♪ anna: florida takes cover. hurricane irma approaches the sunshine state. the diplomat. president trump says military action isn't the only option for north korea while offering to mediate in the qatar standoff. the bank of russia governor tells bloomberg exclusively he is set to discuss easing at next week's meeting. we see room for reduction. we see potential for reduction and will probably debate and .5.e between .25

2 we also speak to the russian finance minister. the factory to the world suffers. china's export flows. -- slows. ♪ anna: a very warm welcome. this is thanos vamvakidis --this is "bloomberg daybreak: europe." i want to talk about what is happening in the gulf of mexico, but first we get to breaking news. a red headline across the bloomberg tells us that a magnitude eight earthquake has been reported in mexico. kilometersake was 87 south, southwest of tres picos. magnitude eight on the richter

scale. let's get to the hurricane activity in the gulf of mexico. we need to be aware of the giant hurricane irma as it continues through the caribbean. it has proven deadly and destructive. enemyadly and destructive -- can it be? prices,, orange juice all of these being affected. this is a projection. see where and when it is expected to make landfall. this is weighing on the dollar. we put up the dollar index on the bottom of the screen. it is down .6% in today's session as we try to get a grasp of the scale of the threat to florida. let's put up the risk radar and shows the asset classes. -- and show the asset classes. further progress for the euro. up shy of half a percent.

mario draghi watching the strength of the currency. over 1.20 in yesterday's session. markets, the msci asia-pacific .5 8%. -- .5%. we have hurricane irma and the gulf of mexico and donald trump koreag about war in north not being inevitable, but concerned we could see a test on saturday, founding in north korea. u.s. 10-year yields outflows that seem to be approaching 2%. keep an eye on yen and gold. we are seeing some movement into the some of those -- into some of those payments. -- into some of those havens.

let's get the bloomberg first word news. here is juliette saly. juliette: hurricane irma continues on a collision course with miami after battering puerto rico and devastating a chain of caribbean islands. the national hurricane center is forecasting a direct hit on florida on sunday, a prospect which has a broiled stocks commodities markets. category five storm destroyed almost all of the homes on the west indies island , inflicting massive damage in other centers and killing at least eight people. says it is not inevitable that the u.s. will go to war with north korea, but that military room -- military action remains an option. say a missile launch may come on saturday. military action would be an option is it inevitable? nothing is inevitable.

it would be great if something else can be worked out. we would have to look at all of the details, all of the facts, but we have had presidents who have been talking, talking, anking, and the day after agreement is reached, new work begins in north korea. juliette: the white house is considering at least six candidates to be the next head of the federal reserve, that is according to three people familiar with the matter. the search goes against the narrative that the choice is a two horse race between two candidates. the list includes executives with making experience -- with the banking experience. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top . it is a little mixed in asia. you had some of these coming through in japan on yen strength and korea head of potential

movement from pyongyang on the weekend. have a look at hong kong stocks leading the region, up .6%. it is helping support the regional benchmark index. seene seeing-we haven't for a couple weeks. -- weare seeing stocks are seeing-we haven't seen for a couple of weeks. wewe are seeing highs haven't seen for a couple of weeks. a health care provider in japan is up almost any 5%. goldman sachs started covering this stock and has it as a buy as of today. sold 30,000pany has tons of product to china. exports of just 5.5% for china.

imports looking pretty strong. we are still seeing strong demand coming through from the u.s. and europe. there is still an absence of u.s. tariffs. that is supporting china's overseas sales. economists are telling us the yuan strength could take some of the competitiveness of the china trade story. that we have been watching story. russian central banks governor says she will discuss the reduction of the key interest rate with her colleagues at the meeting next week. of 25 or 50s a cut basis points, it stresses that are still inflationary risks for the economy that the bank has to consider. she spoke exclusively to bloomberg. i never give your past, estimates.

it will be up to the board of directions. if you look at our track record in the past year, let's take different decisions. there have been cases when we have produced by 25 basis points, some 50, and sometimes we have to pause to take more time to give additional consideration. it will all be subject to analysis. we will look at the situation in the economy, inflation figures, inflation expectation, and all of that will determine our decision. >> does that mean that we can rule out -- you talk about taking into account the factors and you are going to listen to your board and discuss the options, but given where we are with inflation, can we rolled up the fact that you will leave interest rates on hold, and from what you said, can we rollout that we are going to see a 75 basis point cut?

