this is away from the ecb.ing mario draghi that this is the most important but he is also looking at this because everything blends into one. this is what we found out. in hong kong, it surged to a seven-month high. the blue line is the offshore and the white line is the overnight. it is like glide board but in hong kong. we will keep an eye on the pboc because they may move. as you mentioned on the ecb and mario draghi and its relationship to what happened in the united states, janet yellen suggesting we are closer to a fed move. larry summers is opining on that in the washington post. read, therning must problem. credibility he says "i wonder what credibility said forward guidance is likely to have even the utter disconnect between fed and market views regarding future rates and track records f the fed being wrong." we are joined by michelle meyer, head of u.s. economics. cheeks got a summit of here -- chiefs here. does the fed have a credibility problem? stanley fischer saying me might get two. the market an

nothing to do with the ecb? for instance, if we had less bank -- let me say, if we had a harder regulator, less banks, we had a clear out, quicker rather than later, would we still be having the same profitability problems? still having the same net interest margin problems? i take what you're saying, you're right, you cannot blame the ecb for everything going on, but can you maybe turn it on its head and say the ecb needs to be tougher with some peripheral banks? get rid of some banks or let them fail so we can rebuild a better banking sector? >> a lot of banks have to remember where they would be if the ecb had not stepped in as a back stop. is it a good or bad thing now versus five years ago. some say german banks are feeling the heat. four years back germany was critical of the spanish banking issue, now it's on the different foot. which brings up are the spain issues different when you look at the savers in core europe versus the outskirts. >> it was different. with the spanish banking system we looked at t

it is hard for the ecb, the ecb cannot control market expectations.ood job, i think. he's keeping the information see thet and we will market prices still pricing in an extension. i think we will see that. no big reason to be concerned about what will happen in december. >> you are looking at hader spreads. let's begin with a titer spent. spain over germany around one full percentage point. spain is trading near wreck loan terms of yield. how tight can it get? >> previously, we thought it could get down to 75 aces points on the 10 year. given some of the longer term concerns about where the isozone is hitting, that probably the tightest level. if the ecb does do what we think theoes do, that is till allocation of the purchases away from germany, did come in a little bit more, but we are really talking about 25 eighths points. jonathan: i want to talk about a different spread versus spain. recently, you have had been a shield straight under italy for a time now. with anticipation of the upcoming referendum in italy, would you like to play a wider sprea

day, mario draghi's big what might the ecb resident announce. lucky number seven for apple, the iphone reviving slower sales, but where has the innovation gone? and china's cushioned by a weaken yen, surging to a seven-month high. >> welcome to countdown. manus: great to have you on the program. nejra: great to be here. let us talk about the big themes. one of them is do not mess with my currency. the chinese of course, this is what we have for you. now are-yuan.in breach of this level. and the pc of the said this is it. back off on the currency. they ratchet up the price of borrowing, up by 3.8%. since the highest february. these moments of breach and dollar-yuan invoke the invective from the pcbo, ratcheting up. that is putting the cap. that is the message from the g-20.the devaluation , or let us say the depreciation of the currency. exports up for the third straight month, imports are searching. yuan, do not mess for my currency. nejra: is that a look at the risk radar. see what we are watching this morning. starting of course with global st

he says the ecb baseline scenario has downside risk. he says the implication of low rates must be carefully monitored. other policy actors must play their part. that is the message he will be taking around europe this week. he hits the berlin on wednesday pressuring the likes of germany to do more from their start best from their side. mr.raghi: i'm grateful to be back speaking to your committee less than a week away from an important anniversary for the european parliament. , direct european elections possible, signed. i'm happy to be speaking to you, the direct representatives of the people of europe. europeans are calling on our institutions to bring tangible benefits to their everyday lives. we need to respond to this appeal with action, within our respective competences. this is why i'm here today. not only to demonstrate, once that thee importance ecb places on being accountable to eu citizens, but also to discuss with you how the ecb is acting to fulfill the mandate that was democratically conferred upon us. today,re, in my remar

what will the ecb do in the markets today? it is ecb day.quity markets are a little bit lower on the open. one woman who will raise the roof on what is going on in paris. >> i am going to start with u.k. gilts, manus. we are pretty much unchanged right now, 67 basis points. that is where we were before the open. over the past couple days, it has been a bit slow to get going. do keep an eye on that. looking at the imap function, look at the sector health of the stoxx 600, we can see a mixed picture, but overall, we see more on the downside. t. stocks are down by .3%, followed by real estate, down by .1%. on the upside, though you can hardly call it an caps on, energy stocks are edging into the green, with telecoms following after that. highlighting that three stocks that had the biggest moves, i wanted to start with dixons carphone. we got these numbers at the top of the last hour. first quarter sales were a beat, but one of the key things they said was that they saw no detectable impact of brexit. as the cfo spoke on a call with reporters, t

the ecb holds fire on further stimulus.nk experimenting with a laissez-faire approach? welcome to "the pulse" live from bloomberg's european headquarters in london.

