Welcome to countdown. This 7 00 in london on friday morning. Federal reserve members will gather in jackson hole, wyoming for the annual Monetary Policy symposium and will be the first speaks asjanet yellen chair of the fed. Investors will be listening closely for any hint of when this rate rise will happen. The drums are rolling. We have a number of hours to go until she speaks. 3 00 p. M. London time, 10 00 a. M. New york time. Said hawks are circling. They are taking to the air. Of course arm referring to Esther George and Charles Plosser. An interview with mike mckee said we have seen significant improvements in the labor market particularly this year. Have seen wek, we are in a good place to begin talking about normalization. We know Charlie Plosser is a dissenter from the philadelphia fed. She dissented seven times. Stop all of this bond storming being too low. Wages and inflation is not a great correlation. Really, that is not something that you want to focus on. It is prevalent in the bank of england and the fed. They disagree not only in what remains in the labor market but how to measure it. Yellen andom janet look at the market reaction. Yellenomist has called the ferry godmother of the bull market. He says she will not let us down. She will get a dovish message today. Whats interesting. And the last seven jackson hole meetings, the s p 500 has risen the dayge by 1. 3 on that the fed governor speaks from 20072012. Bernanke did not speak last year but every year from 2007 until last year. The s p has risen and it hit a record high yesterday. Raiseill match you and you. Volatility has dropped by 31 this month. Investors are pumping money into bets that volatility will not rise any further. Bit of a hard one to get your head around but investors pumping 300 million into a bet that volatility will not rise any further. It is the velocity daily inverse vix. The last time we saw this kind of momentum by the market, it was right at the start of the year. That was rather shortlived and were seeing a similar pattern in people betting against the tax the dax. Muhammad elerian said yesterday what we have here is divergence. Divergencethe persists, the further shift in Interest Rates and currencies inld trigger volatility Financial Markets. He says that topic should definitely be on the agenda at jackson hole. Youre looking at the treasury market. Shorttermn for a bond sale today. Im saying in the broader context of this storming rally that traders are betting against the rise in volatility or the drop in markets. Decline in weekly bond prices in seven weeks and of course if you Group Economic surprises never mind the waffle all the areas of the world have this index. This is the citiGroup Economic surprise for the United States of america, dated being above or below. It averages them out. Highest level since february of this year and the extra premium that treasuries command in the market relative to g 10 is the widest in almost a month. Sunset members believe the data is Strong Enough to art thinking about raising rates. I think weve covered that. For friday morning, thats not too bad. A convoy is poised to move nearly 300 russian aid trucks to finally cross the border into ukraine at the world letters stepping up. Hans nichols joins us from berlin. When will these deliveries begin . Soon as today. That is the indication coming out of moscow where the red cross is briefing. They want assurances that the aid convoy of nearly 300 trucks has some security guarantees because they are going to places where fighting is very much still raging. Yesterday, president poroshenko indicated that he might be ready to sue for peace. Here is a comment that he gave. Ukraine is seeking peace and the whole world is tired of war. Steppedup this diplomacy, yesterday, there were some setbacks on the battlefield, five dead, 20 11 did and diplomacy includes calls the german lavrov, foreign minister, and Angela Merkel, the chancellor of germany who will be visiting kiev tomorrow. This is all leading up to the bigger meeting in minsk, belarus, when mr. Poroshenko and mr. Putin are also set to meet. This diplomacy is intensifying that on the ground, there are still some very violent situations. You have to weigh one against the other and see whats going to happen over the next coming days. Talked me about the latest in kiev. We may get poroshenko talking about early elections. They may dissolve parliament on the 24th, just in a couple of days. An important anniversary in ukraine the independence from russia. There does seem to be quite a bit of political turmoil inside and the economy minister yesterday resigned because he said he had a deputy installed without his consent. Youhave early elections and just had elections. You have a new parliament that could potentially be formed with a new government in place. It seems theres a fair amount of turmoil that would not necessarily strengthen his position as he seeks to potentially sue for peace. Withns nichols in berlin the latest from kiev. Hovering in jackson hole. Philip shaw joins us ahead of the Monetary Policy symposium today. Welcome back. Im manus cranny. Softbank is selling almost 4 billion in bonds to help finance future investments after the company scrapped a merger of its sprint unit with tmobile u. S. The warchest could be used to buy companies from yahoo and dish network. A judge has thrown out a 256 billion lawsuit against bp by a whistleblower who claimed that the Oil Production plan form was unsafe. The judge said it was ultimately about paperwork wrinkles and not engineering shortcuts. Ebay shares climbing after reports that they could spin off paypal as soon as next year. The worlds Biggest Online marketplace has been telling potential candidates that they are considering spinning off the division. Fed chair janet yellen will make her first speech at the jackson hole monetary symposium ladter today. Theer george hosting meeting said policymakers have every reason to consider raising Interest Rate above zero. And looks like so far between communication from the committee that the market has responded in the fed has not reacted to some movement in data that weve seen but captain more longterm focus. So far, so good. When we move into the next phase, there could be some volatility. We have been at a low for a long time so it would be important to communicate and to be communicating how the path of Interest Rates would go. On what we canre expect from jackson hole today. We are joined by philip shaw. You to the fomc. You are a member. Are you in the seemingly fisher are you more in the janet yellen camp . Lets wait a little bit longer before we start raising Interest Rates . My own view would probably the closer to Janet Yellens than the hockey mentioned ha wk you mentioned. Adont think we are in position where the fomc should be raising rates. They should perhaps be looking at thecy, but right moment, the fed is