once again, we see room for reduction. we are probably going to be .25,ing somewhere between .5. >> you talk about this new phase. i am curious how you perceive the inflation target. how symmetrical is the target? it you happy to be below then you are to be above it? and how muchetry yourance the you have -- do have for being away from that target? >> that is an important question you're asking. the question has been actively debated. that 4%s made it clear is our target, but that does not

mean that inflation will stay at 4% any given day, week, month. there will be fluctuations. it will go up and down, and we are prepared for that. it will be going up and down around this 4%. what is important is to understand the nature of those fluctuations and to come up with correct measures to respond to those. we have to see whether the trend will persist or not. when we first started inflation

-- experience of oliver countries. we decided not to do that. we thought that if we do that while inflation expectations are not --, people would expect inflation to stay at the higher end of the quarter. -- of the corridor. we need to act on case-by-case basis and do analysis constantly, because the economy is a living organism. we need to detect all the changes that are happening. anna: the central bank governor of russia talking to guy johnson in moscow. let's pause the conversation for a moment to bring you up to speed with breaking news. we haven't update with akzonobel -- we have an update with

akzonobel, reporting they are cutting that 2017 growth and saying the cfo is to leave on health grounds. he is to take a leave of absence and that cfo will return in a leadership role. an update from them. this is a company that has been under pressure in terms of management from activist investors. to some extent, that has been ironed out. legal action has been pause. interesting to see an update on the market. also getting further details on the earthquake in mexico. a recap, a magnitude eight earthquake reported near tres picos in mexico by u.s. authorities. -- nos of damage so far reports of damage so far.

this is still early. mexico city is experiencing power outages. let's return to our central banking conversation. joins us.vakidis the russian central bank is talking about what they are doing on interest rates. they are moving the entirely different direction of the ecb. were you surprised at what mario draghi said or the market reaction? thanos: it was broadly expected. there were no new policy decisions yesterday, but the market expects this will happen in october. mario draghi was relatively bandits -- balanced with his economic outlook should -- with his economic outlook.

on policies, i would say a dovish tone. he emphasized the ecb cares a lot about the inflation target and they will use the flexibility within the existing policy framework to meet the target in the medium-term. anna: you have called a dovish and i have read that elsewhere. we saw some spread tightening. we didn't see the euro lifting much. i have this chart. the ecb getting a little worried about the euros rapid advance. 1.20. only at thanos: when you look at the risk market in a different way, their rate market to the effect as dovish. -- the message as dovish. risks from the inflation outlook. he did not push hard enough. one can argue it was reasonable

from investors to expect that he will intervene in the fx market. however, given he didn't push hard enough, in a way, he treated depreciation of the euro as a risk rather than a current danger for inflation outlook. this allows further appreciation of the euro. i don't think it can go up by too much, because we don't know that in october that important policy decisions are coming. anna: what we expect on october 26? thanos: we believe mario draghi will stretch qe as much as he can. instead of announcing tapering, from 60 billion to 40 billion for the first half of the year, and then will leave options for the second half of the year open. the market no set there are constraints within the program. the scarcity program is a

constraintt. -- a constraint. they will push the problem of the constraints for next year. this'll be on the dovish side. anna: we are carrying a story that says the ecb is said to be studying qe options that don't meet a tweak to the rules. all of the bond buying options that have been presented apparently involved, nations -- combinations that stick to the existing limits. no change in the 33% issuers. 33 percent limit on issuers. it doesn't answer the question about where they go to do this bond buying. way, the current framework will work only in the best case scenario.

there isn't much they can do. if the central bank can't reduce , the central bank doesn't have a lot of policy options. it is important to persuade markets that -- policy tools to address scenarios. anna: thank you very much for your thoughts. thanos vamvakidis stays with us. here is your day ahead. speaks tonier reporters. look out for news on that meeting from brussels tomorrow. we get u.k. industrial production data for the month of july. economists are predicting a slowdown. we get employment data from canada. dollar continued

its seven-day slide amid is quite intentions with north korea. president donald trump says military action isn't inevitable. we will get analysis of everything. this is bloomberg. ♪ ♪

anna: welcome back. the msci asia-pacific is up .4%. we see quite a lot of to virgins the strength in the yen hurting japanese stocks. -- we see quite a lot of in thence, the strength yen hurting japanese stocks. doubts about further federal reserve tightening amid ongoing tensions with north korea. traders are bracing for hurricane irma, which is

threatening south florida. thanos vamvakidis is still with us. what is it that is driving the weakness in the dollar? the dollar index, down .6%. a sizable move in just one day. we are watching yields from the u.s. tie having your go lower. a melting pot of issues. 10-year goings. lower. a melting pot of issues. thanos: the headline of north korea can have a negative for dollar-yen. of marketsk correction in the fx market, which is supporting yen against the u.s. dollar. the recent extreme weather phenomenon in the united states suggests that, in the short term, we will see some weakness in the data, which changes the , thet pricing for the fed way the market see that.

