go to 30 billion. that, in their opinion would be a decent move. blackrock, they also for me it comes down to matt, the tone of this linkage, just his language or whether he goes or something -- we have done our amber green and red lighting system. eyes on whatour happens. another story where covering at 9:00 a.m. in central europe, it is european banking giant. deciding to move its headquarters from sweden to finland. it will put the nordic region's only important bank within the eurozone. nordea ceo.ow is

thank you for joining matt and i are it is great for you to join us. he decided to do this. titan -- you decided to do this en it up.ight phone.good to be on the i think we need to start one madeaack and understand -- nordea a. footprint andic with the size we have, we have felt the only way to develop the bank forward is to be in a regulatory environment or regime where we have correct ability,

stability and level playing field. and that is what the banking gives us. they are some savings that we have highlighted on resolution fees and alike. there may be a capital impact which we are not speculate yet because i think it is too early but i think the key has been the one i mentioned it would want to be in the environment and .reating nordea we have one way of creating. factor.been the driving manus: that has been the driving factor. everybody is writing their notes that you have broken this newest . they are talking about your capital and the propensity for dividends. i want to push you more on that. we talked about the potential savings of one billion euros.

you must have some bandwidth perception of how much capital you'll need to keep. can you guide the markets? casper: where not guiding on that. there are a number of open issues. of going intod the thinking union and being under the same supervision. will go under the same exercise. we are very clear that we aim to keep our aa rating. we aim to keep our capital and the dividend policy that we have announced and do not speculate at this point. i am happy for others to make those assessments. we are not speculating on that. manus: hopefully you will join me here in london when you have

made those kind of decisions. let's talk about logistics, casper. how difficult is it going to be? need, as you would , a number of approvals from various regulators and bodies. we will have a shareholder approval that is needed, and we aim to have this complete by the end of third quarter 2018 so --t it would be in that new or have our head office in 2018.ki by october 1, this is a less complex project and process than we did last year when we changed the legal structure of the bank. --hink this is a natural mix natural next step that we are

taking with complexity which is far less than we did last year. i am confident that the timetable will hold and we will go through those hoops without any major hiccups. manus: and about 30 years, strength, weaknesses and threats. what is the biggest opportunity for you being based inside the eurozone? does that provide opportunities for expansion with nordea? what is your biggest opportunity by doing this and coming inside the eurozone? casper: the one i mentioned, we have that level playing field predict ability and stability. at the moment, we are focusing on creating one nordea, crating one digital bank. where the first -- we are the first large bank to create a new

system. that is the focus today. manus: casper, can i finish with a question on politics? i have been reading comments from a variety of politicians. leader there,ng you are caught up by your own greed, is his line. is that going to dredge up a conflict with the swedish government? is this going to affect your relationship with the swedish kindnment, if this is the of line they put forward that this is a political move? think there is a number of misunderstandings of the motives on what we are doing. it is clear we will never leave sweden. this has no impact on our customers over our employees.

it has no impact on our responsibility to the swedish society and how we invest in sweden. it is my role to make sure that this is understood and we have a very good relationship with the swedish government. manus: casper, thank you very much. saying that it is too early to speculate on the impact of this decision to move the bank's headquarters. you can catch that interview on your bloomberg. stay with bloomberg television. up next, it is surveillance. let's get for his word news. taylor: stanley fischer has resigned citing personal reasons and will step down in mid-october. the 73 yard was appointed -- the 73-year-old was appointed by president barack obama.

the wall street journal says the president is unlikely to nominate gary cohn as the new secretary. the central banks meeting concludes today with having discussing various scenarios. that is according to people familiar with the matter. in starting a debate on a magician, draghi is following through on a pledge to start talks this autumn. pcbs post announcement -- the ecb's announcement comes this morning. you can follow it live here on bloomberg. bloomberg analysis suggests asset managers are taking a hit it -- the relations they come in january are designed to make markets fair and more transparent, forcing managing -- forcing money managers to trade if only. -- two traded differently.

theresa may's flagship use of exit legislation will be abated for the first time today giving opponents the opportunity to lay out their objections and u.k. parliament. the plan aims to ensure that all eu law is copy and paste it into british legislation -- copy and paste it into british legislation. here in the u.s., hurricane irma has caused devastation on a ofin of islands with wins 185 miles per hour as it passes puerto rico. irma could reach florida coast by sunday with a category five storm potentially the most expensive hurricane in u.s. history. irma may be followed by another storm, hosea, which has developed into a hurricane. global news, 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries. i am taylor riggs, this is bloomberg.

mark: welcome to bloomberg surveillance. president trump has decided with the cuts adding a three-month extension to the u.s. debt limit. the agreement moved markets, the 10 year treasury yield rose rates. for more let's bring in our reporter, kathleen hunter. also joins us. happily.boni why did some side with the democrats. kathleen: i think the resident was rested for a win or something he could spend as a win. spin as a win. thinking may have been this is a more expedient way to get something done on the debt limit in the short-term not have a big showdown this month and white house advisers are

talking about it as a way to give the deck and free up some space and time to think about tax reform which is the president's top priority. mark: he is kicking the can down the road. are we going to see a major fight in december? you could have a bigger fight in three months. kathleen: absolutely. we were talking about the looming pileup of legislative deadlines and things that need to get done by the end of this month. we have just ticked the can down the road. some republicans feel like it is going to come up and have less leverage in december because there's going to be a lot of pressure for congress to wrap things up for the year, to go home. lawmakers like to celebrate their christmases with their families like everybody else. there's concern with republicans that the deal may give them less leverage. mark: five-year and james, just

copy of and james, rates -- --her euro and james, rates bobby yell -- pushing this into the distance and kicking the can down the road. >> yes it is. we would know whenever there is a debt ceiling debate that it goes through the wire. the issues with hurricane harvey that it was very unlikely that we would end up with a big standoff. trump did the sensible thing was -- thing which was to roll out three months. he wants to get tax reform going . congress has a limited amount of time in september. we spent all of that dealing with debt ceiling issues. to my mind it is a sensible compromise.

we have kick the can down the road for the months and mark: -- months. mark: the big priority when it comes to trump is tax. how soon -- how workable is a tax deal in a short to medium-term? -- fabio: some of the conditions have proven to be quite difficult. anyway it is making the fed job tougher in terms of increasing rates because those expectations of higher growth that might've been geared by a reduction in tax as well as a big investment plan is now pushed further out. that reduces the likelihood that we see more height -- more hike next year. mark: paul ryan told reporters -- mcconnell,

ryan in mnuchin wanted a longer-term deal. it is basically a done deal now in terms of the short-term. it raises questions about the the well of goodwill that trouble have among compass men in basically that he spurned them on for longer-term debt limit increase. there is a political component in addition to the treasury secretary really wanted a more longer-term increase to give markets more certainty. i think from a republican lawmakers perspective, there's going to be an election next year and they don't want to have to deal with the debt limit again. the closer that gets to the election, the heart of that becomes. that is a concern as well and the fact that trump is not eating sensitive to the concern.