still teasing. Were still getting quantitative easing albeit at a slower pace that is being tapered. At the end of october, that is when we can turn around and say we are providing more stimulus to the economy. When do we start paring back the interestth ultralow rates. Having said that, janet yellen is extremely dovish. She really is a seamless transition from ben bernanke. Concerned about low rates of unemployment generating inflation. Im not quite sure if i completely share her views about the labor market, but certainly im of the view that some hawks say that if you discount those who are longterm unemployed or the socalled discouraged workers, if they do not come back into the employment picture, the Unemployment Rate is actually much lower hence the inflation as pressures build. Yes or no . Extent, i think thats probably true. One of the big debates on Monetary Policy is the fallen participation rate, the proportion of people who are looking for work. Is at the lowest rate since the late 1970s. Part of that can be explained by democratics and the fact that the baby booming generation is now almost at retirement age. Janet yellen said even if you take account of that then really unemployment is still actually quite high. Weve done some work looking at the relationship between any givennt and for level of unemployment, vacancies are higher or have been higher over the past cointreau or five years. Five years. Or that suggests there is a tightening of the labor market and some of the hawks do have a point about what is going on with regards to falling unemployment. The market move just marginally higher in terms of a probability for a rate hike next year after we had the minutes overnight wednesday and thursday. What is your view in terms of the fed . Cap,re more in the yellen but what does that do for your view on rates going into 2015 . Its not surprising to hear a more hawkish set of minutes. Unemployment is continuing to fall so what youre seeing is the evolution of the debate being consistent with whats going on in the economy. They are a little bit more hawkish. Whether that actually means were going to get a rate rise over the next six months or so, im not convinced. As i mentioned earlier, what seems a bit more likely as you finish quantitative easing and you start giving hints about when you might start tightening and you decide exactly the technical way that you are going to tighten and there is a debate on whether you should have a set funds target or a range and what will constitute that range. Then you let the market get used to it. Our view is youll probably see the first raising Interest Rates towards the middle of next year perhaps with the risk that it will occur slightly earlier if the economy continues to recover strongly or if indeed we continue to see inflation rising. Said veryve also clearly that exit strategy is something that they will tell all about and thats only going to come through in the argentine. Is that going to have a tightening impact before rates . Absolutely. One of the big dangers is that markets are too convinced that there will be an early rise in Interest Rates when the yield curve steep ins and you have a rise in Mortgage Rates low in the Housing Market down and that is not helpful. Is that one of the feds biggest worries . The Housing Market is critically important to the whole structure. It is also important for labor and mobility. If you are concerned about matching up unemployment and vacancies, the ability of people to move around the country is extremely important. Having a Housing Market that functions well is medically important. Stay there. Mario draghi will speak later. The ecb president will be asking we ask what he thinks the ecb president will be saying. Stay tuned. Welcome back to countdown. Im manus cranny. Still with us is Investor Security chief economist philip shaw. We are talking about jackson hole. The next big speech will be mario draghi. One of our guests from the start of the week suggested that would be the more interesting conversation. Draghi has a pretty turgid set of data. Pmi under pressure in the currency doing for him what he cannot seem to do itself which is perhaps invigorate exports. Where the ecb goes from here is pretty difficult. Some of the data has been worrying in terms of the real economy. We have seen a poor secondquarter gdp. France and italy, growth does not really seem to be happening at all. If anything were a touch disappointing but still above the 50 level but still indicating expansion. Would you please explain to me what use would qe be when you have record lows in a european context . Spain, oneyields in inch away. Bond markets are assuming Something Big from the ecb. Is that a Fair Assessment . What would quantitative easing do for europe . Im not convinced that the ecb would do qe or that it should. Our central view is that qe probably will not happen. The chances of that happening have probably risen over the last month or two given economic developments. You could argue though that the debate over qe is stimulating the economy because you have record low bond yields in spain, the german 10 year bund. You have not had to bring out the threat of the bazooka. If you like, its the same as the out right monetary transaction. Day, that man is actually going to have to deliver. When he said the steepness of the yield curve was an appropriate, we were going to keep rates where they were or lower in due course and people did not really believe him. What has the ecb don . They have lowered rates. One of the more interesting interviews i read was from the former Deputy Director of the imf. He said without a currency devaluation, they should start consulting smart sovereign debt attorneys to ensure the restructuring of the debt. We know their debt burden is two behind greece, 35 of gdp estimate. Really . That is some statement. Abouter the comments criticizing policy makers, theres a lot of criticism of central bankers and the countries that need to do structural reform. Thats right. Central banks or governments, italy has had a high debt burden for a long time. That has not changed. Arguably, the sort of reform that should be following is reform of its economy. Rateey can enjoy a higher of Economic Growth and bring the burden down that way rather than considering a reconstruction. You iftarted by asking you are in the yellen or george camp. Lets move that question to the bank of england. The seven that did not vote for a rate hike . Again, our view has been that rates would not rise in august but perhaps one or two members may have voted and that turned out to be the case. The Monetary Policy base in the uks really difficult. Weve been scratching our heads for a while at least trying to look at the timing of the first rate increase. The economy is clearly recovering. They do not see many inflation pressures. The labor market is tiring tightening. How does the general