time, but we are coming towards the end of this year. we need to find out in the next six months. francine: richard jones there. up next, uber's new driver. the giant is said to pick the ruckus roski to steer it out of crisis. this is bloomberg. ♪

francine: you are watching "bloomberg surveillance." let's check in on your markets with mark barton. mark: gasoline surging to the highest in two years, oil easing , following flooding from tropical storm harvey, inundating the texas coast, shutting more than 10% of u.s. fuel making capacity. oil slipping near $48 a barrel. harvey, the strongest storm to hit the u.s. since 2004, made landfall on friday, floating cities, shutting plants, able to process some 2.6 million barrels -- 2.26 million barrels of oil a day. this is the bloomberg pound

index. it is a bank holiday today, but brexit negotiations start today. prime minister may coming under twosure from twi fronts -- fronts, regulators pushing her to reveal her hand, the labor lureaking a bid to critics to their side, revealing it wants the u.k. to stay in the single market in the customs union. the pound index is hovering above last wednesday's close of 648.29, which is the lowest since january 16. always good to look at sterling against its broad peers. euro, this has risen to its highest level since january 2015. garfield reynolds says the euro is on such a tear that it took nothing at all on friday from

the likes of draghi and yellen. draghi failed to mention the euro and that drove it to its highest price in two and a half years. he says the concern going forward, it may take nothing to bring back leveraged funds. close to a three-year high as they met for jackson hole symposium would be a nonevent. "game ofickly, thrones" and it last night. it tells you where all the real-life locations are. francine: as long as there are no spoilers. that would be the end of the world. mark barton with your asset classes and a couple of cool maps. uber is said to have selected its new ceo.

according to people familiar with the matter, expedia's dara khosrowshahi will take the job. he will replace cofounder travis kalanick, who was forced to resign after pressure from shareholders. let's get to bloomberg news tech reporter reed stevenson. what does the end of the ceo search mean for uber? interesting marking point. it is kind of the end of an era. uber was in hypergrowth mode and they pushed for market share, expanded, basically defying this whole ridesharing sector, and that has effectively ended with travis kalanick's resignation. the appointment of a new ceo really marks a period where uber is going to consolidate and maybe even calm down a bit as it behaves more like a mature company that is going to put a tighter rein on cost and

probably look forward to some sort of ipo for its investors. francine: those are kind of the first tests. when are we expecting uber to confirm this is the person they picked? said thatkesman has they wanted to tell employees first. we, along with others, have already reported based on sources the appointment of dara khosrowshahi. probably early in the week, as soon as monday u.s. time, that is probably the right time frame to keep in mind, at least in terms of a broader announcement? obviously what is going to be more important is what happens after this. francine: thank you for the update. up next, china is slowing, but the rest of the world will feel the impact. that is the view of ubs asset

management. we speak to them next. ♪

francine: you are watching "bloomberg surveillance."

let's get straight to the bloomberg business flash. here's nejra cehic. thea: china is creating world's largest power company as the merger of xinhua group with one of the nation's biggest power generators has been approved. the new company would have total assets of $271 billion, with the largest generating capacity in china. shares in wanda fell after chinese media reported that its billionaire chairman and his family were stopped at an airport as they were about to depart for london. the group denied an article and other reports on the travel ban calling them groundless. sinopec has posted growth in first-half profit. net income rose to $4.2 billion. that is amid better earnings from its chemicals business as well as a narrower loss. buy strugglingto

australian broadcaster 10 network, beating out a rival bid by murdoch. the deal saves 10 network from collapse after the new york-based media giant pledged immediate financial support. 10 has crumbled under the cost of buying programs from the u.s. as advertising revenue plunged. has reportedlyr appealed the corruption verdict that saw him sentenced to five years in prison. lee was jailed on friday for bribery, embezzlement, and perjury, accused of funneling millions of dollars to a friend of the president. it is the harshest sentence ever given to such a prominent korean figure. francine: this year's jackson hole summit wrapped up with a focus on defending postcrisis regulation. that is not all. michael mckee sat down with cleveland fed president loretta

mester, who gave us her take on the path forward for the central bank. >> monetary policy is still accommodative. the gradual path of normalization is really a gradual path. my argument of why we want to stay on that gradual path is we are in a more normal economy. inflation is not yet 2%. we have to move policy a little before we get to the goals, or else we are going to be potentially behind. there's some risk that you could find yourself in a bad spot. i wouldn't say i'm an advocate of higher rates. i am an advocate of keeping us on the normalization path. think the risk of higher inflation is greater than the risk of higher rates having a dampening effect on the economy. >> i think the underlying momentum of the economy on the

real side is very good. we have strong labor markets. we've seen that over time. we've also seen that growth has been maintained at a little above 2% or so. i think that is very important. we have had a lot of shocks to this economy. the economy has proven to be resilient. inflation has not gone to our 2% goal. we had a couple of weak inflation reports lately. you can point to someone off factors. i do expect inflation to remain below 2% over the next couple of months or so. then, eventually up to our 2% goal. that is my forecast. i think we want to have accommodation being gradually removed. >> is there anything that would cause you to change your view

that accommodation should be removed? >> one of the key factors is inflation expectations. so far i think they've been very stable. that is a very important factor. >> your own cleveland fed expectations have been moving down. >> the kind of moving down is insignificant. i wouldn't worry if low inflation numbers were telling us that demand was falling off and prices were coming down, and inflation expectations would be unanchored. i don't see that in the data. that would be the factor that would be significant in my view. what do ceo's tell you about their pricing power? >> most ceo's that i talked to, even labor market people, they are increasing wages. they are not necessarily increasing prices yet because their margins are still

constrained, but in terms of the wage part of the equation, wages are moving up. i expect those to feed into the aggregate numbers. we've seen some slow wage growth, but we have seen a pickup. a very important factor is the productivity growth we've seen. there are some firms that have been able to increase prices, which they haven't been able to do for quite a long time, and wages do seem to be moving up gradually. francine: loretta mester talking about inflation. we have a chart for you. this is another way of looking at u.s. inflation. you look at the breakevens some of the phillips curve. economistsestion for is whether the phillips curve is just hibernating or whether it is broken. that is the model that looks at unemployment versus growth. the more unemployment goes down, the memoir there should be price wage pressure.

