Transcripts For BLOOMBERG Bloomberg Markets European Open 20170901

Brexit negotiation deadlock . Guest that very question. Is now onheirma traders radar. It will not track into the same regions as harvey did. We do need to pay attention. Look track that story throughout the next few days. Matt . Than ae are less halfhour away from the start of european castrating. Take a look at cash trading. Take a look at the futures. We are looking at gains on the continental, not so much in london. Often, that reason has more to do with currency than individual stock movers. We will check that in a moment. I want to take a look at the bond trade. We are trading down. The yields are coming down. Investors sold off a debt and they have been buying it back, pushing yields down to 0. 36. We will keep an eye on that, not really a clear sign as to which way the european markets want to go this morning. Guy lets take a look at where they were yesterday. Maybe that is a guide to where they will go today. Performance coming through, the s p was up 6 10 of 1 . The core pce number telling Equity Investors the fed will not do anything and a hurry and that it is still on. That is the story in equity markets yesterday. Lets talk about commodities markets around the world. Decent chinese data again today, the chinese currency pushing higher. I think 12 days in a row now. Take a look at steel. We are monitoring what is happening with attorneys story around gasoline. Look at steel moving up at 5. 6 . Lets get a first lets get a Bloomberg Business flash update with juliette saly. Juliette donald trump is looking to increase the debt limit to 5. 5 billion for hurricane harvey. According to two administration officials, the request would include 5. 5 billion to the federal Emergency Management agency with the balance going to the Small Business administration. We will speak with gary cohn, the director of the White House Economic Council at 2 30 u. K. Type. U. S. Customs and what protection selected for vendors to build concrete prototypes for president Donald Trumps promised border wall between the u. S. And mexico. They will build near san diego. The construction of the segments could begin next month with the government paying as much as 500,000 to each mockup. There has been more evidence the economy will remain robust enough to offer policymakers more room to curb financial risk. Pmi hit 51. 6, topping estimates. Third consecutive month of expansion, the highest since february. The mexican peso fell almost 1 after the economy minister said the nations to prepare an alternative to the free trade agreement. A second round of nasa talks resumed in mexico city today with president trumps rhetoric expected to feature prominently. Since the first round wrapped up, he threatened to pull america out of the deal four times. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Guy, matt . Thank you very much indeed. First day of the month, friday, that means we get the august jobs data out of the united states. I didnt think this number was in any way important. For the simple reason that the core pce went down yesterday and i struggled to find a story around which the fed can raise rates if the court pce number continues to go down. Lets kick that question over to one of our mliv team, out in singapore, mark crank you. Good morning. Mark cranfield. Good morning, mark. I dont think the absolute level of the payrolls numbers really matter for some time. What the fed are doing here is they are trying to get themselves as far away zero as they can to get themselves some ammunition in case of the economy slowing down again. For when a buffer there is trouble in the American Economy. Eventually, there will be as all cycles do that. They can see growth is solid in america, the most recent gdp data was very good. World growth is also good. Ist they are trying to do get themselves gradually to a level where they have room to maneuver should the American Economy need some health helph sometime in sometime in the future. Watched is very closely , not only by wall street, but even by joe plumber, to use something from the last election. If wall street overestimates this number and the data shows that in august, they have, for the last six years, i a substantial amount, is he going to be bad for morale if we get a big miss to the downside . Guest i am sure there will be a reaction, no doubt. The was dollar in the treasury market will show you there is something going on and traders will of course whenever there is a big headline miss, traders will jump on it. If you look at the longterm average for jobs appreciation 150200,000, one little bit of data is not going to change the big picture. The on implement rate is in the low 4 , which is effectively for employment in america. One bit of data is not going to change that. Pricing december at 30 . On the work screen on your bloomberg. How much lower can that number go, you think . Guest apparently it cannot go to zero. Taken drop a bit further. It can drop of it further. I have seen a goat to 10 or so people are convinced there were not be any rate hikes. It can definitely go further. That, you look at the data, it is so consistently strong. They keep saying they would like to do one more hike. The dot