anna: yesterday we haddudley saying the fed -- we had dudley saying the fed should continue on the rate hike path. they are not entirely convinced by their own models. what is driving their conviction of the interest rates? he's suggested there is something more than he picture. -- than the inflation picture. thanos: this year, despite the , inflation has been falling in the united states. at the same time, financial and monetary conditions are loosening despite the fact that the fed has been hiking. the market believes that the fed will focus on more inflation and stay on hold. we disagree. we believe what the fed has been doing this year is to focus on

financial conditions and low inflation for them is an opportunity to normalize monetary policies gradually. is consistent -- the fed is -- we believe they will continue normalizing monetary policies. thing tothat the right do, given the mandate is supposed to be around inflation and growth? i think the will take asset prices into account as well. -- i think they will take asset prices into account as well. many books and articles have been written on that subject. speaking about the fed, we have speculation about who is going to take over after janet yellen. the market cares about who runs the fed. do you see anything that will influence fed policy? we have candidates that have

been talked about now, six in the running. does it matter if one of these were to get the nod over another? thanos: it matters a lot. could bringe names changes. some are on the hawker side, some on the dovish side. definitely, this is a big unknown, and it is about to happen. by the end of the year, we will know. another area of uncertainty revolves around a natural disasters at the moment with hurricane irma making its way towards florida. whatll wait to see destruction that leaves. i pulled up this chart. this is harking back to hurricane harvey.

this is in common with other hurricanes. we often see this. get this hurricane season, do we sometimes see long-lasting impact on the economy? thanos: the paradox is that natural disasters can have an impact on the economy. you see some weakness in the thet term in the data, but construction process starts, which is positive for gdp, because the gdp does not take .nto account fully the disaster anna: no respect to asset destruction in gdp calculations. thanos vamvakidis, stays with us. russia's finance minister explains the steps they are prepared to take to keep the ruble stable. ♪ ♪

anna: welcome back. this is "bloomberg daybreak: europe." we are seeing quite a substantial move in the u.s. dollar. the situation on the korean peninsula keeping geopolitics to the forefront. also watching the hurricane in the gulf of mexico, or hurricanes in the gulf of mexico. here is nejra cehic. nejra: quite a lot of risks out there. quiteci pacific index resilient today with gains across the board. a little bit of weakness in japan and south korea. you are seeing how asia's

currencies have been on its head. this is a two decade chart showing how j.p. morgan's asia dollar index has quite a strong correlation with the msci asia-pacific index. we have had in asians currency, perhaps signals as a good altar for the region. the dollar index is still 7% shy from a 2014 peak. i find that the momentum still has some room to run and we could see further resilience in the msci asia-pacific index. index is atg dollar a january 2015 low. it has had the longest losing streak since 111. what dollar-yen is showing, a pattern of lower highs. perhaps that means lower downside. you have to take into account

what the treasury 10-year yield is doing as well. we are already at the lowest since november 10. some key fibonacci levels being passed. finally looking at the yuan. i have been watching this all week. the strongest level since may 2016. thanis despite a lower expected -- from the pboc. anna: let's get you an update on the earthquake and mexico. we now see a two nominee morning issued. soon army ways of omar -- tsuna mi waves may hit some coast of mexico. to one meter possible for a quarter and -- of ecuador and guatemala. we saw gains in the mexican

being unwound a little bit when we got news of this magnitude eight earthquake just off the mexico. let's talk about china. the export growth slowed from a year earlier, coming in below estimates. imports rose. for more, we are joined by a bloomberg reporter. what do these numbers tell us about the export engine that drives china? softness. certainly a it is an indicator that the export recovery we have seen maybe topping out and perhaps will slow down as we head into the end of the year. on the other hand, we are comparing them to a very high base.