that model has simply not happened. this is a great chart. hillary put my pci headline inflation in white and the pce core year on year in blue. it is around 1.5%. "bloomberg surveillance" continues in the next hour. david gura joins me out of new york. it is the last day tom keene is on holiday. we will bring you the latest market reaction to the flooding in houston. we will give you currency reaction and go through some of the asset classes. there's also brexit, with the labour party weighing in on negotiation. this is bloomberg. ♪

francine: cautious kuroda. the boj boss warns japan's current growth rate can't

continue and he won't be following the fed or the ecb. counting the cost of harvey. one expert puts the figure at $24 billion. gasoline spikes as rain hits refining centers across texas. uber's new driver, the ride pickng giant is said to expedia's ceo to steer it out of crisis. this is "bloomberg surveillance ." david gura is in new york. we have a quite a lot to get to. it is about tropical storm harvey, the impact on texas, but also brexit, and the fallout from jackson hole. david: so much to talk about. uber naming a new ceo. the images out of texas, truly extraordinary. something we will be following throughout the morning. francine: let's start with the bloomberg first word news. here's taylor riggs. taylor: it is being called a tragedy of epic proportions. texas continues to better

with record amounts of rain. some areas may get 50 inches before it is over. floodwaters continue to rise in houston. authorities had told residents it was safer to stay in place. now thousands are asking to be rescued. harvey has crippled the core of the u.s. energy industry. more than 10% of the country's refining capacity. of houston area produces 40% u.s. gasoline supplies. the texas governor says oil companies were ready for the storm and will restart production once floodwaters received. harvey has turned into an economic disaster for texas. damages are likely to rise to the tens of billions of dollars. says less thann 1/6 of the homes in the houston area have flood coverage. that would leave more than one

million homes in the area unprotected. the federal emergency management agency expects to be in the houston area for years. fema has about 5000 federal employees on-site in texas and louisiana. there is pressure on congress to act quickly. the disaster relief budget is likely to fall short of what is needed for harvey. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. i'm taylor riggs. this is bloomberg. david: thanks. check of the data on this monday morning. the markets still interpreting what was said in jackson hole and what is happening in texas. futures down slightly. the bloomberg dollar spot index just a touch weaker. 1297.07.o fran? francine: this one i'm looking at, a reminder the ftse 100 is

closed. european stocks starting the week on the back foot. we are seeing gains for technology stocks. volumes are quite thin. dollar edging lower, gold rising , as investors weigh the damage of tropical storm harvey and what we saw in jackson hole. the fed and the ecb may be heading toward exit from accommodative monetary policy, but the bank of japan is not going to follow. kuroda says inflation is so far below target that the central bank must maintain its policy. he spoke to bloomberg's kathleen hays at the jackson hole meeting in wyoming. >> the u.s. inflation rate is fairly close to 2%. ecb inflation rate, may be far away from 2%, but it is above 1%. situation inprice the u.s. is much better than the

situation in japan. making balance sheet adjustment, or so it is said. are somewhat behind the federal reserve, so they have not yet started any tapering. balance sheet yetstment has not considered at all. eurozone.ehind the prices are rising only 0.5%. >> better than negative. better than deflation. >> in the last three and a half years, we have been able to achieve positive inflation, but

it is small and far away from the target. i think for some time we have to continue this extremely accommodative monetary policy. how federalwatching reserve and ecb are doing, but our monetary policy is for the japanese economy. since our inflation rate is still far below the target, whatever ecb or federal reserve months, we have to address the situation by our monetary policy. francine: one of kuroda's biggest innovations is targeting 10-year japanese government bond yields. critics say the program is not sustainable. but he told us that it is working well. under so-called yield curve

control introduced last september have been working quite well. ofpite the wide fluctuation interest rates in europe and the united states, japanese 10-year interest rate has been fairly flat around 0%. sense, the yield curve control has been well-managed. course thet, of major challenge of monetary through lowerys real interest rate. a quantitative target we agooduced as qe four years

to reduce interest rates substantially. years of ourur experience, we found that it may be better to directly target low .ncome interest rate instead of the amount of asset purchase. and we switched from quantitative target to the interest rate target or yield curve control. as i said, it has worked quite well. because no unique, central banks have ever made such commitment. as i said, this is kind of logical extension of qe, to adopt a new situation, and i think the yield curve is

maintained through this control. aancine: joining us now is professor at the university. thank you for joining us today. we are hearing from governor kuroda. kathleen hays was asking him what he thought about what you have done so far. how much does he need to readjust to the developments that inflation is now tough around the world? >> his honest opinion, he's not able to disclose this, is basically, we aren't going to do anything further. although he will claim there's a lot more to be done, the pocket of boj is becoming a lot shallower. estimated whatdy could be done, so there are no surprises. he reckons that the ball is definitely in the court of the

corporate side and individual side. we are talking about these targets and this quantitative easing, but why are we doing this? this is to induce spending. if we are seeing signs of it moving, then boj policy is to take away safer approach. francine: is there anything more he can do? his term ends in april 2018. he thinks it is up to the corporate's to do it now. he's already stretched the limits of monetary policy. he would maybe do something if he could. >> one of the things he has to cope with is the external environment. there are lots of minds out there that could basically jeopardize his plans, and the scenario we're seeing in japan is coming back mainly focused on factory automation, and coping with the lack of shortage of

manpower, and individual spending because of the slight increase of pay, which we were supposed to see a lot more going through, but we are seeing at least signs of a revival. the only thing that could really jeopardize that is the external factors, and he would basically have to cope his policies with what is going on with the ecb and the rest of the world. david: kathleen hays began by asking kuroda about situating the bank of japan in the context of the fed and the ecb. how complicated do things become when the fed begins to raise rates further? >> it will be very difficult. external factors are probably the biggest threat in jeopardizing or basically inducing changes to their current policy. bojcially if it is the fed, would have to comply to a certain degree. there's no doubt about that. that is a bit of a hindrance for

bank of japan. we are seeing at least short-term goodness inside the come back. things they've been yearning for, private consumption coming back on back of a wage rise. it is not good enough, but we are seeing signs of that. situation where they are almost praying nothing will happen overseas. david: thank you very much for your time. i'm going to turn to my guest host for the hour here with me on set in new york. what do you make of what governor kuroda had to say about this program, indicating that the yield curve program is working? you are skeptical that inflation has not diminished. >> exactly. you are spot on. the japanese boom collapsed in 1990 when you had the nikkei top out at 40,000 points and we had

nowhere near that 28 years later. they started monetary easing in 1991. when are they going to say this is not working? wouldor kuroda -- i disagree with the professor, that the factors that are external for japan, i think the factors are almost exclusively domestic. this is the oldest population in the world in terms of advanced countries. massive proportion of the population is more than 65 years old. is 45 yearsjapanese of age. when you compare that with the united states, which is about 11 years younger than the average japanese, you do not have consumption. old people do not consume. what japan needs is the third arrow of abenomics. they need to allow more skilled

labor to come from korea, become citizens, and participate in japanese life. if japan insists on a homogeneity, it is going to give up on growth and inflation. monetary policy cannot substitute for demographics. francine: thank you so much. up next, steering itself out of a crisis. new ceo turn the company around? we will discuss that next. this is bloomberg. ♪

taylor: this is "bloomberg surveillance."

in south korea, samsung's billionaire vice-chairmanl has appealed his prison term for bribery. bribing hisicted of way to greater control of the business empire his family founded. his trial was part of the corruption scandal that brought down south korea's president. the world's biggest oil refiner has posted its best profits. china sinopec reported that profits rose. chemicals business improved margins and there was a smaller loss in oil and gas production. that is your bloomberg business flash. david: uber is said to have selected a new ceo. dara khosrowshahi will it take the helm. he will replace co-founder travis kalanick, who was forced to resign in june. let's bring in a bloomberg intelligence analyst. let me just ask you how big a surprise this was.