election plan to the policy debate . That have been stories there is some sort of pact between mark kearney and George Osborne that there will not be arise before the election. Whether you believe that or not, typically you do not get a rate increase soon before a general election and that also in the past has been the case in the u. S. If you factor that in to the scenario, you sort of think that there probably will not be soon, but you could see something toward the end of the year. Philip shaw, chief economist at investix. Stay with us. Welcome back to welcome back to countdown. Justis the dollar index dipping ever so slightly coming off of its sixmonth high as we go into jackson hole. Will the doves outlived the hawks . Coming off the 6month high. Its starting to get into a little bit of a box taking up high on dollarsterling sterling has been falling for seven straight weeks. This is something to bear in mind. You can see it is virtually flat at the moment. Seven straight weeks of declines and we have not seen 2008, september 5. Consensus estimate is 1. 68 by the end of the year. They say the market is modeled. Looking at the china data that has come through, were seeing almost eightrop in weeks since june. Did of the disappointing pmi and it looks a bit strange. We will get you a much better. Hart when we come back the Agricultural Bank of china sang sustained economic momentum is something to be questioned and we may just see some profit taking. I mark barton in london and these are the top headlines. American and british officials are inc. An online chase for the killer of james foley. He was beheaded by a video in a video made by the islamist state. They have analyzed the audio to help identify the killer. Israel is bowing to target more hamas leaders after killing three commanders. The raid was followed by a barrage of rockets and a wage of israeli attacks, the defense minister says forces will continue to hunt down and attack hamas leaders were ever they may be. Set tota governor was become indonesias next president. The court rejected the allegations of fraud. The verdict in the most vices leadership contest since their return to democracy. Leaders are stepping up diplomatic efforts to ease separate kraine, celebrating a second anniversary tradember of the organization. Charles, welcome to countdown. Before we get to the diplomacy of where we are with merkel and poroshenko. They joined the World Trade Organization two years ago. What was it supposed to do and did it deliver . That was a fairly significant event for russia. They applied when Boris Yeltsin was president of the newly created russian federation. Membership is supposed to guarantee an even Playing Field members with international trade. What the wto does not do is act as a policing organization. It does not necessarily prevent countries from getting into trade wars or levying sanctions against each other as we have seen what happened. And thats where we are right now. Spain, poland, some of the big countries around europe are deeply concerned about what is happening in regards to sanctions. Wto . Any of them go to the is there any merit in them going to say its wrong . Poland is leading the charge to file a complaint with the wto. You have to initiate action to try to resolve the trade disputes. There are trade disputes awaiting adjudication in the wto for years. Going to the wto is a gesture, a political positioning type of move but it does not necessarily cure things that are changing very quickly. Lets talk about whats going on at the ground. Convoyrts of the according to reports are going to be crossing the border having been inspected by the International Red cross. Does this signal a partial the escalation of the conflict deescalation . It does not appear that these white trucks crossing the border are any kind of trojan horse. So far, its not an escalation or any kind of hidden increase in hostilities. Ukrainian army is gaining strength. Is a ceasefire possible . Will a ceasefire be achieved . With the Ukrainian Army actually gaining momentum in gaining territory on a regular basis, i dont see a lot of to enter intothem a ceasefire. Surely you know there are peace negotiations between russia and ukraine hosted by belarus. We really dont put a whole lot of stock in those getting poroshenko meeting merkel . They met accidentally bumping into each other after the world war i the commemorations in france. It was an extremely chilean counter. Been no indication that they would get along any better at this meeting. One of the themes is who and trying to save face without falling flat on his back. Is this something that could shift the dial in terms of a solution . Merkels role is becoming pivotal in the way that these two interact and the momentum behind chancellor merkels position is that she is taking a tougher line towards russia. We can probably look to see her increasing the pressure on russia to increase some kind of settlement. These are just the beginning of the process and by no means the end. Know mark has the correct answer to this but it is down 38 , almost the worst saved by mark barton. It is ghana who is the worst. This economy is under huge pressure. The borrowing cost is almost 10 flat on itstively back. Thee do i look for breakpoint in this . Can i answer by saying all of the above . To forget and what we lose sight of at the height of the military confrontation taking place is the rest of the crisis. If and when the military confrontation is resolved and calm down, we are absolutely ack to square one and we have massive crisis in ukraine with problems with borrowing, refinancing, trade. Then youll see russia once again seeking to put its thumb on the scales and keep ukraine economically and politically unstable but using economic leverage. What can europe do to ease that process . They have offered ukraine entry into the trading block by the Association Agreement. When we move beyond the military conflict, just ease the process. One thing we are going to have to look at is the imf contributing more than this 17 billion package that was initially offered at the time just after the Association Agreement was being negotiated. There is a much wider crisis looming. As much as i hate to say it at the end of august, winter is coming. A spillovere effect . There is the gas impact. It is not allowing russian gas to pass through the ukrainian pipeline. What are the potential flash points coming up . As the temperatures begin to drop in the next few months, we will have to see where the gas price goes and reescalate. I think were back to square one. Everyone stake out their turf. The west is claiming that last years mild winter has provided them with the reserves and there is a reverse flow and they will come to the rescue. All bets are off once the military conflict is resolved. , globales hecker Research Director at control the risks. Not even a porta loo. The