the global growth story remains intact. still good demand in europe and the u.s. when we look at the import side, we are seeing demand on chinese imports. hintthem together, it is a it will go further. we are not talking any real disaster for the economy. the this tell us anything about the strength of the you want? -- of the yuan? also, what it tells us about the pboc tolerance for other currencies. we have had an astonishing month from -- for the yuan on so many levels. despite on what is happening just over the border in north korea, investors have been piling in. it might start to hurt in the export story. perhaps a stronger currency is hurting a little bit at the .argins in terms of the exports

at the same time, policymakers are probably ok with this level right now after we get past the congress. -- right now. after they get past the congress, that may change. the currency's performance has been quite remarkable that from our google. it is a perception of being a haven of sorts. anna: thank you very much. let's speak to thanos vamvakidis and get his thoughts. at bankad of strategy of america merrill lynch. what you make of the recent ascent of the chinese currency, the strength of the you want? -- the strength of the yuan? thanos: there are number of factors.

they can afford to let it appreciate. been -- has have been better than expected. authority once wants -- anyink china once to avoid pressures on the currency because of geopolitical risks. i think everything have contributed. anna: the role of the pboc is interesting. controlp quite close over how much they allow the currency to move, yet they seem to be quite tolerant of this big move. people are suggesting this is a change from the pboc. thanos: they have shifted into a basket target for the currency,

which allows more flexibility with respect to the u.s. dollar. they have been managing their better in ae much couple of years ago. they are doing a good job. the currency itself is not strong enough to raise any consensus -- concerns about the economy. anna: this is a stable trade situation. the next chart you will see will be around that trade picture. export growth slowing and imports remained robust. the underlying picture for china, the data, the export engine. anything to worry about? thanos: they can afford a slightly stronger currency. the key consent here -- concern here is trade policies with the united states. a slightly stronger currency with respect to the u.s. dollar is helping concerns.

there is a concern that because of korea, the u.s. could use the policy to put pressure on china. a stronger currency could actually help the concern. i guess the suggesting that was the big conclusion from the fallout between china and the united states over north korea. the trading relationship is what investors should focus on. do you think the chinese want to have a haven currency? the japanese currency is considered a haven, and that is not always welcomed by japanese exporters. the currencyk of as a haven, is that something the chinese authorities would want? thanos: not necessarily. like they, they would currency to be one of the major global currencies. they want to do it gradually. there is an

imbalance their economy. this requires a step-by-step approach. importance ofe the chinese economy, global economy, has been increasing. it is inevitable, the demand for the currency will increase. they don't want this to happen very quickly, which could have negative suggestions for the economy. we were talking about currencies that benefit from haven flows. the yen has been one of those. you suggested that want last if we get to a certain point in tensions on the korean peninsula. when does the market start to change it to be on the yen? view on the yen? thanos: the impact on the yen

can be nonlinear. equities continue to be at highs. volatility is very low. markets had not -- the war. if we see a sharp market correction because of increased risk in the region, this would be negative for the yen with respect to other save having currencies. anna: thank you very much. thanos vamvakidis stays with us. russia's finance minister doesn't for see any significant changes to the currency's exchange rate. she spoke exclusively to guy johnson.

-- he spoke exclusively to guy johnson. >> we are not planning any significant changes to the ruble rate. i'm sure we will not see any significant changes to the end of the year. , whenond point is that elaborating our budget and our we are oriented to conservative oil prices, $40 per barrel. this price permits us to have some reserves in our budget. >> 62% of the russian banking system is now under state control. would you like to see that number lower? of course we would like to

see more competitive five manx in this area, -- more private banks in this area. when the situation is unstable, public banks are playing the stabilization all. ,hen the situation gets better -- the current situation is too

unstable to consider that, is that what you are saying? >> the price of bancshares are underestimated, underrated. -- the price of bank shares are underestimated, underrated. >> have you thought about the possibility that the united states may impose sanctions on russian government debt and the ability of investors to hold that debt? are you thinking about that in any way? that the sanctions, the report will be presented in congress by the end of this year.

have ase, this will certain negative impact, because we know -- is 30%. if this happens, we will be able to replace these investors with , becausenvestors demand is three times higher than supply on that market. impact have it negative -- it will have a negative impact, but -- >> guy johnson joins us from from moscow. anna: how are they festering in the oil price -- how are they factoring in the oil price? >> the minister was talking about how this would be a benefit to everybody.