we've been talking about a short list for many weeks, jeff immelt, meg whitman, who said she was not considering the job. how out of the blue was this? >> they were looking for a ceo for a while, but it came down to finding somebody who has that kind of experience of running a large internet company with a similar business model, taking it to the next level of profitability, and i think dara is a great choice. with him at down couple weeks back. i asked about his understanding of the regulatory landscape. let's listen to what he had to say. >> the visibility into the landscape has definitely gone down. there's a lot more uncertainty. volatility,e although capital markets reflect that. i think as a company, you just have to stay flexible. you can't get set in your ways. david: what do we know about his

political engagement? he's been critical of this administration. he has weighed in on a lot of these high-profile issues. that is something uber wanted. >> if you look at expedia's history, they have overcome a lot of regulatory hurdles. same is the case with uber's business model. ridesharing is still in a flux. there are a lot of issues. he is the right guy when it comes to the whole idea of navigating the regulatory issues and taking uber to the next level. francine: what will his first test be? this hasn't officially been announced. this is a bloomberg scoop. we are waiting for the official announcement. >> i think the first thing he has to do is really context down. there is a lot going on in the

company. this is a company with a global brand. what he really needs to take care of first is the cash burn that the company has. you really have to focus on profitability because it is going to come and bite you at some point. david: thank you very much. he is with bloomberg intelligence. we are going to talk about tropical storm harvey pounding houston. we will look at the fallout from one of america's worst natural disasters next. this is bloomberg. ♪

i'm david gura in new york. francine lacqua in london. floodwaters have been rising across houston as harvey continues to drench america's fourth-largest city with unprecedented rainfall. asoline prices have surged the water impact of the storm becomes more evident. we are joined by reed morrison. great to have you with us. let me ask you about how crippled this network of refineries and pipelines is at this point. what do we know now? >> most of the refineries took preventive actions to shut down. a lot of production has been paused. the pipelines are still moving. i think we are ok for now, but the flooding is a big question. david: when you look at the

country and its refining capacity, how nimble is the energy sector? how able is it to shift? >> right now we are in a fortunate time in terms of the calendar. most refineries build their inventories during august and september. we are ok if we've got a pause, but if we get beyond that, that starts to get compromise. you have the logistics of getting the crude oil in and the refined product out. francine: we understand a lot of the pipelines are closed, potentially stranding crude in west texas. how long does it take to bring back the pipelines? >> it is all about the electrical systems and compressor stations. you've got to have inspections done to make sure you don't have damaged equipment. that takes time. you look at the amount of compressor stations and equipment that has to be

inspected. that is where you get into the flooding presenting that cycle. once you get that started, it is usually a 10 to 15 day cycle. francine: we are seeing higher pump prices. how much impact will it have on the price of crude oil? >> i think less effect than 10 years ago because the global supply is so full right now. this is going to pull forward a supply shortage that is on the horizon. we are going to be ok for the next two to three months. abouts that do question the supply shortage on the horizon. david: read morrison, head of global energy advisory at pwc. let me ask you what the larger economic ramification is. what are you looking for, for larger economic effects? >> the impact, you are looking at what it does first as a human tragedy in terms of the number of people who are hurt, injured,

who are rendered homeless, and then on a macro basis, you are looking at the amount of expenditure that is expected, and the number i've seen is about $15 billion plus of damages. people who have homes that were damaged and they don't have flood insurance, all of that is the national disaster. then you talk about what it does to the energy sector. refining, and i agree that crude will be less effective. thank you. stay with us. "bloomberg surveillance" continues. we are talking more about the storm. this is bloomberg. ♪

live pictures from london, where we are saying a little bit of sun coming out today. the prime minister negotiating on two fronts.

europeanssure from negotiators and over the weekend, increasing pressure from the opposition labor party critics talking about transitional situations. let's get to the business news. houston, itting in has never seen a storm like this one and it may get worse. tropical storm harvey pounds southeastern texas. some areas may get more than four feet of rain before it ends later this week. highway's have been turned into rivers. harvey has crippled houston's energy. federal emergency officials say they will be in the region for years to come. president trump's critics are accusing him of using a friday night news dump to hide controversial decision. in the space of four hours, he pardoned joe arpaio and pardon ways with sebastian work of.

all of this happen while hurricane harvey was pounding down on texas. british prime minister theresa may under pressure on two fronts. brexit talks resume. you negotiators want made to reveal her hand. the opposition labor party is trying to lower may's critics to his side. president urging her colleagues to look past recent week inflation data. she told bloomberg the fed should stick to its gradual pace of interest rates. 2%.nflation is not yet at but we have learned we are to move policy a little before we get to the goals or we will be behind. taylor: the fed projected to raise rates one more time this year. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. francine: thank you.

with threes resume some a under pressure from the opposition labor party. it has announced it wants britain to statement single market and customs union front to four years after leaving the bloc. jones, when you look at these negotiations, they start back today, but it seems once again, domestic politics will actually overshadow as theresa may needs to figure out how she deals with labor. >> right. in terms of how the negotiations are going to be going here in brussels and the third round gets underway later today, this looks like it is just going to be more of a delay for them. the u.k. was starting to talk with one voice and the eu side was optimistic we would get more definitive messages from them. but now it looks like we will not make much progress at all. francine: what visit me for how the -- what does it mean for how the eu negotiates with the prime

minister? do they pretend everything is fine or are they cautious in responding to those papers? . going to talk to theresa may and talk to the may government. they're absolutely going to do that. the question is, exactly what is dated davis one to be able to say when he gets to brussels later today? on the eu side, they're looking for more concrete proposals in terms of how the u.k. is going to deal with the financial arrangements. other at this point, they have been disappointed. i have to say both sides have been pushing down the optimism in terms of what is going to happen, potentially, francine: this week. francine:jones, let's bring in our morning must-read. he was writing --

it seems the rhetoric from a lot of the press worldwide is that the u.k. cannot figure out what it wants to do where as the eu is speaking with one voice. how unusual is that? iron learned to deal with it you that a lot of times is contradicting itself. >> right. i think everyone, including the thehas been surprised at unity it has been able to maintain over the last year plus, since the brexit vote in the u.k. to be the case now. we get indications this country or that country are starting to see a crack or two. overall, michel barner has done a good job of keeping the message together. they're worried about more delays.

the u.k., if theresa may's government has to redefine what it wants, what its messages coming into these talks, then that is just going to mean it takes more time and put more squeeze before march 2019 when the u.k. has to go. what did you make of the papers we saw these last couple of weeks? how worried are you about how fractious the u.k. is at this point? >> i think the labor leader's statement over the weekend in terms of looking for a soft brexit is one extra headache that prime minister theresa may did not want. here is an opposition leader who is taking a softer position with the eu than she is. 27 is as that you concerned, the negotiating party on the other side, to go back to the point that was just raised, something as important as u.k.