plot suggests that. Maybe 25 on the downside for probability like that. Guy great to get your take. Thank you for joining us. Mliv strategist. You can get a great bit of insight by hitting mliv. Whichis the tv function you can use to track your progress through the payroll lease, as well, plenty of coverage. Bloomberg radio, television, and terminal. We will talk brexit up next. That discussion next. This is bloomberg. Matt welcome back to the european open, trading starting in just taking minutes time. Right now, we want to talk about something that will last a lot longer. Brexit. Round three of the talks failed to deliver a breakthrough, the eu and u. K. Government remain at loggerheads over citizens of rights, britains financial obligations the eu, and sequencing of the talks in general. This is putting pressure on theresa may to step in and negotiate a deal. Caroline hyde caught up with city on and said the government must get it act together. The Prime Minister and cabinet have to raise their game. I have met with the british cabinet and ive been saying for a while, they have to make sure they can negotiate the terms with a sense of positivity with the eu. Guy sadiq khan, the elementary groupon european relations are calling on government to keep britain in the economic unit. He calls it a and bake. Joining us from westminster, the u. K. Labour party member of parliament. The groups cochair. Good morning. How much would you be prepared to pay for access to the Customs Union . Guest that depends on the negotiation. When you leave a club or you get divorced, frankly, he will have a divorce bill to settle. That is what the u. K. Is negotiating with the European Union at the moment of it if you , you have to pay the sufficient feet. Mind, butve a fee in if we leave the Customs Union, british businesses are looking at a brexit era proceed bombshell, the kind of extra checks at the border, reports that we will be faced with, will present a massive album for british business. So many people have said. It will be immensely damaging. One of the interesting things is that the chief adviser to the secretary of state for brexit produced a report that said, we are looking at a hit to the economy of 25 billion pounds a year if we leave the Customs Union. Arguingwhy they are that matches during the traditional period after we leave, we should be looking to stay in the union. That is another we can work with, 25 billion. What you are saying, you have your expectation that there will be an exit bill, then a subscription to being a member of the club. And if we didnt do that, it would cost us in excess of 25 billion. That number needed to be less than 25 billion. Around the right area in those set of terms . Guest 25 billion a year private in terms of the divorce settlement, it would depend on existing commitments we have and there have been made. After that, you would not just be looking at some kind of situation subscription fee. You should generally remain members of the Single Market and those countries members of the Single Market have to pay a fee. Im not going to give you a figure. Im not sure that is going to be productive. ,hat i am actually clear about if we leave the Single Market union, it will have a hugely detrimental effect on the u. K. Economy. That much is clear and there is very Little Research that suggests otherwise. I get white you want to stay in a Single Market, obviously, you want to your cake. The question is, what do you end up paying for that in terms of the peoples rights living in the u. K. Or the movement of people . What about those aspects come up which are the payment for being in the Single Market . Guest with regards to the way the Free Movement operates in the European Union, the name it is given is actually quite misleading because it is conditional. One of the big issues that was important in the Eu Referendum debate we had in 2016 and the u. K. Was whether we can increase control over immigration policies while being members of the european unit. And we can. If you have been here for three months and have not secured a job, you can be asked to leave. Other European Countries do that, but we have chosen not to do so in the united kingdom. It is an absolute fantasy to claim we should leave the European Union that we cant increase control over immigration aussie. As membersion policy of the European Union while in the Single Market. While we are arguing these things, i want to make sure we maintain the economic benefits once we have left the European Union, i would rather we werent doing. People who of these think you can have your cake and eat it. There will be copper mice and we will have to pay a fee to get those benefits and we need to adopt a pet and inhabited because if you want any results, you have to be realistic. Arguinglem we have been is that we have made a load of and respect unrealistic promises. They cant live with them now. Matt what other compromises that labor is willing to give up to remain members of the Single Market . European court jurisdiction, is that one of the things you are thinking of . Guest first of all, i would not have the jurisdiction being a redline because it can lead to some rather absurd results. Europeanexample, the Nuclear Energy