the ecb lack of transparency doesn't really help. our estimates would suggest at the moment the ecb became safe run the program beyond march 17, but not much further. when you look at portugal, ireland, you have a similar play. >> thank you very much for bringing us that prove. senior european fixed income strategist at j.p. morgan. >>> stay with us. we will be bringing you special coverage on decision time when we will cover everything mario draghi. we will have guest analysts around the decision and also through the press conference. >>> meantime, richmond fed president jeffrey lacker said the case for september rate hike is strong. lacker won't have a vote in this month's decision, but will take part in the discussions. at the same hearing, describing the labor market as near full strength. all right. e-mail the show. address is streetsignseurope@cnbc.com. let us know if you have any questions for the guests. anything you see on the show. you can also find us on twitter or tweet our directly. >> we will be here all the way through

it is hard for the ecb -- the ecb cannot control the market expectations.tty good job at not sending any signals. he is playing close to this -- his chest. they are still pricing in an extension and a cut. i think we will see that. so no big reason to be concerned about what will happen in december. >> they are clearly disappointed the ecb did not extend the bond buying program. yes, it set up committees to address the scarcity of bonds that the ecb can buy. does this tell us that investors are addicted to central-bank stimulus? the euro rising, and stocks falling? robert: certainly. we know that investors love stimulus. it is kind of a candy they cannot get enough of. they also like certainty. i think the term draghi used -- "study options" -- is incredibly wavering. mark is around the corner when the bond buying program stops, and they are saying no way, he will have to do something else. so words matter. i thought his wavering was not the right approach. i think it is clear they will continue some sort of quantitative easing. anytime you say gdp growth i

it is important there is not reliance on ecb action.e: does that mean you are worried about brexit if it drags on for too long, if negotiations don't start straightaway, more ceo's will be uncertain about their future and won't spend their cash? gertrude: i think you should try to address it as open, as quickly as possible. organizations are getting ready to start negotiations. it is important we get the brexit negotiations also done as soon as possible. francine: how much do you worry about the banking industry? there are so many challenges, negative rates, low growth. a lot of the italian sector is under pressure. how much do you worry about that and what is the prescription to fix it? gertrude: the challenge for the banking industry, macroeconomic challenges, but i also see the challenge from the technology. i think banks have a lot to do in the field of changing their business channels to the public, to the customers. this is the challenge for the next years to come. who does it better will succeed in the market. --t we need is [ind

the ecb holds fire on further stimulus. is the central bank experimenting with a laissez-faire approach? welcome to "the pulse" live from bloomberg's european headquarters in london. i'm francine lacqua. we will speak to the evernote ceo and former google executive, christopher o'neill, about tech, productivity, and more. later, our weekly show, "brexit: what's next" ringing you all the news, analysis, and conversations around the vote to leave the eu. today we speak to the japanese ambassador to the u.k. first, let's check on the markets. we have quite a lot going on because a lot of global stocks are looking at what the ecb said yesterday. bonds also deepening in terms of the selloff after signs that central banks in new york and japan are starting to question the benefits of further monetary easing. south korean assets dropping following this nuclear weapons test in north korea. let's get to the bloomberg first word news with nejra cehic. nejra: north korea has confirmed that it conducted its fifth nuclear test on the an

math: the euro rising after the ecb left rates unchanged. bettman explains the plans for expansion and the significance of the hockey world cup. in saudi arabia, the world is awaiting what could be the biggest public offering ever at aramco. .

it is harder for the ecb to be able to deliver.e did see expansion from the bank of england, that would be positive for growth. growth,ters of negative you could argue we need some growth stimulus in the u.k. at the moment. that would be a positive. it may put less pressure on the bank of england to have to deliver to support the economy. guy: thank you for sticking around and joining us here on "on the move." caroline: we went around the world. up next, anything you can do. we stick with the boe. the boe kicks off its own corporate purchase bond program. the concern. stay with us. this is bloomberg. ♪ >> i think i achieved. billy tubbs but she is going to defeat isis. why didn't she do it -- hillary clinton talks about she is going to defeat isis. why did she do it? 800 people are going to be deported, instead they pressed the wrong button or it was dishonesty. what happened, they became citizens. our country needs help. >> did she say anything that was false? >> of course she did. i did not do my final attack which was to attack