if it were to expire, there would be an expectation there would be a sharp correction in prices. that was the way he put it to me yesterday. the location is if this continues it benefits the russians because it provides stability. there is a question roll around about whether it does provide economic benefit or political benefit. the russians would like to see it continuing. there are watching the ruble carefully. seems to be looking for stability. anna: you also caught up with the russian central bank governor. she talked about an important discussion coming up on september 15. what did she have to say? guy: september 15 is a big day for russia, not only do we have a central bank rate decision, which is being watched closely, but we have smp announcing its rating on russia. the central bank decision comes

first, then we get the rating decision. let's talk about the rating decision. nature, butous by she told us clearly it is likely that the board will be discussing at 25 to 50 basis point cut at the meeting. inflation has been below target of 4% for two conservative periods -- consecutive periods. she is cautious, because that inflation data is incredibly noisy, volatile. it is close to target, so she is happy with that, but she wants to stabilize that target. then you come to the rating decision. it is a 50-50 call whether or not russia gets upgraded. with sanctions a factor, it will be interesting to see what the rating agency has to say. back to you. anna: it is going to be a busy september on many fronts.

thank you. guy johnson joining us live from moscow. let's bring you an update on the mexican earthquake. we have seen the peso gaining a little bit in the earlier part of today's trading session, but that has turned around. it didn't seem to move all that much on the initial announcement of the earthquake. it was the sunol me morning -- it was the tsunami warning that moved things. the eight magnitude earthquake that we announced earlier, 96 kilometers near the coast of mexico, no reports of damage have been made so far. just some reports of broken glass. it is the tsunami warning and the possible waves that have moved things in the markets. coming up on the program, as a , white the economy

has been downgraded. this is bloomberg. ♪ ♪

anna: welcome back. "bloomberg daybreak: europe." futures point onwards. the msci asia session has been positive, but very emergent. -- but very type urgent. ent.ut very diverg north korea in the mix, also concerns around what the hurricane is going to do to florida. let's get a bloomberg business flash. here is juliette saly. juliette: the largest pension fund and the u.s. is talking to blackrock about outsourcing its private equity business.

system is to be in discussions with blackrock about managing some or all of it money in private equity investment. three senior executives at equifax sold shares in the days after the company was struck by a massive cyber attack. 140 3 million american customers are thought to have been affected by the security breach, which was discovered by equity facts -- by equifax at the end of july, but just reported yesterday. confidence, a chinese joining --maker is line the ceo spoke to bloomberg. mobile phones have seen very

fast growth. i am happy to see that the first half of this year, mobile phone shipments to china internationally increased with the average price. juliette: that is your bloomberg business flash. anna: thank you very much. a weaker pound is failing to boost u.k. growth, according to the british chamber of commerce. the business group downgraded its medium-term outlook for the economy in a report released today. a weaker than expected contribution from trade and reduced consumer spending. to thanosback vamvakidis. when you look at what the weakness in the pound has done to the u.k. economy, many voices in support of brexit have suggested that part of the boost to the u.k. economy would come from a weaker pound. what have you seen in the trade

picture? has beenanufacturing -- from the weaker pound, -- has been affected from the weaker pound. currency does not have much of that impact. -- of an impact. year, it has started weakening. the reason is the uncertainty related to brexit and the fact that more than a year after the referendum we don't really know much about what will happen has started affecting the economy and any potential benefits from the weaker currency. the currency is weak because of this uncertainty, which dominates her bidding. anna: i have a chart that shows the pound against the euro. when do we get to parity on this? from someen calls

banks that we are going to get to parity. what are your thoughts? it is somewhere in the middle. 30 might be pushing it too much. could happen if brexit negotiations collapse, but the euro is too strong at this stage. anna: what is the positioning like? thanos: it is flat. positioning is flat.

-- if negotiations go nowhere in the next few months. anna: is it negotiations going nowhere the base case for the markets? thanos: the market has priced a positive financial income. we believe we are going to get the transition, because everybody will be worse off without a. -- without it. now, they will realize they need a transition in order to start this discussion. thanos vamvakidis, great to speak to you this money. the brexit discussion continues

on bloomberg radio later this morning. that is at 9.15 u.k. time. we will update you on every thing happening in the markets. this is bloomberg. ♪

cover.florida takes hurricane irma approaches the sunshine state. mexico is shaken by a magnitude eight earthquake, triggering a tsunami warning. says militaryp action isn't the only option for north korea, while offering to mediate in the qatar standoff. considering a cut, we are told she is set to discuss easing at me -- week's meeting. see room for reduction. we do see potential for beuction and will probably debating for somewhere between