-- is not being sensitive to the concern. for: kathleen, thank you being with us. taylor riggs is here in new york. decision toea banks relocate has been seized on by politicians that says it is an example of jobs leaving the scandinavian region. nordea estimating the decision, it will save regulatory costs. facebook says it has found $100,000 in at spending connected to fake accounts which were run from russia. stir political controversy ahead of last year's presidential election and was connected to fake accounts. the company says it is sharing its findings with u.s.

investigators. united airlines is expanding an earlier order for the a bus a350 jetliner. market. jet the deal for 45 of the a350 five jet plane's replaces an earlier order for 35 airbus is, bigger and pricier a350. apple will have to wait until at least 2019 to move beyond samsung. that is according to people familiar with the matter. apple has been aiming to adopt technologies because of its vibrant colors but has been hampered by limited availability. korea's samsung is the predominant manufacture and also apples main competitor. that is your bloomberg business flash. mark: the ecb policymakers wrap up their meeting later today after getting a first look at

potential stimulus plans for next year. the central banks governing council is being presented with document outlining multiple scenarios for adjusting its qe program in 2018. the document did not identify preferred scenario and as intended a formal policy proposal. let's go live to frank fort gioe we are joined by john -- al-assad euro. >> probably not much. probably unlikely from what we hear that a decision on the future will be taken already. things could end up to the october meeting or even in december. expect a message from draghi about what shape a was set of approach the ecb will take and most likely it will be reassure markets that any effort from stimulus will not to rush.

mark: what about mario draghi. it is going to be difficult to avoid. how will he address the fact that the euro has been rallying this year? alessandro: it is difficult to say but what is expected from economists is he will address the issue because in his previous public factrance, he is in talking but the euro and it could backfire. in jackson hole, he avoided the euro. he may decide to adjust the issue. mark: alessandro, thank you for joining us. the big announcement from the ecb a little later. getting some foreign exchange reserve data out of china. rising for a seventh consecutive month, the end of august.

3.0915 trillion dollars forex reserves in china. let's get more with james barty --fabioy about bony balboni. we expect we will revise it down for next year in 2019. create a difficult environment in terms of the reductionther of the monetary policy stimulus and i do think draghi will address directly the issue of the euro because he said in the past that we are on target but

he will do it on the side. i think he will play the issue of the balance sheet the fact that he is in during the tapering balance sheet will remain high. it along the issue of reinvestment in terms of enduring these tapering periods. that is what he will try to do, send a message to the markets. probably even at the market no they will not tell us from the start when they are going to zero with some ecb what members already starting to tell. mark: james, it is going to be difficult not to adjust the euro. it is going to come up question after question. james: it is one way to do with this, to revise your forecast. you end up revising down your inflation forecast.

therefore potentially to stretch out our exit process. we moved our technical rate hike to the end of next year to the first quarter of 2019. that is the kind of message which draghi will need to get across. it is a difficult balancing act because he will not be of to say we could cut. that is off the table. the market knows they have to execute qe year. they are going to run out of bonds to buy. it is a balancing act for draghi. euro-dollar -- 119 euro-dollar. this carries on twitter to get toward 125 and 130. mark: do you expect us to go to those levels? fabio: we think pretty much we are where we expect the

euro-dollar to be peter we expect a further appreciation with the euro against other currencies, like the pound. that has a slight lower impact. industry does german fair with the euro at 120? if it goes to 130? james: around 120 is a big issue. if we carry on pushing from here , so 120 is fair value for the euro. the ecb, they are more comfortable with the euro being lower when the economy was weaker. the economy recovering, you can tolerate a slightly higher currency people we don't want to see it doing is overshooting in the starting to put downward pressure and moving you away from your target. mark: let's talk sequencing. one was it announced that the next stage of this qe program --

it could happen as late as december before this round of qe ends it give me sequencing for the next year. fabio: we think the tapering announcement will come in october. december is a little bit too late in terms of market expectation. it does depend on how draghi frames it. he seizes on a clear frame on how to do the tapering. we make it the number as late as december but we think october is more likely. we got a new day in terms of weight inflation. -- in terms of wage inflation. effectively they will not tell us from the beginning when they are going to get to zero. we know they can be -- they cannot be buying forever. if they were to speak to 60 billion per month, they would run out of bonds by the first half of next year. we think two batches of three months and 40 billion, one batch of 20 billion and qe done by the

end of year. and after that we such talk about rate rise. no change as far as the ford guidance. mark: what is the pathway of the eurozone bond market during this timeframe? german yields, 36 basis points, -18 or 19 basis points in july last year. is the pathway now a steady increase upwards? james: it is a gradual increase from here. bunds aree reason why 36 basis points -- we need other central banks to do their work. we need the fed to do more than what the markets expect. somewhere in the region of 60 or 50 basis points. , fabio, istion

inflation moving closer on a core basis toward the ecb target? thornt going to prove a in the ecb's side? they could be normalizing policy with inflation stuck below 2%. fabio: inflation next year will ecb --r than when the except but where the ecb is likely to be disappointed is in their wage growth. a very bulky weight, they see wage growth almost 2.5% by 2019. he think it is very unlikely opinion -- we think it is a very unlikely opinion. the fact that the wages in the eurozone tend to be very persistent and depend on past inflation it were quite likely to get stuck into a low inflation and low-wage trap the can make of these to be quite hard. james barty and fabio

balboni both staying with us pierced a with bloomberg. .- staying with us we are going to be chatting with felix hufield. 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. mark: you are watching "bloomberg surveillance." i am mark barton. here's taylor riggs. taylor: president trump has sided with immigrants on adding a three-month extension to the

that limit -- on the debt limit. plan which paul ryan called unworkable provides funds keep the government running until mid-december. stanley fischer has resigned citing personal reasons and will step down in mid-october. the 73-year-old was appointed by obama and the 2014 to a term that would have ended next june. his departure a gift president trump -- may give president trump focus. the president is unlikely to nominate gary cohn. the european central banks two-day meeting concludes today with puzzlement makers having discussed various scenarios for wanting down asset purchases. in starting the debate on normalization, draghi is following through on a july place to start talks this autumn .