festival that has gone posh. My sort of place. After the break. Now there is a new breed of Music Festivals making waves here in the u k. One was synonymous with mud and portaloos, but things have changed significantly. Caroline hyde has packed up to the festival. A banquet cooked by michelin starred chefs and plenty of civilized conversation. Willing tople are spend hardearned cash on an amazing festival experience but also some topnotch grub. Wilderness is not like other festivals. The tea party is over here. It draws celebrity crowds. Even bank of England Governor Mark carney. Everyone participates together. It can be someone famous with a lawyer and an art student. Wilderness is tapping into an evergrowing crowd of festival goers who prefer posh over mos hpits. Ds and ifp to 165 poun you want a seat at the chefs table, 100 pounds. The festival attracted 30,000 people this summer, about twice as much as last year. A lot of the audience wanted to move on from the hedonism and get into kind of healthy living. Businesss a lucrative but its not without its hazards. The weather was beautiful. Now it is warm and not so beautiful. Its going to rain at some point. Its part of going to a festival in england. Caroline hyde, bloomberg. Joining us now is bloombergs rock critic and hardened veteran. Caroline hyde is with us. Apparently there were portaloos. No heated showers. Its all changed since i had three days in redding. It has changed immeasurably, hasnt it . Its quite right. Some are saying its not quite so brilliant and it sort of the same as many of the festivals now, but there are luxury alternatives and they are the ones that people are paying for in a big way now. Progress or sanitized music . What do you think, caroline . Mark, you first. I thought it was an interesting festival. They had some good bands such as London Grammar and Burt Bacharach of all people. It did leave something to be desired from the musical front, but as an experience and the atmosphere, i thought it was really good. Thet was amazing some of experiences. Restaurant at new claridges. You could have a five course lunch with a bottle of wine for 55 pounds. The other problem is had to sign up beforehand. And the fact that you were then having to queue up. The queues were pretty bad. They had this ornate, sort of titillating shows. You are a peer a standard is music above concert. Can the wilderness of this world provide the type of music you, as a music critic, can satisfy you . Can you get comfort and quality of music or not . The two. N combine many are providing some kind of alternative. Like iveastonbury, done for 20 years and if you are in the hospitality area then its good. If you just have the money, you could pay and the luxury is going to cost you about 2000 pounds ahead. You get the luxury experience as well as glastonbury with the very best bands. A load of friends of mine are going to the isle of wight and one was lamenting saying they wished they were doing a little bit more luxury, boutique camping. Its only an extra 100 pounds. The entirety of the week and will probably set you back 100 or so just paying out cash and food or drink. If you are going to be spending anyway, why not just up it a b it . Wilderness and latitude, it is very familyfocused as well. They want it to be comfortable so people are coming along. Do you want to go along with your children though . Does that spoil the experience or not . In some ways but festivals have always been allinclusive nomad which one you go to. Its interesting that they are appearing too young and old. Alex james makes a big thing about that for the festival coming up, this thing with jamie oliver, another posh festival where you can get the luxury cheese. He likes his cheese. Is all of this chipping north set. Samantha cameron had gone. The rumor was David Cameron was not allowed to go because it would make it uncool. Mark carney was there. Cara delevigne. There they are. We need to get you together on the telly. The outfits are great. Its a little bit painfully middleclass at times. You know what i mean . It is very british beyond belief. Is this just a very british phenomenon . How does this translate . Ability toe the translate . Is that a good thing . People are noticing that if you have a festival and you are paying 160 pounds, then you might as well sell for more. Doing lots of things as well with vip packages. There is a new book, all you need is rock. Whats it about . The worlds most followed rock critic, by the way. Visited in there about Glastonbury Festivals and other people ive interviewed over the years. Youve had an Amy Winehouse moment, lady gaga. What were the favorites . You might say meeting up with amy a few times, god rest her soul, was a wonderful experience. Sober or not so sober . Never seen her sober, actually. At of all of the gigs, what do you think is the top . The led zeppelin reunion concert at o2 is the pinnacle. The rolling stones, prince, the backstage gig i had with prince was incredible. Mark, good luck with the book. All you need is rock, a decade of music writing. Able to tap into 100 of her brain but is Scarlett Johanssons performance enough to give the film a stellar reception . We dig into the film a little bit more. Its the papers is. You dont want to miss it. Welcome back to countdown. I manus cranny. I have actually found a story today. Shock. Horror. , 200e beach in barcelona local residents have taken to daily protest outside an apartment. They are frightened that barcelona is fighting back on brits behaving badly. This young gentleman is naked running through a supermarket. He is urinating and doorways. Having all miters at this apartment block. Having allnighters. They have a similar view and the guardian but they highlight italian men totally naked. They have some pictures of them, rather undignified. Lamenting the brits doing it but arent the italians up to it, too . Lucy, is directed scarlett johansson. Shes very good. The theory, i love it. 11 of ourwn we use guns. Scarlett johansson and guns. What more can you want out of life . This ones relatively serious, the guardian thrilled to be alive. The experimental drugs are working. Have leftissionaries and they are alive after zmapp. Countdown continues and we will speak to former Liverpool Football Club president about the new premier league season. The fedng for yellen. Chair speech is the main event for the annual jackson hole conference later on today. Investors will watch for any clues on Monetary Policy. Border, russias convoy is set to enter ukraine with deliveries to start today. In the easternmost region. Politics in kiev. Resident poroshenko could dissolve the Ukrainian Parliament this weekend. German chancellor Angela Merkel arrives to the countrys capital tomorrow. Welcome back to countdown. Very good morning. Good morning to you all. Later today, Federal Reserve members will gather in jackson hole for their Monetary Policy symposium. It will be the first time janet yellen has spoken as the event. Investors will be listening closely for any hint of a rate rise. The drumroll you are getting excited. Lets see what mario draghi is going to say. Lets see what the hawks are thinking on the sidelines. Mike mckee, our economist in the states, he caught up with Esther George mark. She is the conference host. We said, bottom line is missed progress in the labor department. She is not that keen on slack. Obviously we have made progress and it is a good time to stock about normalization. Of course, Charles Plosser is there as well. You are alldy said, getting tied up. Wages, wages, wages as the centerpiece of policy. He said it isnt a Strong Enough link to inflation. They are the hawks that are hovering. The doves, the arched of was arrives today, she gives her speech on the labor market. It is going to be important. From 2007 to 2012, the day the Federal Reserve chairman spoke, during that time it was bernanke, the s p rose by an average of 1. 