0.25 and 0.5. anna: we also speak to the russian finance minister. and the factory of the world stutters. welcome to "bloomberg a break: -- it has justin gone 7:00 in london. the asian equities session is fairly positive, up by .5%. in mexico, around an hour ago, we brought you news of a magnitude eight earthquake, the subsequent tsunami warning. we saw the mexican peso give up some gains on initial news. but that intensified as we saw

missing on the warning. we have heard tsunami waves have been observed after the warning earlier on today, that the quake near tres picos had triggered synonymy waves -- synonymy --tsunami waves. we had a 5.7, a 5.3 and various aftershocks being flagged across the bloomberg. we also focus on hurricane irma. with that in mind, fury -- european equity futures suggested wieder -- weaker at the start of trading. whether it is the geopolitics weighing on the dollar and ftse weighing on u.s. futures or attention to national disasters in the gulf of mexico and beyond, that is taking the edge off of the trader appetite for risk. euro stoxx 50 seen down by .2%, ftse 100 down by a similar percent.

the risk radar for a broad look at where we are as we look at this historically powerful hurricane irma. deadly and destruct if in the caribbean. markets, insurers and stock commodities watching this closely. the dollar is weaker, .uro-dollar at 120.84 let's look at the u.s. futures, they are weaker, down by .2%. the asian equities session was a little stronger, but mixed. mind, keepingin in mind what mario draghi had to say. it was fairly light touch herbalism.-- we went up about 120. the bond markets, a mixed picture for global equities, asian equity markets making some advances. u.s. treasury yields approaching 2.0213.

it went below 2%, it would be substantial in the yield story, but we keep an eye on that. let's get a first word news up with juliette saly. waves oversunami three meters high could hit the coast of mexico. this alert over the last half hour. a massive magnitude eight earthquake struck off the southern coast of mexico, causing buildings to sway violently and people to flee in panic as far away as the capital city. a tsunami up to one meter could hit the coast of new zealand. hurricane irma continues on a collision coat -- course with miami after devastating the caribbean islands. hurricane center is forecasting a direct hit on florida sunday, mostspect of having the expensive storm in u.s. history. storm destroyed almost all of

the homes on the island of our killing atbarbuda, least eight people. president trump is -- says it is not inevitable that the u.s. goes to war with north korea that military action remains an option. a missilea says launch may come on saturday, the anniversary of north korea's founding. the white house is considering at least six candidates to be the next head of the federal reserve according to three people familiar. the breadth of the church -- search goes against -- it is a horse race between gary cohn and janet yellen, whose term expires in february. the list includes economists and other business people. global news 24 hours a day, powered by more than 2600 journalists and analysts in more .han 120 countries you can find more stories on the bloomberg at top .

asia, stillin lingering concerns we could see action from pyongyang over the weekend. the yen stronger, the nikkei closing down .7 percent. elsewhere, gains coming through from hong kong, taiwan, other markets in the region helping the index go back to what levels we haven't seen since december 2007. stocks in detail, i mentioned korean coming under pressure. automakers in korea that are under the most pressure. at a four-month low. kong at ar in hong record high as we see strength in these developers on the stronger hong kong dollar. n field in japan has been added goldman sachs list of recommendations from today. buy,an putting it at a sending shares up 25% on the close. we did see china's export engine slowed somewhat in august, exports up just 5.5 percent. you also have you on strength --

yuan, if we continue to see strength in the currency, that could take edge off competitive of the china trade. imports looking strong for august. anna: thank you, juliette saly in singapore. russia's central bank governor says she will discuss a reduction of the interest rate with her colleagues at a meeting next week. or 50 basis points being on the table. spoke exclusively at the financial form in moscow. >> we never give forecasts. we never give estimates of what we would do. it will be up to the yours that will make a decision if you look at our track the during the past

-- i 25 basis points. we have to take more time to give consideration to the market. it will all be subject to analysis. we will look at the institution in the economy, inflation figures, inflation expectation and all of that will determine our decision. guy: does that mean we can rule out -- you talk about taking into account all of the factors and you are going to listen to ard and discuss options, but given where we are with inflation, can we rule out rates on hold? rule out a 75 point basis cut? again, you see potential for reduction, and you are probably going to be debating for somewhere between

0.25, 0.5. guy: he talk about this new phase, and i am curious to how seek inflation targets. how symmetrical is the target? are you happy to be below it then to the above it? how much symmetry is there? how much tolerance do you have for being away from it, away from that kind of target? that is an important question you are asking, and a question we are actively debating in this country. thatways made very clear 4% is our target. that does not mean inflation will stay at 4% on any given day, week or month. there will be fluctuations. it will go up and down and we are prepared for that.

