fall withsury yields neel kashkari warning rate hikes may be doing real harm to the u.s. economy. party of bows to amend the repeal law, saying the divorce talks are going to slowly. restorefiners worked to operations after hurricane harvey threatens, and natural gas futures plunge. anna: welcome to the program,

this is "bloomberg daybreak: europe." from here in the city of london. vix, we need to talk about what happened in the u.s. markets. what happened in the u.s. markets yesterday and what kind of risk sentiment we've got around these markets as the u.s. financial services industry returns from its labor day holiday they return in a risk on mode. there was plenty to worry about, hurricanes, geopolitical threats, all that leading to the dow down as much as 278 points and the vix spiking by more than 20%. concerns driven by about something to do with the trump administration. that doesn't mean where setting ourselves up for the day ahead. guy: let's look at some of the numbers focusing on this

morning. we find ourselves in a picture where the dollar is down. the aussie is interesting. the market is set up with the expectation will get decent data out of the australian economy. we saw that confirmed with the rba story, then we get this weaker than expected gdp line. so the aussie down by .2%. -- the u.s. the tenure that is interesting as well. a pretty strong indication that were in a situation where the market is getting nervous. >> a confluence of factors to be nervous about in september. let's get the first word news update with juliette saly. juliette: theresa may will face

jeremy corbyn in the u.k. parliament for the first time since the end of the summer break. a top official says the divorce talks are going to slowly. brexitng to the deputy negotiator, he said no movement had been made in the key areas under discussion. as tensions over north korea continue to run high, the white house says president trump is set to speak with the chinese president at 9:00 a.m. u.s. time , as the russian president rejects calls for sanctions against north korea. useless andtions ineffective and urging the international community to offer security guarantees to north korea. hurricane irma has become the most powerful storm to form in the open atlantic ocean with the prospect of property losses that could surpass hurricane katrina. forecasts are struggling to predict whether the storm will

hit florida. when estimate from barclays hit $130g losses could billion in a worst-case scenario. german leaders should allow the president demand will macron some leeway to help his economic agenda succeed according to the german parliament's finance committee. in exclusive interview, the social democrat tells bloomberg macron deserves flexibility when euro area debt and deficit rules. >> one expects small miracles love him and we must make sure, and it's our job not to make his life harder, but help him where we can. if he says he has to go into debt, then we should not say no. we have certain targets, but we should say if it gets you out of debt in the long run, then do it. juliette: australian gdp household spending

was upset. australia's economy expanded 1.8% in the reserve bank cap rates on hold at record lows yesterday. global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. find more stories on the bloomberg at top . --ll nervous is on these nervousness on these markets, down only .10% in the late trade. overopics has just clicked into positive territory, seeing weakness come through from hong kong stocks led by a decline in banking players. large cap stocks have been doing quite well so far this week, in the red as well. not as much support in the commodity players today. terms of stocks we've been watching, the nikkei reporting the toshiba boarded not reach a decision on chip sale today.

that was widely expected, though shares are up by 3.5%. one of the best performers in the region is also a tokyo listed stock on after was added to the nikkei to 25 index yesterday, surprising many in the market. most in sevenling years with a revision to its earnings forecast. we know the yuan has been rallying, a lot of investors looking at it as a safe haven in this environment. it's made the best performer in asia over the past month. that means a resurgence coming through and a lot of small-cap -- in europe.na it's only been pretty for time since 2015 and a lot of analysts saying it could get even higher, up by 14% since mid-july. guy: juliette saly joining us

from singapore. president donald trump will end , the decision putting around one million people in legal limbo effectively. he will delay the end of the program for six months in the hope that congress will pass the legislation. warned there will be consequences, facebook ceo mark zuckerberg calling the decision particularly cruel. president obama also issued a statement saying kicking them out won't lower the unemployment rate or lighten anyone's taxes are raised minimum wages. jackie edwards covers u.s. politics and joins us now from sydney. tell us a little more about the reaction from the business community and the fallout from what this actually might be.