3 . And economist called her the fairy godmother of the bull market. He says she wont let us down. Citigroup says that because lyvishness is increasing anticipated, yellen may have to intensify her support for low rates. Stock did rally yesterday. The s p had another alltime high. The nasdaq, 40 points from an alltime high. Stocks are rallying. Stocks are roaring. I will match you and trump you. When it comes to volatility and what traders see in all this, they are trading what is called investors, 23 million in bets into the daily inverse. They are betting against volatility. We havent seen them that against volatility rising since january when the had the emerging markets. Bond markets are telling us a different story. Treasuries are down for seven consecutive weeks. The biggest weekly decline in seven weeks. Citigroups economic surprise , measuring gauge data that beats and data that mrs. Data above and below forecast. It is the highest since february of this year. Perhaps reason to circle. At the arch dove come of the queen of doves, the fairy godmother of the bull market has yet to speak. Keep the pension fully invested. Diplomacy is intensifying and a convoy is poised to move. Finally settrucks to cross the border into ukraine as World Leaders step up diplomatic efforts. Our international correspondent, hans nichols, joins us from berlin. Do we have any confirmation on when these deliveries may begin . Expect it to happen later today. What is happening on the ground is these convoys are being inspected by red cross officials. They still want some assurance on the security guarantees inside eastern ukraine. There is still a lot of fighting going on. It is a dangerous situation. A couple important developments happened late yesterday. Ukraines president , mr. Poroshenko, he talked about the need for peace. Here is what he said. Ukraine is seeking peace, the whole world it tired of war. This comes in the context of steppedup diplomacy. Angela merkel will be in kiev tomorrow. Over the weekend, you will have that meeting between Petro Poroshenko and vladimir putin. It is an opportunity to cool tensions, to figure out how you can have a ceasefire. This is what was discussed between the Russian Foreign minister and the German Foreign minister. Lots of telephone diplomacy going on. , it should in makes be interesting and it could cool tensions. At the same time, yesterday was a difficult day for ukrainian forces. They lost five shoulders five soldiers. You are talking about fighting on the ground. Give us an update in terms of kiev. Talk of early elections as well. They are talking about dissolving parliament on the 24th. That is an important anniversary for ukraine. Took theirter they independence from the soviet union. There is that on the parliament side. The economy minister has resigned because he said a deputy was appointed without his consent. The coalition, the ruling governing coalition in kiev seems to be fracturing. Snap elections never provide stability. Moving pieces all weekend. Thanks for that roundup. Making it tods are chinese consumers for their appetite and willingness to pay for luxury. It seems the fashion houses are becoming tougher to sell in china. Caroline hyde is here. Rate bit of Investigative Journalism going on in business week. We all know that so many of these luxury goods makers, like, allmh and the have been having stores in china focusing on spending. For the first time, we are seeing discounts, heavy discounts going on. Leather ferragamo palms, 40 off. Bagi, a leather shoulder discounted by 30 in downtown shanghai. Dior, all these stores are doing discounts. Others are doing them really well. Many of these Luxury Companies are terrified about seeming to the bargains. They dont want to be seen to be that. They want to keep the a lower allure of luxury. Halfprice dresses and shoes. It was invitation only, a sale in a hotel. Barred from taking pictures. Chater, they sent out a message to some of their most loyal customers and said, we have got a high jewelry exhibition. All pieces are at hong kong prices. You had to contact the Sales Department to go. Is this because of the tax on chinese imported goods . There is a real slap on these luxury goods. Is it to keep the customers who arent traveling happy in china . All of those. One key reason this is happening is because there has been this crackdown on giftgiving. We are seeing far less luxury spending in that respect. Muchther part is, it is so more expensive to buy in china than when you are traveling abroad. Not only do you have import taxes up to 25 on some products, you have a consumption tax on certain luxury items. Anywhere up to 20 to 30 . They are saying, it costs you basically 50 more to buy in china. They have this great interview with a marketing executive. She went traveling and picked up bag for about 1300. That is half what she would have spent in china. She said, that is basically my entire ticket to go around paris. Why not buy when i am abroad . Terrifying for these companies is how important the chinese buyer is. Goodsird of all luxury bought by chinese people. At 30 . We saw growth this year, 2 . That is how much they are slowing down. We will see how that plays out in the third and Fourth Quarter numbers. Get out there, get a bargain. I will bring you back a gift. What happens next . That is the single biggest question according to commerzbank. Peter dixon, we speak to him next. Welcome back. I am manus cranny. Time for some company news. Softbank is selling almost 4 billion in bonds to help finance future investments. This comes after the company scrapped a merger of its sprint unit with tmobile u. S. Judge has thrown out a 256 billion lawsuit against bp. The whistleblower who claimed the atlantass Oil Production platform was unsafe. The judge ruled the case was ultimately about paperwork. Climbed after a report that the company could