it will be going up and down around this 4% and we think 4.4 is -- for us. what is important is to understand the reach, and to come up with correct measure to respond with those. we need to understand which fact is led to this and to see whether they are sustainable. it is very likely to fade out, any response on behalf of the central bank. we first started inflation target -- studied inflation target, the experience of four other countries and you see some of them decided to determine a orridor of inflation, plus

minus one, 1.5%, but we decided not to do that. if we do that, while inflation expectations are not anchored in this country, that would mean people would expect inflation to stay at the higher end of the corridor, and we did not want that to happen. so we need to act on case-by-case basis, we need to do our analysis constantly because the economy is a living organism and we need to keep track of all the changes that are happening. anna: the central bank governor of russia speaking to guy johnson in moscow. joining us now in london, daniel morris, strategist at bmp parallel. in many parts of developed markets, we are talking about tighter policy, whether the ecb yesterday, whether the fed is really still committed to what it said it wants to do. in some parts of the emerging

markets, we are talking about cutting rates. two things are happening that are interesting. one with reduction of concerns about politics, central banks drivers fory markets. that is one change. this is where you do see a significant difference between the path that we have in europe one way or., another, tightening monetary policy. in emerging markets, you have potential for lower rates. from a fixed income point of more thedoes opportunity of em. call with a lot of conviction, does this rely on global growth story over continuation of the global growth story? daniel: it was driven by the expectation of lower rates which we still think is there, but the bigger part of it, the depreciation of the ball -- dollar and we think that is gone along ways. we're probably not so bearish on the dollar. ecb, talking about the

this is a big story of yesterday. we saw currency markets may not picking up on some of the dovish language that mario draghi was using around the currency. we still saw the euro on the rise, choosing not to listen in the currency markets, but a little different in the bond markets. spreadsee some compression as mario draghi was speaking or after he was speaking as if the bond markets wanted to react in a different way to what he was saying. daniel: as always with these press conferences, you can take what you want from it and different participants take different things. it is more probably the point, when a central bank tries to talk currency up or down, it only goes so far. you have to see the policy measures behind it and fundamentally, we are talking about tapering in the eurozone so that shoulds argue for a stronger euro. on the other hand, it was a question of how slowly we are going to go through this process and there will still be support for bund yield.

have justification for both moves, but fundamentally, it is a question of how quickly they will do this. anna: it has been a rapid rise in the euro, but it hasn't reached extended levels, has it? we are talking 120 and we have a strong economy in the eurozone relatively speaking. in 2014, we had a fragile economy and had the euro at 140. her excuse to worry in 2014 about that strength. and mostxactly, strategists over the medium-term expect the euro to strengthen, and that is appropriate. the euro zone is running a current account surplus, what could surprised markets is when you have such a big move over a short period of time. moveurrencies don't always slowly, they tend to move quickly so now we just need to make the adjustment. anna: where does this leave you on whole transatlantic vaden equities? -- debate in equities. we see people getting into european stocks in the early part of this year after the

french election, political currents are gone, get into europe, but then the euro on the rise starts to hurt exporters. this chart shows euro on the rise in the blue, but has economic surprises in europe over the united states. contrasting picture we have going on here. compared expectations at the beginning of the year for outperformance in european equities, that should really happen given you haven't had the political consensus in europe that you thought. forof the more reason equities to outperform, but they haven't. the key reason, is the strength of the euro. that underperformance really started post the second round of the french election when the euro started to strengthen. from here, now that we have had that adjustment in your earnings expectation because of the change in the valley -- value, the fundamentals should argue for a faster rising markets in europe and the u.s.. anna: we will get your thoughts on the united states when we get back.

the failure of stimulus to materialize, one reason for more downward pressure on ten-year yields. daniel morris, senior investment strategist at bmp parallel, thank you very much. up next, hurricane irma leaves a trail of devastation across the caribbean, triggering the biggest evacuation in miami's history as florida takes cover. we will get an update on what is happening in the gulf of mexico and florida. this is bloomberg ♪

♪ anna: welcome back, bloomberg daybreak: europe. it is a: 19 in berlin. dax futures suggested weaker at the start of the trading day. on on theat is going korean peninsula still in focus, but also hurricane irma and now this earthquake off coast of mixco, all he factor in the

for investors. dollar index down by .5% on concerns of those factors. more broadly, stocks futures expected to open lower, down by .2%. u.s. 10 year yields, haven't quite on the decimal places to illustrate what is going on but 2.02 is where we trade at the moment. we have been down as low as 2.028 four. if we went below 2%, it would be the first time since november, under winding -- unwinding the expectation about inflation. futures, we are all like's -- expecting that to be down. futures have come down a little bit over the last hour. hurricane irma is on a collision course with i am he after devastating chain of caribbean islands is threatening to become the most expensive storm in u.s. history with fears it could destroy $1.2 billion worth of crops. for more impact of commodities, dan murtha joins us from

