James bullard said failing to reach the fed inflation target is hurting its reputation. We will bring you our interview with the president. Againstoins the stance risky positions. The question is, is dying down risk the right trade right now . Matt lets take a look right now, 30 minutes away from the european open where futures are trading, we had a reversal in asian markets, they recovered from the trump concerns and turned back down again. Here we see futures, no change for european stocks. Take a look at what we see happening in the bond trade. I will zoom in to see which direction we are going to coming back up in the yields so investors are selling off german debt. The yesterday we took a look bund isthat this, the trading in the tightest range since 1992. Almost no movement, no volatility and very tight ranges have been the story of the market and it continues today. Equitieserday european selloff, it was quite a chunky soft. 1. 5 . That was the story yesterday. This morning the dollars bid, trade currency is it as well the dollar is bid. Lets show you what else is going on, look at the south korean won, down. 201 . We are watching the glencore numbers, they have done well on trading. Some of the metals are rolling over. Lets show you what is happening on the far side. What were seeing is south koreas cbs flashing red. As the market pays attention to what is happening between north korea and the president of the united states. Lets get a bloomberg first word news update. Here is shery ahn. Shery ahn south korea and japan are warning north korea that it would face a strong response if they carry through with the threat to launch a missile toward the u. S. Territory of will. The defense minister said it would be legal for japan to intercept a missile aimed at guam. South koreas joint chiefs of staff said their countrys military is prepared for any action by north korea. Kenya is sliding toward a political crisis over opposition allegations that hackers interfered with provisional vote tallies from tuesdays general election. Protesters took to the streets of the capital of east africas best economy after the Election Commission released a test results showing the president with a commanding lead over his main rival only to later say the tallies were not official. Zealand dollar is losing ground this morning after the countrys Central Bank Held its official cash rate race at a record low of seven private percent. They cannot expect to raise amid weaktwo years inflation. His deputy said the nations currency needs to adjust down. Two of the biggest Money Managers have a message for investors, time to dialback risk. According to a report by pimco, investors should third down stocks and debt while shifting to lower risk assets such as treasuries and Mortgage Backed securities. T. Rowe price cut the stock portion of its Asset Allocation portfolios to the lowest level since 2000. The former Google Engineer who is controversial memo has triggered the debate on gender differences and Diversity Efforts in technology has defended his views. Speaking exclusively to companyg, he said executives are smearing him after the memo went viral. I shared it with many of our diversity programs and with but no onegoogler high up ever came to me and said no, do not do this. Even though there were many people that looked at it. It was only after a gone viral that the upper management started shaving me and eventually firing me. Ahn speaking exclusively to bloombergs emily chang. Ceo issued a statement. Our job is to build a great product for users that you difference in their lives. To suggest a group of our colleagues at traits that make them biologically less suited to that work is offensive and not ok. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. Matt thanks for a much. Federal James Bullard said failing to lift inflation to the 2 inflation target can erode its credibility. Pc datahe said recent was an unexpectedly low. Inflation is coming to the downside during the spring and not just by tiny amounts. Really by a large amount that we to the private made. We were creeping up toward 2 all during 2015, twice 16 and in 2017, most of that progress has undone. That is at least in my mind leading to a reevaluation of our story about whether our policy is lethal inflation back toward target or not. We will have to see how the data comes in the second half of the year. Are you saying lets wait for the data . Am willing, were always data dependent. I am too optimistic were going to have higher inflation measured on a yearoveryear basis by the end of the year. If you look at the sep we are predicting 1. 6 . For core inflation by the end of the year. So we would still be well below target and not too far from where we have been in the last couple of years. I think we have a ways to go here on inflation. If inflation is not responding much, what is the it throw the economy into recession . You would be moving preemptive against future the policyy moving rate. We have moved policy rate three times. Why you need to do this in this environment, you have lower inflation in the u. S. , Inflation Expectations measured by markets below where you would like them to be. You have other countries with in thelation rates developed world. It does not seem like inflationary environment where this will get away from us. You do not need to be preemptive in this situation. Bullardsident james speaking to kathleen hays. Fedsu think the credibility is on the line here . Mark i think it is a bit harsh to save the credibility is on the line. A lot of people have said the credibility is down the line for a couple of years. The comments were quite dovish thethe ranbaxy left expectations for a december hike. The market is more focused on the Balance Sheet unwind and dudley is speaking later. He might be a hawkish surprise seethe fed seems to want to good news. There is an easier risk reward surprise on a site perception of hawkishness than the business and that is why you have not seen much reaction from bullard yet. Policy, has ity reached its limits . There are a lot of Central Banks that are unable to reach their inflation target. Mark i am a massive lever we need to reexamine the policy framework. I am not convinced inflation targeting is such a great idea. You can get good Growth Without inflation, romania, poland, israel, they had sharp deflation but strong growth and even some developed countries like the u. S. And japan, they still had reasonable growth. I am not sure this idea that we need 2 inflation is the right thing for growth. Were not sure that Monetary Policy is the best mechanism for generating it. It helps generate inflation but it used to be the main way of generating inflation. It is much more marginal when there is structural inflationary pressures caused by demographics and technology. Guy draghi might go to the market and raise money. What is your read of what is happening in the credit writedown market, are these the deals we look at gone and say that was the top, we have seen this before commodities are the kinds of transactions that stand out . Mark what we are at a turning point, it is crucial. We had two weeks ago the at t l, the largest dollar and dollar offering. Where talking about another one, we have talked about this year yield tesla deal that is supposedly highyield, and we have below 5 yield. Sudden rush these to markets by corporates. Raise as much seasonally but everyone is rushing to market. Corporate snow this could be the end of, they are issuing debt at a low yield. A change in is the catalyst even though most people rashly do not expect an escalation of tensions that could lead to war. The has been the catalyst for the change in sentiment. And Investment Grade credit was trading at the narrowest level and a few days later it is back at early july levels. The shift has happened. The market is set for a bad patch as a result. Us, thanks for joining bloombergs mliv macro strategist. You can follow their blog at mliv. Greco, ceo of Zurich Insurance joins us after reporting net income that Beat Estimates for his first interview of the day. This is bloomberg. Matt welcome back to the european open. I am matt miller in berlin. Lets get the Bloomberg Business flash. Patrickn billionaire draghi lts is working on a offer to buy charter communications. According to people familiar, the European TelecomMedications Company and its subsidiary are yet to decide whether to bid for charter. Softbank wants to merge the cable operator with the struggling u. S. Wireless companys rent. Debts word in the Third Quarter 32 . 3ancial debt jumped one billion euros at the end of june from a year earlier. A reported negative Free Cash Flow before mergers and acquisitions. The company said it expects the cash flow figure to be positive in the quarter through september. The recent headlines about er and harassment at ub the gender diversity row on google have put request workplace the hager on the front pages. Exclusive interview, Sheryl Sandberg said employees must step up to the plate. Sexualharassment has been around for a long time in every industry. It is abominable that it still exists in this day and age. People know better. It is great when people lose their jobs when it happens because that is what will get people to not do it in the future. It is a leadership challenge. As a leader of the company in its destinies to be no tolerance for it. Shery ahn that is your bloomberg is this flash. Guy thank you. Signaling that it can continue its positive momentum. An overhaul gains traction. Joining us now to talk through the figures, mario greco joins us from zurich. Good morning. You talk about the fact that your 17th, 19 targets in terms of restructuring on target. Wouldu ahead of target you say or would you say you are on target at this stage . Mario good morning. Is difficult to judge. It can use we leaving on the targets. Is return on equity [inaudible] the adjustments. Are atcost reduction, we 550 million after slightly more than one year of the for your target. On cash remittances, were well on track for that. Aboutl, we feel good indicated targets. We are confident that we will deliver on all of them and possibly exceeding them. That lets talk about the strategy. What role will acquisitions play in the strategy . Commentsing at the coming off the media call. We are in the market for acquisition but no need for the strategy. How pivotal m a is going to be, how central is it to your thinking Going Forward for this business . We have a strategy which is no acquisitions. The previous question on do we feel we have gaps, we do not think we have any gap. Soldgh this year we have two businesses, to portfolios and we have made to acquisitions. All these transactions made perfect sense to us, they all added value. We will continue to be extremely disciplined. We committed to improve the return to shareholders through this plan horizon. We would be disciplined in doing exactly that. Matt if you do not need any acquisitions, if you do not need any acquisitions and you are on or head of target as far as your cost cuts are concerned, plus you are beating expectations for profit, can you return money to show shareholders in the form of higher dividend or share buybacks . Zurich has had a dividend unchanged of 17 francs for a very long time. Tooar ago, this was all dividend cuts and i heard lots of questions on where the be seen cuts news would out. In November Lester we presented the strategy and we talk about dividend growth. Now it is all cuts and we are committed to that. As part of the plan, we are committed to remuneration orders through sustained increased dividends. And we want to deliver on that. Let me ask about something that may be is political or cultural for the company. The former chief has been elected or nominated for election as chairman. I wonder what your reaction to this is and what it means for zurichs dna. Mario the board has run a very thorough and efficient process assessing and its and has identified him as the best candidate to propose to the agm. ,e look