spin off paypal. The worlds Biggest Online tellingace has been potential candidates for the top position of paypal that it is considering a spinoff. Janet yellen will make her first speech at the jackson hole symposium later today. Kansas city fed president Esther George has been speaking to bloomberg. She said when the time comes to raise rates, communication will be the key. Far betweenlike so communication from the committee, the market has responded. The fed has not reacted to some of the data we have seen, but kept a more longterm focus. So far, so good. When we move into the next phase, there could be some volatility. We have been at low for a long time. It will be important to communicate and to be communicating how the path of Interest Rates will go. More fed policy options. We are joined by peter dixon. Hi, peter. When the tapering ends, when the music is over, turned on the lights. In october probably. The key, isnts it . How do they go about that . The communication has already started. You saw a lot of information in the fomc minutes about what will happen when the qe process draws down. Now i think we want to see is, what is the fed actually looking at . We heard suggestions that the fed is looking at a broader range of market indicators. Things other than just the Unemployment Rate. We want to know a little more about that. Whether ms. Yellen will tell us about the day got herave already dashboard. Nine pieces of data that she likes to look at. The majority are still below their highs from before the recession. I think the thing which Central Banks like the fed and the bank of england are concerned about is the amount of slack. That will be the key to the timing of the first rate hike and the speed with which rates go up. That is part of the Bloomberg View piece this morning. If the hawks are correct, unemployment 6. 2 , the longterm unemployed are not coming back. They are not looking for new jobs. In which case, even though unemployment is falling, the real rate of unemployment is about 4 . That is through full employment. Do you think that is stretching . A bit. What you are seeing in the labor market, people working parttime involuntarily, once you see these guys coming back into the starts toe, once that get down to Something Like 10 or 8 or 9 , then you talk about full employment. We asked our guest earlier and i feel we should do the same for equal balance. If you had to sit with plosser or george, or would you be setting in the camp of janet yellen . Do you think they should be tightening sooner . They should be tightening soon but not immediately. I think they have got six months before we need to pull the trigger. I think they have got to give it maybe six months. By that time we get to the spring of next year, i think that is the time at which we should push for a rate hike. Erian hasd el written that two things should be addressed today. A, prices in Financial Markets becoming attached from economic conditions. Two, the divergence between ecbfed, the boa and the which he thinks could prompt further ships which could rther volatility. Should she, it is questionable. What happens in markets is a question for markets to solve. I dont think that the feds mandate changed significantly. That is not what they are about. About thisyou say detached assessment of markets . There is no doubt that they are detached. This is partly what the communication has to be about. Telling markets that cheap liquidity is not going to be there forever. You have to be prepared for that. As we said from Esther George, that will lead to market volatility. I think the trick is to prevent markets from falling out of bed while preventing them from going the you think markets are prepared . You look at some of the equity market runs. The s p, the longest run in almost two months. Is having a market fairly tough week. Who is ready . I dont think we know that until the fed does something. My sense is the equity markets got too far ahead of themselves last year and havent really pulled back this year. I think the equity market 10 correction . The one we have been waiting for on the s p . We havent had a correction in three years. I knew i would get to use that. Are we due it . It is likely to happen in september or october. Would that be healthy . I think it would be. I think it would give investors the sense that, wait a minute, nothing goes up forever. Stay with us. Peter dixon, mario draghi i just is jackson hole later. Welcome back to countdown i am manus cranny. Still with us is commerzbanks Global Equities economist, peter dixon. Reo draghi speaks later on today at jackson hole. He has had a tough set of data to swallow. Running aton data is a quarter of what he would like. Things are not good in europe. Voices of discontent are rising. They are. The ecb view is, we are doing whatever we can. But it is not enough. Governments really have to do more. They have to step up to the plate. Over the course of the last couple of years, we have had austerity, but we are not getting so much austerity now. We are getting in action. Without Government Action is that the dialect that draghi has . If he gives qe to the government , to implement Structural Reforms . He will of course implement qe if he thinks the euro zone economy is going to spiral ever downwards. Aboveion hovering just zero. The point at which you might want to pull the trigger is getting ever closer. This year, next year . I suspect after september. Once we see the impact of the ltro. We had a survey earlier in the week which i referred to. The amount that the banks are going to take up is going down. Unemploymentrd levels in some of these countries. Problem or amand supply problem in europe . It is both unfortunately. That is not i wanted to hear. What it tells you is that you demand. Have that is where governments can play a role. On the supply side, banks have more work to do. We have the stress test coming up. As we asked you, we have to ask you our boe question. To put a theme of the day. Are you the seven that decided not to vote for a u. K. Rate hike earlier this month . I think in the course of the data has moved against it. I do think the u. K. Probably does need a hike but not necessarily this year. Was in the cpi or the housing data . I think it was wages in particular. Also seen a weakening in the Housing Market. I think that is a secondary indicator. Will it last . Maybe in 12 months, prices might be up again. I think prices will continue to rise but not as the same pace we have seen recently. A loss of momentum this year. We are going to leave it there. Peter dixon. Coming up, we are going to talk football. When we kick off the start of the new season here in england. The bad news continues at Manchester United. Who better to look ahead than the former ceo of liverpool . Welcome back to countdown. 