that is well below the ecb target of just under 2% -- the ecb forecasting inflation of 1.6% at the endf 2018. i thought it was at to put over to put over this chart the blue line which is draghi's preferred inflation gauge. . it measures expectations as you can see, from that chart, this blue line is near an all-time record low. today we're at one point 30%. inflation is proving sticky around zero. expectations at near record lows. what is it going to take to boost inflation in the euro zone? that is something we asked the former president of the ecb in roughly 15 minutes. minute into the trading day in the united states let's get to the markets. >> one thing that will not help expectations, retail numbers. i will get into those in a minute. those were what modes the market earlier. screens are after some fluctuation this morning we're looking at risk on behavior across equity markets. by a sizable amount take a look at the nasdaq almost up 1% off some gains pretty good across the technology space especially apple on a real tear the past four days. the s&p and dow jones up about half a

this is our survey, what is next for the ecb.ing out all the options come as you said, the most likely option is the program will be extended following a deposit rate cut. ecb isblem is, paul, the a long way off its inflation target. data last week showed inflation is stuck at .2%. doesn't that tell us there is some necessity for the ecb to act now or is it still confident that target will be reached in the two-year horizon? paul: no, not the horizon. the ecb is confident it will get back, but it's not happening anytime soon. at the moment, forecasting no earlier than 2018. fresh forecast will come out on september 8. it could be the ecb has to push them out even further. that would be a worry. in particular worry for credibility. you look at five-year inflation expectation measures, they are not good at all. mark: talk to me about brexit. what's been the impact a couple months off the brexit referendum vote? paul: the confidence numbers in some areas have been down. the pmi numbers published today unexpectedly fell. the key weak

the ecb moves are not likely to affect what the ecb does -- what the fed does.out a symptom a rate increase, are you? steven: what the fed will be looking at from now on with the economic data coming out -- we have seen some weakish job numbers. the fear is that maybe it is more cyclical, not a structural. based on manufacturing pmi, retail sales, that will guide the sale -- that will guide the fed very much. is it a supply-side thing where we do not have bodies, or is it a demand thing? tom: we could continue for another three hours with steven englander, robert hormats. michael mckee and i will do that on radio. they will continue in conversation with us on bloomberg radio. tomorrow, we continue our discussion on international relations, and folded into the financial system, richard haass will join us, from the council on foreign relations. in michael mayo of clsa on banking governments and banking nonprofits. from london and from the gorgeousity of new york, the beauty of new york -- the chrysler building there is extraordinary. this is bloomberg. ♪ jonathan:

ecb and policy decision around 7:45 a.m. eastern time. let's bring annette who joins us live from frankfort. annette. >> reporter: thank you so much. actually economists are really split whether we'll see some action today or not. likely action until the end of the year is an extension of quantitative easing program here in the euro zone. of course the ecb buying 830 billion euros of government and corporate bonds per month. mostly likely will continue to do so beyond 2017 next year march, but when they are going to announce, we are not really clear. it could be as soon as today. could be october. most likely october. today we night get tweaks to program. a little bit of technicality, but it's very crucial to the program. they have a problem of scarcity of assets because they have self imposed creoling to what they allowed to buy. can't buy in bonds yielding less than negative deposit rate, which stands now at north.4%. for the german bond union fierce it means 70% of german government bonds are trading below that threshold. you see the i

unfortunately, the ecb has been wrong for years.hey should've started the program probably five years ago, when the u.s. started the program. they relate to the game of quantitative easing. it is why some of the banks in the eurozone at not come back to full strength. vonnie: the u.s. is trying to get away from this kind of easy monetary policy, has not been able to except for one quarter-point increase. what are you in telling those that come to you for advice? austen goolsbee is at 32 advisors. he would say he was not want them to raise rates a month and a half before this election that will obviously cause markets -- if trump wins -- to be incredibly disruptive. in his opinion, and i think most people in the markets. most of us think they should have done it a year ago and started their unwind -- begin the rate hikes, but they didn't. ows is notbs and fl the best way to proceed. my best advice would be to wait until december if you want a rate hike, and then have some continuity. september would not be good timing. even in decemb

the ecb cannot control market expectations.ruggie is doing a pretty good job -- mario draghi, is doing a pretty good job of not sending any signals. he is keeping the information close to his breast, and we will see what the market prices in. it is still pricing in a bit of a cut and an extension. i think we will see that. no big reason to be concerned about what is going to happen in december. andrew, let's talk about how you trade this -- tighter spreads and a yield curve, spain over germany. spain trading at a record low in terms of yield -- your thoughts of how high the spread can get? how high can it get? mr. bosomworth: previously thought it could get down to 75 basis points on the 10-year. given some of the longer-term concerns about where the eurozone is heading, you know, that is really probably the tightest level. if the ecb does do what we think it does do -- will do -- and that is told allocation of the purchases away from germany, it could come in a little bit more. but we are really talking about 25 basis points f

