Transcripts For BLOOMBERG On The Move 20160825

More than 25 billion come hedge funds last month. The biggest month redemption monthly reduction since 2009. Caroline we have cautious trading ahead of jackson hole. Federal reserve chair speaking tomorrow. Futures down 20 if youre looking at the euro stoxx 50 at. 2 moment futures down if youre looking at the euro stoxx 50 at the moment. I know youre good to be checking other assets. Manus into the calm before the storm. That is a part of the debate will have today. Repressed volatility. Is it qe at work echo stocks in the u. S. Lowest since 1994. Bloomberg dollar index at the top of your screen, up. 4 . We are shifting into they five of the dollar bid zone on that. Underneath that you got crude oil up. 25 . He had stockpiles again. U. S. Suppliers up by 2. 5 million barrels. Greenfield ceo says short crude at these levels, 50. Is it a moment of recovery or more pain echo pain . Growth will be close to zero this year. Olitics is the dominant theme i am or has a sword into 2014 at we have a iron ore has a sword get ready for issues in terms of supply and you are going to see a contraction in the biggest user, china. That is your risk radar. Lets get to juliette saly. Juliette, good morning. Juliette manus, thank you. Investors pulled more than 25 billion from hedge funds last month, the biggest monthly reduction since february 2009. Total outflows this year, close to 56 billion driven by mediocre performance. Hedge funds have faced nothing criticism over state costs and their failure to keep pace with it is a most time to short crude rally, the centuryold commodities firm which was the largest in dependent oil refiner in the u. S. Simon green shield says traders should short the vti crude should short wti crude. Former Uk Independence Party leader, nigel farage, appeared on stage with a rally with donald trump in jackson mississippi. Farage spoke of britains decision to leave the European Union as a positive example and urged Trump Supporters to get out to vote against the establishment. Next line establishment. If you want change, you better get out there campaign. Enoughg is possible if decent people are ready to stand up against the establishment. Thank you very much indeed. The issues we face here in america are similar to the issues faced in britain during their referendum on membership in the European Union. Juliette the death toll from the earthquake that hit central italy has arisen to 24 7 according to the countries has risen to 247. Its lend the centers it flattened the center of three major towns. Global news, 24 hours a day, powered by 2600 journalists and analysts in more than 120 countries. This is bloomberg. Caroline thank you very much. Mark mobius says helicopter money for japan is on the way. The veteran investor speaking to Bloomberg News suggested that more action from the bank of japan could come soon. Japan is the leader. What japan is doing is having a global impact. The experiments that japan is trying will be watched globally. Japan is a leading indicator for the rest of the world. Engage in helicopter money with great care and reluctance. Of course if they do it to carefully, it will have the desired effect. Moreare going to be much circumspect and they probably will wait until the yen reaches 90 before taking action. Manus andrew parry is the head of joins us now. Mobius says the bank of japan was delivering. It will hold back until yen hits 90 before the evoke helicopter money. Andrew i think it is a big step to go farther than they have gone already. Helicopter money is an illdefined concept. It means flooding the system and more liquidity. The problem with the problem you have with these extreme how do you unwind it . People talk about the Immediate Impact of monetary policy. What is the endgame . It does work, [indiscernible] i do think there is this constant touching faith in the ability of the banks to turn it off and unwind it once these extreme actions have been put in place. Caroline how would you deem it has worked . Is it the year is it the yen weakening . Question. Is a grand for me, too many people are focused on asset prices as the litmus test on whether it works. The nikkei are the s p on the stoxx 600 going up. At the end of the day, mark mobius said japan leading the way it will if japan is leading, weve all got a very sad future. It is going to come down to economic activity. Manus we are trying to secondguess what the review is from the bank of japan. Ive got a chart for you in terms of dollar yen. One month volatility over one week volatility. It is slowing out. The volatility in yen is the personification of risk. In your view, it is possibly qe, more negative rates. It could change the invasion target. What would that do to dollar yen . What the you make of that . Andrew red herrings in terms of longterm economics. A lot of it is a justification of helicopter money is just justification of going to extremes. Intois beginning to move totalitarian Monetary Department policy where we are being coerced into a better Economic Future purely by more and more extreme monetary measures. The central bank feels they have to find some theoretical justification. When you step back and look at these commonsense terms, your lending to the japanese government for 40 years at one point, negative rates. Are these signs of a healthy economy . I do worry they are pushing it to an extreme where you might get an immediate shortterm reaction, yen might weaken, but what are the longerterm consequent is that we are left with. They could be if you move the helicopter money japan, then you suddenly get inflation soaring in an uncontrolled way. One good thing, you might get inflation to 2. 