singapore. good to have you on the program. beyond the told the hurricane is expected to take on human lives and suffering, we have seen it be devastating already, what are the most important market impact we're watching for? dan: you already mentioned biggest one, which is crops. biggest grower of oranges, fresh tomatoes, cucumbers, several other crops in the u.s.. on the demand side, florida is one of the most populist -- in america.es hundreds of drivers by gasoline, hundreds use electricity, which pulls on natural gas demand. a long recovery from that is going to sap some energy demand and potentially weaken some of the energy complex, things like natural gas prices and gasoline prices. anna: that is why we watch the reactions in the markets.

fascinating to look at how the economic impact to be different with irma versus harvey. this part of america not as crucial in infrastructure -- energy infrastructure, not as much supply at stake in florida as in texas. dan: that is exactly right. both of these storms are looking like they are going to end up being catastrophic, barclays estimated if irma hits at a category for hiring -- higher, it could be $130 billion of damage. hurricane harvick in right through the heart of america's energy complex in the gulf coast of texas in houston, shut down refineries, shut down oil and gas production offshore. supply sidey a impact where you weren't being able to produce as much gasoline or natural gas. a little bit of crude oil. irma is looking to be completely opposite kind of impact with demand being what is affected. people not being able to drive

because they are stuck in behind destroyed roads or not being able to turn on their lights. looking at this one to be a real demand impact kind of storm. anna: dan, thank you for joining us from singapore with an update on hurricane irma. daniel morris at bnp paribas still with us. as we look at this storm, truly distraught if and deadly as it has proven to be in the caribbean. gdp figures are no respecter of asset destruction. thewe get this rebuild follows, is that the typical response you look for here? there is a lot of demand taken out of the market in the short term as people can't go about their daily lives. daniel: there are two factors in the medium-term. one is, certainly the destruction caused by the hurricanes, but you have the rebuilding and that is going to be important in the context we know we do want to have tax

reform and tax stimulus package in the u.s.. we have had the debt ceiling debate resolved by adding more money to the recovery package, so it is a opportunity for the congress to provide a bit more fiscal stimulus like we thought we would have back in november. anna: it does almost seems these natural disasters, as disastrous as they are, focused minds on getting things done before deadlines. daniel: we talked about that. anna: i've got this chart for you, this is productivity and the boost janet yellen never got, which puts the recent fed governors and talks about the big up tick in productivity they have enjoyed, at least for part of their tenure. janet yellen has not been blessed with that. this is a structurally different u.s. economy, because of technology? daniel: the biggest debate right now is are we able to capture the innovations from technology proceed in our daily lives, uber, bnp -- airbnb.

as opposed to the price of computers getting cheaper. is this believe that productivity is actually higher than the measures are able to show and that hopefully proves the outlook for the u.s. economy, but it is not something we have been able to prove. anna: what do you make of what the fed does next? the debate about who is at the fed next year, but more near-term in december? do we still get the hike because the market doesn't believe the fed really is going to hike? at least that is what a lot of market expect tatian shows priced in. i think it was fed dudley, saying you think this tightening path should be? daniel: it is very much an act debate. debate. what will make the decision even more complicated will be the impact of the hurricanes, which ,ill put -- push up food prices

so the headline inflation rate might increase. it will make it more difficult to understand what is going on with core inflation. an already decision -- difficult decision will be more so. anna: personnel at the fed, how much does this matter for you? trust the process? daniel: both, if you are a central bank watcher, you have all of these candidates in trying to ascertain how they were react, so that will have an impact on treasury yields. that is a reason you have seen yields so low. this uncertainty around the leadership at the fed. at the same time, if you think about how they are going to act once they are in a position, i think it is similar to the supreme court. what you think happens turns out to be different. they do it they think is best for the economy. anna: daniel morris, senior investment strategist at bnp paribas. bloomberg markets: european open is next. i'll be hosting that with matt miller who joins us from new york. we are live on bloomberg radio,

on your mobile device and dab in the london area. whilst doinghat your morning commute, perhaps. this is bloomberg. ♪

♪ anna: welcome to bloomberg markets, the european open, we bring you the first trade of the day. i am anna edwards with matt ller and here is what we are watching. currency conundrum, ecb president mario draghi admits euro, but stops short of intervention as policymakers edged towards cute the exit. hurricane irma early to have it in the caribbean as it heads for florida. investors seek shelter in treasuries. will yields fall below -- below 2%?