the ecb's policy announcement comes at 12:45 u.k. time with draghi due to speak 40 five minutes later. you can follow it on bloomberg tv. as many asy cut 14,000 jobs in europe and latin america according to a report in a swedish newspaper today. the company which is headquartered in stockholm has about 109 thousand employees worldwide and is struggling to grow in a declining market. global sales of wireless equipment will drop more than 9% this year. theresa may's flagship piece of brexit legislation will be debated for the first time today giving up on it's an opportunity to lay out their objections. and pastedis copy before brexit takes place. here in the u.s., hurricane irma

has caused devastation on a chain of islands in the 185bbean with winds of miles per hour as it passes puerto rico. the latest forecast suggests irma could reach the florida potentially the most expensive hurricane in u.s. history. irma may be followed another which isse a -- jose, developed into a hurricane. -- which has developed into a hurricane. global news, 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries. covered the time the ecb will make its latest announcement as host makers are poised to discuss various scenarios for winding down asset purchases. bankers will be paying attention to plenty of other things. me.x hufield joins thank you for joining us today. the big development in european

banking took place in sweden yesterday with the announcement that nordea is moving its headquarters to helsinki. do you see this is a precedent for banks laying regulators against each other -- playing regulators against each other? felix: well, i wouldn't think so. this is less driven by regulatory arbitrage but by this is model considerations. we don't comment individual banks anyway. yes indeed, consolidation is a fact of life in the european banking market. it happens all the time, practically under small banks. critically in my country -- particularly in my country. since nordea chooses to come

back to the ecb for provision, it cannot be -- isk: you don't think this going to open up the floodgates when it comes to arbitrage? felix: i don't thing so. mark: if i could ask you the case of china conglomerate, hna, which has got a fairly sizable stake in deutsche bank. it looks to be interested in allianz. do you intend to look at any hna because of its investments and its interest in allianz? whether that is materializing in any specific steps in the first place. if they do, we have very clear rules. if they acquire more than 10%

stake, we would consider that to be a significant holding and introduce quite far-reaching scrutiny with respect to andgrity, transparency capital equipment. in that regard, we have very well-established receivers -- establish procedures. let's be clear, the european union and germany is an open economy. we are benefiting from global trade and open borders. we welcome foreign capital and that includes everybody, but we will always perform quite intrusive scrutiny on whether or not a particular investor is legible to take such a stock. mark: what is the moving activity right now? how many bankers have applied

for a german license? felix: in the making as we speak. there's a solid double-digit number of banks, very specifically considering to apply for a license in french for it -- in frankfurt and already have done so. we are engaged as supervisor which we are at where not a marketing agency. we are spelling out the conditions under which any particular bank and do business within germany or the eu in general, and that is a very engaging process. we have had conversations anywhere between 70 or 80 banks but the number of applications will be much smaller. think london could see its appeal dented further is -- if this is more compensated

and makes it more of an expensive place for overseas investment managers to do business? is the brexit issue? what kind of impact might it have a london? felix: the cost of doing business is going to increase. capital is going to increase. there will be a price check. on the other hand, i don't believe that london will not remain a very significant hub for financial services going forward. i think they will remain very significant global hub for financial services, but things will become more competition and more -- more complicated. mark: can we talk germany? how are you addressing those weaknesses that emerged among your smaller banks?

indeed.es we have done that for the third time. on a by annually basis. the impact is very significant. the longer the low interest environment remains, the higher the risk becomes for changing interest rates. highest that is the risk we have identified and what are we doing? we go back to individual banks where we feel that balance sheet is not strong enough to cook with challenges just enough to coat with us challenges -- enough to cope with challenges. mark: one of the interesting

topics of conversation concerning germany is the housing market. from where you're standing, how hot is the german housing market right now? elements ofe overheating with respect to asset prices and a number -- in a number of regional markets. that is very clear. what has not happened yet is we have not seen a spillover into the financial markets concerning e-voting credit standards or anything like that -- concerning eroding credit standards or anything like that. we are observing very closely whether or not it is deflating itself into a financial challenge which has not happened yet. we are quite grateful for the legislature, the deutsche stock who enacted a couple of macro

prudential tools which will enable us to act on a macro level in case we are confronted with a broader crisis with respect to real estate. mark: if i could just finish up with a question on basel standards. the lobby has urged the european commission to hold the implementation of two basel standards linked to market risks because the u.s. treasury has suggested to do the same. do you think this is a good idea? felix: no i don't. i think the europeans should go ahead with the fundamental review of the trading book which you go ahead -- book. we should go ahead with the two components you referred to. having said that though, we don't have a deal yet on the

reform on the completion of the basel free reform. that remains quite tight discussion. we are hopeful we can cut a deal anytime soon. that remains quite a bit of a challenge. mark: thank you for joining us today. felix: fold just joining us today. felix hufield there. will get full analysis next. -- we will get full analysis next. this is bloomberg. ♪

mark: i am mark barton.

blackouts across puerto rico as it continues its distinctive path through the caribbean and toward the mainland united states. ensures are comparing to count the cost. reassurance companies may take more of a hit from hurricane have reduce their exposure to florida in recent years, something irma will be manageable for the industry but that may change if it causes severe damage in florida. we're joined by charles. what sort of insurance losses are we looking at? charles: it depends what happens in the next 48 hours. the city catastrophic hurricane tested this is a catastrophic hurricane. -- this is a catastrophic hurricane. that level forward 24 hours which is quite unusual. there has been one hurricane in

at recent past that a state category five force for more than three days. when forced jobs as he goes of the land and again slightly. if we're looking at a hurricane at aes the florida coast hurricane force five level, the would see inrio short losses of $130 billion. that insurersue will pay the brunt? charles: that is true. it is the rate insurance market that would pick up the largest share of the loss. to try and put this in some sort of historical context, the largest hurricane lost to date is katrina in 2005. if you translate that into a current values, that would be

$80 billion loss. historic major events, hurricane sandy was about $30 billion, hurricane andrew which was the nearest comparable going back to 1992, that is probably $27 billion. the reason why we have a big difference between those inflation adjusted costs and the scenarios the industry is now modeling is we have continued to see the relevance of property in these areas and the demographic shifts. mark: charles, thank you for joining us. , fabio balboni are still with us. can we assess, james the impact irma?vey and arm a -- and james: it is a hard number.