look at the euro strengthening after the ecb yesterday.test knocking down the korean want. also having an impact on the japanese yen, which is also buffeted by the ecb. look at the mexican peso. it fell one point 5% yesterday, they worst-performing emerging market currency really getting hammered. analysts said that was an overreaction to the ecb, so the peso is coming back a little bit today. the ecb is in the rearview mirror. now it is the fed ahead, and it is a big day for fed officials. boston fed president eric rosengren saying -- speaking robert kaplan takes place in a moderated question-and-answer session. we are back with ellen zentner and peter tague. eric rosengren has been in the dove cap, so you might not need -- we were talking about the dove on the board. you may not need to get to her if you want to make the case. he has also said he thinks rates might need to rise because we are may be seeing some distortions in capital markets because of fed policy. ellen: eric rosengren is a good example of a swing voter on the fed but us

ecb can buy up to 33% of any given bond.re to take available assets from 33% and increase it to 50%, that is one option. another option goes back to the previous chart. -40 points where the deposit rate is, just scrap that role and it would allow you to buy all of that debt, the two thirds of german debt that you cannot by and you would be able to circumvent the political complexity. wantoal may be that they to increase the amount of q8 and extend the period of time beyond march 2017. extend thef qe and period of time beyond march 2017. the market is expected and the broad-based consensus is that at some point this year the ecb has got to tweak the bond buying rules to increase qe. david: anyone of those options has political complexity. if you remove the deposit rate floor you are losing money on every single bond you buy. can you imagine how the germans would respond? jpmorgan's chief global strategist david kelly will be giving us his outlook for united states growth. this is bloomberg. ♪ david: third time is a charm for

ecb, vonnie. we are showing the volatility going back to 2010.e: we're looking at the dollar index. it is above 95 right now. after it's in contraction. if you look at the sub reportnt, the employment shows a drop down to 50.7. it is very important to chair yellen. that was down .7% today after a revised number in july. it's a negative number for employment. these little data points are pointing to weakness on the labor front. i want to move elsewhere. u.s., you are seeing the dollar yen trading at 132. this is a stronger yen. course, the euro strengthening and strengthening on the back of the weaker u.s. data. the japanese 30 year yield is worth looking at. it is 51 basis points. they will actually want more of that for the 30 year yield to go higher. let's look at the major averages. the dow jones and s&p are unchanged after having a choppy morning. the data are really wait on them as well. let's go to midtown manhattan and abigail doolittle has more from the nasdaq. : we do have the composite index up ever so slightly. there is one factor that

there is only one event, and that is mariota rocky and the ecb.the rate decision and what they are going to do, and in the news conference. i think what is interesting is -- marioota rocky's lookingill probably be at yesterday. will the ecb be acting head of the political rose -- of the federal reserve? last week, an executive members said they are encouraging signs of resilience. we get growth and inflation targets today, and we get them again in december, but this set of numbers produced today are done so by the ecb staff members, not the external board. where will the euro go? have will be bond market react? will they lower the rates at which the european central allowed to buy assets? a lookl of that and have at this, because this is the euro against the dollar. morgan stanley saying never mind the stimulus that could come from mario draghi. nothing could stop this bull run. from the ecb will be ineffective against the inflows. thanuro will end 5% higher where we are now. it has rallied 3.5% so far in 2016. the euro will continue to rally agai

we have gone from the ecb, to th e fed, to the think of england.: we have tensions over north korea and next, we will get more of an international reaction from that particular blast. more of that to come on "countdown." ♪ manus: testing times on the 60th anniversary of north korea's founding. the state says it has carried out another nuclear blast. signs of stabilization. inflation eases the least in two years. draghi's delay. the ecb president says his policies need more time to work rather than being expanded. and a big, big moment. jeffrey says it is time for fixed income investors to prepare for rising interest rates and higher inflation. welcome to "countdown." i'm manus cranny. nejra: and i'm nejra cehic. happy friday. let's look at how equity futures are opening up. we are looking pretty much flat on the euro stock 50, the tax, the cac 40. dekes futures off by just 0.1%. you can see where we might see the market open when it does. looking really quite subdued and pretty much flat. manus: after draghi's comments yesterday, so a bit of a dip

