Transcripts For BLOOMBERG Countdown 20160829

Markets postjackson hole are see aning when we might increase in Interest Rates from the Federal Reserve. Lets start with the work function on the bloomberg. It puts in perspective the moves we have seen over various Asset Classes and what this tells us about expectations for a fed rate hike. In probability of a hike september. Increasing bets on a fed increase. That number was just 22 a week ago. Janet yellen making the case for a fed rate hike. Even if talking about being more gradual in the future. The markets assessing the near term. If you are not convinced about september, it looks like investors are convinced for the rest of the year. 65. 7 of a hike by december. What is that doing to the markets . We have seen greenbacks strengthening. Emerging markets stocks a little bit weaker. A divert ins policy between the boj and the fed. Lets show you the risk and where we are on these various Asset Classes. The dollar index fairly flat. Spoke, took an little time to settle in. It settled into something of a pattern against the yen. We have the yen weakening, down by. 4 this morning. The dollar rising to a twoweek high against the yen. Corona saying he would boost stimulus if needed. We are down by. 4 on the msci asia. A big story going on there. Weakness in emerging markets is one of the things from the jackson hole some pose him. We are seeing weakness in those assets. Part of the weakness in asia driven by a weakness again in the oil price. That is on the risk radar for you as well. Down around. 5 this morning. Investors not convinced we are going to see some kind of reduction freeze at the informal opec gathering that is due to take place next month. Lets get the bloomberg first word news now. Yellens jackson hole speech was hawkish enough for Goldman Sachs to boost the odds of a september Interest Rate rise. Conversely, emco has said there was nothing of note in her remarks. Bond traders agree with themans view with probability of action rising. Janet yellen says the case for tightening has strengthened. Forget helicopter money. The bank of japan may target plants,g hospitals, our and sewers. That is the view of some analysts who say the central bank might start buying bonds in local government and public corporations that fund such projects. That would stop short of direct financing of fiscal spending. A spokesperson at the boj declined comment. The worlds Biggest Pension Fund has grown after the value of investments tumbled. The one point rejoin dollar Government Pension Investment Fund would need to spend 53 billion on domestic shares needed. On friday, Stock Holdings fell to 21 . Its goal is a quarter of the portfolio. German vice chancellor says the u. K. Vote to leave the European Union is creating a sense of instability and will lead to big problems. The leader of Germanys Social Democratic Party reiterated Angela Merkel message that britain cannot expect to cherry pick eu advantages. Speaking at a separate event, the german finance minister says the british dont know how to deal with the outcome of the vote. Angela merkel made a pitch to win back voters made by the influx of refugees and germanys deepening involvement in international crises. She hinted at tax cuts and attempted to broaden the party base. Just over a year before the next federal election, merkel fielded questions in the Television Interview on eastern europes reluctance to accept refugees. Singapore has stepped up its fight against the zika virus after confirming 41 locally transmitted cases one day after reporting its first infection. The ministry of health said it will continue to screen people who had close contact with those infected. Of the 41 people who contracted the virus in singapore, 34 have fully recovered with a majority of cases occurring among foreign construction workers. News 24 hours a day, powered by more than 2600 journalists and analysts in more than 150 countries. Find moores stories find more stories at bloomberg top. Anna lets check out the Market Action in asia. Juliette saly has the details for us. Emerging markets coming under a little bit of pressure as markets reevaluate the fed and how strong the dollar can get. Juliette yes, that is right. We were talking to scott earlier on bloomberg radio. He is from wells fargo and he was saying before asia even opened, if you are going to see any we is in response to Janet Yellens comments, it would be an emerging market stock and currencies. We have seen big selling coming through in a lot of those markets. Australia trading lower to the tune of around 1 . Here in hong kong, stocks tracking at a twoweek low. A very different picture in japan. The nikkei is up over 2 with one hours trade to go. It is a tale of two Central Banks. On the one hand, you have janet yellen being hawkish about tightening Monetary Policy and then governor kuroda coming loose inbeing quite saying that he might add more stimulus into the japanese economy. Of course, Dollar Strength putting weakness on the yen. We have seen a lot of automakers and Electrical Appliance makers surge quite strongly in japan. Yamaha motors up over 7 . Toyota also doing very well. Flat in shanghai at the moment. In terms of those emerging market currencies, the won is the weakest performer. That is weighing on the overall cost, down by about. 