look at the impacts of hurricanes, you tend to get a boost in the quarter afterwards. putting hard figures on the exec scale of that is a difficult. mark: i know you are a european guide but i will throw a fit question your way -- through a fed question your way. possibly a rate hike, also you look at our work function, investors are buying it. do the two hurricanes confused matters for the fed as we approach the final course of the year? theo: the fed may edge on side of caution. distance would be a rebalancing of later on -- their stance would be a rebalancing later on. the fed has been ill to give a

clear trajectory. they might decide to edge on the side of caution if this turns up to be quite negative for the economy. but the fed is most worried about is the latest weakness of inflation as wage growth is not picking up as much. strain? there a risk is there a risk in delaying the next rate hike by the fed? james: i'm not sure there's a risk if they skip a december hike. the market is expected to do nothing over the course of the next 2.5 years. the fed says we need to have a significant tightening. the fed is more likely to be right and why the market currently is. with inflation at 1.47, you can

understand what the market is the way it is. mark: james comer great to see you. i'm next, where investors are looking. -- up next, where investors are looking. this is bloomberg. ♪

mark: you're watching "bloomberg surveillance." let's get the bloomberg business flash. nordea's taylor: nordea's move to finland puts the notice region only important bank inside the eurozone with nordea estimating the decision will save it $1.3 billion and regulatory costs. facebook says it has found $100,000 in ad spending connected to fake bank accounts which were run from russia. about 470connected to fake accounts and pages on the social network.

the copy says it is sharing its findings with u.s. investigators . united airlines is expanding orders for the jetliner giving the european playmaker a win. the deal for 45 of the a350 900 planes replaces an earlier order. that is your bloomberg business flash. mark: taylor, let's get final thoughts from james barty. how are you feeling about the markets? james: they are pretty well underpinned pete we got sick or night global recovery -- underpinned. we've got sick or night global recovery. at this point in time, --

mark: equities, your assets of choice? james park because the -- james: because the assets that are .vailable look at european credit markets even in the u.s. there is more return. pretty feeble against a backdrop where investors are tried to get libel and you cannot do that in bond markets. mark: what is the miss that the ecb is failing to normalize its policies? what are the financial conditions of failing to get this process underway? under theon't think european context, i don't think there is any immediate risk. far frome are very that to happen. there might be concerns on the banking industry. [indiscernible]

the forex, at some point ecb will have to address the question. i would not say we're close to any sort of over eating in the european economy. i am more worried about the structure of the fundamental of the economy, whether the european leaders will be a look to bring forward over the next few months what is needed to ensure the long-term benefit of the euro. mark: do you think that is good that is goingo -- to happen? >> i am always skeptical. -- germany inny order for that the happen will be quite high. it could cause a recession itself within the eurozone so it would be a very high condition. it applies for some of the rules amounted banking unit which would be paramount in the eurozone to get toward a common

insurance, but some of the conditions might be too high. mark: james comer does north james, does it look korea get to a point where investors cannot shrug it off? james: it is always possible. i suspect that we will have a series of tensions with markets will start to look through. mark: good answer. ames, fabio. thank you for joining us. "surveillance" will continue. this is bloomberg. ♪

♪ nejra: will mario draghi and the latestwe have the

decision.nk president trump and congress agreed to a debt limit extension 28 harvey victims. a deadline looms. u.k. prime minister's flagship legislation goes to debate. opponents get their chance. and friend to map or have the morning off. it is great to see you, mike. decided they were going to hide out from hurricane irma and come back when the clouds are over. taylor: hurricane irma taking aim at florida. it could be the most expensive

storm in u.s. history. beentory evacuations have ordered for downtown miami and miami beach. barclays has estimates of a worst-case scenario of 130 billion dollars in insurance losses. 5 mile perane of 100 an8 hour wind has destroyed much of puerto rico. session ng came china objects to the missile defense system saying that it will disrupt the balance of power. in a surprising turn of events president trump sided with democrats over rejections of fellow republicans. he agreed with democrats and adding a three-month extension of the debt limit and hurricane relief bill. thee speaker paul ryan said deal was unworkable.

and the u.k. debate begins on prime minister theresa may's flagship brexit bill to convert european union rules into british law. opponents will lay out objections in parliament, that are unlikely to have enough votes to derail the plan. global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. , this isor riggs bloomberg. mike: thank you. let's get you set up in the markets with a lot going on. but we are looking at is futures in the united states down by about 2/10. we're watching yields try to reprice the changes at the federal reserve. a little stronger. crude oil in the united states is a little stronger, always happens around hurricanes. nine straight days the chinese yuan is up, the longest streak since 2011.

turning their attention to north korea, and looking at the caribbean basin, these are companies traded in the caribbean, you would not be surprised that the index overall is lower. nejra: so glad you had the yuan. have a draghi day. the euro front and center. 1.1960 aheadof -- of the decision. we have perhaps more of a reaction there in the euro depending on what we hear from draghi with the 10 year yield up . european stocks pretty much unchanged. we were seeing gains earlier. up a little bit. then i have thrown in some copper for good measure. it is up five point 5%, weakening for the first time in a while.

up by .5 percent, weakening for the first time in a while. mike: a picture is worth a thousand words. the white line is the december treasury bill. the blue line is the october treasury bill. in december,debt all of a sudden you don't want to be holding the december paper because a default on goes higher. you could see that immediately when the deal was announced. treasury yieldr rise. i have a chart for the ecb. pricing in euro upside, euro-dollar one year risk reversal, saying the market positioning for euro strength, regardless of what mario draghi

actually says later. optiont of one week call on dollar relative to put most expensive in a month. we also have data from the euro zone economy breaking as we just came to a are the euro area , unrevisedwing 0.6% from the estimate growing 2.3% in the second quarter year on year, a little above the estimate. mario draghi finally opened the future path of stimulus. according to those familiar with the path, he prevented officials with various scenarios for winding down asset purchases ahead of the decision. that spring and a chief european economist at ubs. seems to berket positioning for a little bit of ecb and tilt from the mario draghi. is that what we are going to

get? >> i think so. we don't expect any firm decision on tapering today. we think this will be delayed until the 26th of october. the reason is the strength of the euro, the appreciation over the last few weeks. that will force draghi to be somewhat more cautious and not put more into the fire that would drive it higher. nejra: using driving the tapering would be used to push back on euro strength rather than explicitly talking about euro strength? reinhard: it is both. delaying any hawkish decision, delaying monetary policy normalization. why draghi ha refrained last couple of weeks ago we think today he might be more explicit for the further

appreciation of the euro is not welcome. jackson holet would mario draghi's book to the kansas city fed conference. everyone expected him to say something about the euro and he didn't. does he want to get into the business of trying to job loan the currency. do they think it would have enough of an impact to have a difference on monetary policy? reinhard: jackson hole was the extension, already before that at the last ecb meeting, draghi refrained from commenting on the euro. that is a hands-off approach that gave the signal to the market that perhaps the ecb cares less about the euro than they anticipated. it still does matter. for example today the ecb will revise its inflation forecast this year and the next two years downward. we think draghi will reiterate, as always, that the ecb targets inflation not the exchange rate.