5 or 3 . If it was easy to control, Central Banks would of done that a long time ago. That is the challenge. Mental i suppose any but manus im sure anybody would be grateful to andrew parry from him as caroline we are talking jackson hole up. What is the fair chad likely to offer . Plus accrued outlook for the ceo of phibro recommended shorting the vti. Shorting the vti the plot thickens in south africa as the finance minister says he wont abate a police order to present himself for questioning. All this ahead. This is bloomberg. A glorious morning in berlin. Less glorious if youre on the back. Futures down. 3 on the open. Here is juliette saly. You. Tte caroline, thank shares in hp tumbled after hours. It is next profit of . 34 per share, lower than estimates of . 40. That is as the printmaker slumps struggles with a slump in demand for its products. Chinese investigators are invest imc has received inquiries from the related to futures trading and its shanghaibased affiliates. China has been cracking down on highspeed traders in the wake of last years market rausch. Monsanto has revealed it has withdrawn its application for it isproval and its over debate with the government on royalty fees. Monsanto said it is reevaluating its business in india after he cut to royalties. The company says it pulled the application last month because of regulatory uncertainties and ongoing discussions. Thailands National Oil Company says the Energy Market is increasingly oversupplied with prices falling and a new longterm contracts. It plans a new shopping spree. The company ceo told bloomberg he expects prices to head higher. For the rest of this year, we tonk it will be between 45 50. We will be planning to see the to 50radually going up to safety dollars in the next two years. It will be in the longerterm, maybe 60 dollars maybe 60. Juliette after they thatcted and multiple drug generates 20 of the israeli companys revenue. They were challenged by two rivals who want to make cheaper versions of the drug. A decision on a third should be reached next week. New zealand led the world when vote. E women the right to now it is claiming another world first, pizza delivery by drone. Dominos Pizza Enterprises has joined forces with usbased line operator thats flying robot operator flying robot operator it will Start Testing the service in new zealand later. Drones ining to use australia, france, the netherlands and germany. No pizza for you, manus. Manus flying pizza on a friday night. What more could you possibly want . A new paradigm. 2016 and economic symposium that kicks off in jackson hole, wyoming, today. One of the paradigms they are going to be talking about, investors are going to be listening for clues. The Options Market pricing in over a 50 chance of a hike by the end of the year. Uncle mickey since this week Michael Mckee since this report. Been holding have a symposium for 40 years and for 38 and for 38 of them, ceos bernanke laidben out fed policy. What is janet yellen going to do on friday echo she wants him to do on friday . She wants she wont say much. September 21. We have had bys chair sam fisher suggests the september meeting is life. Yellen might say that, but whether she suggests the fed is close to an interestrate increase is something we will find out on friday. Michael, bloomberg, jackson hole, wyoming. Caroline andrew parry is with us. What you expect to come from jackson hole . What do you expect to come from jackson hole . Andrew talking about the manner. In a positive possibly raising rates in the future and finding a reason not to do so. I think the fed is tentative about raising rates. I think it will always be. There was use the excuse of externalities as a reason not to do it. I know the fed is a political but they do have half a mind toward president ial elections later in the year. It will be a continuation of what we have seen the last few months, particularly if the ray equally the ray rice manus curious to know, we have the money market could volatility in the fx market. The difference between 30 year paper into your government bonds. And twoyear government bonds. The propensity to hike by the fed . I am not sure it is underestimating the ability to hike. What it is underestimating is the potential for shock. We got into a position where a lot of complacency is in the market. Investorswhere equity have been putting their money. Investors are starting to bet on the trade coming through and pushing up miners. They are putting up cyclicals and that is not reflected in the bond market. We mentioned that the japanese s equity line manus if Equity Investors are being pushed, i would counter would you just said. It it is interesting is a sort of same thing. If you dont believe in the reinflation, those yields on some of those sickle stocks are not going to be there and those cyclical stocks are not going to be there in the future. You can only pay a high dividend if theres underlying economic expansion. I do think there is more than just a search for yield equities. Thats equities have been equities have been yielding more than bonds for years. Point where it has to decide it wants to push the inflation the next policy initiative from government. I will believe that when i see it. [laughter] andrew wherein a Pivotal Point in the equity market. Is this a regime change . We are moving away from fears of stagnation and deflation. Now maybe the Central Banks the reflation, retrade helped by this goal largess is going to help. Caroline i see manus talking about volatility in the bond market. I see volatility in the stock market. We are seeing asian stocks trading at the lowest bound that we have seen in four years. Will that change post friday . Andrew it could very well the. I look at bollettieri it could very well be. I look at volatility. It tends to trend down in regimes we have monetary coercion, where Interest Rates are very low. Caroline how you hedged, andrew . Andrew it is trying to focus on socks that are not dependent on an account focus on stocks that are not dependent on economic outlooks. All remains optimistic. That is one of the differences in opinion that you get from the bottom up to the top down. A lot of macroeconomics, geopolitical concerns but you can find some interesting stocks from the bottom up, even in china were the outlook for growth is very clouded. Manus no one wants to spend money on buying andrew, stays with us. We are eight minutes away from the start of the trading day. We are going to take a look at the corporate movers. [indiscernible] stop and shop, keep shopping. This is bloomberg. Caroline 7 54. Minutes away from the open. That means were checking out some stocks. Check in on our hold it were talking retail and the dutch margins likely to push stocks higher, 1 or 2 is how much we could see climbed. Quickly changing tact. We are going to be looking at the german stocks. Lufthansa, the Company Striking a deal with some of its union members. A longterm agreement, relief. Manus well, those airlines could do with a little bit of relief given the summer they have had between terror and global issues. Coming up, it is the start of the year trading date. Stocks indicated for slightly lower opening. London down. 68 116. Where do we go next and and countdown to jackson hole . This is bloomberg. Manus good morning and welcome. This is on the move. On manus cranny in Bloomberg European 500 is. Alongside me, Caroline Hyde in berlin. We are moments away from the start of european trading day. Caroline global gathering at jackson hole, set to kickoff as investors seek clarity from the fed. Ready to drop. Saysetons mark mobius japan could be months away. And hedge funds clipped. A the report says investors pulled more than 25 billion of hedge funds last month, the biggest monthly redemption since 2009. Were running up for the open, futures pointing to a lower start to the trading day. Caution in asia trading. New volatility, the lowest in four years in terms of trading in asia. Lets have a look at how europe is expected to open. Futures ticking down, down for the dax. Earnings. Attering of but overall, we want to get a breakdown in terms of regions we want to look at, how we are impacted as the Federal Reserve janet yellen is likely to give some sort of hint as to where the market is likely to go, where the Federal Reserve is likely to move. Will it be cautious tones . Europe, downstern 1 10 of a percent, france tracking lower, u. K. Pretty low. Dax, always a the bit of a laggard, off by 4 10 of 1 . Keep an eye on lufthansa and nejra cehic, because she will be breaking it down in terms of yields of the u. K. Take it away. Nejra because of course as well as the equity market open, we have the gilt market opening right now. Lets take a look at the 10 year yields. We were at 55 basis points before the market open and we are pretty my still there now, just up one basis point if anything. Not a lot of movement at the moment, but we will wait for that to settle. Moving on to whats happening on the stoxx 600, you can see it set to break down. Its pretty much across the board. Consumer discretionary leading the losses, materials following closely behind, also down 5 10 of 1 and followed by health care. Telecom is outperforming at the moment, still off by 1 10 of a percent. Open, asart to this the futures are indicating. In terms of stocks we are watching, lets bring this up for you, starting with the dutch emerged last month, beating estimates in the second as cost reductions improved profitability in the netherlands. Operating income grew 8 to 335 Million Euros on average adjusted basis. It looks like we may be seeing some gains at the open. Event if we move on to play of, a special dividend 150 Million Euros will be paid on december 6, 2016. Some are calling it higher and it looks like its up more than 4 . P. M. In a pipeline remains healthy, continuing to focus on m a. Its also confident of strong growth in 2016 and beyond. Those shares are rallying on the comments. Crh finally, just wanted to show you this, seeing no real change in the u. K. Post brexit. It says that Brexit Impact is unclear for the mediumterm. It says europe is at the start of a long, slow recovery and sees the second half somewhat tougher in the americas. 