25 in late trade. Still busy in terms of corporate attorneys that we are getting filtering through in asia. Have a look at some of those. Prada doing well. It did see a clam down on sales, but shares are looking strong. The Agricultural Bank was weaker in hong kong trade, but unchanged at the moment. Bad debt climb, but is trying to raise 12 billion over the next three years. Sinopec came through after the bell. Even though it did report a fallen profit, it did a lot better than its peers. Today, everyone reacting to janet yellen and government and governor kuroda. Thank you very much. Juliette saly in hong kong come at telling us how japanese stocks are going their own way. Thetary policy setting course, it seems. A september rate hike could be back on the table after janet yellen said she considered the case for tightening has strengthened. Mike mckee filed this report from jackson hole. Some of whatt got it wanted from this conference. While she did not put a timetable on it, janet yellen said that Economic Data has improved enough that the case for an increase in the federal funds rate has strengthened in recent months. That led investors to dramatically raise the odds of a rate move in september, or definitely by december. Stocks fell and bond yields rose. Other beneficial back that view. We are being patient and a bit cautious. Demand is weak around the world. Central banks are cutting rates. We are below are target and growth has been it was 1. 25 in the first half of this year. I think that our caution is appropriate. Still, she cautioned that the outlook is uncertain. Knowing where rates will go ultimately is quite limited. That raises the question of what a central bank or does to fight a recession when rates are so low. That is the topic of this conference. A former fed staffer who is now at Carnegie Mellon university proposes nominal negative Interest Rates. I am talking about making the case for an encumbering nominal Interest Rates in the negative direction so Central Banks have the capacity to move Interest Rates below zero to a greater extent than has been possible today. That is for the longerterm term. Monday morning, the focus moves back to janet yellen and the data. Fridays jobs report is looming large for markets now preparing for a rate increase. Anna joining us live from our ingnd for office is the chief economist for austria and germany. Thinksn ask what ing about the jackson hole development, whether anything has changed in your view with regard to the u. S. Interest rate story. It was a slight change. Honestly, we would be surprised if we saw a rate hike in september. She did not announce a rate hike. It was a slight change. I think the fed will remain very cautious. If they are the only central bank around the world which would tighten Monetary Policy, it would lead to a much stronger dollar. A much stronger the much stronger dollar is not in the interest of the u. S. Economy. Anna is there something on the jobs front that could substantially changed the market view . We had the jobs data on friday of this week. How do you think investors are positioned heading towards that, given what we have heard about being close to full employment and the not so important nature of the jobs story right now, but the inflation story in the u. S. . We have been there before. We have had the kind of crazy around jobs data from the u. S. I think the market will really eye the market data on friday and strong jobs report will again, shift expectations closer to a september hike. Ets be honest the jobs report will not be the only indicator the fed will be looking at. There are other indicators. It is about the trend and what is happening around the globe. There will be one important element, but it will not be the element on whether or not the fed will hike in september or not. Anna what is your expectation . September, december, into 2017 . Right now, september would be too early. Likelyr looks much more if the economy continues like it does. World will not fall into recession again. Of global, slow Recovery Scenario continues, then a december hike looks very likely. Anna it seems that Monetary Policy setters had to walk a fine line. A wanted to call on fiscal authorities to do more, but they look at this as if they are out of tools. What is your view on the balance that is needed globally to stimulate the economy . Honestly, if you read between the lines, Monetary Policy has more than reached the end of what they can achieve. They can try to do more, but the impact on the economy is extremely limited, which brings us to fiscal policy. This is why we have this discussion around the world. It is the same discussion everywhere. We are in a low growth environment. We have two little investment around the world. Therefore, we do need fiscal policies to support Monetary Policy. Fiscal policies providing tax incentives, doing fiscal stimulus itself. We do need more investment. This is where fiscal policy enters the occasion. Angela merkel was speaking on German Television over the weekend. A possibility of tax cuts in germany. Is that the way the government might boost play their part in boosting the european economy in germany, where you are . Be as much probably a surprise as a september hike. Yes, she was talking about it. The experts are talking about it. Dont forget that the balanced fiscal budget, the dogmatic target for the German Government i would be surprised if we saw fiscal stimulus ahead of the german elections next year. After the german elections is a different story. Will argue whether or not we do need more fiscal stimulus. Of course, there is a case in germany where there is investment that fiscal policy needs to boost investment. Not only public investment, but private investment. I would be surprised if we saw this ahead of the elections. She was talking about postelections. Thank you for your thoughts. Highlights for your week ahead. Germanys Angela Merkel speaks at an election rally. Tomorrow, the Spanish Parliament holds a debate on the new government. Thursday, chinese manufacturing pmi data. We round out the week with the nonfarm payroll jobs report out of the United States, which we have referenced already. It is a bank holiday in the u. K. Today. So be aware of that. Program, doeshe samsungs search for new Growth Drivers in a tile with Fiat Chrysler . And germany strikes a stern tone over writtens plan to exit from the eu. How did an early election pitch or down . Plus, the big freeze. And opec output agreement hinges on agreement between saudi arabia. Is the market share to enticing . All of that is ahead. Anna welcome back. This is countdown. 