to the extent that the exchange rate puts downward pressure on inflation, the ecb will have to react somewhat. that will be saying more than he has said so far, but it would still be somewhat restrained. mike: you mention the inflation forecast, how long do they go today when they issue revised numbers? fromard: for this year, 1.5 to 1.4. next year they might cut it to ..1, and in 2019, down to 1.5 most of the revision will hit next year. it has to do with the exchange rate impact which is quite strong of the first 12 months or so. in the medium-term, inflation has not changed so fundamentally , that should also implied that it might not hold that the ecb from making a tapering decision at the next meeting on the 26th of october. nejra: is the rate market

positioned correctly for how the tapering market will look if and when it does come? reinhard: we really believe the ecb when they say that interest rates will only go up after tapering. from our perspective the first interest rate hikes would only come in 2019, not before. to the extent the shortened rates market priced in earlier rate hikes, we think it is not in position. in terms of longer-term rates we think rates will have to go up. to the extent that they remain very well and very low in the longer end, we think over the next couple of quarters a rise in long-term. nejra: please stay with bloomberg. we will bring you the ecb's interest rate decision when it a 12:45 p.m. london time. followed by mario draghi's news conference 45-minutes later. this is bloomberg.

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taylor: this is "bloomberg surveillance." in germany outputs stagnated after a strong performance in the first half of the year. production was unchanged since june. factory orders signaled a weaker expansion lies ahead. tellingnaire investor proctor and gamble it needs to modernize and go after neil branton digital sales. he is one of the largest shareholders. he has laid out a 93 page plan for png's future. is your bloomberg business flash.

mike: after a devastating attack on a chain of caribbean islands, hurricane irma now battering puerto rico heading towards florida. it could reach the sunshine state by sunday. stilltegory 5 storm is strong, potentially the most expensive in u.s. history. president trump and congressional leaders agreed to debt relief for hurricane spending. is still with us. , hurricane relief is obviously necessary. inthis new bipartisanship washington, or just to get money to people in texas have prepare for what could happen in florida?

stephanie: is this a temporary spirit of bipartisanship over a more long-lasting approach of trump to reach a course the -- reach across the out to get his agenda through? it takes it down to december, which is not what the republican leadership wanted, or steven mnuchin. they wanted an 18 month extension of the debt ceiling to kick it beyond the midterm elections in 2018. instead, they got a mid-december which increases the leverage of democrats ticket compromises on everything from perhaps immigration reform, tax wants to shut one down the government right before the holidays. mike: let me ask you about the hurricane and its track. astounding numbers on the damage. something like 300 billion dollars. how realistic is that? think that the concerned

has to be if it is able to make landfall as a category 5 hurricane comes the last time we saw something similar was hurricane andrew in 1992. that caused absolute devastation. the insurance industry's estimates of what a hurricane of florida, could do in the insurance market uses a scenario around $130 billion in insured loss. sort of historic perspective. hurricane katrina in 2005, if you adjust those numbers were inflation, it gives you a figure of $80 billion. about potentially the biggest insured loss from hurricane event ever. that has to come with a big caveat. it depends on whether the akens and what

happens with the track. last year hurricane matthew looked like it would make landfall in florida after causing devastation in haiti. end a change course and only cost about $4 billion in damage. the track could make a huge difference in the overall level of loss. nejra: where are we seeing the biggest impact? insurers or reinsurers? in florida it is the reinsurers. away from the market because of its high levels of exposure. variouse have seen industry groups take a hit on the s&p 500.

which businesses are most affected? by the hurricane? insurers are bearing the brunt of that. .eal estate developers as well it depends on how strong hurricane is when it hits and whether or not it changes course. anda: stephanie baker charles graham and reinhard clus thank you very much. reinhard cluse stays with us. this is bloomberg. ♪

♪ nejra in am night rich london. mike mckee in new york. chart.got a quick surging among the dollar doldrums. the industrial metals index against the dollar spot index. when it comes to commodities, it is oil you are looking at and how that is feeding into inflation?

reinhard: oil is the most important. a 10% rise in oil will lift euro zone inflation by 25 percentage .oints it is quite important. in fact, oil prices have not recovered so quickly over the last couple of months is one reason why the inflation pressure from the oil side has not risen for the last couple of months. in this regard, the euro plays a role. the rise in the euro over the last couple of months. commodities in oil has had more stable influence on inflation overall. nejra: do you expect that stability to change dan to see another uptick in oil prices that could take pressure off of mario draghi? think oiled ubs we prices will continue to rise. willink oil prices continue to rise and that will help the recovery in inflation. in the short term the pickup in

oil prices was not as pronounced as we had anticipated. nejra: we will be back with reinhard cluse and mike. abouthe has been talking oil prices in porton to global aviation. in london.aviation annahat and word -- edwards is there. aviationare at the festival in london. let's beat to him and we have been talking about innovation. various prices and other factors. how has that come back over the summer? marked improvement.

we have seen a lot of the business we lost in the early part of the year, particularly the american market, come back to us. in the next six to nine months we will probably reduce. it is a lot better than we thought it would be. if you had asked me in april or may i might have told you a different story. anna: instead of the problems that you had to new united states with a laptop ban and the security concerns, what do you think a few months into this? the negotiations you have done and talks you have done. what was driving that? to the cannot speak white house why they thought it was a threat. it was clear and present to them. the results on us were clear and present. it settled down now. people are getting used to the new protocols. with regards to entry to the united states whether it be issa or processes they have to go through at check-in or arrival. they're used to it and may have overcome concerns that they have.