and the brexit issue to bring the 27 countries together with a unified voice because they don't want britain to get away with it. this is going to be very serious for the british prime minister. if she loses some of her cororters going over to the byn side, you're calling for new elections and more uncertainty under brexit front. hayden, give another round of talks coming up. what is the objective for this particular round? they are saying they don't expect much to be accomplished. from the eu side, it is clear we need to talk about the with drawl issues. the talksas to get to about the trade in the future relationship, but the eu is adamant we need to talk about the brexit well, the northern ireland border, and citizens

rights. and if you like we have not gotten enough, that the eu side has not gotten enough from london in terms of really talking about those issues, so they will be pressuring david davis to get more details on what the key -- u.k. can do on those issues. francine: jones hayden, thank you so much. seeou look at these figures nations, it seems brexit is a little bit of a blip in the kind of european economy but it could potentially be a real mess for the u.k. are you surprised that we have kind of gone through it without any major headwinds? francine, i'm looking for the brexit negotiations, the talks to be much more hurtful of the british economy over the next year to year to have come in particular, for the british pound to be a lot weaker than it has been recently, perhaps going $1.15 from where it

is. this is a slow-moving process. there are steps being taken, some which seem to be positive for britain. days,y, over the last few essentially, weakens the british case. as we start talking about the itcalled exit fee -- and looks as if 60 billion euros is the amount being discussed -- that is huge. and if we get anywhere close to that, francine, we're going to facing british economy the adverse consequences as a result of that. i think this is a slow-moving thing and you have not seen all of it yet. it is going to be 12 to 18 francine: months to see be full impact. 1218 months to see the full impact. francine: thank you.

the silicon valley lawyers and how players in the nba are taking a big stake in tech. in asia and europe, we take a look at global democracies. a wonderful cover. to staysinessweek.com ahead of the competition. this is bloomberg. ♪

is "bloomberg surveillance." in news in for tom keene york. more investors are joining the cast of wall street veterans in warning that risky assets are overvalued. among assets under scrutiny are emerging market bonds. only for the third time in history are less than junk that. janus capital has weighed in.

joining us now to discuss all of managing editor for global emerging markets. justin, always a great idea to have you on the show. thank you for coming on. give us a sense of which are most vulnerable and how this is tied to fed policy. >> we are seeing emerging markets going through a very good phase at the moment. we're seeing very high valuations and growth rates are good in emerging markets. we see inflation coming down in some of the bigger markets such as india, south africa, and so one. but you said against those outations some of the risks there, particularly, what we're seeing about the prospects of what i call policy deadlock in and we're states beginning to hear now some of these increasing voices saying,

maybe it is time to just dial back a little bit some of the risk, take a little bit of money off the table and take a more perhaps considered view of how far this rally can go still. francine: you mention south africa. which are the countries in emerging markets that have not taken any structural reform or that will be dig dated to buy big -- dictated to buy big political risks? >> you look at me immediately anything of a country like turkey, which you might say politically in terms of its political institutions, its structures, is going backwards rather than forward. you think of a country such as brazil, which is desperately trying to make efforts to restructure. we see it pushing through labor reform, trying to get this pension reform package through and still not gaining perhaps as

much traction as investors would like. and then you begin to see how the risks, at least to mystically in some of these countries, still weigh on sentiment. -- what issimilar the catalyst, if you could identify one, that has caused them to change so rapidly seemingly? would catalyst i think have to be where the u.s. is going. the situation in the emerging markets themselves, if you take it as one giant asset class -- of course, it is not always helpful to look at it that way because there are certain or there always differences on the ground. but if you take the asset class as a whole and you set it against war the united states is theg and we're seeing how study as you go policy from the fed, which is keeping the dollar lower, keeping yields on u.s. treasuries low -- which is

helpful to emerging markets. but when you consider what is going to happen in terms of policy, what is likely to happen over the next 10, 12 months, then you would hear voices about whether how that is going to impact on u.s. growth and what that means for the rest of the most at risk.is of course, the developing economies are first in line. david: and then near-term, what are the data you will look to for how emerging markets are doing? the key here is inflation. we have seen inflation and some of these countries, you look at south africa, turkey, india principally, where inflation is falling, giving central banks the ability to cut interest rates. we see more emerging markets, central banks cutting rather than raising. that is where -- is one of the crucial data points. growth is another one. we are seeing tremendous growth

rate above 4% across the emerging markets probably quartershe first two of this year. it are we going to continue to see those kinds of levels? the question i think a lot of people will want to know the answer to. david: justin carrigan, joining us this morning. get back to wall street. you hear that, you have read the commentary. what is your attitude toward the emerging markets? are there places you still see opportunity? >> i see opportunity both on the debt and equity side, especially when you're looking at longer-term investments, five to equity, realrivate estate, enormous amounts of opportunity. the reason for that is, first of all, on the short-term side, the fed looks like it is going to remain easy. reduce cannot afford to its bond purchases too much because the euro is going to

strengthen even more in that case. the emerging markets are getting a pass. second, as just a mention, you have some countries that want to take in structural reforms. i was in brazil all of last week . even though elections are coming next year and you have a very unpopular president, they have would besures which considered courageous in any context. so those are all being very positive. i think that is what is reflecting on them. the big risk i would see following up on your question to justin is, that if the fed were ever to reverse quite sharply and there were going to pad the balance sheet -- which i doubt very much they would do -- or to increase the rate two or three times in quick succession, that would put a damper on the in the shortet term. francine: do you hedge against the possibility of a policy mistake? >> there is no way to hedge it

other than to say, i'm going to reduce my exposure when i can. but i think -- for three to six months, your relatively in the clear as far as emerging markets are concerned. yes, it may be frothy in some markets, but we know from canrience f theroth continue for quite some time before the bubble burst. you probably have, let's say, conservative three or four months to adjust yourself, reduce your exposure on the emerging market side. or perhaps after three months, re-examined to see if you want to have a big presence going forward. i don't see in urgency. francine: thank you so much, komal sri-kumar. onyou have questions, click tv and look at some of our cool data checks, look at some of our previous market moving interviews, including kathleen hays talking to governor kuroda.

questionsn ask sri directly. this is bloomberg. ♪

to the let's get business flash. a long-awaited study, the makers of the blockbuster blood thinner the relton. the study in the new england journal of medicine found that it helped stave off heart attacks, strokes, and death from cardiovascular disease. the drug is made by johnson & johnson and buyer. cbs has of i do buy out 10 network. deals were not announced. 10 network was near collapsed because of plunging ad revenue. it gives cbs the on-demand service and squeezes the potential bid by the murdoch family's news corp.. in china, the conglomerate that owns hollywood studio legendary entertainment says rumors about its billionaire chairman are groundless. henese media reported that and his family were stopped at the airport as they were preparing to fly to london. wang's number 30 on the billionaire index for the $30 billion fortune.