authority. It overseas the transportation of Nuclear Material across the European Union and also the medical isotopes that help cancer treatments. The premise or has this redline that we were not accept jurisdiction she has changed her position on this, but she had a red line that said it would not have impact on the urine union. That does not seem to be like a logical proposition. Accept we have to pay a fee to continue to access some of the benefits. Youll be back in brighton. His labour Party Position on brexit now fixed . There has been a significant shift over a softer brexit. Stone . Policy now in do you think it may change again host conference . Post conference . Guest an important move forward has been made. Party leadership has now accepted our position, which trade union, this is, and that the overwhelming majority of Party Members have said we should seek to stay and Customs Union during the period of transition. We should not be pursuing the jobs destroying proposition in brexit. I want to ensure that is our position for arrangements posttransition because you can delete jumping off a cliff from 20192021, but it is still jumping off a cliff if you do not have us staying in the Single Market Customs Union after the transition. That is where i would like to see policy move next. Move,we have seen one big im hoping we will see another big move and for the sake of british jobs, is as is and workers. Is this is an workers. Businesses and workers. You break the deadlock that seems to exist in these talks . Guest i think we need more realism in the negotiations. There are two issues and there have been two problems. One is confidence, one is undeliverable promises. Over a year out from the referendum, five months out from 15,triggering of article only after that passage of time has the government actually produced position papers over the last few weeks. It is extraordinary they have wasted so much time between then and now in coming forward to what we want. Bigndly, there were very promises made in the Referendum Campaign in his country. The biggest was the claim that if we left the European Union, we would see an extra 350 Million Pounds a week, over 8 Million Pounds a year being spent on Public Services after we left. That was a promise that ignored the fact that you have to settle a divorce bill and if you want to continue having the economic benefits we enjoy now, we would have to pay some kind of fee. The government accepted the principle of a fee, but that means you cant put your 350 million extra pounds a week into Public Services, but the pledge of the campaign in the u. K. This is the big problem. Brexit, and the terms it was promised, is proving impossible to deliver. When we had the Eu Referendum in 2016, it was based on hypotheticals and predictions. Now we have hard facts. They are now hitting reality and it means they cannot be delivered as promised. Matt really appreciate your time this morning. Thank you for joining us. U. K. Labor party member of parliament and cochair of the ap bg on eu relations. We are minutes away from the open. Up next, we take a look at the movers of todays trading, including vivendi as the topped estimates due to strong figures of universal music group. This is bloomberg, the open just seven minutes away. 7 55, just minutes away from the open of cash trading here in europe. Lets get to some of the stocks you are going to watch this morning. Vivendi is one of them, apparently not pronounced vava ont in france. They beat estimates, confirming its fiscal year outlook is opposing at joint ventured with italia. We are going to get to the open in just four minutes from now. Stay with us. This is bloomberg. Guy it is payroll day. We are starting expecting a decent start. It looks like we will be up at 0. 5 . London looks like it will underperform today. Have a look with one eye while you are watching gasoline prices with the other. We have a hurricane headed straight for the gulf. This is irma. O is ofin, hurr function on the bloomberg. It is headed for what i believe is the greatest place in the world, the British Virgin islands. It comes over the dr and cuba. It could approach texas. That, considering where we are now, is not something the Energy Industry is looking forward to unless you are a european refiner. 0. 2 . Othere up by markets are expected to open more firmly. A third tocting 0. 5 . Was a solid day for european equities. We start off a new month as people return to their desks. Again, another significant week for outflows in european equities. We will talk about that in a couple minutes. Supported. Data is thehave the numbers, strongest exports in seven years out of china. That is the underbelly if you want to be able, by these stocks buy these stocks. 0. 