anna: there were some big airlines in the united states lobbying the big government because they believe that your industry and other carriers in the gulf for subsidized. with the change in administration in the u.s. do you think they could have more of a chance of pushing their case against you? that.'ll have to ask them so far, so good. i was going to say that i believe that the administration at the moment is not minded to take action for all of the other things going on in the united states at the moment. we have argued that emirates has no subsidies from the government at all. anna: in terms of the issues you are facing months ago, with the united states, has that had impacts on your future? or are you hoping to get back to where you were? that we can continue our growth into the united

states, increase production on existing points, and clearly there are many good stories about what we have been doing. i cannot see why that would change in the medium to long-term. talking about hurricanes and preparedness for those kinds of events. hurricane irma bearing down on florida. is that something that your business is having to adapt to. do you have anything you need to move out of the way? >> houston, the problems they had, we had to shut down operations in houston. we have canceled our flights to fort lauderdale as we anticipate what is going to happen. we're constantly adjusting, not only to the united states, but two other places in the world for natural disasters or whatever. anna: are you surprised by how much it has gained momentum in able to buy new technology in

aircraft manufacturing? >> i am surprised it has been so slow. in the 1990's there was low-cost long-haul. technology is a great in a blur. the production of new aircraft as well is making the business than itre profitable might have been 10 years ago. i think it is going to happen. watch out the carriers in the united states are worried about us, they need to worry about the norwegians, others with entry in the u.s. at devastatingly low fare levels. have been a disruptive force in aviation for some time. are you at risk of being disrupted by these low-cost carriers? otherook at it as any challenge. we have to adapt in the presence of their growth. i'm sure that there is room for 2.

i could see elements producing a hybrid model that includes some of the long haul, low-cost assets bundling the bits and pieces. anna: you are partnerships with --al fair lines on what were how is that going to change what you are doing. >> with fly dubai, we will have an operation that will have upwards of 300 aircraft and 250 destinations, regionally and internationally. the cross loads will create one of the biggest hub operations the world has ever seen. prior to that we have been working with low-cost operators anyway. quieted to do it slightly heng software that we hoped

wouldn't find, but he found. [laughter] joining us,you for joining us from the aviation best of all, the emirates .resident mike mckee, i hope you have no travel plans that will take you to florida. be back in the next hour with another airline ceo. there is slightly good news on the hurricane and florida. the latest tracks are out and it shows that the hurricane may he taking a little bit of a jog to the east and may not hit miami directly. we are still a long way from landfall. something that we will be keeping a close eye on, .specially on the bloomberg mike: we want to get you the latest on hurricane irma. the most powerful

storms ever recorded is headed for florida. floridae irma could hit by sunday afternoon. mandatory evacuations in downtown miami and miami beach. it has a rattled markets for every thing from orange juice to insurance. wind0 mile per hour has destroyed as much as 90% of the homes on barbuda. hein spoke in russia where repeated that diplomacy is the only solution. in south korea 4 launchers for u.s. mitchell shield has arrived. they more than north korea could launch another missile on saturday, the day they celebrate their founding. challenging president trump's decision to end the dreamers

program, saying it violates equal protection and due process of the constitution. the white house is confident the president's decision was lawful. spacex will launch a secret spy craft mission today if the s.ather a cooperate bericane irma is expected to 900 miles southeast of the kennedy space center in florida at the time of the launch. global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. nejra: thanks. let's turn to how yields. the european high-yield market has flourished. 56 point $9 billion so far. a 56% increase of the same period last year. of large leverage buyouts

means a supply of new money in the markets. let's speak to kevin foley, the finance forrage jpmorgan. he joins us from the high-yield conference in london. question, as it is ecb and mario draghi day, how much of a draghi distortion is in the high-yield market? good morning. thank you for having me. obviously, the ecb will be a focal point. it has been over the last several years as the low yields has forced money off the sideline into the market, secondary or primary. the hunt for yields has been out there. we have 900 investors here, 55 differentissuers, institutions trying to do their work, their credit analysis, making sure they have the opportunity to put the money to

work. $155 billion in leverage loans and bonds in 2017. 75% is refinancing driven. in thect $20 billion next 20 weeks, but it will not satiate the demand. the ecb and central banks have been keeping yields low, forcing money to find a home. he asset class has been a perfect place for it. a lot ofere has been comparison of european high-yield versus u.s. treasuries. do you get any sense from investors they are concerned they are not being compensated enough for the risks a are taking in european high risk markets? the jp morgan high yield index, the universe of euro denominated issuance, it is trading 250 basis points over the index, a substantial premium

. if you put that in context of where it has historically run, it is not much inside that. there is significant premium for the asset class. you have to look across the rating spectrum to decide how much of a premium. for how you'll then leverage loans, while there has been compression, they continue to get rewarded. that keeps yout awake at night about the possibilities? talk to any central banker and they say they're keeping an eye on high-yield but it doesn't seem that bad. how long can this go on? kevin: there is definitely the healthy skepticism. you look at geopolitical concerns, shifting central-bank policy, terrorist concerns, always the unknowns. a lot of people want to compare this to the past credit crisis. you look at this versus 2007, systemverage in the

looking at corporate balance sheets with less leverage. you look from an investor standpoint, they may have been leveraging their portfolio. gonecrisis they may have to swap lines up to 10 times leverage. if they are doing it at all they are going three to four times. 300hat point banks had over billion dollars underwritten on their balance sheets, now it is $50 billion. there is less leverage, it is less healthier. we are seeing businesses perform. it does feel differently. that is why you're seeing money coming into the asset class and playing out in returns. high-yield in europe is up about 5%. the asset class continues to perform. that you other term hear from people talking about central-bank qe policy is on the company's.

the ultra rates are keeping alive companies that could otherwise not earn their keep. do you worry that once the ecb announces it is going to pull when the fed starts its balance sheet wind down, that we will see some names exposed. you may want to be careful about where you put your high-yield money? i would first disagree with the concept of a zombie company. we have seen investors doing the work. that has been one of the most misnomers of this market, that anything can be done for any company. while we have had eye-popping ly low rates, the market has been disciplined. is there a risk as central banks move policies? .es

issuers are taking advantage of long-term capital. it is going to allow them to perform through different cycles . the idea of a zombie company is overplayed. question onal beverage finance issuance. where do you think most of that will come from going forward? demand a or refinancing? and a or refinancing? kevin: it is going the heavily m&a driven. behind that, it is hard to say. the level of m&a activity sustainable from a financing standpoint? right now we don't see it, but there is a lot of discussion. it is a good backdrop for m&a. we think it will pick up, but it is hard to forecast at this point. so much, foryou, joining us on "surveillance."