7 30 in london. Time for a Foreign Exchange check. Lets check in on the dollar. We are coming off those sixmonth highs against jackson hole discussion. You are seeing the dollar, off its high. That is setting the tone. That is transferring into sterling. You have seen an uptick in sterling. Sterling has had seven straight weeks of declines. Just trying to undo that. A dollarately will see 1. 64, 1. 68 by the end of the year. The dollar just coming off its nearterm highs. Ok, those are your currency time now for your headlines. American and british officials are now conducting online chase for the killers of james foley. The u. S. Journalist was beheaded in a video made by the islamic state. Officials are analyzing the voice recording, the video and social media to identify the killer. To target moreg hamas leaders after killing three commanders. Israels defense minister says forces continue to hunt down and attack hamas leaders, however maybe. Jakarta governor joko widodo is set to become indonesias next president. The court has rejected his challenges. Allegations of fraud. The verdict ends the most decisive conflict since the countrys return to democracy. Our next guest was in the studio on the opening day of the world cup. He just spent some time with the england football squad in miami before the embarrassment. Joining us now to rake over the past and look ahead to the future, the new premier league season, the former liverpool ceo. Hi, christian. Good to see you. There we were, beginning of the world cup, full of optimism. What went wrong . We probably werent that optimistic but there was hope we would get out of the group. I speak for myself. Probably after the italy game, that hope continued. A generally wellreceived performance. I think the columbia game was a great his appointment. What is wrong . The manager has said, we are not that dissimilar to germany in playing style. What is at fault here . It in thean we remedy near term . I think it is just a quality issue. I cant put it more simply than that. Playing style is one thing but if you look at the germany side, most of that side has come through in the previous world. Up comprehensively annihilated england in that world cup with a team that was presented as being young and upandcoming. Wereyears later, they seasoned veterans. All of them playing at the highest level in club football. Explayers, you had a good first game but then we started well. If you want to be technical, i just didnt think that changes in the second game made any sense whatsoever. The standout player in the first match, playing in the socalled number 10 position. He was the talk of the country. Probably the talk of the world cup. There was then a clamor that wayne rooney had been played out of position. We moved rooney into the position, pushed sterling out. We were much less effective. I would never change a successful feature demand a broken aspect. Lets talk liverpool. Bought belinelli to try to plug the hole that was luis suarez. Would you as ceo have bought him . He looks a pretty good deal. Basically 1 5 s ofuarez suarez for a proven goal scorer. Here is the issue. I think it is quite an interesting take. Liverpool are owned by fenway. The chairman is a Hollywood Television veteran. Fenway is a media company. I think liverpool last season ine the most televised team english football. Everybody loves a bad boy. I think mario will be the new story of the season. Commercial development absolutely centers on this international appeal. I think with suarez gone, there was a sense there was a hole and mario more than fills that hole. Box office means sponsors. It means tv audiences. Field, you misbehave on when you have fights with your manager as he did in Manchester City, what does that do to sponsors . The image has been tarnished by suarez. Very good question. Lets call that risk. There is a level of operating risk about recruiting a player with that kind of track record. Thatpect they will feel they have some experience in managing those issues and they take a view they can manage those issues and the benefits outweigh that risk. We will see if that is right. Certainly they will start with a level of media interest that would not have been there if they were left with a hole in that center board position. Liverpool has an american owner. Manchester united has an american family. The papers have been full of stories about how the glazer family have made another 200 million by selling shares on the new york stock exchange. The figures are astonishing. Debt hasest on the amounted to 700 million. Man u lost their first game. The pressure is on mr. Woodward. Is it time to deliver . I think so. The spotlight is now on him. This time last year, we would have said, new manager in david boys, new chief executive in and woodward. The focus probably shifted to the right man. That window was not successful. The january window, the sense of panic. Lets put it this way. Thatnk the world feels they have a high caliber senior appointment. The focus is now on whether the operations of man united can support the manager. 75 million has already been spent. Amazing how it racks up. You and i are sitting here thinking they have spent money, havent they . That is a lot of money. And yet the edit is money, the chevrolet money, the sponsors keep coming. If they are not in the Champions League another season cant validate i this but i have read that the new adidas deal, they are being paid more per annum than any other top European Club including real madrid and barcelona. What is interesting for our listeners who like to follow ,arge caps, nike yeartodate 25 rise in the stock price. Trading very nicely. Adidas down 30 year on year. The big story last week was russia. Who is going to win the title . Chelsea . I have to say that their transfer contrasting with Manchester United, they looked thely to have sorted out effectiveness of their transfer market. Certainly a great start on monday evening. Just look very at home. I dont know if you saw the game. Looked natural for the premier league. Strong, athletic, very hardworking. That was their problem last year. Are they favorites . I think they are. Last year was the first year without a title. I think they are favorites. I think Manchester City will run them close. Third and fourth . Will be theiverpool team that will be fighting. Heart toer in the Manchester United fans but you may be right. Lets put it this way, the next two weeks are absolutely critical for Manchester United. Big times. Thank you, christian. Christian purslow, the former ceo of Liverpool Football Club. Mark, thanks for that. We are getting fresh details on saudi arabias fans to open its stock market for investors. Hascapital Market Authority released draft proposals on foreign shareholder limits. We are joined from dubai. The regulator came out yesterday with a draft regulation the market has been expecting for a while. They came aligned with expectations. We were expecting something opening the market for