3 . Ials are up by we had a conversation with one analyst who made the point that it is dollar weakness. Dollar weakness is the key issue for the euro. Other people might have various words for my intellect. It is a great conversation. He talked about the strength of the euro and challenges for macron. He talked about super easy eurocentric banks. Asian stocks up for eight months in a row, the longest streak since 2000. What is next is what this chart tells you. What is it telling me . Certainly not the value of the euro. What it is telling me is investors are calling profit estimates, bang, bang, bang. Cuttinger of people their estimates are outpacing, upgrading estimates for nine weeks in a row. Directly correlated to the euro issue. Revision is profit the biggest margin since 2014. Gilt markets are open. Opening a little higher this morning, a little better. Is there a debacle unfolding between the europeans and the u. K. . Is a theresa may really the person you want delivering the bargain . You have gilt yields at the bottom of your screen at 1. 04 . The top story we have is that this could be her queen of sheba moment when it comes to negotiating between the eu ropeans and the u. K. That is interesting. I am off to digital radio. Lets talk about what is moving these markets. Bull market is in gear this morning. Take a look at the truck maker out for financial targets. The market loves what it is hearing from volvo this morning. Citigroup talking about volvos new ambitions underpinning the stock. I think the nuts and bolts of what is happening right now is the focus. I want to talk about airbus this morning, the pan european oem is being raised. 72. As a target of elsewhere, other stocks are trading higher. Lets take a look at where we sit in terms of downside. The focus is trading off tencent. Astra tradingan to the downside British American and astros trading to the downside. Truck you call a something you would have in your driveway, but we do not. R you, it is a lorry . In any case, it is very different from the business, which makes the suvs and the awesome volvo station wagons. There are a lot like that, rolls royce, volvo. Shares sawtracking some of the biggest outflows since article 50 was triggered. Here on this chart, i am not just telling you, i am showing you, these are outflows you are saying, the biggest seeing, the biggest since article 50 was triggered. Us guest is here to help understand why investors are fleeing the continent when it seems the most hope is here where the growth and stability is concerned. Welcome to the program. Where what do you think of these outflows . John i think they are unjustified. Looking at political differences as they have been looking at japan over the past 10 to 15 years, where they made a very ther comparison between savior of the equity markets. In japan, the i wouldory was argue that for europe, there is obviously a kind of revival of the domestic economy. And it is a bit of selectivity warranted in terms of sector allocation. It allows european investors to focus more on sectors such as thanks, which are banks, which are very domestic. The aunt theng impact of what is happening on the currency front it is going beyond the impact of what is happening on the currency front. Matt it is a vulnerable trade right now. I am sure we could talk about eurodollar for the next days or months chariot what do you think about the volatility on a day so much manufacturing data is coming out . Jean there are two sides to this trend. Thee is one side which is dollar weakness, which is supporting the euro strengthening, but there is not just that. There are also elements supporting the euro strength. When you compare the behavior of the common currency to some safe haven currencies, like the swiss franc. Just the parity versus dollar currency. A strengthening of the common currency, which to a certain extent we are regaining to which extent is regaining status around the world. Guy i want to get back to this issue of the currency. The screen will highlight this for me. We have come back to this over the last couple of days. 5 in euro terms, 19 if you are a dollar investor. You made 19 . 19 on a portfolio is a big chunk of change. That is me done for the year. I will take that money and run away. Since with u. S. Investors, they come from massively underweight to making 20 in the meantime and are thinking, lets have some of that. Jean you are right. If they think that weakening of the dollar is over, therefore you have to take some profit comes you have some a bounceback of the dollar. That 19 will be eaten away by the dollar strengthening. We believe the strengthening of the euro is durable. Of a changeething of era. Have seenlar, what we recently with the strength of it isrth korean issue, telling you that the dollar as a safe haven currency is losing a bit of its punch. Like a trumpost Administration Risk premium being built on the dollar, and that is supporting the euro. If you are a u. S. Investor, you have a 5 upside year today, versus a much stronger double digits. Ecb was out yesterday the report was out yesterday, one of our competitors, talking about there are more people on the governing council worried about where we are. The ecb is dipping its toe in intervention. If it doesnt work, it will go all in and stop this thing from going higher. Also somee are reasons to doubt the dollar weakness. We have to look at the two sides of the coin. The dollar weakness is one of the most worrying elements of potentially triggering some volatility bounceback. As far as the euro is concerned, i think we feel very far from a level of pain in europe. The average parity of eurodollar since the creation of the euro is 1. 