that is your bloomberg business flash. francine: thank you, taylor. chairman being stopped at the airport have impacted the markets. david, this is what i am looking at. it is nice that we have a cool chart looking at some of the bonds. these are the bonds that were due in 2024. their overall work, $600 million. they fell as much as three cents on the dollar. a little bit of nervousness. we need to remind everyone this was denied by the company. that is billionaire chairman stopped at the airport. but there was a little market reaction. of anothereminds me story, the chairman was reported missing a couple of months ago. that company work doggedly to show the rumors were unsubstantiated. still, a lot of anxiety in the marketplace about many of these chinese conglomerates. still in new york with us, komal

sri-kumar. what do you make of this story? what do you make of the ever the chinese government has to curb the outflow of country -- capital in the country? >> what is happening there is intense desire to acquire foreign assets on the part of that only chinese institutions, like insurance companies, entertainment companies, but also on the part of normal chinese individuals who are allowed to move $50,000 equal in per year per adult. yuan isof the fact the being maintained by government controls and the foreign exchange reserves, they want to move before the exchange rate changes. a 19 people'sve congress coming up for discussion in november. xi jinping is probably going to get a second five-year term and the chinese for stability, they want everything to remain very

stable. the concern is, what might happen afterward. i think the chinese government preference with stability in the market front, but the global reality where there is more of a demand to globalize on the part of the chinese, there is a clash. and that is what you see being shown in the markets today. francine: does it make sense for investors to actually buy part of the markets, the ones you're about in your code even if we have these clashes, overall, we're surprised how this economy is being managed. >> absolutely. if you have a medium-term outlook, francine, i would say that is what investors need to have when they go into china. it looks very good when you're 7, 10 years ahead. this is eventually going to become the largest economy in the world, beating the united states. it is a very large economy in terms of gdp size. the population is a very popular

feature as well. -- positive feature as well. all of the emphasis they're putting on changing the economy is going to come to fruition. what you cannot bank on is what happens to the stock market and three-month to six months. david: thank you for being with us in new york, komal sri-kumar. coming up on "bloomberg surveillance was good julia coronado -- "bloomberg surveillance," julia coronado. also, the latest out of houston. this is bloomberg. ♪

so new touch screens... and biometrics. in 574 branches. all done by... yesterday. ♪ ♪ banks aren't just undergoing a face lift. they're undergoing a transformation. a data fueled, security driven shift in applications and customer experience. which is why comcast business

delivers consistent network performance and speed across all your locations. hello, mr. deets. every branch running like headquarters. that's how you outmaneuver. francine: counting the cost of harvey. one expert put the figure at 24

billion dollars. gasoline spikes to two-year high as rain hits refining centers across texas. the boj bosque warns the current growth rate cannot continue because he will not be following the fed or ecb as an exit anytime soon. ceo is said to pick expedia to steer it out of crisis. good morning, this is "bloomberg surveillance." london and new york, i am francine lacqua and david is in for tom keene in new york. live a lot going on. we need to talk about uber, harvey, brexit, and jackson hole. the images and video out of houston, something that bears notice this morning. we will get it up a throughout the day. -- update throughout the day. is being called a tragedy of epic proportion.

tropical storm harvey continues south west- batter texas. some areas may get 50 inches before it is over days from now. floodwaters rise in houston. residents were told to stay safer to stay home and now thousands are asking the rescue. storm has halted about one fourth of oil and natural gas production in the gulf of mexico and more than 10% of the country's refinery capacity. the houston area produces 40% of u.s. gasoline supplies. texas governor greg abbott says oil companies were ready for the storm and will restart production want floodwaters received. harvey is turning to economic disaster for texas. damages likely to rise to tens of billions of dollars. unusually large share of victims don't have an of insurance. less than 1/6 of the homes in houston area at federal flood coverage.

that would leave more than one million homes in the area and protected. the federal emergency agency expects to be in the houston area for years. fema administrator says there are about 5000 federal government employees on-site in taxes and louisiana. meanwhile, pressure on congress to act quickly. the total federal disaster relief budget is likely to fall short of what is needed for her be alone. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. david: thank you for the update. a quick check on the data. futures are down slightly all stuff -- futures are down slightly. gold at 12.97. this gold is at 1297. francine: the ftse is closed in europe. the dollar slipping a touch.

european stocks dropped. this has to do with euro strength. the fed and ecb may be heading toward the exits from super accommodative policy. this is what we found out. the bank of japan is not going to follow. governor kuroda says inflation is so far below target, the central bank must maintain its policy for some time to come. he spoke to kathleen hays at a jackson hole meeting in wyoming. in the u.s. and in europe, inflation rates are close to their target, close to 2%. in japan, inflation rate is still 0.5%. far away from our 2% target. so there is some difference between u.s., europe on the one hand and japan on the other hand. rates are not rising so far.

-- prices are not rising here, there is some kind of deflation mindset. leaders.ong business be cautious in raising prices. so that what companies are doing is they are heavy investing equipment, and so forth, and also changing the business model so to reduce labor content. from doing that, this bite wage increase, costs have not been rising so they are not required to raise the prices.

>> but they are doing well. gdp growth is up six quarters in a row. you are succeeding on growth and maybe something has changed to the degree that does inflation matter so much? japanese households like low-inflation if you have the growth. >> but two things. one, 4% growth is good, but i don't think 4% growth can be sustained. canably around 2% growth we next fiscal in the possiblee to 2%, maybe to attain. but 4% growth is somewhat unusual. this 1.5%,ite sure 2% growth can be sustained in coming years. interview withe

the japanese governor, speaking to kathleen hays at jackson hole, wyoming. join now by julia coronado here with me on set in new york. could you give us insight into what governor kuroda might be thinking into where his bank is positioned, first, the ecb and the fed, when to begin tapering, went to raise rates. why do think is going through his head and how might he react to what is going to happen with these other banks? >> my guess is he welcomes the divergence because i could help them out in terms of the reflationary efforts. mario draghi is facing that conundrum. the more, the better of the european economy does, the more ity tiptoe, the stronger gets. still low in europe and falling short of the target in the u.s. we are back into that little bit of that currency war dynamic, i guess you could say. yellenthis is from janet

austria's speech -- -- janet yellen's speech -- she did getting some of the changes regulatory league we have seen. the conversation continues to center on who is going to lead this fed going forward. there was the interview on friday as well. how much does personnel matter and what do you make of that defense of regulation she gave in jackson hole on friday? herhe considers that one of most important -- she was there before, during, and after the financial crisis. creating a framework for stability. i think the personnel does matter. for janet yellen, to leave after

one term, that would make her the first one term chair since miller, who left in disgrace at expression. it would speak to the institution if we get gary cohn over janet yellen, who has been, by all measures, very qualified fed president, and replace her with somebody who doesn't have his qualifications or experience. as big store very political decision. -- that speaks to a very political decision. i think it does matter. francine: i want to go back to something you said, saying we are kind of back in a currency war type of mood. what does that mean? i jackson hole, we did not have mario draghi trying to talk down the euro. >> no, he didn't. i think he is trying to walk that perfect line. when they meet next week in september, they're likely going to have to and villa slightly flatter inflation projection