foreign ofestors by the beginning 2015. The regulator yesterday said they are considering capping shares for Foreign Investors up to 49 of stock in each company. They were planning to cap that around 5 in each company for each qualified financial investor. Defined investors and institutions it have 5 billion dollars under management and five years operating history. Most of that is meant to quell the rush of hard money they were expecting to come into the market. The market is the regions biggest and it has around 580 billion capitalization. , thanks for the latest from dubai. Alertes, they are on high. Airlinesiscuss how the are preparing for a possible eruption after the break. Welcome back. I am mark barton. Europe keeping an anxious eye north as one of icelands volcanoes shows like. Experts cant say whether another eruption is imminent. Some airlines arent taking any chances. Of beliesess the activity happening below. This giant of central iceland is awakening. These earthquakes are indicating that there is magma pinnie the surface. If that reaches the surface and comes out of the ground, that is when we get an irruption. It happened in 2010. The irruption closed European Aerospace for six days, stranding 10 million passengers. 100,000 flights were grounded. Costing airlines 1. 7 billion. That was a very expensive eruption which sent a cloud of ash high into the atmosphere. That combined with the fact that the jetstream was moving the wind down from iceland towards europe, those factors combined and the ash spread throughout europe. It lies under icelands largest glacier. When lava hits an ice wall, the result is explosive steam and lots of ash. Particles can strip the metal from jet wings and stop turbines by melting and congealing inside of them. Airbus, easyjet and Norwegian Company have developed technology that stops ash from a distance. This was the first test off the coast of france last year. A ton of dumped icelandic ash into the atmosphere. The other used infrared cameras to detect the concentration of the ash, giving pilots enough time to fly around it. It is called the of void system and it works. In the future, easyjet wont necessarily be grounded by an irruption. There is just one hitch. The technology isnt due to the fitted to the easyjet fleet until 2015. In the meantime, it is one of a handful of airlines watching and waiting. The icelandic volcano is the latest threat to the airline industry. Flights may need to be canceled across the north atlantic route. Happened to the volcano to prompt the authorities to issue an orange alert . They had a significant number of seismic events. All this is happening under a glacier. Explosion,will be an there is an indication that there is magma flowing around, it could cause an explosion, a mass amount of melting and flooding. They are evacuating the local area. Orange alert is serious. It is the second highest alert. You did a great job of pronouncing the volcano that erupted in 2010. I cant quite get it out. Could we see similar disruptions . You know, never say never. 2011, aaid that, in year later, there was an explosion which was more powerful in iceland. That caused significantly less distraction. About 900 flights compared to 100,000. We saw the map showing the wind direction coming from the polar ice cap down across europe. That is what really caused the major disruption of european travel. Absolutely. It was very fine dust, very dry. The ashe stadium the air. There has been a lot done what have they done, the airlines, to reduce the impact . Easyjet has been the leader on this. They helped produce their own technology. This is infrared technology. It would allow pilots to see ash in the distance and avoid depending on what they see. That is quite an advance in technology. Dataare using ashton city from centers in london. That to create maps which airlines can look at and say, these are the flights that will be affected. Give the power to the airlines rather than ground control. That has been a shift by euro control. Best placed to make the decisions . What was it called . Forget it. Right, coming up, the s p closing at record highs. Will fed chair and eight yellen continue to drive the optimism . Trends look at the moving markets. Stay with us. Welcome back to countdown. Seven minutes to go until the start of european trading. Markets are undecided. Jon ferro is with us. London up five points. A couple. France off heading for the best week since february, the s p 500, record highs. Peter dixon said it could happen soon. If you are looking for a hawkish janet yellen, i will bring you some of the previews. She will respond in force to the early rate hike calls. Credit suisse, she will delay hawkish rhetoric. Hsbc will emphasize slack. Slack, slack, slack. The fairy godmother of the bull market. I cant find a single analyst that is looking for anything but a dovish speaker today. They want to try to reduce the importance of this meeting, take it back to what it was. If you look at some of the invitations that got out, some key names on wall street. The chief economist didnt get an invite. A want to make it less of a wall street event. With rates where they are, and talk of rates going up soon, they are never of course, of course. This is my favorite one of the moment. Volatility,he vix, use it to protect yourselves, market are going to correct. The vix is dropping 31 this month. Investors are still pumping money into a product. It is called the daily inverse vix. Againsts you to bet volatility rising. This is an interesting one. The last time we saw this was back in january when the market went bang, snack, recovered. Equity markets recover very quickly. The vix, this is a bet that you can make. We havent seen this level of betting against the vix. Asset markets and underlying economic conditions. Said in his bloomberg hes, this has to be on the agenda at jackson hole today. Great piece by the way. Mario draghi, that could be the big one. Is next. Move the show. E helding manus and i will be here. Welcome to on the move, it is friday. Minutes away from the start of trading here in europe. The Federal Reserve is in focus as jackson hole gets underway. Here with me now, the international correspondent. It is going to be about jackson hole. It will be about russia. It will be about u. S. Equity markets. Bonds, the biggest decline in recent weeks. Wait forrkets, as we the doves to fly or the hawks to circle. We will be watching the diplomatic efforts in the ukraine. In a broadcast here in berlin, the Ukrainian Foreign minister called for a plan for the ukraine. We will be looking at what that means and potential in a potential resolution for the conflict. The european markets are just opening. If you look back over the week. That second week since february. John i will go in a slightly inverted way. Who is driving who . Equity markets in the states, in terms of the nasdaq, you are touching num w