6 19 in london. 1 19 if you are in hong kong. The hang seng is down, in line with the broader index. Lets get the Bloomberg Business flash. The ceo of Fiat Chrysler said he sees samsung as a strategic partner. Commentsrchionnes come amidst interest from several potential buyers. We have a very Good Relationship with samsung, both as a supplier and strategic partner. I have a dynamic relationship with j. D. We share membership on the board of on a board. What i did say when i was at anrling yesterday is opportunity has been looked at by our people. I think it has Strategic Value to us. The worlds hurts biggest refiner. Sinopec posting a 22 decline in profit with net income down 3 billion. Chinas big three Energy Companies have all suffered this year. Sinopecell 98 while announced its first ever fullyour loss. Fouryear loss. Broken turbines on three 787 planes with rollsroyce engines. The move comes after the airline canceled more than a dozen dreamliner flight last week. The company said broken Turbine Parts damaged other sections of the engine when they snapped off. A proposed 8. 5 billion u. S. Dollar natural gas export plant in canada is getting a boost as an Aboriginal Community has signaled openness to the project amid speculations that the location may be changed. The group is set to meet in the coming game the coming days. Bloombergs your business flash. Anna thank you very much. The bank of japan has reiterated its pledge to boost monetary stimulus if needed. Governor kuroda said there was ample space for more easing. Some analysts say the Central Banks next move could be buying bonds of local and public corporations. Lets get more with your economy editor, who joins us now. How should we be interpreting coronas comments and what does it say about using at next months boj meeting . It will be a busy september. It is. It is a highly anticipated session next month. Roomubt, there is ample for easing in the three dimensions, which includes the moreive rate, as well as asset purchases. There is talk among analysts that a way around he said on several occasions there will not directcopter money, funding for stimulus, but maybe a way around that is to be purchases of bonds issued by local governments or corporations that are financing projects like rails and hospitals. That kind of thing. That is what analysts are telling us. Governor kurodas comments appeared to be a way to refute some of the talk among analysts that they have run out of policy options, they have run out of room to act for further easing. He was saying we have the tools and we will act if we need to. Anna a different tone to the one struck by janet yellen. The markets perceiving a different direction in policy. How is a strategy review at the next meeting going to affect policy action . What is the latest thinking on whether that will be a next use an excuse to do more or less . Some analysts think there is a greater chance of easy because of this policy review, which was announced in july and will occur. To look at what easing has done, the effects of easing and how effective it has been over the past several years. Comments thisas weekend would seem to underscore that, the fact that there will be a review does not mean that they wont take action. He seems to be indicating that that wont get in the way. Anna thank you. Still with us from our frankfurt office, carson. Thank you very much for hanging anothero talk about part of the world, which is japan. How concerned are you about divergent Monetary Policy there . Is this something we need to worry about . Do you expect the boj to do more in september . Im with you. I am concerned. That is the big thing, especially from what we heard from ms. Yellen at jackson hole. We also do see that the bank of japan is willing to do more, driven by the japanese. Overnment uphink something will come from the bank of japan. It will not be textbook helicopter money, but what we just heard, trying to fund local or regional investment projects. I think this looks like a reasonable road forward. Anna looks like a reasonable road forward. Would it really make a difference . It would not make a difference in terms of the Structural Reforms and in terms of an aging economy, tackling these Structural Reforms. Could make a or it difference in terms of providing shortterm stimulus and increasing investment in the japanese economy. It is a discussion that is very similar to the discussion here in europe. In the shortterm, it would make a difference. It should not be a substitute for not implementing Structural Reforms. Just look at the numbers. Apan is an aging economy they need to tackle this aging problem and that is something you cannot do by just building more roads and highways. Anna thank you very much for joining us. Carson stays with us to talk more about europe, the eurozone, and brexit. Plenty of news surrounding the german electoral story and the bracing conversations over the weekend. Up next on the program, the big freeze. And opec output agreement hinges on relations between iran and saudi arabia. Share grab for market more enticing . All of that is ahead. We talk about the informal meetings coming up in september around oil. Could we see a freeze . Anna a very warm welcome back to countdown. We are getting some breaking news. Explosion at the belgian terminology institute, a bomb exploded overnight. North of brussels. No casualties. One of several suspects entered in a vehicle. This is according to rtl. A new addition of daybreak is now available. It gets you up to speed with everything you need to know as your day get started. This is jackson hole. This is a Monetary Policy calendar and represents september. Boosting the odds of a september rate hike, boosting the outlook. See a september move on the table. Others did not see much change. Pimco suggesting there really was not much news about september. The next story on daybreak is the yen slide for a fourth day after governor kuroda said