22 . I think we have a little bit of room before it becomes a powerful headwind for growth in europe. I am also talking about estimates. Concern. Ery different it calls for active management. As far as the growth is concerned, i dont think we are there yet. Matt jean, you will stay with us. Jean medecin will continue to go is a ton ofthere news and data out, and a lot going on around the world. Up next, we will talk about the greenback game. We will look at the dollars performance. This is bloomberg. Matt will come back to bloomberg markets, european open. Lets take a look at where markets are. We see the ftse gaining 0. 2 . The dax in frankfurt up almost 0. 3 , and the cac gaining the most, up 0. 6 . I want to draw attention to a smaller british story, which, unless you are an investor, you are unlikely to know the company, but you probably know one of its products. It is a drug maker for both human and veterinary uses. Whichld go generic soon, would result in losses for the that issignificantly, their words, significantly change their guidance possibly to the downside, and as a result, the shares are falling. The company was worth almost 3 billion pounds, today it is worth less than 2 billion pounds. Guy pretty punchy. Subjectto talk about a we were beginning to touch on. The dollar is on the rise again. Reports isb expected to show robust growth. Steveng back mnuchin told cnbc the currency is somewhat better for u. S. Trade. Lets move on. Lets get jean medecins take on this. He is an invested Investment Committee member at carmignac. How much lower can the dollar go . Answered thatof question all yet already, but it seems we have a phase of euro weakness. I am wondering how symmetrical this whole story is. Jean i think we are right now back to neutrality, when you look at trading for parity. We are very far from an overextended trend for the euro versus the dollar. We probably can go further. What in my view is very important in terms of the u. S. As the leading country in the which is a little bit more uncertain in terms of behavior, which is obviously a m in wordo. Look at the euro, back in the was around 19 t off the global rate of currencies, it went up to 28 . Room for thet of euro to regain momentum as a rate of currencies for countries around the world. Guy can the Federal Reserve raise rates when the court cpe is going down . Jean that is probably what is interesting in that in the sense, what we have seen recently is that for the first time, the fed was discussing its academic ray mork of the of thenship framework relationship between Inflation Numbers and monetary policy. Beyond the slack in demand, there might be structural factors explaining the Inflation Numbers. If that were the case, that could actually trigger some kind of moderation in terms of raising rates, and that would be very positive for the stock markets. Matt i wonder what you think about the chart here. It is a basic bloomberg function, dots. It shows the feds dots going up longerterm. Here is 2018. Scenario, forible will they have to reduce their outlook soon . Jean what we have seen historically is that they have to reduce their outlook. So obviously, we should not be too aggressive in terms of rate expectations in the u. S. On therent scenario other hand in europe, where obviously we have markets which are in terms of the inflation, when you look at what we are trading for the german bund, we are in a very different situation. I would argue that one of the best ways to implement the global strategy, this kind of committed dissonance between the revival of the euro, the strength of the euro, and what is happening is probably to be short on the german bund. Matt jean, you are going to stick with us for a while longer. Jean medecin is an Investment Committee member with carmignac. We have more to digest, including what is happening in germany with the election, and france as well. Macrons gamble begins to pay off as labor reforms wins support from some leaders, surprisingly. More on this story next. This is bloomberg. Matt welcome back to the european open. France, the government presented its plan to loosen the labor code yesterday. President emmanuel macrons highstakes bet to tackle a stubbornly high Unemployment Rate has been accepted, as two unions say they will not join demonstrations against it. Still with us is jean medecin, Investment Committee member with carmignac. What do you think about hasons popularity plummeted since the election, but he still seems to have an incredible start our on of the world stage, or at least the european stage. Able to push through these labor reforms, so important in a getting the pots of money from germany . Thesewhen we look at things being done in france yesterday or we look at the unions reaction, it is very that they be able to go with their reforms. The ability to implement those reforms is probably quite high. Obviously, those reforms going in the right direction will improve the productivity of negotiation within corporations, but the thing we have to agree that they are far from being the kind of resolution that we have seen in germany during the shorter era or in the year k the u. K. It is probably considering also the improvement of the growth of the eurozone economy, a kind of right time right now. Guy is it enough