because of the strength of the euro. it is a conundrum. they want to play this just right. exit, but cautiously and slowly so that you don't over do it on the currency site. unfortunately for draghi, it is not just monetary diverging, but the fading prospects for stimulus here that are boosting europe. it is the performance of the real economy also pushing the currency stronger. is mario draghi being backed into a corner because technically, he does sound have enough of the bonds to buy, german bonds? >> backing mario draghi into a corner is a difficult thing to do. he is a very tenacious man. i think clearly, they're going to take a step down and the amount of asset purchases. that is without a doubt. they're determining how to do that. that said, i don't think they are headed toward announcing a true tapering -- which is stepping down steadily toward

zero. i think will be step down, then wait and see. win thehe is going to battle and be very cautious in this exiting process. it is going to about long, slow process. francine: so if we are back to the head of a currency war, what is a currency that is most distorted? is it dollar or euro or yen? >> it is tricky because it does hinge on where the u.s. economy goes here to a large extent. i think the currency market has reacted to the prospects of fading fiscal stimulus, certainly more than the stock market has. so it has sort of in building that in steadily over this year. but exactly what happens, i think will determine what the right levels are over the next quarter or so. david: julio stays with us here on "bloomberg surveillance." coming up, a conversation later

this morning with the vice chair brookings institution senior fellow at 8:00 a.m. in new york, 1:00 p.m. in london. this is bloomberg. ♪

taylor: this is "bloomberg surveillance." and south korea, samsung billionaire vice-chairman has appealed his five-year prison term for bribery. he was convicted of bribing his way to greater control of the business empire his family founded. his trial was part of a bigger direction scandal that brought down south korea's president. cbs has agreed to buy australia

struggling 10 network. terms of the deal were not announced. it was their collapse because of plunging ad revenue. it gives cbs a platform for video on demand service quizzes of potential bid by the murdoch family's news corp.. -- squeezes the potential bid by murdoch's families news corp. china's reported first earnings growth 40%. the chemical business improved margins and there was a smaller loss in oil and gas production. that is your bloomberg business flash. david: floodwaters have been asing across houston tropical storm harvey continues to drench the center of u.s. energy industry. while the city is battling the rainfall, gasoline has surged. more than 10% feel making capacity. joins us along with julia coronado. give us the latest, if you

would. this is a storm sitting over large parts of houston. how long is it expected to do that? 10 to 15r two days, inches of rain. this is the first category or three greater hit since wilma 2005. only the third storm to hit began back records in 1900 at a category 4 strength. the cubans were warning about hurricane forecast and they did not listen. the great galveston storm of 1900 hit the u.s. act been an -- back then and inspired a wonderful book. countryhis part of the is no stranger to tropical storms and hurricanes. let us understand the particular houston.aced by >> a lot of the canals were built 150 years ago and have not been updated. there is a lot of farmland that drains quickly.

i do believe in climate change myself, global warming. i think this is an indication of that as more and more storms have gotten more severe. the big problem is going to be the refineries. we are seeing the spread between crude oil and gasoline go up. gasoline soaring because of local refinery issues. a glut ofis still in oil production and where nothing an impact in the crude oil market itself. francine: jim, looking at refineries and pipelines as rain may last for days with some areas seeing as much as 50 inches. the more rain you see, the more difficult to switch back on these refineries and pipelines? >> it is. when you look at the grain markets, the cod market and sugar, you see it happening every year, it is easy to predict what crop yields may be, etc. but this is a once and a 100 year storm as far as houston goes. it is difficult to gauge how severe the long-term damage will

be to refineries. if this is a situation, right now 30% of production is shut off in the gulf. refiners for an extended teething of time, you will see those spreads between gasoline and heating oil were crude widen over the next -- were crude white over the next few weeks. francine: how long will it take for damage to be assessed, days or weeks? >> this is a one and a 100 year storm and i think it will take probably several weeks. we have not seen right continue for five or six days incessantly in any area, let alone houston. i have not seen inches of rain in my life. it could take a long time. roemer, thank you for joining us by phone. julia coronado here with me in new york. one wonders about the larger economic ramifications, especially as we look forward to jobs day later this week. what kind of affect could this have? >> it will have an effect.

first of all, probably in the employment data. sixths the fifth or largest metropolitan area in the u.s. this is a storm in terms of its disruptive power on par with katrina or sandy. we're going to see an impact. it will be in the employment situation, probably 50,000 to 100,000 spike in jobless claims in the next few weeks, then some of that will follow through to weakness and payrolls. over time as the region recovers, you will see that come back. gdp, when we look at katrine or sandy, the gdp impact is more muted than the employment impact. it gets spread out over time. it is not necessarily a gdp thing, but we will see it in the employment numbers. pricese: when gasoline go up, does that impact other spending? >> that is the other area of

impact, for sure, how quickly these refiners get back online and gasoline prices come down is going to be an issue for everybody. this will be a tax increase, basically, in terms of disposable income for consumers. how big it is and how long it persists will matter. if it is short-lived, you probably won't have much of an impact. we will see how quickly those refineries come back online. david: julia coronado here with me in new york. later today, we speak with former fema director at 2:00 p.m. and your, 7:00 p.m. in london. this is bloomberg. ♪

david: i am in new york and for tom keene. uber has said to have named a new ceo. mandeep singh joins us. we know the challenges. we've seen the investigations into what has gone wrong at uber. how much time is this new ceo going to have to turn things around? >> i think you'll start off with it -- he will start off with a clean slate. the first thing you have to do is call him things down. there's a lot of press around the infighting, the board structure and everything. so he is going to get the management team that he wants and really try to focus on kind

cost structure. this company has a problem with experimenting a lot of things. you need to fix that. you need to align the cost structure. you need to fix the cash for an issue. that is one of the issue -- issues that is back him up. it is something investors will focus on if they want to invest. francine: what is his number one priority? >> culture. culture needs to be fixed. you have to move away from that , experiment in phase. you are a big company with over $7 billion in revenue, $20 billion in bookings. since it is a global brand companies to be managed at way. david: i have the opportunity to sit down with him a couple of weeks ago and i asked them for his sins of the regulatory

landscape, what it looks like right now. let's have a listen. >> the visibility into the landscape has definitely gone down. there is a lot more uncertainty. i think more volatility. although, capital markets will reflect that, they environment is more volatile. you have to stay flexible as a company. you can't get to set in your ways, you can't get too comfortable. david: when it comes to regulation, google has been in .he news for a long time expense fighting against google. how important is that as we see -- >> ridesharing is one of the experiments that uber is getting into. obviously, this market is in a flux. no one knows what the future of ridesharing is going to be. i think the way to navigate is what dara did at expedia. you focus on cities where you ,an get through the laws