tomorrow, we hear from the russian central bank governor. this is bloomberg. ♪

♪ taylor: let's get to the bloomberg business flash. has reached its first major deal with the major record label since beginning its online music service two years ago. warner music will provide a catalog that includes music from ed sheeran and the red hot chili peppers. ibm will spend a quarter billion an artificialelop

intelligence lab with the massachusetts institute of technology. artificialt how intelligence can work in specific industries. irish investment fund has agreed to pay $867 million to the victims of a ponzi scheme fraud. that is about 72% of the principal wiped out by the mad off scheme. nejra: the u.k. prime minister's legislation will go to parliament for the first time. the a slim majority in comments, theresa may's task will be keeping dissenters in line. tot 7 rebels could be enough defeat the law. the chief european

economist at ubs. how do you shift through the noise with brexit and the permutations and changes we seem to get at every stage? reinhard: it isn't easy. everything is in flux. we need to see how the negotiations are going. policy papers have been released one by one. everything is moving. eventually, where the rubber hits the road is what it will do to household consumption. are the variables that move the economy and gdp. what does it do to sterling, and what impact does that have on the bank of england monetary policy? nejra: we have seen a softening in consumer sentiment. what does that do to your outlook for the u.k. economy?

reinhard: we are cautious. we had 2.2% growth last year, .his year we expect 1.4% the implications are coming in that a slowdown is on the way. next year we expect less than 1% . more cautious than the consensus, but we think it is coming. nejra: when it comes to the bank when we stood outside talking about the meetings and mark carney's press conference, they predicated the decisions about the decision being smooth, but no one can predict that. reinhard: early in the year we saw the bank of england turned more hawkish. we had up to three members of the mpc that voted for a rate hike. we think that is eventually not sustainable. as the economy slows down, it would mean the significant pickup in inflation would be temporary. that would give the mpc an

opportunity to look through the pickup in inflation or do we think the bank of england will move to a neutral stance and not hike rates anytime soon. theresa may's former chief of staff is writing in "the telegraph" they think they can break the deadlock on the free movement of people lysing that workers can go back-and-forth as long as they are employed. is that a key to keeping the u.k. economy on track? reinhard: there are many processing, that would face significant adjustment problems if the supply of labor were to be cut off quickly. it is an issue that will have to be dealt with and discussed. there will be a lot of pressure from various u.k. businesses in this regard. mike: we are seeing some softening. is there a checkpoint at which

we would see business confidence, in particular, fall off if there is not concrete progress being made? reinhard: i think the pressure will rise over time. we know the first phase of the negotiations would have to be bycluded, hopefully christmas. there was a plan to do this by october. this is about the status of eu uk citizens. and it is about the republic of northern ireland. the degree to which we receive that break on this issue not being achieved, it would on the realogress issues, plus any transition agreement, would be further delayed, so potentially all of this may not be in place by the .9th of march 2019

if businesses see time is running out, it might have more of a negative impact on sentiment in the corporate sector. nejra: a question on wages, which does have a link to what mike was saying about immigration, is the bank of england reading too optimistic? reinhard: we had 4.4% unemployment, that is very good. however to the degree that inflation is going of on the , it of a weaker sterling will cut into household purchasing power, meaning eventually this scope for inflation to rise in a sustainable fashion is limited. nejra: reinhard cluse stays with us. in the meantime look at tv . you can check the charts we have been showing throughout the show, headlines, and you can get in contact with the producers if

you have comments or questions. this is bloomberg. ♪

♪ mike: i am michael mckee in new

york. i want to take you inside the terminal, hurricane . the latest track of hurricane irma. jose tosee hurricane hos the right. it is shifting to the east. go into out it would florida a little above miami on this track. exit somewhere around orlando, .hen head into the carolinas it is hard to tell if this is a better solution or not. for the people of miami, slightly better at the moment. we're keeping an eye on irma's developments. the chief european economist at ubs. a lot has been made on the low and hisbers for macron

new presidency in france. will he be able to make changes that will affect investors, or will the french people be in the streets with more of a status quote that we got under hollande ? reinhard: we think he has a fairly good chance to achieve real progress with the french economy. the government has presented an important set of labor market responses in late august that is being discussed in parliament and likely to be voted on on the 25th of september. making the labor market more important toch is increase the overall flexibility of the french economy. something we have been waiting on for some time. we think this will make a difference. we are impressed with the speed of the new administration. the approval ratings have declined, but mr. macron's party

is not a well-established organization. we think that does not bode so poorly for the future. we think there is good reason to be confident. innce is the only country core europe where we see higher growth rates next year compared with last year. most of the other big economies we see a two-year acceleration de-acceleration. before this fx the french economy? you have revised it higher? reinhard: we have increased the forecast for france. in the past we have done it over the summer. we think that these reforms will not work necessarily overnight. what is at stake is convincing corporate's that there will be a

significant increase in flexibility going forward. some corporates want to see how it is shaping up, but i think there is good reason to assume that the business environment and france will improve going forward, and that will justify higher growth. medium-term we have stressed the outlook for potential growth. the growth potential in france is decent, not least because population dynamics are strong. nejra: i want to ask you about germany. manufacturing momentum slowing a little bit. does the german economy hold up regardless of what happens in the election? reinhard: i think so. the underlying momentum is very strong. ,f you look at the fundamentals it is very strong. i would not be discouraged by one data point. industrial production is

volatile. reading too much into one data point, i wouldn't do. nejra: is it much of a market event, do you think? reinhard: i think it is based on the latest polls. i think it is clear who we will have in germany as the next chancellor. what is more interesting is the shape of the government coalition. will america team up with the social democrats, as before, or will other parties come in? who will be finance minister? ?ill wolfgang schreiber stay will the german soften up in terms of their european initiatives? will they make a big step towards the proposal coming from france regarding a european finance minister? will they establish a european monetary fund? on other soften up

fiscal issues in europe they haven't been accepting so far? mike: as we talk about france macron he is in greece. we have not talked about the problem children of the european union. at this point it looks like next year we will get elections in greece and italy. how much of a risk factors that your outlook and 2018 -- in 2018? on thed: we have an eye italian elections. we think the outlook remains favorable for the eurozone. i think that the idea for greece , restructuring, so to speak, where they would reduce interest rates and linkedin maturities of outstanding debt is likely to happen. greece a lot.p the italian election would be interesting.

it is something we expect for the first or second quarter of next year. something international investors would be focused on. mike: thank you very much. reinhard cluse of ubs. with --p, we will speak 6:00 a.m. in new york. 11:00 a.m. in london. ♪ macron landingf in athens. this is bloomberg. ♪