for the germans . Jean we will soon know. I think the germans will be the labort just at reforms, but also what is happening on the budget front. And part of why the popularity of the president s has been triggered by some kind of moves terms of addressing the budget deficit. So, i would think that probably, yes, the germans would look at it favorably. Guy i need to switch gears and ask a quick question about something else. Something else. Something else. So we need tablets installed. With the menu app ready to roll. In 12 weeks. Yeah. The world of fast food is being changed by faster networks. Data, applications, customer experience. Which is why comcast business delivers Consistent Network Performance and speed across all your locations. Fast connections everywhere. Thats how you outmaneuver. So new touch screens. And biometrics. In 574 branches. All done by. Yesterday. Banks arent just undergoing a face lift. Theyre undergoing a transformation. A data fueled, security driven shift in applications and customer experience. Which is why comcast business delivers Consistent Network Performance and speed across all your locations. Hello, mr. Deets. Every Branch Running like headquarters. Thats how you outmaneuver. Does todays payroll number matter after yesterdays weak inflation figure . He sayss labour party, his party should move closer to a softer stance on brexit. Will that separate the two sides even further . And Hurricane Irma is on radar. S will it add to the destruction left in the wake of storm harvey . Welcome to the european open. I am matt miller, alongside guy johnson in london. Some of theoking at numbers coming through. Lets see at where we sit in terms of markets. Cac up and cac up, the by 0. 7 . Thanks to the ib on this one, the return in capital is why the stock is lower. Lets get back and talk about other markets, because that has been the story for equity markets during discussions of the historical storm that has ripped through the golulf coast. Quarter ofhut down a the refinery capacity in the united states. Gas prices rising 25 in the month of august. Have our guest and editor. We will start with you. Where are we in terms of understanding how long it is going to take to get them back online . Disruption remains severe. We have pipelines going north to chicago and the middle dutch midwest and it is not clear how long we will get refineries up and running. It was clear that the biggest refineries could take at least a week to get going, which shows you the disruption is not over. Guy implications of this are what . Pretty significant on products prices. You already said that gas and heating has surged by 20 , 25 . I think the market is missing something else. The fact is there is no spare Refining Capacity that is operational in the market right now. Have a lotnezuelans of capacity, but that is not available to the markets because theyre refineries are not functioning. The chinese have a good capacity. What you will see now is, yes, there is inventory cushion. We might be able to sustain the current draw, but winter is coming and we are going to enter the winter season with extremely low diesel stocks, which sets up for potential spikes. Winter is coming. I cant recall a winter in which there were lines all over the place on the east coast from boston, new york, philadelphia. Will we see that again with the Colonial Pipeline shutdown . Amrita right now, i dont think it is likely, but if it persists, it is likely you will see that, because right now there is enough in this Year Inventory that we may not see those queues right away. But this is the first time a hurricane has hit the u. S. When the u. S. Is a net exporter of products, and i dont think the market understands the gravity of that. In the past following a hurricane, a lot of the Gulf Materials would go to the east coast. Right now, latin america relies on the gulf coast. Anype cannot give them balance. It will swing into latin america, unless prices rise a lot further. Matt even in the u. S. , we see the u. S. Tapping the Strategic Petroleum reserves in order to get some refining materials. What will we see happen in europe . What will we see happen in latin america . Are we expecting crude prices to actually increase . Will we have seen amrita partly because crude is problematic because refineries are down. It is a much more refined product story. It is a very bullish story. Will we have already seen prices rise in europe, and we amrita says,as every refinery in the world needs to meet shortfall. Guy fantastic function on the bloomberg, hurr. Will that be a problem . Will it is too early to say. What it does signal is that we have two months three months in the hurricane season, and storms are getting big and the possibility is for more disruption. Guy what is the longterm story here . You have an awful lot of infrastructure on a coast that has the potential for this kind of flooding. We talk about this flooding in houston. We ignore the fact that houston has been flooded a number of times in the last couple of years and has not made headlines. How will it square that circle . Important is a very question, particularly given how much u. S. Production is on shore. We are getting more stories about production lands. We