operate as an independent entity. the other ones, you work it out gradually. it is going to be the same. i think he has a playbook. francine: mandeep singh, thank you. with us.onado stays in the meantime, this is your asset check. european stocks starting from the on the back foot. the ftse is closed with holiday in the u.k. the dollar is struggling, moving sideways. gold rising as investors try to weigh the damage from tropical storm harvey. this is bloomberg. ♪

francine: this is "bloomberg surveillance." overlooking hong kong harbor with gorgeous hotels out there. the looking to china and

biggest or out of china is the creation of the world's largest car company. 271 billion dollars in terms of the assets they hold. i am here in london. david is in new york. here is taylor riggs. taylor: houston has never seen a storm like this one and it may get worse. tropical storm harvey hounds at southeastern taxes. some areas may get more than four feet of rain by the end of the week. record flooding has turned high was in the rivers. it has crippled the energy industry, which refines 40% of the nation's gasoline. that will emergency officials say they will be in the region for years to come. the britishon, prime minister theresa may under pressure on two fronts as brexit talks resume. eu negotiators want her to reveal her hand and the opposition labor party is china critics tore may's her side.

cleveland fed president loretta mester is urging her colleagues to look past recent week inflation data. she told bloomberg's should stick to its gradual pace of raising interest rates. >> inflation is not yet at 2%. but we have learned we have to move policy a little before we get to the goals or we're going to be behind. taylor: we also spoke with the head of japan's central bank and jackson hole. keeprned the country can't up current growth rate. >> 2% growth rate is excellent, but we don't think 4% growth can be sustained. 2% growth is likely. inflation rate, gradually climb up towards 2%. taylor: global news 24 hours a day powered by more than 2700

journalists and analysts in more than 120 countries. i am taylor riggs and this is bloomberg. president trump closely watching the aftermath of hurricane party, now tropical storm harvey. he is said to hold discussions. each we did -- the white house has president trump is set to travel to texas tomorrow. for more, here is kevin joining us from d.c. let's get away from politics and talk about this white house engagement with the storm over the weekend. president trump monitoring from camp david. what kind of disaster relief -- relief can we expect? >> the administration has been in constant contact with the authorities on the ground of this state and the town's that have been impacted impacted by hurricane harvey. administration

standpoint, they have been facing pressure from congressional leaders, including people like senator chuck grassley from iowa to make sure the white house is engaged. so far, so good. there is not been any miscommunications at this time. francine: kevin, what are we expecting from the president this week? i don't know if there's a plane for them talking more about taxes or focusing on other things. >> president trump right now is scheduled to continue to overlook the hurricane harvey situation. lawmakers return from recess in a couple essays, one week from tomorrow they will be back. they are going to have to do tax reform, raise the debt limit. it has been interesting to watch the president's twitter account as he is gone after several of the republican leadership as there seems to be some grassroots organizing on the far right. to workressuring them with us a administration on policy issues and to get the ball rolling in what is shaping

up to be a very busy month of september. david: appreciate the update, kevin. joining us now is mark walker of north carolina and still with us, julia coronado. you mentioned you lived in houston for a couple of years. no doubt, you're watching this unfold. how is congress preparing? >> i think we are ramping up for a very busy fall. this is going to add to that add toop -- this will that. this is devastating. it is unlike anything we have seen. however, we saw a couple of weeks ago, a group of idiots in charlottesville, virginia. what we're seeing right now is the heart of the greatest part of our human resources, and that is people in our country coming together in amazing ways. thes is a proud staples of federal government has a major role in days ahead. sixd: you have the big

working on this. what are you looking for when you get the proposal from that group over these next few weeks? >> i think it will be one of the things we're measured on as a hole in the 100 15th congress. we have talked about health care, but tax reform. out a fewuck our test times talking about how many things we have passed, but i think one of the stackpole's that we will be measured by is how successful we are on tax reform him at what will it do for growth next year. the board of adjustment tax is no longer part of that. david: i spoke to many investors and economists skeptical they will see anything get done in the near term. what is your understanding on the timetable? what can you tell them about when we might see action? >> i talked to kevin brady several times over the break. i respect him as chairman of the

ways and means committee. i think by thanksgiving, there is some kind of movement. i also believe there is been an agreement, not in writing, between the administration, the that once the senate the bat tax was taken out, some kind of agreement moving forward. i think this will be an easier accomplishment than the health care bill. francine: do you worry about a government shutdown? >> i believe all of us should be worried about a government shutdown. even going back to the tweet a few months ago where we heard something about a good shutdown, i don't think a shutdown is good for the american people. i think members of congress, specifically something we talk members, weur 155 have to be effective in what we accomplished. hold the line and be conservative with fiscal responsibility, but make sure we're not putting any group in peril as we move forward. francine: how does the republican party deal with it when the president tweets things

like that? i don't want to say it is blackmail, but it seems it is not the right message for international investors. >> we appreciate the president being engaged as much as he is. however, we still have to be functional in accomplishing what we promised the american people. whatever district you represent from here to alaska, to make sure we're putting the best foot forward and fulfilling the promises we have made to the american people. we are not deterred by any tweets. we use that as encouragement to make sure we deliver what we promise the american people. david: let me ask you about some of these tweets. over the weekend, the president raising the specter he might call out of nafta. -- pull out of nafta. we have talked about the risk. how much credence to give to that? the fact the state negotiation's

continue with mexico and canada? >> there's a lot of heat and light and noise. you want to look at the bigger picture. i don't think there is likely to be a very severe trade war them all out trade war. there has been some relatively in-depth reporting suggesting he once something at least symbolic to hang his hat on. i think that leaves us with it is going to be a little dysfunctional, probably, but we are not going to see the worst-case an aerial in terms of really overt trade wars. we are likely to see some actions on trade that will certainly affect certain industries. will it be with nafta or chinese steel? probably more likely chinese steel than nafta. congressman, i want to come back to something you said. do you welcome the president tweaking even if it is disruptive? >> i think it is subjective when you say something is disruptive. what tweet ors

specifically, what topic. with the debt ceiling, we understand the ramifications of not raising the debt ceiling. but we know for six or seven years in a row, commerce continues to promise real reforms connected with the debt ceiling. right now we're looking at $147,000 of debt per household. what number does it have to reach before we get serious about putting in the kind of reforms long-term that are needed to bend back the bill curve of fiscal responsibility? francine: i was alluding to the clear tweet which was saying, i will force a government shutdown if they don't get me what i want , from the president. is -- some of the tweets, sometimes try to fear which way we need to go when he tweets something specifically, what is the endgame. but remembering, this is him who came out of the real estate business, brash new yorker that