2016s the tail end of 2017 before a return to m a. That stock is moving a little higher. Manus thank you. Breaking news for our viewers from fairbank, the russian banking institution. Second quarter net profit came in at a nice peak. The market had a number pegged at slightly less when it comes to net interest income. This is the real core of how to judge whether a bank is working. Income in that interest. Second quarter provisions come in at 97 billion rubles. Second quarter provisions coming in at 97 billion. Sberbank will probably rely on margins and costsaving. Always on thes cusp of questioning a russian recession, the price of oil. Lets bring in andrew perry from Hermes Investment. Sberbank is just one prism. The rapprochement between putin and erdogan, recovery in the price of oil, what do you make of russia . It has been a great name to own, because it is giving you such a play on the recovery in oil price and action it can take on its own part, the recovery in net interest margins. Its more ironic than it is of european banks. I think russia has surprised people this year. I think people have been and it is sort of an example of what has been going on in emerging markets generally. Earlier in the year everyone got phenomenally pessimistic, and of the world. The reality was it was never going to be quite so that. We are now at the end of the summer and things have turned out to be a lot easier. And now people are in a far more optimistic state of mind, of the problem is have they gone too far. Thats the key question for investors. Caroline talking of going too far, volatility crushed at the moment in terms of the emerging markets. Youre seeing how much one of the Biggest Exchange rates has seen volatility fall off the cliff in august from really significant highs to soaring much lower. Are we bracing ourselves for a significant, jarring action, if we see a move from the Federal Reserve . Its all eyes on the dollar. Trade weighted u. S. Dollars have been trading sideways for a year. The emerging markets are very dollar sensitive. Will bethe markets looking to see which way the dollar breaks over that trading range. Manus hold that thought. We have one of those lovely moments we have compared for you. Nejra, you got the very personification of volatility. Is it a home before the a calm before the storm of jackson hole . Nejra is interesting we talk about volatility, because treasury volatility is near a 20 11. Morgan, its j. P. Near a onemonth high. Looking at equities, the rally that took Global Equities to a oneyear high as the losing a little bit of steam recently. Looking at volatility across equity indices, that really has been coming down. Vix in white, volatility in blue, nikkei in purple. All of them are near this years lows. Equity volatility seems to be coming down. If you look at the msci pan day volatility, that is near a fouryear low. So yes, good question. Is this the calm before the storm . Caroline . Caroline nejra, a key question to ask andrew perry. I asked you before, how do you hedge this . Is all about your stockpicking. Talk to us about that ahead of potentially the storm to come. I think we have been very encouraged by the reporting season in europe, people were very pessimistic about the outlook of the economy. We have had five years of rolling pricey and disappointment and this is probably the first year where the underlying economy has been healthbased, at the market is coming in stronger than the depressed expectations from earlier this year. Strikeout oil and gas and the Banking Sector, and the story from the corporate sector in europe over the Second Quarter was actually quite upbeat. We saw earnings and sales growth meeting expectations. Crh said it is not the most exciting of stories, but i was interested to see they were talking about a slow grind upward in the recovery in europe , being more cautious of the u. S. In the second half. That is why we prefer europe over the u. S. Anus lets talk about asia everyone is obsessed with japan, but theres is that trading relationship between japan and china this is the chinese stock market in new york, near its highest level in a year, around 22 . You have the shortterm moving averages breaking above the longterm. We have at golden cross color do you like trying . We like it as a stockpicking market. But china is such a broad market , if you try to take a macro view of that you could get confused because there is such a rich opportunity, the really exciting tech companies, dynamic businesses, and it has absolutely nothing to do with the chinese economy. Tencent had Great Results recently, alibaba. That part of the economy is very dynamic. Where we are less positive on china is about reform that continues to be disappointing. The consolidation in the sme sector has been slowly moving. That is because the chinese authorities are worried about rising unemployment. From a topdown, the cautious story is still there, growth doesnt look that exciting, the macroeconomics are quite worrying and there are lots of things to get excited about in china. A golden there was cross of april and it wasnt such a good signal. Manus mark barton will use that as his caveat. We only remember the good ones. Manus andrew perry stays with us. Caroline thank you. Coming up, rand resolve. Traders a see more pain to come for the South African currency. The Prime Minister says he wont report to police. Then, the tech tussles. Will post Brexit London use its title as europes Technology Hub . Ubs is betting on zurich. We speak to them. And jackson hold up. The markets expect a lot from fed chair janet yellen. We look at what Goldman Sachs wants. This is bloomberg. Caroline welcome back. 13 minutes into your trading day, we are down across everything the sector on the stoxx 600. Check out the trr function. You will see the sectoral breakdown. Worst performers are off by almost 2. 