need to put the u. S. Needs to put together potential. This is unprecedented. We have never seen such a vast amount of rainfall before. I dont think you can really plan for this, but i do think the market needs to not be as complacent as it has been. We have had three years of oversupply, but the market is close to balancing and these shocks will be felt. We need to be more cognizant of these things. Matt amrita, we have seen the spread. Barrel. A do you see that increasing or du see more arbitrage opportunities because of this . Bearishharvey is more because at the end of the day, a lot of the refineries that are butline would take crude a lot of pipelines offline are backing up into cushing. If you start getting more on shore shocking, it is relatively positive. Doesnte that spread need to widen out further if onshore production starts to shut in. Watch out for the news about the ngo processing plants. There are talks they might be shutting down. That is very significant for u. S. Onshore production. Matt will, what are you hearing about prices at the pump for consumers . Will they increase significantly . Will they will have to. We saw yesterday the contract has now expired. But even now, prices are doubledigit Percentage Points higher than before the storm, and that will inevitably lead through to pump prices, even if it turns out to be a relatively short period of time. Wise, it is a bit of a setback because we have more refineries down right now. However, on a global basis, and that is what the market should care about, this is very positive. It rebalances the market even quicker. But the product side more than the crude side. I dont expect it to do much right now. We need to see how this whole thing pans out because a lot of refineries are still offline and we hear stories that they will struggle to come back anytime soon. The markets will get tight. Once the refineries get back, it does mean that crude demand will be strong. You. Thank you to up next, the company to popularize it is unilever. They feature on this weeks edition of business week. This is bloomberg. Guy 41 minutes into the session. Here is your first word news update. U. S. , according to two administration officials, the request which could come as soon as today would include by . 5 billion to the federal Emergency Management agency. We will speak with gary cohn, but white house general Economics Council at 2 30 p. M. U. S. Customs and Border Protection have selected vendors to build concrete for the border wall between u. S. And mexico. The company will build prototypes of their design near san diego. Construction of a 30 mile long segment could begin next month. U. K. Prime minister theresa may is coming under increasing pressure after the latest round of brexit talks ended in stalemate. The negotiation says the u. K. Is ignoring its financial obligations. Meanwhile, the london mayor says the government needs to get its act together. I think the Prime Minister iheir cabinet needs to have said for a while they need to negotiate in good terms with positivity with the eu. And the mexican peso fell yesterday after the economy minister says the country needs to prepare an economy to an alternative to the north American Free trade agreement. Global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Guy, matt. Much. Thanks very arguably the biggest question for the upcoming german election is less about who to be chancellor, but which parties would be called to govern the country. Will we see a coalition, a grand coalition, or will it be Something Different . On that note, i want to share a couple headlines coming across from Angela Merkels challenger. He is currently giving an the most widely read newspaper in germany. There is a live online feet of it, so if you speak german, you can tune in and watch. He is saying he can still win. He says totally percent of voters are undecided, citing a survey. He says chancellor Angela Merkel and the eu is ducking a campaign confrontation with him. Barry interesting because they will go headtohead on sunday nights televised debate. She will not be ducking it for long. Everyone isn, excited about the possibility of a jamaica coalition, which will be the free democrats the yellow party, paring with merkels they, and the green party, environmental party. Those colors make up the flag. Eating ledket ftp is back into parliament. The leader says germany needs to grant leeway to greece, france, and other euro area company countries. Debt cut aswas a suggested by the imf, we should be open to finally finding a solution to this problem. Is onlyebt cut outside the eurozone. It is the only option. They will never be able to stop. Cut, the gets a debt money is gone, but greece needs to leave the eurozone, receives a new currency that can be valued. The country increases tourism. For this to happen, eu contracts must be revised, but as a member of the union those funds would no longer be disguised as credit, and never gets paid back , but is instead handed out as a proper grant the is used for a specific that is used for a specific purpose. Guy it is going to be fascinating. Could make a way meaningful difference in terms of how that coalition will be created. Lets switch gears. A story in businessweek