raises the bar constantly. that is his way of motivating people from the executive branch. there are those of us that need to stay consistent on the goals we have laid out for the 115th congress. we welcome any challenge that comes from the administrative branch to make sure we keep our eye on the ball. david: i grew up in the district right next to yours. i know well the historical legacy that trade deals have had in that part of north carolina in particular. when you're talking to constituents, how hard is it to while you havet that legacy of jobs that were lost over these last few decades? >> excellent question. you know the area well. the district a represent at one time was the largest textile district in the country. when the president talks about getting these trade deals correct, the people i represent, they're fully supportive of that. they understand, right or wrong, blaming things on nafta, after

nafta was passed, we took a huge downturn and losing many of those textile jobs. they want to make sure when we talk about fair trade, -- we've seen a little movement in the area to bring those manufacturing jobs back to north carolina. david: julia, i would ask about .rioritization i imagine you are worried about the debt limit. how confident are you that washington can get through all of that? >> much less confident than ever before. i would say at the margin, probably the hurricane probably reduces the chance of an actual shutdown because it is too important, we are two critical of a time for the government to stop functioning. that said, this president has shown perfect willingness to break with convention. he seems to enjoy the chaos that comes with that. i would say he seems to be willing to go to the mat on the border wall funding in particular him and he doesn't

necessarily have the votes. he is going to force a lot of very uncomfortable situations for a lot of congressmen and women. i would not say the chances are low that we see a government shutdown. the debt ceiling? that is another question. i think the chance of disruption are higher than they have ever been. , a newit every day convention broken. i don't think we can presume logic in this situation. francine: julia, thank you. thank you also to mark walker of north carolina. julia coronado stays with us. breaking news in the pharmaceutical sector. said to be buying cut from singles for about $11 billion -- aboutharmaceuticals for $11 billion. this is according to "the wall street journal." this news just coming out. we're hitting the phones making sure on reporting concludes this

is the case. we will delve a little deeper into this possible m&a in the pharma sector. this is bloomberg. ♪

couple ofin the last minutes, breaking news reported by "the wall street journal" that gilead is buy kite pharma for $11 billion in cash. premiumen quite a hefty or at least the share price has gained quite significantly from january 2016 and we understand what they are now offering, which is $11 billion if confirmed by the company, but a means gilead will pay $180 per

share. you can see the closing price on friday was $139. 29% premium to what the share price on friday was and also means in premarket trade, the share price is gaining 15% as we speak. let's get to the business flash. is creating the world's largest power company. beijing approved the merger of the country's top coal miner with the new entity that has as its up hundred $71 billion. it may be the first of a handful of mergers and china's power industry as policymakers try to cut industrial overcapacity in the number of state-owned enterprises. also in china, wonder group that owns legendary entertainment says rumors about its billionaire chairman are groundless. chinese media reported that wang and his family were stopped at the airport as it were comparing to fly to london. the indexber 30 on

with a $30 billion fortune. brexit talks resume in brussels. theresa may is under pressure from the opposition labor party, announcing it wants britain to stay in the single market and in the customs union after four years after leaving the bloc. that brings us today's morning must-read -- joining us now, london's bureau chief. still with us, julia coronado. i imagine this would be frustrating for the negotiating team. the opposition party, labor, which has a big weight since the

election last time, is saying this is how i would negotiate. what does the prime minister do? >> for the first time, there is clear blue water between the two biggest parties, what they think. up until now, jeremy corbyn's party has been quite vague what it wants from brexit because there are labor voters, those who one of brexit, so labor has to decide whether it is going to fight for jobs in the economy or listen to the arguments you're saying reduced wages and all of the rest of it. the story has much impact on the negotiations this week. at where we will see the impact is in september when legislation comes to parliament about which is crucial to the brexit process. we could see some maneuvering. several lawmakers and the conservative party whose out of soft brexit the labour party is setting out. does it put theresa

may's position a little more fragile because she needs to --ten to the labour party she did not do too well last time. they have more soft power. >> that's true. but it is more about holding together the conservative party. on the one side of her party, people who want brexit at any cost if they like most of they don't want any transition. on the other side, pro-business, pro-soft brexit lawmakers. she does not have a majority in parliament. she has the loose coalition with irish lawmakers. where should comes under pressure is it depends on how the conservatives in her party, like the labor proposal -- it depends on how they react. no one has come out and said, yeah, i'm going to vote for labour. francine: what do we find out from brussels in the coming weeks?

do they have to say their position on the position papers that the u.k. actually gave them last week? >> what the eu has said, we're not going to expect a huge amount of progress this week. asking. as, said u.k. is the wrong questions. they are not answer the questions the eu needs answered before it will say they can go divorceill, the settlement if you like, that still has to be worked out. the u.k. has not made much progress on that. one would expect that to come up this week. david: emma, thank you. coming up, alex deal and jonathan ferro. >> three things we will continue to bring updates, the natural disaster unfolding in taxes at the moment. the second thing, we will ask whether janet yellen effectively signed her resignation letter with that defensive at jackson hole, putting her at odds with

the president. the third thing, exploiting the question of whether tom has capitulated. francine, the vacation story. he is still away? i think this is the second week. tie day, national bow i will point out. .out tv a bunch of data charts. you can ask our guests a question on the bottom left-hand side of the screen. this is bloomberg. ♪

david: time for the single best chart. yawning to virgins between the stock market, s&p -- yawning between the stock market. how well has janet yellen made this case? >> she has walked it back a bit. i think she shunned more flexibility in the last couple of months. i think the committee broadly

has shown a little bit of flexibility. it is one thing to sort of keep your eye on the broader trends and not want to fall too far behind, but another thing to keep tightening when inflation is outright declining. i think they are willing to be patient and certainly come in september, it looks like they will take a positive on raising rates. francine: would a policy mistake come in tightening too quickly or tightening too late? >> in my view, a does that seem like they are far behind the curve. the economy does not seem to be overheating. inflation is subdued. consumers are not responding to the stock market impulse like they have in the past. they are far more cautious and conservative. i don't think the greater risk is they are falling behind the curve. i think it would be if they plowed ahead without taking into account some very real signals coming out of inflation. it is not just a u.s. phenomenon, but a global one.

they have to recalibrate what that means for interest rate policy. david: just a tease of the job numbers. what are you expecting? >> i'm looking for 116. the 12 month, six month trend is 180. two months well above that. it looks like we are due for some payback. overall, the job market seems to be basically humming along at a pretty good clip. below consensus, but no red flags. david: julia coronado will join us on radio in just a few moments. we will continue watching what is happening throughout texas. futures down about one point. the dollar is still a little bit weaker. this is bloomberg. ♪

♪ >> hurricane harvey hammers houston. floodwaters overwhelm america's

fourth-largest city. draghiellen and mario sidestep monetary policy in jackson hole. they have a message for politicians. usr is said to get xp give to leave the company. low employee morale. from new york city, good morning. a warm welcome to "bloomberg daybreak" on this monday morning. david westin's office morning. don't miss this exclusive interview with governor kuroda. more updates from jackson hole a little later. futures this morning and the u.s. trading water after the biggest week or the s&p 500 since -- a high we have not seen since january 2015. treasuries stable in the face of a ton of supply this week. alix: