Verbal to actual intervention . Deflation at nestle. The slowest sales growth since 2009 on sluggish price growth. Good morning. Less than half an hour till the European Equity market opens. Lets show you what is going on in terms of where the price action is and where we think we will go this morning. This is the fair value calculation 22 a half white rise. Pointing to a halfpoint rise. This line here, this column here shows you where we think the market is going to be opening. It will take you through to the gmm function. We are getting a little bit of breaking news coming through. Let me take you to that as i show you the gmm. Sampson news coming through as we can see on the screen. Closing at a record high. Let me take you back to my gmm. We have the bloomberg dollar 1 . X down by point. 4 of it does not register as being one of the top five. It is all the way down here. 83. Ese yen up through 199 it is the aussie dollar and the kiwi that are making the big moves today in terms of the z score. The size and scale of that move. What does the boj do next is the question that is outstanding. Lets get to the news. Possible ance france possible Unemployment Rate has dropped. That will help the president fulfill a promise to cut joblessness before the next election. Japans july exports dropped 14 , the biggest decline since 2009 and marks the 10th consecutive month of shipments falling. The difficulty of kickstarting japanese growth. Prices euros and 51 cities versus 55 in june. The head of ireland plus National Olympic committee was arrested. Following a wider investigation into illegal ticket sales. Down from allg his roles temporarily in sport. Global news 20 for hours a day powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. Now for the prospects of a u. S. Interest rate. The bloomberg dollar index sank to a threemonth low. Go onnt to see that wirp your bloomberg. Divided and confused, the markets reading it right essentially saying what that means is there is going to be no hikes in the medium term or even the longterm. It is difficult to work out what the fed means. The fed does not seem to know what they mean and you can look at the dot plots are you looking at the forecast for the next year. The highest is at 2. 5 . Very hard for the markets to wrap their head around when that you cannot give a clear message. Will provide more clarity in jackson hole. She wants to keep more focused if she wants to keep the rate hike on the table. The market is pricing and 5050 about whether we get one rate hike by december. That number needs to be much closer to 80 for the fed to be able to pull the trigger or else that will cause too much volatility in the marketplace come december if it stays in the levels. Is in the zone where it is going to stay soft for a while. I look at the dollar is strong in times when Interest Rates are rising in the u. S. Or times when investors are fearful and look to the dollar for as a safe harbor. Right now the economic environment internationally is fairly ok. Nobody is seeing the dollar as a safe harbor and rate hikes seem to be elusive. The dollar stays in the zone of weakness for a long time in my view. We are in a long, drawn out, we could dollar weak dollar period. It is not great news for japan or the eurozone. Walk us through if the dollar sets the tone than the rest of my portfolio works off it. What does the rest of the portfolio look like . Guest valuations have come along way. A long way. Ones that benefit from the weaker dollar. Guy how much . Youre talking about that is where i put my extra ammunition. Is that a significant over way is that a cautious overweight, the emerging markets story in so many ways does not work because there are so many fundamentals that are working against it. It is the fact that there is nothing else to buy that drives people in that direction. Guest what i would be saying is there are two fundamental things dollar. Hindering the they fell 15 , there was a stronger dollar and falling Commodity Prices. Commodity prices are stabilized in the dollar has stabilized. That allows emerging markets to brush themselves down and have a reasonably good time. You are starting to see the economic ada stabilizing. Stabilizing. It is starting to stabilize and i think that is where the trade is. Guy what with the dollar surprise look like question mark . Look like look like . Are putnterest rates back on the table for this year and next year. If you see in placement inflation coming up the fed will react to it. Why do i not just keep buying what is going on in the states . That seems like a lower risk option and multiples are elevating but we live in a weird world where bond yields are where they are and as a result of which markets are doing what they are doing. There is no normality here but nevertheless im wondering why i do not take a lower risk option. To deliver. Re going why do i need to get the extra risk out of emerging markets . Guest it is trying to add a little spice to your portfolio. Emerging markets can return doubledigit. As much as i think the u. S. Is a relatively safe harbor asset and i agree it could move higher, it maybe high singledigit growth this year at best. Next year, mid to lower single growth. It will not deliver for the longterm. Emerging markets give a little bit of spice to your portfolio. Guy this is what is happening with the price at the moment. We are . 