we speak to the former ecb president jean-claude trichet.his is bloomberg. ♪ francine: we are getting some breaking news out of samsung. they have just announced that it will make global replacement program for the galaxy note seven. this is a phone that came out earlier this month. seven hasand the note been released in 10 countries. samsung mobile, they had their is making comments in seoul right now. this was purchased by one of the main news agencies because of that report earlier that they are announcing this global recall of large-screen smartphones, note seven because of fault the batteries that could catch fire. their shares on samsung are currently closed. i expect some sort of follow up on monday. we have heard an apology because of the recent battery explosions . it is unclear how many they have put in place at the moment. we do know they are in 10 countries. they should be getting a replacement but the cost has not been estimated yet of how much that global replacement program will cost samsung. it doesn't look great, because it

we're not getting more stimulus from the ecb at this point. to what extent even though the uk is moving apart, do they still depend on what's happening in the euro zone. >> the european and euro zone is still the biggest trading partner. 38% of trade. very material in terms of trade and the uk has been successful let's say in terms of changing that terms of trade through sterling depreciation. for the next two and a half years, you get unchanged trading relationships. actually that stands to benefit the uk. it's a real threat for draghi and finance minister. own country able to play in devaluation space and take advantages that draghi has been able to give the euro zone. >> do you think carney will take additional action at the next meeting or take a page out of draghi's book and wait here. >> it's going to be difficult to take rates lower at the next meeting giving the upbeat data. i put some stimulus into the marketplace and see what the transition mechanism is first before taking other steps. >> and probably take credit for tall good data.

. >> ecb was disappointed. >> i did see it. our european equity markets this morning flattish beyond the open, a little bit lacklusterness being seen given that you had these massive moves stateside especially on friday that big drop. yesterday markets moving higher, evening it out a little bit. markets moving more in the past two days stateside tan in the 14 tase prior to that. not feeding through here and in europe. when it comes to our main equity markets similar story being reflected there,ing slightly flat start to the morning. the ftse just a couple of points later. the sector rounding it off, health care, financial services holding on to gains while basic resources in oil and gas selling down a touch. >> let's get back to the reason. fed reserve governor has struck a dovish tone warning the fed shouldn't raise rates too fast. it's one of the last officials to speak before the central bank's meeting next week. said the case to tighten is less compelling citing below target inflation and overseas risks. >> the market poten

looking at the ecb meeting, what do you think the ecb is going to do and what does it have the capacityn its constraints? manish: the ecb probably believes negative rates will work. though i do not think they will do more negative rates at this time. but there was big panic in respect to brexit. but that is not fact. so it is not as catastrophic. it does not put the ecb in the same panic. but they have to react in do more qe. so we probably see status quo. i do not think they will extend their qe, which ends in march next year. it will be later in the year that they decide. but i do not expect them to do much this year. so i am thinking status quo at the meeting. see europe popld up on the back of that. positioning for something to happen. andks for your time thoughts. manish singh, head of investments at crossbridge capital. , russian president vladimir putin in our conversation with bloomberg's john mickelwaith. this is bloomberg. ♪ nejra: you're watching "bloomberg markets." i am nejra cehic. guy: i am guy johnson pay let's talk about the russian president. nejra: yes. talk with john

the ecb cannot control the market expectations. doing a good job at not sending any singles that signals. he is playing close to this just. -- his chest. they are still pricing in an extension and a cut. no reason to be concerned about what is happening in september. toit set up committees address the scarcity of bonds that the ecb can buy. does this tell us that investors are addicted to central-bank stimulus? >> we know that investors love stimulus. it is the candy they cannot get enough of. they like certainty. i think mario draghi's term that they will study options is incredibly wavering. mark is around the corner when the bond buying program stops, and they are saying no way, he will have to do something else. words matter. notought his wavering was the right across. it is clear they will do some sort of unstated easing. anytime you say gdp growth is 1.6%, you cannot say wow. based on inflation, you cannot say wow. based on volatility, you cannot say wow. >> were they right? ofsix months to september 2017, basically change th

the ecb failed to deliver with sufficient dovish action or rhetoric. either way we didn't get what we expected. markets lost a little bit of steam. as we look at the bond markets, we did see yields tick up yesterday around the world as that ecb action didn't come in in terms of easeness. and today we're just seeing yields move a fraction in the other direction. 1.616 on the ten-year treasury note. >> all focus right now on korea. breaking news out of north korea overnight. successfully tested a nuclear war head in what might have been the most powerful launch ever. very worrying. covering that story for us from asia. >> good morning, morgan. while it was enough and it was major enough to really rankle the markets over here. we did see heightened risk sentiment and no surprises. south korean benchmark was down. dollar juan was relatively stable around 1100. important to note the bank of korea met today and elected to keep rate steady at 1.25%. difficult to see how this plays out. are we going to see more uncertainty. whether sanctions being brought to b

over the last two days it went up a bit with ecb easing going on.is like a global tightening of financial conditions on the margin we have gotten over the past few days. joe: what does that finding -- tightening do for the real world? torsten: it is hard to be modest, but the question he comes if it is an early sign of something changing, and are we now in the face of the fed hiking rates, or is the market still write them fed will not hike rates as they have been predicting for quite some time? fed looks atow the tightening, but it is not a mandate. how much do they give that? matthew: they give it a lot of weight as opposed to when you had the economy growing 4%. the financial markets could not put it at a cap. now it is 1.0%, it is more important. we are seeing tightening in the u.s. that caused interest rates to fall quite a bit. there was some sort of offset that was needed there. that is the fed story, they did not raise rates as they were expected to. they lost the tightening of financial conditions. it goes to show you how sensitive they are

i think the ecb will extend their program in december.ard pressure on the long end of the yield curve which was be a limb u.s. were yields are higher. -- which will spill into the u.s. where yeilds are higher. david: beyond financials to the equity market, what are you looking for in terms of earnings and a last part of the year? , we are hopeful that we will see a shift to positive earnings growth in the fourth quarter, that is the view.sus there is no question that the forecasts have been downgraded consistently. no surprise. that are still positive, however. the question for us is how robust is the u.s. economy? the underlying trend is 2% annual growth. the thirdpected in quarter, we might see something better than 3% if we get an inventory rebound, and that could lend exuberance to the notion that maybe earnings could be positive in the fourth quarter. we will see some of that reflected when the year-over-year comparisons in the energy patch get easier. marketlook at 17, the looks to the future, those earnings forecasts look robust to

beinge thaee ecb engaged. that is what you see in that chart there. you see central banks pretty good at suppressing volatility. the challenge we have got is some central banks are moving towards the end of what we would expect them to do, the bank of japan being the classic example. i think we will see a little more of a cautious start. that is what we are doing. anna: tell us more about that start. what looks most exciting to you in the bond market? what would you avoid? >> we would say credit, general, have had a really good rally. you know, we would recognize that we, when you look at government yields, you have that e fed on the one hand trying to raise rates ,but in a world of low interest rates, they have room to rally. looks kind of -- we are pretty agnostic on duration. in terms of risk assets, our things thats to buy we would be comfortable owning if we do see volatility. i know manus have got a busy day ahead of him today. manus: i know more about high-yield than we ever wanted to. mike amey, stay with us. anna: here is a quick look at your

government bond yields edged up on the ecb's inaction. yields on the german government bond that you can see there in fact rose just a touch. we should also keep an eye on energy stocks. crude oil prices jumped after a report showed u.s. crude inventories fell by the most since 1999. brent touched $50 a barrel. and wti, west texas intermediate, jumped 47%. hurricane hermine stopped production on some offshore platforms. let's get a quick idea of the other indexes across asia. seoul's kospi is down 0.75% and sydney is down 0.45%. china markets open in 1 1/2 hours. we'll have more later. back to you. >> sounds good, ramin. thanks a lot for keeping us up to date. >>> honda motor is recalling nearly 670,000 more vehicles in japan for problems with air bags made by takata. honda has filed a recall notice with the transport ministry. the move covers 16 models including the fit and the freed. they were produced from january 2009 to december 201 1. ministry official assist that takata air bags could explode when deployed shooting out metal parts.

it's been discontent, dissatisfaction at what the ecb has been doing.en brewing for that whole time. last time, that was right around the time of the outright monetary transactions claim, which was also very controversial, highly controversial, and now of course it is about the superlow rates that have also drawn a lot of criticism. caroline: there is such an extent that we have had wolfgang schaeuble almost laying draghi's feet, claiming he's behind the rising populism between the afc and deutschland. >> yeah. schaeuble has been very outspoken. of course he is also a very wily politician, who knows that there is a home front, and on the other hand there is draghi and the ecb. chancellor angela merkel has in much more reticent. but this is -- what's be honest, it's an opportunity to ask questions, and it's also an opportunity to vent at draghi and let him know there is this level of dissatisfaction. they have been calling for a long time for an exit plan of low interest rates. guy: the real story in germany right now is not what's happening with negativ

the general understanding among german lawmakers is that the track record of the ecb, what the ecb has done, quantitative easing, buying huge amounts of bonds in the markets, interest rates close to zero is doing more harm than good. is there economic growth? there is not economic growth in countries, or not enough in a lot of countries in the eurozone. general understanding in berlin is this policy of low or negative interest rates has to find an end. only yesterday it was said what is needed is higher interest rates, structural reforms. mario draghi has a different message. he will promote the idea that countries like germany should spend more money, ie use what they call fiscal space, meaning increase the spending of the government in order to revive or kick start economic growth. and inflation buy back. that's a second round effect they have in mind when they are urging countries like germany to increase spending, by increasing spending that would also mean that it would make it easier for the ecb to reach inflation targets. i think they won't find a common understanding of what ne