is about unilever and how they are trying to prove they can do well by doing good. Wild around for quite a while. The Senior Editor of businessweek joins us now. Is this a unilever story . I guess the real question is, can you make money by being good . Has put hisullman mark on that Company Since he took it over seven years ago. Guy whothat he is the is driving this, of course. The story is about both, and it is a terrific read. Dot my main question is why we not get it here in germany. Are working on that. But these products are so ubiquitous, it seems there should be a big buyer. I am thinking of a guy who has a hundred billion dollars in cash, he just turned 87. What is the possibility of that kind of thing happening . Kraft has been after these guys them sixmade a run at months ago, and i think they will be back because there was a sixmonth cooling off period they had to weigh out, and that ended august 19. I expect kraft to be back and make another run on these guys. Matt this is a company with a lot of great assets. Lets talk a little bit about italy. The economy looks like it is gaining a little bit of traction. How is that feeding back into politics . Italy has seen yes, the economy is deigning some traction, but there has been a startling rise in poverty over the last seven or eight years, the last decade really. Of People Living in poverty in italy has almost tripled, and that is a big problem. That is going to be a big issue in the elections, which we will probably seat next winter or spring. A percent of the population is in poverty. 11 is the unemployment figure. While the economy has made a comeback, it has come from such a low level, it is unlikely to be felt by the people when they go to vote, to decide who will be the next leader. What is the stability of the government like in this country . They have had Something Like 50 or 60 different regimes since the end of world war ii. David clearly, you have the government right now which is which is this upstart populist movement run by a former tv comedian. Those guys have come up with a plan. We went up to a port city a couple hundred kilometers north of rome near florence. We talked to a couple people who eurobeneficiaries of a 500 a month subsidy of basic income plans that they have come up with, and they have tried that there. The opposition says it is a bunch of hogwash and p are politics. And pure politics. But they have come up with a similar plan of their own. Not quite as generous, but they came up with the idea. Fighting poverty will be a huge issue. Matt that is a fascinating story. The whole magazine is fantastic. The unilever story, i think of it as hellmanns. And politics explained is important to a lot of people. David rocks from Bloomberg Businessweek. We bring you the european legislation that could catch Financial Firms out like deer in the headlights. This is bloomberg. Guy we are months away from a regulatory event that could up and financial markets. Ins goes into effect january. What does the legislation in compass and how big of an impact does it actually have . To give it its full an awkward name, the market and Financial Instruments directive two, this is the European Unions second push in regulating markets, set to rewrite the world how information is shared, how they paye set and how one another. The first situation was in 2007, and harmonized stock trading. Then, policymakers decided more was needed. Iis ambition is to expand to bonds, derivatives, and beyond. The new regulations will force much of this on to open and regulated platforms. With automated trading making up half of all trade in several highprofile crashes blamed on this, algorithms must be registry did must be registered with regulators. It is not just the machines under scrutiny. Researched long provided by banks, analysts, and paid for by trading commissions, will now have to be paid for separately or not given at all. It happens in a europe does not stay there. Security, no any matter where they are. Over 800 million to be compliant. All the while, the clock is ticking to mifid iis january deadline. Matt for more on this and other issues, catch rules and returns. The First Episode airs tonight and features a key writer of the regulation. Some headlines coming out of germany. We have the pmi manufacturing data coming out at the 9. 3. We were looking at 59. 4. Just off that, but still relatively high. We have some headlines coming in from Martin Schulz and his interview with the built site to tung, and the competitor to Angela Merkel technology will be around for a while and it makes sense to invest in this combustion technology. Keep in mind, how many people are paid to make diesel engines . People employed in carmaking directly and one in four indirectly. Headtohead this sunday, we will have plenty more on that monday morning. Up next, it is surveillance. For matt i come a we are off to join the bait daybreak team. This is bloomberg. We get the latest u. S. Jobs data. We set for the will august overshoot or undershoot and return for a seventh Straight Year . The message for the u. K. Government. Energy. Why the latest inflation data may serve to strengthen Mario Draghis caution at next weeks ecb meeting. This is bloomberg surveillance. Some