>> business leaders today spoke out against the decision to rescind daca. the tech industry employs many immigrants in the u.s.. you mention mark zuckerberg speaking out against the move today and the microsoft president had a statement where he said he was deeply disappointed with the decision and urged congress to act swiftly to work on legislation to replace daca. agenda onas a loaded its plate. this month alone they are working to address the nation's debt ceiling, work on spending bills for the next year and address of funding bill for hurricane harvey which is the u.s. last week. so take industry leaders maybe disappointed in how quickly congress can move to enact such

legislation. >> is clearly matters too many business leaders in the united states and might matter to investors in terms of how it as to the long list of things that congress has to do in the near term. dice we've seen donald trump holding a meeting with republican leaders. what is the expectation there? tuesday with a group known as the big six, group of individuals made up of white house officials and congressional leaders who've been working on efforts to overhaul the tax system. they've been meeting since the past spring. donald trump met with him today and cautioned -- officials caution we should not expect any great breakthroughs from today's meeting. there were not any details on the trump tax plan. lots of questions remain unanswered such as where he will

set individual and corporate tax rates, but one thing the meeting did serve as was the kickoff to congressional movement on legislation and works on tax overhaul. donald trump is the meeting to reiterate some of his key points about text messaging such as that he wants to pursue a tax code that is much simpler than the current code and that he wants to promote an agenda that is pro-growth. much.thank you very let's put that in context in terms of the federal reserve. interest rate hikes may be doing real harm to the u.s. economy according to neel kashkari. he spoke yesterday at the university of minnesota. next maybe our rate hikes are doing real harm to the kenya me -- to the economy.

leaving more people on the sidelines, leading lower wage growth and lower inflation and inflation expectations. these premature hikes are not free and we need to remind ourselves of that. why is the market so whorised that these two, are pretty dovish, are sounding dovish? >> i was surprised at how much he was saying the right -- rate hikes have been affecting the u.s. economy. -- gdp number beat expectations. chris if you look at people's expectations for this coming quarter, it looks pretty good. anna: so you were surprised?

>> i think the way he talked about it was very surprising. this chart,led up the former bill rate exceeding the two-year note yield in the united states, alluding to something being not quite how it normally is and also to do with the debt ceiling. honiara what is important to watch because congress has four weeks to increase the ability of the treasury to borrow so that it pays its bills and avoids a default. what are you watching for specifically? >> we've seen it play out a few times in the last years. hour.ypically 11th for the near term, you get the sort of reaction where people are concerned and that comes into price and you see yields on bills.

we have been here before and yet some of the language has this time strong around. >> we saw that back in 2011 when we had the downgrade post some of the concerns related to the debt ceiling. we obviously have a republican majority to push something through but we always seem to have these last-minute conversations right down to the wire. this time we may get some form of respite if they managed to postpone it due to some of the disaster relief that is coming from the americans. when we look at the market now, 90 basis points of hikes by the end of 2018.

>> the reality is, the u.s. economy looks pretty good at the moment. there is obviously a problem with inflation which no one is quite figured out but we've got pretty decent growth. job growth is still above what people believe the rate is a actually increasing jobs in the u.s., so that means the fed will continue to normalize policy. we also heard about the extent to which harvey is going to impact on their estimates for the u.s. economy. the dow suggesting it's not going to be all that material terms of the expectations around the u.s. economy. >> you normally get this your terms like decline and that will

rebound, and the recovery process takes place. transitory is one of their favorite words, as we know. watch three of the numbers. >> it would be hard to announce a step back from that. it seems to be a done deal. everything is off the table. i remember we went from 3280 in short order earlier this year. >> it was around similar levels to where we are today. seen since yesterday is maybe that is not going to occur. when you read some of the language, it was very clear, in

my opinion. >> we were having this conversation yesterday. the data has to say something. >> we have a few months. they really changed perception of what they were out to do. i think they want to get a september debt ceiling and also the tapering on the reinvestment program out of the way. they would also like to see inflation pick up, let's be honest. .nna: thank you very much let's have a look at what we need to watch out for today. prime minister's questions for the first time since the summer recess.

employment has gotten strong sense your last release. 10:00some point after p.m., we get a rate decision from brazil forecasting the bank will cut darling cost for an eighth straight meeting. holding levels again tomorrow but for how long can that go on, and what does it have to say about the euro? that is all coming up next. this is bloomberg. ♪

>> let's find out what's going on in singapore and around the world. offering facebook

major record labels hundreds of millions of dollars so users can include songs in what they upload. they can ask facebook to take down infringing materials. shell says it's seeking to boost local demand in heavy transport such as shipping as well as helping developing nations begin imports. europe's biggest energy company hopes it will allow them to invest in new plants. a gas executive at shells said demand is strong across asia, not just in china. we been pleased to see strong demand in the last two years, from asia and china and also from countries that demand see thend this year we supply increase being very robust.

unitederns about technologies acquisition of rockwell collins. boeing has been squeezing suppliers for discounts and wants to take action to protect itself if the merger happens. credit ratings company said the manufacturer had downgrades. anna: let's turn our attention to the ecb. a statement tomorrow afternoon. the central bank will raise its forecast but despite a strengthening economy, recent appreciation of the euro is likely to dampen the outlook. our guest is still with us. in terms of the euro expectation , is he going to say anything about it or just change the inflation forecast? how explicit do you think he will be?

>> this is the dilemma he has got. we are talking about tapering the program to bring down inflation expectations in 2018. what might be more interesting is what they do with the 2019 numbers. they can do the tapering if you're seeing the inflation trajectory moving up. it looks as if it is heading in the right direction. that might bring them back into play. it's why is going to pause and wait until the october meeting to give us a bit more detail. hint that theany rollout of the program happens i buying?y, what am is there good money to be made there? >> when you look at the big that's one way,

to say what the value is but a worse we have elections coming up in the first half of next year so there may be some caution around that. i would say you still want to buy credit in europe. the influx of money will filter down into corporate spaces. that's what we would be focusing on if it looks like any kind of pull back. thatnk moore the fact where does it end up ultimately? people will maybe shy away from going into other parts of debt where there is concern for the next few months. europe is doing well in terms of corporate help. it looks great to us.

when you look for a fiscal boost in the eurozone, maybe not maybe theut netherlands, france, belgium, in different forms, something that aoks a little bit like different picture -- picture. election, we would expect to see some fading away there. maybe use some of the work for the ecb for him. when do you stop pricing in the german election? i'm curious to know when people are paying attention. at the moment, people are not really concerned about the

german election. the outcome is highly likely to be pro-euro. muchu've got pretty pro-europe. any changes likely to take away from that? particularly with the ftp. is there a negative number here that needs to be applied? i think you either get continuation of the process, and combine that with pro-euro out of france. most people are focusing on what would happen next year. that will be the concern. anna: he will stay with us.

guy: the board members under to rest. this is bloomberg. ♪

anna: welcome back to "bloomberg daybreak: europe." ongoing concerns geopolitically and a host of other things to be concerned about. we've seen volatility rise the little bit in asian equity markets and were seeing another down day. the msci lower overall. a mixed picture in terms of industry groups but underperforming are financials. we can also be seeing a reflection of what we saw in the

u.s. session with real estate companies being hit as well as insurers, concerned about hurricane erma. real estate and consumer discretionary under -- underperforming on the msci asia-pacific index. onshore and offshore not moving a huge amount today. this week we've seen the on short you one hit a 15 month high. pbocys, and we did see the extend come a weaker than expected yesterday. generally it's been underpinning a recovery and small-cap shares encouraging investors to keep their money at home. correlation10 day and it's gone above the levels that it has only gone above for time since 2015. a lot of interesting commentary about the yuan strength. are going to far in saying it's a safe haven currency and what

point is the pboc path patient going to be tested. yield, 10 year treasury we saw this drop 10 basis points yesterday. a lot of comfort things as you called it coming together to move money into safe haven assets. close to breaking through another pivotal arch level. if you break to this one, it will wipe out all of the post trump mood in the 10 year yield. let's turn to what's happening in the atlantic. florida is bracing for hurricane erma, the most powerful storm to form in the atlantic. the system barrels its way toward the coast packing winds of 185 miles an hour and potentially life-threatening

storm surges, less than two weeks after hurricane harvey and with josé in close pursuit. us from abuy joins dhabi. were getting the knee-jerk reaction to harvey. walk us through what you are seeing in terms of irma so far. >> we have an impact on cotton and orange juice futures prices. the real action remains in gas, as you just pointed out. up.id see gas prices forced they are coming back down now on ma. back of hurricane ir down to just under three dollars. harvey,ck to hurricane that was a supply and demand story.

impacted because we had a bunch of refinery outages in the gulf coast. we also had demand impacted because we simply had a lot of power outages and stranded cars in areas like houston. so gas usage was coming down. irma is expected to be a pure demand story. we are expecting it to do a direct hit on board it and then move upward along the coast. that would mean it takes a chunk out of florida's demand. ford is a big importer of gas but does not necessarily impact supply and all that is being interpreted as a bearish signal in the gas market. fascinating, it depends on which portion of the infrastructure they hit. is there a risk that we see further impact above and beyond

what you described? >> i don't want to play down the risk of the storm. if you look at the word some of the meteorologist are using, superlatives galore. we have monster storm, unprecedented, historic. this is a category five storm that could come with 185 mile per hour winds for five days, not just ours. literally off the scale. have josé coming up as well. you would think there's going to be an impact on pork. he could be so widespread that you end up affecting oil export from places like mexico or the

gulf coast. when you have this number of storms it becomes difficult to predict the effectual get on energy infrastructure assets. much, tracyyou very alloway. universe andour , it'smpact on inflation fascinating to hear tracy long they last and how it can have completely opposing effects. they can drive prices up or down. we don't know what the effect of harvey will be. we heard it yesterday about the near-term effects.

they'll look at it from an inflation standpoint and that's what you have to do. -- washe it will through the economy. >> are they going to tie aid to the debt ceiling? >> it's going to be seen as the most important thing they need to do. getting the debt ceiling through clear more or less likely? >> the market is going to appreciate that they got it all signed off. >> is that something that would worry you more or less? >> were going to get through it at some point.

i'd rather not postpone the debt ceiling debate and have it a few weeks down the line in cost more market anxiety. let's get through it and get it out of the way. not going to deliver the inflation that central banks globally are looking for. >> it's still going to be down to wages. that's what everyone is focusing on. it doesn't seem to be working anymore. when you look at things like oil prices, we've seen them fall and rise back up again. central banks will look through and they want to see the underlying core inflation levels going up. anna: if you're tracking , it's this chart on the bloomberg that shows you the path as expected in december --

in september. guy: let's bring in another voice. atting the reference rate 6.5 percent. interesting that it's written in long financial form. lehman traded currency has been on a tear in the last month. >> the latest comes among tense relations with the beijing relation resisting the latest talks against pyongyang. robin, good to see you. what is the likely impact, tie this together what were talking

koreantensions on the peninsula and the pboc's latest move on rates. >> the risk has shot up in the region and people are looking for the alternative to the japanese yen for state -- safe haven status. u one are looking at the for two major reasons. they believe the pboc will come into the markets and we've seen that happen for the past several months. we have seen the currency rising attempt to doers that, to keep the currency really steady. and it's not a surprise that people want to invest in the you want at least. we have the 19 party congress twice a decade. a leadership change meeting is

taking place on october 18. believe it will keep the president very stable before that meeting. >> effectively north korea is challenging the authority, is this one way of communicating to the world there is stability out there? is the currency market being used as a communication tool? convinced thate is the case. china wants to maintain stability in its own financial market. we see china behaving not in sync with the outside world. what we want to do is have in almost all financial

markets so they can say they can ,eflect on their achievements however, something that is still slightly scary, you mentioned the 14 day advance in the offshore yuan. one has to realize that after 14 days, the market officially , the longest10 rally since then. you have to look down and see if you are rising too high. we saw the pboc yesterday setting the daily fixing at a slightly weaker level than expected. be careful of excessive gains. there is some embellishment that maybe stability doesn't mean a search. anna: thank you very much,

robin. i was reading some great copy on this yesterday suggesting they want to cast currency as a haven in that was sort of intentional. maybe they've had some success with somebody's money at least. for you, how does it fit? is it a credible argument? >> obviously they have moved over the last few years and we have seen the dollar weakness. you expect it to appreciate versus the dollar. on top of that is the fact that the chinese economy is doing better than most people had thought from a growth standpoint.

other people are as well. thats just pointed out they're unlikely to cause any sort of disruptions prior to that. it can be a well thought through thing. >> you at metals in general and that should show you where the environment is booming at the market. we would agree with that. treasuries seem to be the missing link. yesterday was really telling that actually the dollar sold off. that was causing treasuries to rally. anna: thank you very much. if you are on the move come he

can listen to bloomberg radio on your mobile device. guy: double trouble coming up. that is next. this is bloomberg. ♪

, 1:48 a.m..ry early london. let's get a bloomberg business flash with juliette saly. offering facebook hundreds of millions of dollars can include stuff in

there uploads. frustrating legal action. arab have voiced concerns about united technologies acquisition of rockwell collins. boeing has already been squeezing suppliers for discounts. investors sent shares plunging by the most since -- in two years yesterday while credit ratings company said they risk downgrades. one of belgium's biggest investors has seven times the public relations firm. it's partly owned by an advertising giant. it returned its stake without compensation about two weeks go. the company is attempting to whether a reputational crisis after being accused of running a divisive social media campaign in south africa. at your bloomberg business flash. anna: the brexit plan facing a

double threat. negotiatornumber two is said to have told german lawmakers she is tactical officials will be able to begin discussing a trade deal with her in october. the debate would not be settled anytime soon. >> my expectation is that the untilargument will go on european. it will apply here, absolutely. >> we have the primary author of the report. thank you very much for joining

us to give us an update on it. i suppose the question really is around whether we move on to trade negotiations. the longer the move to the next state of the process is determined, the longer they have to wait to hear about all the other issues they want revolution on. >> it's really a regulatory question. services server only to make the decisions about where they go and how many people they move and what they need to build in new locations in the near term. it's really critical by the end of the year. the people ine the report.

>> what we've seen play out is taking a bit of a look at the existing footprint and also where they can get their people to move. were not seeing one emerging bloomberg and a little bit to paris as well. anna: -- fragmentation is part of the argument they always use. if you fragment the market, it pushes up the cost of business. why is it so significant, this clearing question? numbers they have to move to the eurozone? complex question when it comes to the mass behind it. it comes down to numbers of how

many jobs it would move in what you mean. it's not clear how it would fragment. others put numbers much lower. it's hard to see how that will all play out but certainly fragmentation for say. it's somewhat embedded in our numbers. guy: just to come back to the issue, if i am a corporate trying to execute whatever it is i need to get done, how much more is it going to cost me once we are in this more fragmented world? >> it is hard to put a number on that.

it depends a lot by product. if you're dealing with complicated products, then the increase is likely to be more. do you get any sense of which way the political wind is are theyemily: assuming this goes to frank heard? frankfurt? >> there is certainly a big push, and theg location is entirely political matter. how hard the french or german's push him a determine some of that. but the primary focus is trying to avoid the fragmentation issue because that will impact their clients. it's not obvious that things would necessarily move here.

it would be hard to mandate it will happen in the u.k. what can happen elsewhere. the euro piece of that may pull back into europe because it would have to be written that way. there's a question as to where it would move. guy: there's clearly a lack of clarity. how often do you think about the unintended consequences here? you're looking at the map and trying to understand. how big is the range of outcomes you are looking at? >> i think they really are.

if you look at some of the surprisingly low sometimes. it's in the tens and hundreds, not the thousands of people that perhaps were initially expected when we talked about brexit a year ago. there is a question of overtime, will that grow. if there is a hard brexit year viewi think the -- when we look at the industry as a whole, it's easier to model the in game than the transition to it. it depends on how hard the brexit is. anna: thank you for the latest on brexit. guy: an hour and four minutes left.

>> we will let you know forget any numbers from them. this is bloomberg. ♪

guy: fed officials reinstate views on policy. rate hikes may be doing real harm to the u.s. economy. anna: the labour party vows to repeal the law as talks are going to slowly. a category five storm threatens the u.s. and natural gas futures plunging on the back of this. ♪ guy: good morning and welcome.

mbergre watching "bloo daybreak europe." anna: i am anna edwards, it has gone 7:00 a.m. in london. and 8:00 a.m. in germany. estimate was for a 0.2% gain and many economists would say is just one months data but it was an unexpected fall. before key elections. this is a decline and it is a typically volatile rating. it compares [inaudible] 0.2%. demand was up 5% by -- from the previous year. guy: that is a combine harvester, isn't it? farmingat is impressive

knowledge. see onthis is what we the futures. down by .41%. theas been risk often asian session. the u.s. session was risk off yesterday and we saw the u.s. markets coming back after labor day. geopolitical threats and hurricanes in the mix. it feels more risk off than maybe it is. let's show you the risk radar. ey is the maindl event. dollar-yen has come down. the aussie dollar and the market was expecting the gdp number out of australia.

the aussie fell. that story is beginning to turn a little bit. s&p many features flat and the yes -- the u.s. 10 year. to 10 and we have moved below that. anna: keep an eye on all those assets. andy coming out of stocks that was part of the story. let's get an up date with juliette saly. juliette: the fed's rate rises may be doing harm to the u.s. economy according to minneapolis fed president neel kashkari. he said hikes may explain why inflation is low and job growth is slow. he has been an outspoken critic of the fed's drive to tighten monetary policy. >> maybe our rate hikes are actually doing real harm to the economy. it is possible that our rate hikes over the past 18 months jobleading to slower growth, more people in the sidelines, leading the lower

rate -- wage growth and lower inflation and expectations. these premature hikes we have been embarking on a, they are not free and we need to remind ourselves of that. fed will publish its book later today. a top european union official said the divorce talks are going to slowly. according to people present at the meeting, the eu's deputy exit negotiators said that no movement had been made in the key areas under discussion. tensions run high, the white house as president trump is set to speak with chinese president xi jin ping. called sanctions

useless and ineffective and urging the international community to offer security guarantees to north korea. hurricane irma has become the most powerful storm to form in the open atlantic ocean with the prospect of property losses in the u.s. that could surpass hurricane katrina. forecasters are struggling to predict weather the storm will hit florida. insurance stocks the biggest decliner on the s&p 500 index. one estimate suggests insured losses in a worst-case scenario could hit $130 billion. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. more stories on the bloomberg at top . issuespolitical affecting markets and as we saw a little bit more strength coming through in the japanese yen. the nikkei closing down by .1 of 1%. the broader topix has closed higher by .1 of 1%. financial stocks leading declines in hong kong, the hang f and you have weakness

in sydney at the close. down .41%. karen stocks still under pressure, the third session in a row they have been down by one third of 1%. having a look at stocks we will be watching, toshiba is rising. we heard from the nikkei news that it did not raised a decision on the chip sale but that was factored in. bestit holdings one of the performers in the region. 225as a surprise add to the and kia motors fell the most in seven years in 2010 after a number of broker downgrades area we have been talking about the fact that it is a strange geopolitical environment. -- yowon is [inaudible] investors retailing

business are turning to more speculative markets like that chinex index. rather than putting their money into hong kong via the stock connect link. up 14% from a low reached mid july at a has moved beyond the .75 index, the fourth time we have seen that happen since 2015. anna: thank you. juliette saly in singapore. the allowanceng for [inaudible] the airline hopes it will reduce the violence carry on bags -- that this will reduce carry-on bags. so interesting news for ryanair. it has driven customers into a way of behavior carrying all their bags on them. worth it? >> we have a load factor of 97%,

182 people trying to get on the aircraft and a lot of them are carrying two big rags and you cannot get them on. policy is fair to customers and will cost us money rather than we do not make money from it and it will drop -- drive more customers to check-in luggage. you will pay 30% less were 30% more bag. guy: how has this affected turnaround times? >> this is in the peak, too many people with two big tags in the get on board but but we have been having to do is take those banks from the cabin of the aircraft and put them into the hold created has impacted turnaround times and when you are ryanair turnaround time is king because that drives the efficiency and drive slow costs which drives low fares. anna: it could fly bigger

aircraft if you experience incredibly high load factors. do you need a bigger aircraft, opting for a bigger airbus or have you considered changing the type of 737? guest: the max air that we have coming in does give us more seats which we -- is good and we look at what is next after 2019 in that order. the aircraft is right for us at the moment. challenges.of the have flagged this for the last 12 months and something has got to give. the past 12 months we have seen that. this is a policy we put in plate when we had a load factor at 82% and the other is in the mid-90's so you cannot accommodate all those bags and we have tried our best and said you need to work with us, too many people have brought to much stuff on board so we are making the change. we think it is fair inflexible

and customers are making a saving. we are dropping the price to stimulate more people to say i will put it in the hold. security at airports, more consumers are wanting to put their bags into the hole because they do not want to drag them through the airport and have the security checks. we think it is a fair policy. it will cost us money rather than we make more money. people are taking priority boarding which is good. and the turnaround times come down. when you are ryanair turnaround time is the most import and thing and the most important thing to our customers. we would have had more customers complaining about why the plane is taking off late because you have to take so many bags from the cabin into the hold. anna: this will cost you 50 million a year. do you say that on reduce cost from delayed turnaround? >> we probably will not save to that extent. we are dropping the price of the checked in luggage in the hope it will stimulate and drive a lot of volume of checked in luggage and we are not in any worst position.

denies strenuously that it has a liquidity problem. when the profit warning came out at the time, you are starting the summer peak . it was unusual for air berlin to announce insolvency in august. about bloodbaths in the european aviation sector. is that finally happening? is starting to happen in certain markets in certain routes. that can result in low fares. toe to toe to go with any competitor. some would say norwegian have overreached in certain markets. we are not too concerned about what they are doing with their business, we keep doing what we are doing and keep growing organically and everything is working well when you're focused on cost and delivering low fares. anna: you have done the big turnaround in how you relate to

passengers and always getting -- in the always getting better campaign. one of my colleagues suggested maybe you need to spend more time getting better relations with regulars and government if you want to part -- be part of the consolidation taking place, maybe air berlin is an example. why did you step away? >> there is nothing to step into in the case of air berlin. it has gone for sale and we will be sold quicker than a three bed semi in london. they say you are employee -unfriendly. >> i do not think so in the case of early there. notany is a market we will act off on. it works backwards in some ways, aviation markets in all of europe. german consumers pay the highest fares and all of the eu and what is happening now with air berlin has been taken over by the

town's a -- lufthansa. that is the german government theing after lufthansa, not consumer. which they should be. we're happy to be quite challenging of the mayor of increaseaying do not airport capacity and we're happy to challenge the german government to say ryanair for years was not successful or allowed to take over another airline. everyone has been sold to lufthansa quicker than a three bed semi in london. guy: the market in london is slowing down. alitalia?ing to get inthe next is the first week october. we have made a nonbinding offer. we're not interested in all the layers of management. in contrast to the air berlin process it has been run at a very open and transparent way.

the next will be the start of october. it is an port and we are involved -- important we are involved in the process. anna: is that going to mean that you do not win this asset because you have that already exposure to the italian market and therefore there are regulatory concerns perhaps. >> it will not be one alitalia asset sold to one airline. we have -- we will be interested in certain routes they are flying. anna: are you interested in their long-haul stuff? >> we would be interested in cooperating with whoever takes over. we are doing connected flights at two airports in rome. we're open to working with long-haul airlines in terms of feeding their operations. that is the way we think the european market will evolve. focusing on the long-haul. anna: thank you, kenny jacobs from ryanair.

next, the violent storm, the debt ceiling deadline and the rogue space gone nuclear. sending risk into retreat. we will navigate all of that next. this is bloomberg. ♪

guy: 7:18 a.m. in london. good morning. let's talk about the markets. let's show you what is going on. the european equities will be softer and not much action in the german ten-year but .33, markets are looking stretched on to buy.de and the fed speech seems to be the dominant theme. anna: here is juliette saly.

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amazing. juliette: one of l pottinger's against investors [inaudible] charm communications returned its 27% stake without compensation two weeks ago. it is attempting to whether a reputational crisis after being accused of running a potentially divisive social media campaign and south africa. that is your bloomberg business flash. anna: another powerful storm headed toward america and the debt ceiling approaching and the specter of north korea's nuclear ambitious looming large, many traders are not reeling back the risks. investors may -- moved into wants and safe haven currencies. we had seen that in asia.

good morning. when you look at september it will be a busy month. how long as the dollar -- in the dollar do you want to be during september? >> we will have more dollar weakness to deal with and the reason it is happening as we are dealing with a lot of u.s. dollar liquidity. our main theme we are promoting excess capital which is around 100 billion. times, itout 10 to 15 means we will add more than one trillion of liquidity to the an increase in monetary velocity. that is going to overshadow the debate at what pace the fed is going to reduce its talent sheet in future. we think liquidity is going to

stay ample and that means we will have volatility to stay low despite what is currently happening and in regard to volatility spikes. markets look at equity are still trading near record highs. bond yields declining. that is a typical environment which is indicating there is a lot of liquidity out there and that is weakening the u.s. dollar. guy: good morning. this axcess -- is permanent feature of the global ndscape? funding looked into the and you look into the current account positions of those main either so what you see,

or increasingns surpluses. those regions are offering more savings relative to local investment needs. they are exporting additional capital. that is to be significantly developed in that case of the u.s. where the banking sector apparently is much stronger than in japan or europe. that explains why the dollar is on the weak side. anna: how strong does the euro will mario worried draghi be about that do you think tomorrow? draghi think that mario is likely to push against the euro strength but the question is when you look at one year or two-year swap differentials compare that with the euro-dollar. [inaudible] that means other factors are

driving the euro. that has maybe to do with what you expect from the u.s. or the administration or it may have to do with europe looks at lyrically more unified created looks like europe is going to iner a time of consolidation respect to the banking union, the fiscal union. with one word to currency union is becoming less suboptimal. it is going into an optimal currency union. the is what is leading to move, it is adding to the u.s. dollar weakness. there are other factors that are contribution to the u.s. dollar weakness. let's yeari may say one year differential to lower levels but they have to allow for the impact and the impact that it is going to have on the exchange rate will be fairly limited.

guy: we talk about this as a permanent feature of the global economy but at some point some of this will be drained out. what is the market reaction we start properly draining global -- liquidity, is this the genesis of the next financial crisis? hans: yeah, you have to think about that in the following terms. central bankers are always on a learning curve, they look into a situation where something similar has happened so you go back into the mid-1930's in the u.s., when the u.s. increased its reserve requirements and the economy was going into recession. knows about it and that means that the draining process is going to be handled very carefully. me that experience, it is one of those known unknowns so you deal with that. a situation where the fed is going to still be on the cautious side. it does not mean they are not going to hike rates but it will

be a transparent process. it is thee time velocity of money in the u.s. which is increasing and adding to dollar liquidity. anna: you seem nervous about balance sheet reductions but you think we by emerging markets my just briefly. the environment will stay supportive. look at rates of differentials. you have to think about what is happening to investment spending and investment spending looks good. rates are staying supportive in em. guy: thank you very much indeed. redecker joining us. is "daybreak europe for co. the european open is next. manus is gone for the day.

andreas dombret at 2:00 p.m. london time. this is bloomberg. ♪

manus: you are welcome to bloomberg markets. we bring you the first trade of the day across the mass -- across the asset classes. the fed governor on cautions on hiking again until inflation gets back on track. minneapolis fed president neel kashkari says raising rates may be doing real