the former ecb president. thank you so much. meantime, julia chattily has been speaking to pierre the italian finance minister. and i want the bring you some of the highlights. he's been telling julia, policy must do more. must mobilize all tools. he does admit growth is disappointing, but improving. he adds, one should not be skept call of the nps solution. he's referring to the bank bailout solution. the bailouts are absolutely ruled out in the european system. nonperforming loans are not just a problem for the italian banking sector. as soon as we do get that interview, we'll bring it to you and that should happen in the next half hour on so. >>> in the meantime, quick look at the european markets this morning. it is friday. not just any friday. it's the jobs friday. we're expecting around 180,000 jobs in the month of all. if we get a number north of 200, this might prompt the fed to hike rates. very modest gains. want to show you what the individual markets are doing one by one. xetra dax up 0.2%. ftse mib is showing a simil

i don't think the data would more to the ecb doing anything right now.are convinced that draghi is going to be quite harsh in is looking atg he the data and inclined to go ahead with further monetary policy stimulus. an extension of the program. i don't think ecb is looking at the euro-dollar that much. francine: is this linked to brexit? we saw weakness and germany. production falling. it seems to be holding better than expected. vasileios: i fully agree. as far as surveys are concerned, they have surprised most people on the upside in the resilience that the euro area has exhibited. it has exceeded expectations. , it iss of their action going to be a mixed -- a mix of things, including brexit, the ongoing sluggishness and kickstarting lending. inflation is their mandate. francine: am a political point of view, you look at exit, how does central banks look at what is coming up in the next couple of months in europe? we don't know what the various positions are. phillip: what we are going to see is endless succession of elections don't completely change

to be fair, the ecb recognize that.n they went more aggressively likelihood is a lot more qe and a lot less in terms of negatives. guy: what is happening in italy i, the banking sector cannot fail. that economy desperately needs a functioning banking system. germany, in many ways, is in the same position. >> it is. you will see a lot of the entire banking system in europe. there is likely to be a lot of consolidation. there are elements of banks in europe that need a little bit more capital, and that is critical for growth. if we can get more growth in europe, that will help banks as well. guy: nick is going to stay with us. the european equity market is about to open, likely to be called flat, i think. four minutes away. we will see you in a moment. this is bloomberg. ♪ welcome, i'm guy johnson at bloomberg's european headquarters in london. moments away from the start of european trading, here is your morning brief. who will succeed a lot of your putin? we asked the russian president that question in our exclusive int

julie: traders are reappraising the ecb's plan. we have the latest, next. this is bloomberg. ♪ mark: live from london, i am mark barton, counting down to the european close. we are about 15 minutes away. julie: i'm julie hyman. time for the bloomberg business flash, it would the biggest business stories in the news right now. a veteran volkswagen engineer has pleaded guilty to conspiring to defraud u.s. regulators and customers. it is the first criminal charge in the justice department year-long investigation into air reading of federal pollution tests. he answered his plea in detroit federal court today, facing a maximum penalty of five years in prison when ntenced. the founder of a big british pub chain says the u.s. does not trade deal with the european union. he says he says eu countries sell twice as much to the u.k. as the u.k. cells back. he says brexit may have a bositive impact on the pu business. he has been one of the most vocal brexit supporters. that is your business flash for this hour. mark: breaking news, negotiations between bayer and tosan

ecb will extend its quantitative easing program.kers may have to reconsider what they can actually buy. some options include changing an issue and the limit, the deposit rate, or expand into new asset classes. to help us digest all of this is global strategist from jp morgan. are we expecting an extension of quantitative easing? we as a house are not expecting them to move at all on thursday. but we do have a few that before the end of the year they will make an extension over here. this is important. an increase in chatter in the market that we might be at a turning point where -- with bond yields and ecb could be important here. if draghi sounds relaxed on people will think nothing will change on thursday but we do expect an extension of the bond purchase program at the end of the year. anna: how will they do that given the limitations they are under at the moment? >> i am not an expert on the ecb. we think there are a lot of options available. they could increase the limits. it does not impact their criteria. -- for theeven move