3 . Every single sector is in the the cac is the underperformer at individual indices. Lets get more with the breakdown with juliette saly. Juliette thank you. A new report says investors pulled more than 25 billion from hedge funds last month, the biggest monthly redemption since february, 2009. Total outflows this year are close to 56 billion, driven by mediocre performance. Hedge funds have faced mounting criticisms from clients overspeed costs and feeling stock market benchmarks. The former Uk Independence Party leader nigel farage appeared onstage at a rally with the republican president ial nominee donald trump in jackson, mississippi. He spoke of britains decision to leave the European Union as a positive example and urged Trump Supporters to get out to vote against the establishment. If you want change in this country, youd better get your walking boots on. You better get out there campaigning. And remember, anything is possible if enough decent people prepared to stand up against the establishment. Thank you very much indeed. The issues we face here in america are similar to the issues faced in britain during their referendum for membership in the European Union. Uliette the death toll from the powerful earthquake that hit central italy yesterday has risen to 247, according to the countryss Civil Protection agency. The magnitude six tremor that that was felt in rome 100 kilometers away has destroyed one medieval town. Global news, 24 hours a day, powered by over 2600 journalists and analysts in more than 120 countries. This is bloomberg. Manus . Manus thank you very much. Is it the end of the crude rally . The new ceo of a commodities from, simon green shield, recommends shorting crude at 50. Yousefdle east anchor joins us with the chart of the hour. Short at 50 . Yousef thats simon greenfields call, the new ceo of what is a centuryold commodity from one of the largest independent u. S. Oil refiners, famous for churning out the likes of mark ritchie, founder of glencore. The let me show you why we are listening in this case. It is one of the most read stories. This is the chart you can see when he buys into phibers, right when oil bottoms out. Since then, it has rallied almost 60 . He as been speaking to bloomberg and he has been saying, he doesnt expect opec to come to any clear agreement in terms of cutting oil production, but says the fundamentals remain bearish. He would also rather sell the rally than by. Finally, he says this glut will persist through 2017. As we try to get more voices and perspectives ahead of the key informal opec meeting in on tears. In algiers. Manus thank you. All will become clearer next month. Yousef, joining us from to buy. Still with us is andrew perry from Hermes Investment management. Treade. S much a dollar are we cap debt 50 . I think it feels that way. Economic activity isnt strong to list off to lift us above that level we have to draw from the system to tighten the market, and we still have the conflictopec internal i want us to keep that supply and not allow flexes allow prices to run too fast. Showsk with the oil price is how much this years trend in the equity market or commodities market has really been driven by the reserves of everything that was bad last year that has been doing this year. I think that was because of the pessimism back in january with that reversal in fortune, now going to another level in the summer months. I think it will require some sort of positive economic sentiment. Andrew, you see oil range bounties, the correlation of continual breakdown. I think the stock market was beginning to feel it run into stand. This summer is always a dangerous time to extrapolate trends. We have had a good summer with the post brexit world being surprisingly positive with monetary accommodation and the feeling that equities there is no other choice, but it does feel as if in the shortterm that some of that momentum has gone out of the system had a lawful depend on what happens postjackson hole, if there is anything significant in either price. Manus the other story i read was that chinas stockpile has dropped the lowest in three years, inventories are declining. That prices in a real question about demand. Well i think the chinese economy is continuing to grow slowly and a lot of that could be reflecting a change and economic dynamics in china. The one thing to watch in china is what happens to the won. We were talking about in a won so we hadf the some selfevaluation there manus do you think it is far enough . They dont want it to run in the lower . I think they do. But there are going to be currencies that derive and thats a bit of information i want to see which way is current is break or is itdollar regain actually going to slide away . Uncertaintyll that. Manus andrew perry, head of equities at Hermes Investment. Thank you for joining. Up next, just how bad is chinas nonperforming loans problem . We are going to get a big reveal from chinas secondlargest lender. More to come. This is bloomberg. Caroline welcome back to on the move. We will be talking china, because we get earnings from the secondlargest bank today. The figures could give some insight into the state of chinas nonperforming loan problem. Is bloombergs senior asiapacific bank analysis. Frances, other than lowquality, are there any other risks to these lenders . What you maybe focusing on when the numbers break . An easinghould report trading in credit quality in the Second Quarter. In fact, during our visit, they revealed that could be peaking soon. [indiscernible] that could be a positive sign. If you look at the industrywide data, we draw similar conclusions, where things are rising in the Second Quarter. Manus are there any positive operation trends that you are able to spot in