forward, we welcome him confirming his opponent as the chairman and i am sure we will work extremely well with him and i will virtually have the pleasure. Guy let me take you back to the m a story. Thisave been asked about already this morning and you have not exactly provided us with a huge amount of details which is understandable. Lets talk about anz, assets you could be in the market for. Anz wealth business the kind of business you would be looking at . Again, i do not want to comment on any specific transaction. The only thing i want to say on top of it is that we only do the things that we are good at doing and we only do things that would be accretive for our shareholders and will confirm our Strong Capital discipline. Other than that i do not want to comment on anything. Did he give you anything on the types of businesses, there are all kinds of businesses out in front of you or are there specific areas you might be focusing on . Mario we are not focusing on anything yet. The strategy we have is grounded what we have today. Maderansactions we have our transactions that make good sense for us and our shareholders. Either because we sold businesses that would not that were not performing extremely strongly or would not highly integrate strategically for us or vice versa. We purchased assets that could fit very well in our business model. That is the way we will continue operating. Matt i want to ask finally about youre talking about in strength of your returns local currency. There has been a lot of action in the currency lately, post reporting period. How do you think you are doing with that is first hedges are concerned and how much more difficult does it make a business to see these kinds of currency moves . Mario yeah, currencies have moved a lot. So far, currencies have helped the pnl. Our businesse of growth which has been lost in currency movements. We do not hedge. We have a natural hedge which is the balance of our business. I think it is a good thing for switzerland and the swiss franc against the euro. This is something that helps the swiss economy and its strong developments. A balance business like we have, currencies still make a strong difference. Matt thanks so much for your time, really appreciate it this morning. Mario greco, Zurich Insurance group ceo joining us on the phone, appropriately from zurich. We want to get you a couple of stocks to watch, tyson crew is one. Yssenkrupp is share up 50 coming down a little bit into this announcement or it will see how the shares react at the open. This is bloomberg. We check our phones 85 times a day. So it only made sense to create a network that keeps up. Introducing Xfinity Mobile. It combines americas largest, most reliable 4g lte with the most wifi hotspots nationwide. Saving you money wherever you check your phone. Yeah, even there. See how much you can save when you choose by the gig or unlimited. Call, or go to xfinitymobile. Com. Xfinity mobile. Its a new kind of network designed to save you money. Guy 21 stocks go exdividend today. Exds. Re bigname going diageo is exdividend. Royal dutch shell is exdividend. Joe is exdividend. When you take a quick look at the wei screen, london looks like it is going to perform a bit. That may be down to a big, big chunk of exdividend coming out. Glencore out with numbers as well. Pay attention to that. Matt. Matt yeah, im looking at a chart that i showed you yesterday. It is btv 7722. And it shows when investors flock to safe havens what happens. Some of this all until it he comes back to life. This is global currency volatility. The gold is obviously gold. The white is the yen. Youre watching gold today up 1. 35, not really breaking out of a range. Treasury yields are not that much lower either. Guy let us take a look at where we stand with the ftse 100. Opening stocks are as expected. 7493 is the opening price. 8583. Cac 40 down by. 1 . The french will be focused on what patrick is up to. You can see what the stoxx 600 is doing, down by around. 1 . London is underperforming. I will show you the mov screen in a moment. You will see an awful lot of exdividend on there. Let us get more details. Nejra cehic. Nejra even though we are talking about money moving into safe havens on geopolitical risk, the bond markets are study. Moving ayield, not whole lot. Moving ever so slightly higher. That is what we are seeing with. He 10year gilts yield as well it is moving up just about one ares point, 1. 11 where we at the moment. It is unchanged one basis point higher. Looking at what is happening with equities on the breakdown, the imap on the stoxx 600, of course, we saw losses yesterday. We are seeing the stoxx 600 open about. 2 lower on the benchmark overall. In terms of the sector, energy underperforming. Interesting even though we are seeing wti and breadth move higher. We have materials underperforming as well. Lots of commodity producers down. 5 followed by financials. Most Industry Groups heading lower on the stoxx 600. We have been talking about volatility. I am so excited about this chart. Easy number to remember. G btv 8888. I want to get this right. If you look at the 20 day realized volatility on the s p, it hit four yesterday and is now even lower. We are around three on the realized volatility. The lowest level since electronic trading was introduced. If you look at the data combat to the 1920s, the only time it was lower was in the 1960s. The stoxx 600 in europe has seen realized vol rising this season, bringing the spread to the largest gap in over one year. Check out that chart. G btv 8888. The are talking about minors. This chart shows a simple divergence. She btv 3198. Gold minors suffering while base metal mining that is since the beginning of the year. Guy let us take a look at what is happening on the mov screen. The movers around europe. You can see it in london, what is happening here. Bunch of exdividends. These are mainly exdividend talks on this side of the ledger this morning. As a result of which, not going to focus on them. This is a stock i