it is not just euroeans interested in the ecb's strategy.s person has been tracking it from america and joins us now. what has been the reaction to the ecb decision there in new york? jose: we saw some disappointment among investors that quickly transmitted into a stronger euro. draghi could not go back to this bond of thing from 2017, but it easily postulates biting will continue over the forecasting horizon thursday meeting was not a game changer. but analysts look forward to the time for the ecb to take action in december. daniel: let's look at something else. you like selfies, and snapchat wants to go public. what are you hearing? jose: as for now, it is too soon to tell. sources are still waiting for us to file proper documentation. with that of the $20 billion, the app i am still figuring out how to use could be i see you next year or the next. so far the ipo economy has been down over 53% from last year. so investors would be very happy to take a bite in this kind of company. daniel: i will let you get back to working out snapchat, th

all but two have been ecb related.his is a world where that search for yield means that you focus, you focus on yield. consent. out real think about december, last year, two russian jets were shot down. thecine: i you saying that market is not as sophisticated as it used to be because of central bank action? we are in a binary market? simon: what i'm saying is that the search for yield become so extreme and so forced that people do not have the option to worry about those things. they have to ignore it and search for yield. francine: what happened to the turkish lira or any high yielding currency? furtherhe fed hikes than expected, i would expect to see a huge downward move taking place in emerging markets. francine: temper tantrum? simon: absolutely. i actually think moore concerning would be if the ecb were to say we can't do anymore in terms of bond markets. fed hiking rates, it would be a shock, but at least the direction. unable to goo be any further, that would be the big issue. francine: how would that impact em

the ecb not expending qe and perhaps adding pressure on rates. i want to look at russia because that is quite a turnaround story. this is a five-year look at russia yields and you see back in 2013 with the peak crimea stuff, much higher than now. completely erased a lot of the anxiety and turmoil of the last couple of years and real quickly, let's look at the german bonds -- yields higher on the day. you see the jump early in the morning on the draghi affect. no particular urgency in terms of expanding government on buying there. hoping investors were for some hints that they did not get and you see higher yields will stop scarlet: i'm focused on the euro. it climbed to a two-week high after the ecb didn't do anything. no change to the qa program. adjust forecast inflation lower. matt: as he said everything was going fine. isrlet: the interpretation he's passing the baton to the politicians saying you have to do something. the path of least resistance was higher for those gains faded. the mexican peso with leading losses among currencies. at an i

economist see a high probability of the ecb lengthening qe. data showing a gauge of economic growth. is weakest the 19th month. our next guest said policy innovations could be announced on thursday but delivery is more likely in october. neville hill, penalty director -- managing director. there seems to be an overriding consensus that the ecb will extend stimulus by around six months what about the idea of tweaking the purchasing rule? neville: they will have to do that at some point. on current trends i think you're lucky to run out of bonsai november. it willely i october have to tweak some of the constraints they proposed to allow themselves to buy war bonds. mark: do you increase the maximum share the ecb is allowed to buy? or drop the rule that the ecb cannot buy bonds if it they are yielded love the deposit rate? neville: we think they might tweak a lot of the rules shift theo as not to market one direction. if they were to increase the proportion of any bond they buy, you are likely to see the bond curve flattened. if they allow themse

don't forget the ecb. they have a lifeline with ecb. they can ask for as much money as they want in case of a liquidity crisis. we won't face another lehman moment so quickly. the comparison at that time might be a little bit over exaggerated. >> thanks so much for that. let's turn our attention to the other big german lender which is in trouble not as much trouble they announced that major rebound, they are spligt up the bank and this morning we're getting more commentary from the ceo who says or confirming that they are targeting 1.1 billion euros in cost savings by 20. we have the press conference going on in frankfurt to outline the 2020 strategy points that they sent out yesterday. the ceo saying the bank the stable but not profitable. the head of corporate lending is leaving and that seems to have been a concern as well. >> greece is expected to grow at 2.7% next year and the first indications. i'm thinking that's very optimistic, 2.7%. >> a ton of countries would be happy with that growth. >> the country has been grappling with s

if dbrs downgrades, ecb will not buy portuguese bonds. will stick his neck out and say i will buy portuguese arms. it is too dangerous -- portuguese bonds. it will be too dangerous. that is dangerous for a company facing slow growth. politics stabilizing a bit but that's a big deal. vonnie: let's put it into a little context. but it isis up 3.2% still much higher than the other peripheral countries right now. what happened? the government and portugal is gaining favor with the populace more and more. in countries like spain we don't really have a stable government. >> you are absolutely right. that is what is confusing about portugal. why isn't this is one of the worst performing? not just one of the worst performing in the euro area, but one of the worst performing bonds in the economy. the big thing is the rating. portugal is just one notch above this investment great rating. then it will be in speculative territory and will basically be a junk-bond. the fact that portuguese debt burden is big and the government has said we will meet ou