♪ mike: it is a big, it is bad --

it is every bit as dangerous as advertised as more. 16 million people in the crosshairs as irma leaves a battered caribbean and heads to florida. is it qe taper time or does the ecb stay its hand until october? a stunning deal between president trump and the democrats. upends republicans, politics as a christmas showdown looms. this is "bloomberg surveillance ." world headquarters in new york, i am michael mckee with nejra cehic in london. tom keene and francine lacqua have the day off. nejra: i am going to get the breaking headlines from the central bank -- russia central bank governors saying russia is to discuss a rate cut of 25-50 basis points on september 15. of the russian central bank

governors saying also the anchor of russia may start -- also saying the bank of russia -- this is something we will keep an eye on for more headlines coming out of this interview and you will hear more from this interview that guy johnson has .one in moscow tomorrow first, we've got the first word news. here is taylor riggs. taylor: hurricane irma is taking aim at florida and it could turn out to be the most expensive storm in u.s. history. evacuations have been ordered for downtown miami and miami beach. barclays has estimates of a worst-case scenario of $130 billion of insured losses. the hurricane's 180 mile per hour wind devastated a small chain of caribbean islands and it has lacked out much of puerto rico. korea mays warn north

launch another missile as soon as this weekend. china objects to the midst of -- missile defense system saying it will disrupt the balance of power. a surprising turn of events, president trump sided with democrats over the objections of fellow republicans. the president agreed to add a three-month extension of the debt limit and government spending to a hurricane relief bill. house speaker paul ryan said that deal was unworkable. in the u.k., the day begins on prime minister theresa may's flagship brexit bill. will lay out their objections in parliament, but they are unlikely to have enough votes to derail the government's plan. global news 24 hours a day, powered by more 2700 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. michael: thank you. let's get you up to speed as we get ready for the trading day here in the united states.

they are already trading in europe. atean towards a down market the open. we will see how we end up as stocks are lower and we see bonds rise and yields a little 10-spread the two and has come in a little bit. euro is trending a little stronger. nymex crude oil has gone down, burma is not as an energy story as harvey was. party congress next month. the yen weakens a little bit. the yuan is lower as well. speaking of the caribbean, we are looking at the caribbean basin fund, companies traded on exchanging the caribbean, they are lower today, no supplies. nejra: i've got a little bit of a draghi day board. you are saying the euro up .5% gains 1.1978.

it looks as if traders are positioning for a stronger euro despite anything that mario draghi might say. keep an eye on the bond markets because this is where we might see a little bit more movement, the 10-year german yield up one basis point. copper is down for the first time in a week. let's get to the breaking news from the russian central bank chief. guy johnson spoke with him and he joins us live from moscow. great to see you. how much of a surprise are these comments we have had on discussion of a rate cut given where inflation is? guy: economists at bloomberg that have been polling suggest we could be looking at a 50-basis point cut. is saying isrnor

inflation remains volatile. we have had two months below the central bank target of 4% and that's why i think economists are's adjusting we could see a bigger cut on the 15th when they have a rate selling meeting. the governor was cautious around what is happening with inflation and suggested this number remains noisy. they have a 4% target. thet read too much into noise around the inflation data, but it does look as if we are going to be seeing some sort of cut from the central bank. the expectation in the market probably already for a 25 to 50 basis point cut. it's nice to get confirmation they are thinking on similar lines. michael: they are talking about replenishing their reserves as they bring the rate down? guy: absolutely. this is a process that is ongoing, but they are looking for stability. we are moving into a new phase for the russian central bank and they brought highs from around

17% a year ago down to where we are now incredibly quickly. what they are trying to do is move from a period where they can bring inflation lower aggressively to a period in which they stabilize the inflation rates around the target of around 4% and at that point they start looking at what is going to happen with the fx and gold reserve. it's the stability she is looking for at the russian central bank. guyael: bloomberg's johnson, thank you for joining us from moscow. we look forward to that entire interview. you can watch that exclusively right here, l reimer nabiullina -- all direct -- elvira nabiullina right here on bloomberg. the ecb president has provided officials for various scenarios for winding down asset purchases. let's get more with the head of america's fixed income strategy.

how much of an event risk is there today? there has been talk of draghi trying to soft-pedal what the ecb said about winding down qe and push that into october. do the markets really want to hear something today? good imo -- could he move markets singularly or is it likely to be an october event? >> given the action in markets this morning, i think people are viewing this meeting to a stepping stone toward the october meeting where we think there will be an announcement the tapering of process in 2018 and finishing in 2018 as well. it's kind of setting the stage for that move. really this is a function of the euro, there is some strengthening this morning, but it has been on a tear for the last couple of months and that really caught their attention and i think that will make them more on the cautious side.

has been some fits and starts on the inflation front, but they believe in the outlook and there will be for his move toward the taper in october. michael: we saw the german yield curve steepen, is this based on the idea that we are going to see the short end most affected by what the ecb does or is the long end coming into play because we start buying fewer bonds? george: if they don't -- the longer it takes to taper, the longer they have low rates or negative rates within the eurozone and i think that is what keeps the front end. we think there will be a transition plan set in place. this is not really the meeting for that, but there will be a need to acknowledge october is the time for it back at either be in the statement or mentioned in the press conference. either way, there is kind of this transition phase, it is a critical month if you think about the sequence between fed and ecb although you can never say there's any kind of a court

happening in jackson hole, but there -- they were both there and there is this view they have to go first and they have this balance sheet unwind they have never done before and the ecb goes second. nejra: on the euro you just mentioned, i have a chart showing euro-dollar onewest -- k reversals. really, the market here positioning for euro strength in a way regardless of what we get from mario draghi. after some previous meetings, we have seen a disconnect in terms of reaction in the euro and the rate market. if you look at the rate market, what kind of reaction are you expecting today? any underperformance in the periphery versus bonds? george: the longer they postpone things, we don't really see any sort of major reactions from the overall bond market. we think it is a currency story and i think most of the central bank actions have had a larger

impact lately on currencies versus the bond markets themselves. themselves. we do think itn i need to book a hotel room,

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at the moment we are seeing michel barnier speaking at the european commission, a little double box, you can see them both lives. you have been watching "bloomberg surveillance." with myself and michael mckee in for tom keene and francine lacqua. this is bloomberg. ♪

♪

>> mario draghi decides. the euro hangs in the balance as they announce their latest positive position in the hour. hunting for clues. kicking the can down the road, president trump stuns republicans by striking a short-term deal on the debt limit and funding the government, setting up what could be a major showdown in december. bracing for hurricane irma, it barrels towards florida after battering the caribbean islands with wins over 180 miles our area and welcome to "bloomberg daybreak." i'm david westin. speakingl has been with some of the top leaders in energy. i know you are excited to be there. bex: you know i'm excited to here. yes, we are talking about their individual businesses and growth prospects on oil, but the overarching theme this week's hurricane harvey and potentially hurricane irma