he is ready for easing. The transpacific divide in interestrate policy a factor for Foreign Exchange markets. Daybreak focuses on the worlds Biggest Pension Fund which may be gearing up for a 53 billion shopping spree. Bloomberg has run the numbers. That is how much they would have to spend to meet their target. Investors excited. Markets inng stock the asiapacific region a little sluggish. But japanese stocks are on a tear. The u. S. Dollar is broadly flat this morning. A hawkish tone from janet yellen at jackson hole. Ryan chilcote joins us now. Ryan a little bit more about the dollar. This is a threeday chart. You see the dollar kicking along. Speaks. Llen what does the dollar do after the comments . It plunged initially. Investors confused. Had stanley fischer, deputy head of the fed come out and say, september on the table. A rate hike in september as possible. That sent the dollar up, where it has been ever since. Japan. To take you to dis the nikkei 225 up 2. 5 on the back of Janet Yellens speech and roto speaking kuroda speaking in wyoming. If he has to, he is prepared to do more easing. On friday wasaw the biggest in a month and a half. I want to talk about emerging markets. South african stocks, it is the worlds worst performing emergingmarket currency. That is helping some stocks, in particular. Exposure, the dollar this is a five day chart. Meanwhile, however, the midcap stocks, the white line, they are down because they do not have the dollar exposure. Anna thank you very much. Crude oil has moved lower this morning on doubts over production freeze agreements. Yousef joins us now. You are looking ahead to algiers. Fascinating charts this weekend about the increases in saudi a and from the arabians. Thing, the stronger dollar is weighing on the commodities complex. We are focusing in on the production numbers. We have been getting comments from various officials and ceos over the weekend. Little hope of opec cartel reaching an agreement in algiers. Iran is trying to get back to its presanctioned level of production. This chart shows you how this is playing out. You can see irans current output. 3. 5 5 Million Barrels per day. That is the highest level since december 2011. Apparently, not high enough. Barclays analysts underscore iran is the key in this puzzle and that has been sending mixed signals. The market is likely to discount the outcome of the free stocks because of compliance. Compliance will be an issue if a deal is reached. We also had a comment from the United Arab Emirates oil minister and he is saying there will be stability in the oil markets soon. But did not give more details than that. Anna thank you very much. Joining us there from dubai. Janet yellen and her peers reaffirmed the believe in the power of Monetary Policy to stop economies from slipping into deflation. They were less keen on academic proposals. Gatheringd at the more activists measures were not being considered. Joining us now to analyze what we heard at jackson hole, from uis. H, global cio at great to have you on the program. Countdown. There seem to be different views in the market as to whether it moved the dial. Not ices say they were there was not much new. We think there will be one hike this year and it will probably be in december. The fed is taking their cue from what Alan Greenspan used to say. If you think you understood what i said, you are not hearing me clearly. They have the situation where the u. S. Economy is very strong but they are still very focused on the Global Situation and realize too many hikes in the United States would likely drive weaken theup and u. S. Economy. Anna how strong does the dollar have to get before it becomes a real worry for the fed . Mark it has moved quite a bit and the earnings have adjusted. We would be looking at not one hike making the dollar too hikes, but if we sell to i think if we saw to hikes two hikes, the message would come into question. The kind of thing that could drive this very low volatility higher and start to hurt the equity market. Anna i was looking at an interesting chart on u. S. Corporate profits and i know you are keen on u. S. Stocks right now. U. S. Corporate earnings have been dropping. They have seen their longest slide since the end of the recession. Does that make you concern about the growth picture . Whether the jobs engine is still intact . On the contrary, this is one of the reasons we like u. S. Equities now despite the fact that their pes are above the historic norm. But we think is happening is you have got still feeding through lower earnings from the energy sector. Yearoveryear, corporate earnings are down about 2 . If you stripped out the energy component, which is unlikely to have a similar fall this year given how far Energy Prices have come down, earnings would be up to to 4 . 24 . O we think for the year, earnings could be up about 3 and that should help are overweight in our equities help overweight in u. S. Equities. Anna what pushes them ever higher . Is it an earnings story . All of the above. The earnings picture is improving from where we started the year. Said,k, as you recently of fix is still in in terms centralbank policy. Janet yellen and her global counterparts reaffirmed at jackson hole that Monetary Policy still has some oomph to it. That came into question at the beginning of this year, but now it has been reaffirmed. Mark carney said the bank of england would potentially introduce qe. We saw those bond yields not just in the u. K. But around the world fall and we saw equity markets respond to that in a positive way. Anna we heard comments over the weekend from central bankers. We also heard calls for horse fiscal for more fiscal stimulus. Do you buy into this idea that we will see more fiscal stimulus . Are you making a strategy around that . Is a little too early to get extremely excited about fiscal policy in the sense that they are just starting to formulate arguments around it. We are going to very much look ahead to what the bank of japan in to say about it september. There are scenarios around the u. S. Election where we could see some increased fiscal spend, perhaps of Hillary Clinton is elected. There is one key point that is important to focus on today and that is mark carney, and talking after brexit, said we will not take Interest Rates below zero. The market responded positively to that. The market thanks, mark carney gets it, there is a limit to Monetary Policy and taking rates below zero or further negative is potentially deflationary and that puts the emphasis back on that switch over to using fiscal policy rather than just lower rates to help stimulate global growth. Rateswhere do you think should not get more negative . Rates have gone lower in japan, we saw that impacting banks because people fret about banks. That happened in europe as well. Think,egative rates, i are at their limits in terms of policy measures, even though central bankers see no technical hard limit. They are anxious to see the discussion shift more to fiscal policy or other means rather than lower rates and certainly that is what the market likes if you look at the response of financial stocks. Anna what would you make of a policy and japan to buy local government bonds . Would that be radical enough to make a difference . Well, it is hard to say that anyone move is going to be enough given the history of stimulus in japan has been erratic. It is not so much it is not a binary decision. It is how much they do and whether they can create that sort of shock and awe at this point in the cycle. Everybody is hoping they will give it another try. Hitn has not been able to their inflation target and that has put that country and that centralbank into some kind of jeopardy. They could announce a massive stimulus program, both on the monetary and fiscal side, or they could end up reducing their inflation targets. It looks like they are going to use more stimulus. Whether they do it now with the yen at these levels of a weight for the yen or they wait for the yen to strengthen more, that is an open question. You mentioned the brexit debate. Notes, your most recent you seem fairly impressed with how resilient Global Markets have been. On the u. K. Side of things, do you think we know yet what impact this is going to have on the u. K. Economy . We seem to be in some sort of phony exit phase were nothing has happened yet. Mark phony exit phase is one way of putting it. The gdp numbers, so far, have held up. The weaker pound and a beautiful summer in the u. K. Have boosted things like tourism, for example. There is a window here are policy can still have a very large impact and one of the things i wanted to focus on this month is the example of switzerland. Switzerland decided not to join into the European Union and they struck out on their own way and they have been enormously successful. It is up to the u. K. To choose the policy path they want and the kind of political economy they want but there are examples in europe of different paths from being in the European Union that are enormously successful. It also highlights the key point that the u. K. Should be looking at. We have not seen any moves yet and i think that is a good sign. Hopefully, the government and the people are having a debate and working out their strategy before they pull the trigger and say they want to exit. May i understand theresa meets with cabinet ministers this week. Thank you very much for joining us on countdown. There is nothing refined about sinopecs latest numbers. Opec. Es on we discuss. Retail therapy, japanese consumers are not the only ones who need to get shopping. Funde World Biggest engine ready to shed some cash . Anna welcome back. This is countdown. A. M. If you are in new york, middle of the night. Business the bloomberg with stephen engle. The ceo of Fiat Chrysler says samsung as asees potential partner. We have a very Good Relationship with sam some both samsung both as a supplier and a potential strategic partner. I have a Good Relationship with jd. Ive made no comment on the samsung deal at all. Is that it is an we have it as no interest in just selling. Oil hurts the worlds biggest refiner in the first half. Chinas big three Energy Companies have all suffered this year. Petro china saw profits fall 98 . Airways have found broken turbines on planes with rollsroyce engines. The moves come after the airline canceled dreamliner flights last week. Damaged othert sections of the engine. Prada shares have jumped in hong kong trade. The chairman said he sees a rebound for the company as early as next year. His comments came after the report after first half declines. That is your Bloomberg Business flash. Anna it is. Thank you. The german vice chancellor said the uks vote to leave the European Union is creating a sense of instability and will lead to big problems if policymakers mishandle the brexit process. Merkelsated angela message that britain cannot expect to cherry pick the eus advantages. Speaking at a separate event, the finance minister said the british do not know how to deal with the outcome of the vote. Is our guest from our frankfurt office. Reflectke some time to on german news. The official view seems to be just waiting for the u. K. To decide what it wants. I think the chancellor is trying to prepare the grounds for unified european view. A lot of tough talking, we have heard this before in the greek crisis. The brexit story, it might be different because it is not only the german view we are hearing but the entire european view. The entire a you seems to have an interest eu seems to have an interest in making his negotiations very tough. They want to set an example that it will be very difficult to leave the eu. They are trying to close the ranks and come up with a common view on how to deal with the british government. Do you thinkilient the German Economy will be with the brexit . Honestly, it is still too early. The first indicators were actually good, seem to show nothing in the entire euro zone was at harm from the brexit. All of a sudden, we had belgian Business Confidence go down. Opposing trends right now. There is no brexit, we have the brexit vote. Before we see the hard economic impact, we have to know how the brexit would really unfold and this is going to take a while. Germany will be hit through trade. Germany will also be hit through investment. Of ae brexit is the start very fragile future for the rest of europe, germany will not get more investment. That is the biggest risk for the German Economy. Continued uncertainty and no pickup and investment. Investment intart an aging economy, strong Government Support is needed. What kind of Government Support are you looking for . This could be your roles, you need to put some public money or rules, you need to put some public money in it to stimulate investment again. The money is there, both in the public and private sectors, but it used but it needs to be used. New technologies, education, lots to be done in germany to maintain this position of strong growth. Anna thank you very much. Thank you for waiting around with us this morning. Waiting around with us the whole hour from frankfurt. We look at the possibility of a september rate hike. This is bloomberg. Anna venture janet yellen is the case for a rate hike is getting stronger. Forget helicopter money. Financing local government maybe the dojs next move as governor kuroda pledges to boost stimulus is needed. Wnr Fiat Chrysler and Fiat Chrysler ceo says Samsung Electronics could be a potential target. Welcome to countdown. Lets have a look at how the European Equity markets might open up as we look backwards to jackson hole, head to the jobs number on friday. Where might mondays start of trading put us . Lets look at European Equity fund, expected to open weaker at. He start of trade this is a near guidance. It looks as if we will be a little bit weaker on the european session, down toward the end of the asian equity session, broadly. In ine. Emerging market week is on the strong dollar, weakness in the yen really propelling japanese exporters. Overall msci asiapacific down. With that in mind, lets bring up the risk radar. The dollar,in fairly flat, 95. 54. Jobs report due out later on this week, then the fed meets in september to consider Interest Rates. Is september back on the table . The work suggestion is over 40 . Weve got considerable weakness 3, the end today, 102. 3 propelling japanese equities. Reaffirming that Transpacific Partnership is a big focus. Msci down, emerging markets investors arewn, not convinced this morning that any sort of deal in algiers will result in anything meaningful from opec. Lets have a quick look at the bond markets. Is where we stand, 1. 61 the yield on the u. S. 10 year. Lets get the bloomberg first word news with christine hardy. Ch Janet Yellen Jackson hole speech looked hawkish enough for Goldman Sachs to boost the odds of a september Interest Rate increase. Conversely, pimco has said there was nothing of note in her remarks. Bond traders agree with that goldman view with the market implied probability of action arising after yellen said the case for tightening policy has strengthened. And forget helicopter money, the bank of japan may target financing a bit closer to the ground with trains, hospitals power plants, and sewers. That is from analysts who say governmentbuy local bonds. A spokesperson of the boj declined to comment. Speculation comes as governor Haruhiko Kurod bonds. Said at jackson hole that he wont hesitate to boost monetary stimulus is needed. And the worlds Biggest Pension Fund. Spreepans stock shopping tumbled last quarter. The 1. 3 trillion pension would need to spend over 50 billion to meet its target for the asset, according to Bloomberg News calculations. Stock will sell to 21 of investment at the end of june. Its goal is a quarter of the portfolio. The german vice chancellor said the uks vote to leave the European Union is creating a sense of the ability and will we sense of instability and will lead to big problems that famous handle it. He also reiterated on glenn angelas mongol o merkels saiderman finance minister the british dont know how to deal with the outcome of the vote. Made a pitchrkel to win back voters with the influx of refugees and japanese deepening involvement in international crises. Attempting to broaden her party base with an appeal to citizens of turkish descent. Just over a year before the next federal election she fielded questions in a Television Interview on eastern europes reluctance to accept refugees in relation to turkey, russia, and brexit. Mb has reportedly exploded at belgiums National Institute for criminology north of brussels. According to rtl, one of several suspects entered in a vehicle and detonated his bomb in the laboratory. No casualties have been reported. Singapore has stepped up its fight against the zika virus after confirming 41 locally transmitted cases a day after reporting its first infection. The ministry of health says it will continue to screen people in close contact with those infected. Of those whom i contracted, 34 have fully recovered. The majority of cases are occurring among foreign construction workers. Global news, 24 hours a day, powered by over 2600 journalists and analysts in more than 120 countries. You can find more stories on bloomberg at top. Im christine harvey, this is bloomberg. Anna thank you. Lets check in on the markets in asia. Juliette saly has details. A tale of two equity markets this morning. Juliette yes, anna. Have a look at how japan has finished today, up 2. 3 as governor kuroda signals that there could be more stimulus coming through into the japanese economy over the weekend, and of course Janet Yellens comments that we could see a rate hike, or at least putting the rate september, table for seeing the Dollar Strengthened in the yen weekend. Biggest gain in about three weeks with japanese equities, and you can see that a lot of those are electric carmakers. Also have a look at the selling. Emerging market stocks and currencies in particular are very much affected, and we knew that would happen of janet yellen was going to be a little more hawkish than some had anticipated. The korean won has been the worst performing currency in the asian currencies, which is weighing on the session. Weakness in australia, finishing its session down by 1 . It has had three sessions of losses, the first time we have seen that in 10 weeks. New zealand is also closing lower, and emerging markets in Southeast Asia are coming under the pump as well. Still seeing trade in shanghai, down by one quarter of 1 . Here in hong kong we are seeing stocks at a twoweek low, with concerns of the Property Market filtering in, with a lot of weakness and casino markets. The worst decline are on the hang seng, galaxy. One other stock at want to show you is Crown Resorts in sydney. That has close down the session almost 2 weaker. This is of course the casino enterprise, who has sold further and the ceoiness now owns only 48 of the company. You can see that big plunge that came through and of course the japanese yen has also been in focus, continuing to weaken against the dollar on the back of Janet Yellens comments and comments we heard from stanley fischer, down by half of 1 . Boosting. E weaker yen anna thanks. Getting exporters in japan reason to smile. A september rate hike by the Federal Reserve could be back on the table after janet yellen said she considers the case for tightening to strengthen. Mike mckee reports from jackson hole. Wall street at some of what it wanted from this conference. While she didnt put a timetable on it , shouldnt suggest that Economic Data improved enough advocates for an increase in the federal funds rate has strengthened in recent months. That led investors to dramatically raise the odds of a rate in september, more definitely by december. Stocks fell and bond yields rose. Others back to view. We are being datadriven, but we are also being patient and cautious. Demand is weak around the world. Central banks are cutting rates. We are below are inflation and growth was 1. 25 . I think our caution is appropriate. Still, the outlook is uncertain. There is no preset course for rates and no way to know where will go ultimately. So what does of a good due to raise a recession . That is the topic of this conference. Former fed staffer now at Carnegie Mellon proposed nominal negative Interest Rate, a controversial but intriguing idea. The case for on nominal Interest Rate in the negative direction, the Central Banks have the capacity to move Interest Rates below zero. That is for the longerterm. Monday morning the focus moves back to yellen and the data. With fridays jobs report looming larger they are preparing for a rate increase. Anna joining us from brussels, the Senior Vice President at the dimeo intelligence. Looking briefly back to jackson markets what we saw, are increasingly factor in the change rate hike in september, is not september than december. Does that go along with what you would expect . How will that play out for the world . I think it plays out for politics in the sense that obviously rochus was back to the political arena. So far Monetary Policy is the only game in town and i think that is a function of a situation across developed democracies with the populace on the rise. Is of course if Monetary Policy starts to step back a little bit do we actually have the leeway to move ahead, to do what has to be done . That is the thing to watch over the meaning of to longerterm. Anna and if we are looking at a bigger fiscal boost and we saw plenty of cause for more physical activity at jackson hole where did that come from . Where would you focus . Thats a good question. If you look at europe it is nowhere to be seen. I know there are market expectations, but if you look at the politics in europe what you see is a stalemate between populism in the south calling for a more expansionary stance, and obviously you have germany going into elections next year, and that will be absolutely toxic for a loser fiscal stance. I think europe remains caught between these two populisms and i dont see any room for fiscal expansion. Anna although it looked as if angle of merkel may have been suggesting that tax cuts could be part of her electoral pitch. Does that sound likely . Yeah, i mean, it could happen on the margins. If you look at the Budget Surplus in germany, something along those lines is probably realistic, especially because she has to do something to win back support from her own party s more business friendly right wing. We could look at an announcement over the next 12 months on her electoral program. But again, Something Like a bigger fiscal stimulus rebalancing of the eurozone, i think that remains off the table. Anna some years ago we heard from john plug younger about his plans to develop infrastructure spending. How would you write those in terms of size and effectiveness . More, or Something Different . That has clearly been the commission costs idea to move in that direction, but if you look at the reality of policymaking, you have to move from the and it hasuncil, really led to a situation where we have room on the margins to go with projects like younger. But there is massive rebalancing before we will see any improvement here on the structural reform. Anna with the subject of brexit, crucial to european leaders, and they meet on the 27th, is it likely that they will discuss investment and how you stimulate further the european economy oris brexit too much of a distraction . It will certainly discuss that, civil because matteo renzi is going to a crucial referendum. Francois hall on is going in spring. There will be a push in Southern Europe to discuss it but as you i think the brexit issue is the most pressing. If you look at the slow pace at which we have been moving ahead, its clear that theres a lot of work to do and the pushback from the north against anything more substantial in terms of fiscal expansion will be significant. Anna thank you very much. Ou reality. Crude we look ahead to the offshore northern seas Conference Starting in norway today. This is bloomberg. Anna welcome back. Bank holiday monday in london, but the pound is on the move. 131. 17 against the u. S. Dollar. Markets in london will be closed, or lacking in volume, but elsewhere in the rest of europe we will see a full equity trade. Lets get the Bloomberg Business flash with christine harvey. Christine thanks. Chrysler hasat said he sees Samsung Electronics as a possible strategic partner. Sergio marchionnes comments, come amid several car buyers. We have a very Good Relationship with samsung, both as a supplier and as a strategic partner. I happen to have a Good Relationship with him. We share membership on the board of xor. I made no comment on the samsung at all. Right now its an opportunity that has been looked at by a great deal of people. I think they have Strategic Value. Christine chief oil hit the worlds biggest refiner in the first half. They posted a 22 decline in profit with net income down to 3 billion. Chinas big three Energy Companies have all suffered this year. Profit fall. W it will see the Global Oil Glut continuing at prices staying low. Unbrokenn airways turbines on 377 planes with rollsroyce engines during part of its investigation. Comes after the airline canceled more than a dozen dreamliner flight since last week. They say the broken parts damaged other parts of the engine when they were snapped off. Shares of jumped in hong kong trading after the chairman carlo monsey sent out an Earnings Call that he sees a rebound for the company as early as next year. His comments came after a report of the first decline in opening sales since 2011. Thats as weak demand in china and terrorist attacks in the u. S. Continue to weigh on the italians luxury good acre. That is your Bloomberg Business flash. Anna thank you. Christine harvey from hong kong. Morning,e lower this by the investors are preparing for a change in direction. Money managers are slashing death of falling prices and boosting wages on a rally. Lets talk more about whats coming up in norway today, as the offshore northern see 2016 conference kicks off today. Us g cavity joins thanks for joining us. What is the significance of this conference and what are we expecting to come out of it . Conference, the important conference is coming about a month before opec ministers meet informally in algiers. Everyone is looking forward to since the news of that meeting has come oil prices have moved quite a lot. Oil has gone up to about 50 per barrel. People are looking at it, they will no longer discuss the implications if it happens at all. The opec meeting, the price of. Roduction, and of course cost win in the oil industry have been suffering for the last two years at least, profits are down, jobs have been lost, its not looking very good for the oil company, and that will be a big focus. Anna we will hear from a lot of ceos. Youve been hit by Falling Crude prices, this area of norway is right at the heart of the industry. Guess. Yes. We are at the heart of the norwegian industry. Oilre europes biggest supplier, but the last two years the world has not been good for norway. We were the biggest sovereign wealth fund, the first year the government had to withdraw money from the sovereign wealth fund, edges and great news. Which isnt great news. Lost, and this conference points that out. We are looking at, what are the industryf the offshore . Anna thank you very much. Ryan chilcote joins us on set to talk about oil. Becausekes its wounds, it suffered as many Oil Dependence have, what are we expecting on the oil story . We have this big, informal meeting. Thats right, september 2628. You will have opec producers, nonopec producers, they met in february where they failed to conclude a deal. The best they can hope for is some kind of freeze. I think the idea of a Production Cut has been completely ruled out. But there is some kind of hope. There is hope for some kind of freeze. The real question is will it change the fundamental picture. If you look at Spare Capacity, with the exception of the saudis, who are more or less happy anna there was a great gadfly piece over the weekend talking about, if there isnt going to be a freeze, who was going to block it we got some charts that show how since april production has increased, production in iran. That country has come back in those charts are interesting because they show you how perhaps these two countries might be happier but in this case he says it will be iraq and nigeria, who have been suffering the outages. They are not too far off their target. They have really ratcheted up production. The saudis have a couple Million Barrels of Spare Capacity and they could increase, but it is the nigerian specifically that have suffered so much of the last six months, the attacks on the pipelines, they will say like, really how do we have to contribute . There is really hard text that says each country has to freeze and that would be a no go. Anna they might want to negotiate something higher. We have seen is temporary ceasefire, havent we . Whether that will have a longlasting impact we will see. Lots of focusing on as we go through september. Boj and the fed. The jobs report will keep us on our. Toes that will do it. On the move is up next. No u. K. Trading today, but the rest of europe is open and it looks like it will be a sluggish start. Guy welcome to on the move. We are counting you down to the european open. Im guy johnson; Caroline Hyde is out today. Hiking in jackson hole. We will look at friday well fridays payroll numbers confirm september is a live meeting for the fed . The nikkei soars, kuroda faust to act decisively. But what is on the Shopping List . And a bad week for the bricks. De la rue said makes a final stand in south africa