20 away from 50 bucks a barrel. We will carry on the conversation next. Japanese International Shipments sink as the strong yen chases off foreign buyers. We are in tokyo next live. Revenue gets hit by deflation and banks will not wait for brexit according to people familiar. Beginnancial firms make their exit sooner than expected. What brexitpwc on should do next. This is bloomberg. Guy 19 minutes to the market open. Welcome back. Juliette nestle has reported the slowest firsthalf sales growth since 2009, increasing 3. 5 on an organist is the on an organic basis, missing analyst estimates. Cisco will on them 7 ofght illuminate its workforce. They are moving away from traditional hardware. Savings from the job reductions will be invested in newer businesses that cisco expects to fuel sales growth such as cloud computing. The Ceo Chuck Robbins will be on bloomberg oh at 2 30 p. M. U. K. Time. Sent hit a fresh record high in early hong kong trade. It beat analyst expectations. Tencent abovee 10 alibaba. Companys seo expects its lossmaking smart phone to turn a corner as it shifts toward higherend devices and reps of marketing in the u. S. And china. Fell 14 in exports july, the biggest decline since 2009. Japanese exports have been made less attractive to international buyers. Is it just down to what is happening with the yen, the data . Guest the yen has a lot to do with it for the yen has strengthened about 20 this year and you pointed to todays move. Is making products on the International Stage from japan more expensive and weakening the export picture. However, we have seen some ned global weake demand. We have seen almost all the Major Trading partners, those numbers being off in the past month. They were off more than 12 , to the u. S. More than 11 and to the eu off more than 6 as well. Cars,e seen weakness in shipments of steel, and shipping. It is were seeing it in some major sectors and Major Trading partners. Verbalen does intervention become actual intervention . When does the boj try to do some thing about this . We have a big meeting next month. A lot of anticipation, more than a month or now but everyone is watching. I do not think this one report does a whole lot. You start to see this trickle of reports, you start to see the numbers we saw in gdp the other day pointing to a weak economy and obviously with the yens strength what that can do in destin things in terms of exports. You see this putting pressure on the boj but on Prime Minister shinzo abe and his government as well. Guy there is always something of a Silver Lining to many of these stories area japan has historically been a big importer of energy and Raw Materials which not only have been coming down in dollar terms but have been coming down very much so in yen terms. What effect is that feeding back to the economy . Have we have seen some of that and we have seen some things that do not seem to be heard by the strengthening yen. We had good tourism numbers, some numbers yesterday, that does not seem to be affected. Tourists still keep coming from south korea and china. Those numbers were very strong. Some of this seems to fly in the face of the strengthening yen. Guy great to get your take. Joining us out of tokyo. We want to take you back to the terminal. Crs. Is the debbie crs w such a massive outperformance versus the dollar versus what other currencies have done. Spot return, the japanese year again. , 2. 65 . Why such a disproportionate outperformance of the yen versus other currencies . This is investors losing fakes face in the ability of faith in the ability of the bank of japan to stimulate. You have negative Interest Rates, they own 40 of the Government Bond market. They are a top 10 shareholder. There is not a lot left they can do. Kuroda has a real challenge. There is a lot more he can do to stimulate the economy. Hence why we are seeing this rally in the end. Guy this is the billion threemonth dollar yen threemonth. Jody talks about the september meeting. They will try and purchase something. I am not 100 sure what they are reconsidering what they are going to do. They will explore this negative Interest Rate. When they went negative in the beginning of the year it caused a negative reaction the marketplace, big selloffs in banks and the wider market as they went below deep into negative territory. I would expect some sort of action from them. What needs to happen is some sort of fiscal stimulus and we are starting to see that coming into effect with the government announcing a package that could amount to 6 or 7 of gdp over the next couple of years. The where the boj has gone ecb has followed. We have seen in japan what has happened in the long end. This effect, the euro zone beginning to show signs of life. It is not phenomenal but we do tickingnch unemployment down into single figures. There is evidence that Consumer Confidence is starting to rise. Why are we getting the different response . The differences japan has been in a deflationary spiral for two decades. The money they have in their bank will buy the more tomorrow than it will today, hence why they hold onto it. Thatis once you are in mindset it is difficult to break it and it will take more than three or four years we have seen to awaken those inflationary spirits in the japanese economy. As long as shinzo abe remains in power and he recently won an election, he can continue to if a mate those implement those reforms area this is why were seeing a different reaction out of the eurozone dated than you are out of japan. Guy well get a count out of the eurozone. In think the difference the data is going to generate a very different response Going Forward from here, the ecb can sit and do nothing or does just does it need to do something still . We are getting the minutes is what they will be doing sitting on their hands and seeing what the economic fallout is postbrexit. Bit early tolittle be taking away the medicine from the patient. What i would be expecting is some form of extension. Probably not a real ramping up in purchases but an extension to september of 2017, that seems a realistic response from the ecb postbrexit. Guy thank you. Minutes away from the market open. We take a look at the movers in todays trading including kingfisher and the food giant nestle. The market opened nine minutes away. This is bloomberg. Guy welcome back. It is 7 53 a. M. In london. About to change. We like the weather here. Six minutes to the market open. The market is higher this morning. Here the stocks you need to be watching. A deflation problem, houston and the caffeine hit is not working because what we are seeing is the sales line being hit. We have the worst numbers since 2009. You are looking at a fairly dismal number. This is a deflationary story and that is interesting Going Forward from here about whether or not a company like nestle can take itself into a new world with a new management that will up margins and focus on health care. It is an interesting story as we work our way through the next two years. It is a low inflationary environment. How does a company like nestle pump up the middle of the story, the middle of the market and get it going . The next story of want to talk about is vestus. Look at what is happening with the question surrounding nuclear. There is a story doing the rounds that the u. K. Can benefit from spending money on wind. The turbanted to be business will perform strongly Going Forward. Pay attention to that particular shift. Nice pictures of sheep, always peaceful. Kingfisher. Bout this company is not doing quite so well in france. The numbers are weaker. Getting stronger. We will see whether or not the hot weather has offset the brexit affect. This is useful in terms of showing that story. The market open is four minutes away. We will get a reasonably positive story. The big theme running through markets is what is happening with central banks, have they lost their firepower . The fed seems divided and confused. The big story is what is happening with the yen. That is a big story. Will take you as we wrap things show you what is happening here and give you an idea of what is going on. We are expecting a market and what that is showing you, the dax will open. 7 of 1 , the main markets opening up about. 44. 501 . The market open and minutes away. That is next. Guy good morning. You are watching on the move. Im guy johnson, here in the city of london. We are moments away from the start of european trading and here is your morning brief. Divided and confused. Investors take a dovish queue is confused as to whether to hike rates. 14 was pledged as the yen flexes through 100. When does the boj move from verbal to actual intervention . And the worlds Biggest Food Company reports the slowest first half sales growth since 2009. So, lets turn to the terminal. The fair value points to 0. 5 gain for most european markets this morning, the as we count you down to this open, where are we actually going to go . Let me show you the market open. Here we go. We think these charts are going to pop a little bit higher this morning. It will be interesting to see what the key stocks do. There we go. There is the ftse 100, we are up. 2 . Up 12 points on the european markets. What is moving the markets . Lets find out. You can save the Consumer Staples are the only Industry Group that are declining so far in thsese few opening seconds. Verall, european stocks are up that is the stoxx 600. Most of the consumer stocks are also gaining. You have also the bond markets thise u. K. Trading gilts morning. This is the one your chart for 10 year Government Bonds. There were a few dozen protesters at the bank of england yesterday, telling the bank of england to create money for people, not for financial institutions. The bank of england is probably feeling pretty all right with itself. This is part of the quantitative easing plan. So, you can see that yields this morning are a little bit lower. Gilts year bonds and u. K. Actually rising this morning. Fewerms of stiocoks,ks, a companies are coming out with announcements. Lets start with kingfisher this morning, overall sales beating estimates. The u. K. Was better than expected and france, worse than expected. There is no clear evidence of impact on demand from the u. K. Vote to leave the european n union. The austrian bank, saying the Second Quarter profit missed estimates, although the shares are up a little bit. Pretty much flat therefore the austrian bank. The outlook is unchanged, they say, but it is suffering from pressure on revenues as a result of these record low Interest Rates. That is the big game acrosthemes chart today. Moving on to nestle, shares are down. 7 . Nestle seems to be struggling to raise prices and revenue is growing at its slowest pace since 2009. Guy think you very much indeed, elliott. I just want to say, it is the end of the reporting season in london. Pearson, reckitt benckiser, some of the stocks that you can see pretty clearly reflected in your mrr today. The stoxx 600 is on the big losers of the bottom of that. Lets turn our attention to what is happening with nestle. Bloomberg Intelligence Consumer duncan fox is here, as is Alexander Dryden from jpmorgan. Duncan, inflation took a bite out of nestle. Yes, it looks like the developed world is struggling to the any sort of pricing at the moment, despite good innovations. So, that is just making life tough at this time. Guy we have a new Management Team starting. They are coming from the Health Care Sector. If you were looking at these numbers, the obvious thing to we need to, move into higher margin products. This ishealth kind of spectrum that nestle seems to removing up at the moment, i we just going to see further extension of that story . It certainly seems that way. They call themselves a health and nutrition company, so i think taking somebody in from the Health Care Sector shows a couple things. One, they want to move that way. Two, they think regulation will get tougher in the sector Going Forward. So, you might need them at he who understands how to get through the regulatory side. Guy the government may be not moving as aggressively as some people had anticipated. Alexander, this is a stock that carries a decent bit of yield, 3 . In a world where people are looking for a little bit of kerr above what tht a little bit of carry above what the banks are expecting, this is should make People Fairly relaxed. Reasons not to own nestle . The dividend yield is pretty attractive at 3 . So, 3 , plus the upside participation out of equity markets could make some sense. Have really shipped equity markets so far this year. It does not surprise me that in the u. S. , the top three sectors are health care, telcos, and energy. The sectors that have the highest dividends are health care , telcos, and energy. This has been to shape the equity performance year to date. Duncan, is there a read across i can take into the rest of the sector from this . What is the effect of this sector story . From the sector point of view, they are all translating into growth. They will want to buy into emerging market areas where they are strong. They all have pretty strong balance sheets. So, they will be looking for a way to improve the volume growth. Away fromre taking the developed world, where inflation will be around for a little while longer. Guy sounds like the advice you are giving to your investors. Agreed. It is the yield we are always going back to. When of the Biggest Challenges we have with our client base right now its the cant find anything with a positive enough yield. Right now is that we cant find anything with a positive enough yield. This hunt for yield is one of the reasons why emerging havet debt and highyield done so well because investors are rushing to the yield spectrum to find something with a positive return. Guy duncan fox joining us from Bloomberg Intelligence on the nestle story. Alexander dryden will stay with us from jpmorgan. Member, this company has upped expectations Going Forward. Lets see which is stock is popping very nicely, trading up nearly 10 . Coming up in the meantime though, mongolia. Yes, mongolia, they have hiked Interest Rates 15 . We will get the details later. Thwe get the latest from berlin. Abbanksl to come, wont wait for grexit. Banks wont wait for brexit. This is bloomberg. Guy welcome back. You are watching on the move. We are approaching 50 when it comes to the oil trade. This, as we continue to monitor developments from opec. We will see if we could see some sort of production freeze. That feels very much like a dollar trade. The ftse is up by. 3 and the dax is up by. 5 . A quick look at the mrr, to see what is happening here on my bloomberg. Number of other stocks are wake. Ing in tehe it is the day that stocks go ask dividenex dividend in london, ad that is affecting the bottom line. Kingfisher this morning, on what is happening in france, down 1. 26 . We get retail sales in little bit later today. Lets get the bloomberg first word news. Reporter thank you. Frances Unemployment Rate has dropped to the lowest level in almost four years. It fell to 9. 9 in the Second Quarter. That should help president Francois Hollande the ability to fill a promise to cut joblessness before the next election. Officials were divided in july over the urgency to hike. Some prefer to wait because inflation remains be nine, while others inflation remains benign, while others want to go as soon as possible. Apans and sports dropped 14 . The continued drop highlights the difficulty of kickstarting the japanese growth. Havese home price gains called for the month of july. Prices rose in 51 cities, as opposed to 55 in june. Two u. S. Swimmers were taken off a plane in rio yesterday. Colludings an as dispute between there is an escalating dispute between the swimmers and the local authorities. A group of four swimmers say they were robbed at gunpoint by men posing as police. Global news 24 hours a day, powered by 2600 journalists in more than 120 countries around the world. This is bloomberg. Guy lets talk about the united kingdom. Jobless claims are falling. The Unemployment Rate is at its lowest in more than a decade. That is Rearview Mirror stuff. Job vacancies, though, something to Pay Attention to. Maybe an indicator that you need to watch out for them. They have implied that employers need to be more cautious about hiring. A lot of this is focused into areas such as apprenticeships, which require a longer term commitment to people, but it is interesting to see how this story is working its way through. This story is not new. We have seen Job Vacancies decline for a while. Lead indicator in a world where most indicators are lagging. When do we feel the brexit affect . Right now. If you look at the bank of england forecast, it is an interesting display of how the brexit will affect of the economy. What we wont see the effects of is anything on the consumption side until 2017 or 2018. Those breaks that have been put on investment with of the vacancies falling off stop with the hiring. Unemployment starts to creep back up. That is when you will see consumption start as low. This is why retail sales continue to hold up. The consumer has yet to feel the impact of the brexit slowdown. Were still in the really early days of this. A shock will that be . Because the market has lori priced in a lot on this story. Weird does that get price where does that get priced in . Honestly, there is no best case. There is no study i can point to that shows the impact of a country coming out of a trade glut. As the happen before, which means forecasting here is based more on emotion rather than information, which means a lot of what we see has to be taken with a pinch of salt. It could deteriorate quite quickly and we are starting to see that. Guy let me relate back to the fed story with what is happening with sterling. People are very negative. The data is very clear that a lot of people are positioned against the british pound right now. The dollar is weakening. And the market continues to price out the possibility of a rate hike from the fed further and further and further. 2016 is pretty much done and 2017 is looking shaky. We just dont know. It could be one and done. When do people start to think, this is a pair . The dollar side of it is starting to scare me a little bit. The amount of people shorting the pound, how negative people are. The pound versus the dollar will 1. 25,o about 1. 20 to which is still in the very early stages of the brexit fallout. Weve just in the bank of england turning from a passive to an active central bank. We expect more action out of them, potentially in the form of more quantitative easing and potentially in another Interest Rate cut. Is badeconomic data enough, does the bank of england step over the border and go negative question mark guy they have made a very clear that that is not going to happen. Indeed. It very cleare that the bank of japan was not going to move into negative enough,ry and no now sure they are in negative territory. I think of it is that enough, the bank of england will try to stimulate the economy. Negative, we would be the first country to explore negative Interest Rates whilst running a huge current account deficit. Guy that was my next question. Those two things would be two fingers on the value of the pound. That is when we would see it start to fall. Guy the u. K. Feels it has the opportunity to be somewhat of an experiment. Great. Agreed. We have talked about resetting fiscal policy. The question is, what will this look like . If you really want to support the u. K. Recovery and try to help people through this brexit fallout, it is about trying to put money back into the pockets of the consumers. That could look like tinkering with the income tax to help the consumer. They make up 60 of the u. K. s gdp. That is where i would focus if you wanted to make a fiscal difference. Guy will break those down for you here on bloomberg, both on the radio and on television, and of course on the bloomberg personal services. Alexander dryden will stay with us. Up next, mongolia hikes Interest Rates to 15 . Details, next. This is bloomberg. Guy welcome back. You are watching on the move. A number of assets we have to focus on this morning. Lets focus on the oil markets. Very much a dollar trade, but nevertheless, a backdrop of what will happen at the next opec meeting. Postollar has weakened the fed minutes and you can see that in the next line. European equities are a little bit higher this morning, not exactly helping out. Nestle is up. 2 . The deflation story is certainly hurting the top line when it comes to the worlds Biggest Food Company. Lets talk about emerging markets. We do not often talk about mongolia. It is top of the markets, though. It has made a decision to increase Interest Rates to 15 today, a rise of 4. 5 . This is something of a uturn as well. What is going on . It is something of a u turn, guy. There is a big run on mongolias currency. The government is talking about the risk of an economic crisis. Mongolia rode the wave on the upturn of the commodities cycle. Well, that story is obviously gone now. Trade between china and russia, slowing down. Russia is in recession. It is all hitting mongolia quite hard. By all accounts, all the pressure is on the government finances and whether or not they can meet their debt obligations. Many things are coming together at once and that is what the central bank was forced to do what it did today. Guy this feels very big, a 4. 5 move. But is this really big in terms of what the central bank normally delivers . It is a reasonable move by all accounts, but like you said at the beginning, the uturn signals how concerned the central bank is. The economy is slowing down. You would have thought they should be doing everything they can to the growth off the ground. But if you step back from this, this is only the beginning of a wider push by the authorities to try and get the economy back on track. On the one hand, they are going to have to push through some kind of fiscal tightening to get a grip on spending again. On the other hand, they are going to have to try to generate activity underground. Accounts, there is not much of a plan b for mongolia. There is no easy way out for them from the current commodity crisis. They do not have much in the way of services. Expect more action from the policymakers over the next month i would say, guy. Guy thank you very much, indeed. Alexander dryden from jpmorgan is still with us. The commodity currencies, funny enough, had been doing very well, the big ones. As we have seen, the backup in oil and Commodity Prices as well. Is that something that you think has legs . The dollar is down and that is part of the story, but commodities have been rising from a very beaten up position. When you look at your emergingmarket story, when you look at what is happening in commodities, do those two things tie up . Global not get much further and perhaps, copper will not either. Gold does not get much further and perhaps, copper will not either. Theres not a lot of upside for a lot of people beyond this. Re seeing this bear market. The bloomberg Commodity Index was down 17 at the start of the year. What we are starting to see is a sense of splintering of how different commodities are behaving. Some of them are going sideways, but there are still areas where you can see deterioration. The markets are still massively over supplies. The nextnow entering phase of the commodity stabilization, where things start behaving in different ways. Guy you need to really segment it. The us, not every commodity currency is going to rally. It is going to be those once any positive markets we see some supply readjustment, such as oil. You should see those currency stocks stabilize. If you are more exposed to the industrial metals, there is still plenty of downside, in our mind. Guy what is the more longer term prognosis . 2014,ce the summer of Capital Expenditure has gone down by 385 billion among the oil companies. That delays about 3 Million Barrels per day of production until the next decade. You can see the supply adjustment we have already had in oil. That should be something that will stabilize over the next couple years. Guy they are still pumping. Yes, and you still have the u. S. Shale producers keeping a lid on oil prices. I think the days of the 100 barrel of oil are behind us. What were looking at is maybe 60 this year and 70 next year as the oil price starts to slowly grind higher. Guy alexander, thank you very much indeed. Alexander dryden, Global Market strategist for jpmorgan. Alexander will continue the conversation with manus cranny on first word europe on bloomberg radio. Up next, we will take a look at what is happening with the u. K. Economy and how the brexit vote is affecting it. That story, next. Yousef guy welcome back. You are watching on the move. We are 30 minutes into the trading session. 4 . Toxx 600 is up lagging a little bit. A few stop that gone ex dividend today. 74,ll trading at 68 the ftse 100. Shares are up. 1 . They said they would start a formative Million Dollars would start a 400 million euro buyback program. Reports range in the italian newspaper that they may return to purchase the Premium Television unit. There was an agreement between the two, but then they pulled out. They may come back in for shares rising 2. 1 . Pearson, the educational publisher, shares down 2. 5 . Dividend,e gone ex along with a number of other put the 100 companies. Guy thank you very much indeed. Lets take a look at exactly what is happening with the u. K. Story in more detail. We get july retail sales figure at 9 30, and that covers the period following the brexit vote. Kingfisher reported sales that the estimations. There has not been any clear evidence of an impact on demand thus far. Kingfisher is trading at mildly this morning. Lets talk about what the retail story looks like in the u. K. What do you make of what is happening with the u. K. Consumer at the morning . The sun is shining and you have yet to see any significant price increases because of the pound. British consumers are shrugging their shoulders and carrying on. Absolutely business usual. One of the key drivers of Consumer Sentiment is unemployment. When people start losing jobs, that is when people start their spending. Business has been driven by the warm weather. Sales have been pretty decent. So, there will be some commentators desperately trying to read something into the retail sales figures and trying to infer something from them about brexit, but it think this is too hard to tell really. Guy the mechanics are quite interesting. What is the average lead time on something being made somewhere and arriving in a u. K. Shop and being sold . Presumably, if i am a big retailer, i am purchasing of the decisions that affect what is happening now were made nine months ago or maybe even one year ago. Of this would have been january at the endat the en of the previous care. There is not a lot of forward buying, for example. Any inflationary impact will be felt strongly there. That said, one of the supermarkets cutting prices and margins to compete against each otheer anyway. Weather is a big factor. And you know, it is business as usual. Wit really is business as usual. One year from now though, how different do you expect the picture to look . I think it will still be difficult for retailers. There is huge competition. Business,oing out of the stocks will affect some of the others. Yes, it might be interesting to see who feel the impact from that. Are moving, things along quite nicely. Kingfisher is very robust. We never underestimate the impact of whether. Impact of weather guy we joke about this around the world, but it is actually a real story. The big driver, as you mentioned, will be prices rising. Historicrates are at lows as well. It is going to be impossible to say what happens in the retail sales today are due to brexit. Guy ashley is talking about nestle is talking about raising prices in the united states. Sorry, raising prices in the u. K. If you relate this back to what the big supermarkets are saying, and they are still talking about aggressively managing the margin to keep prices lower, if nestle turns around to one of their biggest suppliers and says, we are going to put prices up, that could happen, right . Commodity prices are fluctuating. And as the prices of the main aputs go up, supermarkets are bit more realistic about passing that on to their shoppers. But obviously, a retailers are very reluctant to accept this. Most of them will take that. Guy what about the upper end of the markets . Electronic scenarios like that. Premium product story work . Whatever apple launches or microsoft launches, a lot of it is about the newness of the product, the innovation of supplies. There has been a lot of raising of the game from the retailers themselves in terms of the instore experience in customer service. But that can be volatile, too. Havetrength the pound will is going to hugely impact that. If youre washing machine bro, you would purchase a new one, end of story. A lot of those categories are driven by the new launching of the marketplace. Guy thank you for spending time with us. Brian roberts, joining us from tcc global. Big Financial Firms may begin their exit sooner than expect ed. We talk about what clients should be doing. 8 37 in london. This is bloomberg. Guy 8 40 in london. Welcome back. You are watching on the move. Germanys Deputy Foreign minister spoke with michael roth. They are now joined from berlin with more. What was the message that roth was trying to give us . Good morning, guy. Rothessage really is that is trying to dispel any kind of notion that some kind of a special deal or a special status u. K. ,be an offer for the at least not now and probably never. The eu has had lines of htthis terms of then brexit taunts, which have yet to begin. What is interesting though, is past experiences with countries connected with the eu, but outside the block, like norway, might not be the template at all because the situation is so unique. Guy so, given the uniqueness, and therefore the difficulty, and the amount of time it will take to create such a solution, how does that fit with potential german and patience about getting this issue moving potential german i mpatience about getting this issue moving . There was a sense of inpatience. Foreign Affairs Ministry officers said theat we need to recognize that the u. K. Needs to get clarity from what it wants from the eu. But the issue should not be delayed or put on the back burner either. Another official we spoke with in recent days expressed frustration that germany and the rest of the eu is not getting any real signals yet from london about what theresa mays government wants out of these talks. Guy i am sure she is mulling that. How to kind of wrap it up, much of this is negotiation . We are in the early stages where tactics are important. You dont want to be seen as saying, you can have what you want, cherry picking is permissible. Of course, at this stage, they will say that will not be the case. Sure. We all know that in the eu, the usually,is the game and it will not be different in this case. Here, we are talking about what is potentially a very long period, something that will go r r years, and as michael said, we are seeing a lot of uncertainty. That is the german view. A lot of the data suggests that the uncertainty is not that huge, but that is the political view from a certain set of german politicians. Guy thank you very much. Meanwhile, banks will not wait to see the brexit deal. We will start the process of moving jobs from britain within weeks of the government triggering its eu exit. That is according to people present when the plans were being drawn up. Lets talk to the head of brexit for the u. K. Financial services. They advised banks on how best to respond to the referendum results. What message are you communicating to them . What anyt know yet deal will look like. So, banks really need to focus on the potential worstcase scenarios they need to plan for and start thinking about what options they can put in place sooner rather than later, should that be required. Guy so, there is a lot of ifs and buts and whatevers. Is there a case being made that actually, we cant take the risk of waiting . That would need to actually move people . The cost of moving people is high, but in the longterm, it all comes out of the wash. It would not make that much of an effect whether we have people in paris or frankfurt or london. Additional Capital Requirements are required. Do banks have the right banking licenses . All of these processes take a lot of time. To i think banks want understand what options they have any timetable they have to implement those options. Is somethingickly they dont want to risk either. Guy is there a difference between how american banks are responding and how european banks are responding . European banks in the eurozone have that advantage because they are already within i europ europe. American banks need to think very hard about where their entities are if some of these worstcase scenarios do indeed play out. Guy what about staffing . What has always been interesting is you talk to banks about people moving outside of london. And they struggle to find the right people to deliver what they need. How easy is it to do that across europe . How big a problem is the staffing story . I begin will be a huge issue. The issue is not just finding the right people and moving them to the european ccasions. Moving large amounts of people is never going to be the answer. Guy what is happening now, in terms of the mechanics in how the banks operate . We will seey the u. K. Data later on and we are struggling to find the effect. Has there been an affect within the Financial Sector . Curley, overnight there was clearly, overnight there was a huge amount of volatility in the market. The banks are struggling with the economic problems in a low Interest Rate environment. That makes it more difficult for many institutions to be profitable in the shortterm. Guy does sterling have an effect on this . Undoubtedly. All currency movements will have an impact. The sterling obviously, is significantly lower now. That will make this a more complicated game Going Forward. Guy how does it work, and this may not be entirely your area, but in terms of rent and being locked in, how much stickiness is there surrounding being in london . There is a lot of stickiness, and it is not just about property. It is also around the people, the structure, regulatory licenses, liquidity. There is a lot of talents and availability of the skills in london, which does make that difficult to replicate anywhere else in europe. Guy besides guaranteeing access to the single market, what could be u. K. Government what could the u. K. Government do . Passport arrangements are basically the key thing. So, preserving the access rights. It is not just the banks having pe,ess to your theuro but recognizing that the banks perform their own purposes as well. Guy we will watch with interest. Andrew, thank you for joining us. Up next, oil nears a bull market as the u. S. Glut approaches 50 a barrel. Next. N oil, this is bloomberg. Guy welcome back. You are watching on the move. The yen is back below 100. What is the boj do next . Will we see fireworks in september at that key meeting . The margin targets are being raised this morning. A very nice reaction to that. The stoxx 600, just to give you we are onwhere average, higher this morning, up by 0. 5 . Lets get the details with what we need to know around the world with the Bloomberg Business flash. Nestle has reported the lowest firsthalf sales growth since 2009. Sales increased 3. 5 on an organic bases, missing analyst estimates. The worlds Biggest Food Company struggled to raise prices in the face of deflation spreading across europe. 5500 will eliminate physicians, 7 of its workforce. Moving says they are workin away from traditional hardware. Savings will be invested in your businesses, such as cloud computing. And ciscos ceo will be on aterg 2 30 u. K. Time. The chinese social Networking Company be analyst expectations last quarter. Lenovo posted a firstquarter profit that also exceeded estimates, but that came you may on the back of cost cuts and asset sales. Smart phonected the business to turn a corner the next fiscal year as it shifts to end devices and ramps up marketing in the u. S. And china. Insurance products will be sold through the chinese outlets. The londonbased bank is thinking about 400 million for exclusive access. Representatives for allianz, a xa, and Stanchart Asia declined to comment. Of oil is back on the brink a bear market. Lets take a look at where we are right now. Just below that nine, 49. 94. The nymex trading at 47. 10. Lets get the details on what is driving this. Is it the dollar, or just Something Else . Saudi arabia is potentially driving this. Yousef, what is going on. Is this the fed affect or the saudis, or combination of the two . As you know very well, several variables are feeding into this equation. There in mind that you are trading within a whisper of 50 per barrel with brent. Those volumes, 18 below the 100 day moving average. The numbers we got out of the the simplyhe eia showing a drawdown. We put this on a chart for you and you can pull it up on your bloomberg. This shows you what is happening with those inventories and the latest decline we had. Our reference line right there is the oil price and wti. Inventory is dropping by 1. 5 , which was largely unexpected. As much as that paints a bullish picture, it would be a mistake to say this is an entirely bullish report because there is still a lot of oil in the market. 1. 8 . Eproduction is up u. S. Production is up 1. 8 . Morely then, a slightly bullish report than expected, but again, still a lot of oil out there. Guy in terms of the momentum about what people are talking about, to be back in the bull market, we have to get to 50. 16. What is going to get us over the line and keep us going . It was a glance of the cynicism and the market versus the upward trajectory. Talk to me about sentiment. Last time with a 50 a barrel was in july. Host of that rally was driven by sentiment most of that rally has been driven by sentiment. Talks between opec members and nonopec weighing in on the conversation as well. Most people we have spoken to say a freeze is not likely to happen, but we have had influential voices agreeing with the former president of opec who think that because all of these numbers are pumping at record highs, they have additional incentives and additional leverage to come to some form of an agreement at this meeting. So, that possibility, low a ist is at the moment, weighing in on that sentiment picture. Bloomberg intelligence is saying optimism is likely transitory. That is why prices will be transitory as well fol. Guy think you very much. We have july or retail sales coming up. That gives us a picture of the british economy after the vote. Then, angela merkel, holding a working dinner with donald tusk. Francine lacqua will take you into the pulse next on bloomberg television. And Jonathan Ferro and i will be on the radio. Francine it divided fed minutes shows official split on the next hike. Retail sales for july. The labor market shows. And oil, on the verge of a bull market. Oil minister says there is hope of a freeze so oil can stabilize. Welcome to the pulse. Im francine lacqua