this earnings season . Key income could be one of the positives. Them [indiscernible] because of the low Interest Rate environment in china currency, [indiscernible] that could be one [indiscernible] also we may see an easing trend theyeir margin squeeze as gradually reprice the deposit at lower rates to flag early Interest Rate cuts in 2013. [indiscernible] francis, lets see what the numbers deliver. It will all be down to negative interest income. Frances chandler with the latest from hong kong. Caroline thank you. Up next, we are talking rained retreat. Falls to aa currency fourweek low as the finance minister refuses to cooperate with the police. We are checking how much further it might have to go in terms of weakness with a specialist on emerging markets. We also take a quick check on the market. I have the imap on the bloomberg terminal. This is the sector breakdown, currently seeing the dax falling three quarters of a percent. But on a six for a basis we are off. Underperformance . Health care, 1. 6 lower today. Financials are off by 5 10 of a percent. Key stocks to keep an eye on, there will be some areas of Consumer Staples and consumer discretionary, but generally oil tracks lower, energy is lower, financials down. A gloomy london. This is bloomberg. Manus 30 minutes into the trading day. Welcome back. Every single Industry Group on the stoxx 600 is lower. Nejra cehic is finding the three good stocks of their. Stocks out there. Lower. Esources we had a bit of a run, glencore down another 3. 5 today, the market was skeptical yesterday, glencore leading the decline. Some noise is coming from some of the people in china, about the lack of belief in terms of the steel industry. That is certainly something shaking the market in the china and i the china iron ore market. It will probably contract further into 2017. Down. Oup, ubs are talking lets get to nejra cehic. Nejra good morning. I found the upside and the sunrise, sunrise communication. They have risen the most since march, reaching their highest level since march, up 6. 3 at the moment, secondquarter estimatesth beating and reiterated its for your of 3. 24 and arrange swiss francs per share. Tech,oving on to play shares have hit a record high today, this after the company says it is confident of strong growth in 2016 and beyond. The m a pipeline remains healthy but it also announced a special dividend of 150 Million Euros to be paid on december 6 this year. Are the lastuse standalone results of this company as it merges with the dutch grocer. The Company Forecasts a boost in second half profit. We are already seeing the benefits of the merger after secondquarter earnings beat and let estimates. One analyst says it is a big start to married life. Caroline [laughter] very nice. Nejra cehic, thank you very much. Ministericas finance says he wont obey a police order to present himself for questioning. In connectiond with allegations over the authorization of a special Investigative Unit when he headed the national tax agency. He has denied any wrongdoing. The rand has lost more ground after the announcement. Lets get more with our south africa reporter in johannesburg. The finance minister has said he will my present insult to the police this morning. Does this mean business as usual . What should be take from the squaring off of the finance minister versus the government . Well, finance minister made it very clear that he wants to carry on with his job, to focus on the mandate of steering the economy that difficult times. We know is that yesterday he was expected to make an address and that is what he did he made the announcement saying that growth may not reach beforeel it had reached and is bound bounds. What we know is that the two other officials implicated have resented themselves to the police this morning. It is said that they arrive for questioning this morning, but as to whether the finance minister will be called in again, we are watching very closely to see how it develops today. Manus i read one great line in the Market Report could have been worse. It hasnt shaken up much but it has moved. Yes it is certainly moving. We saw that big plunge on tuesday evening just after the news that the finance minister have been summoned by the police. Yesterday we saw further weakening and what we have also seen is that bonds are trading yesterday,ord highs almost of the levers in december when the former finance minister was abruptly fired by jacob zuma. The market is certainly not happy with the uncertainty that has presented itself by the current probe the finance minister. Manus thank you very much. Are South African reporter in johannesburg. Lets bring in the International Head of emerging markets for economics. Thank you very much. Everything that i read says this comes down to what happens with the rating agencies in south africa. Gordon said last night, no growth. What do you make of it . I think it is more serious. This is about, power and ultimately what president zuma wants to do is to access levers of spending without blocks in his way that are given out to political connections and clearly this is frustrating that. They have lost control over 85 of their budget so it is even more important that he keeps power. The ultimate and goal isnt to see him in jail, it is to win the elected conference at the end of next year, to help the next leader after him to secure the succession. Peter, you dig into andmovements on the rand, we are seeing around the worst performer over the course of the last five days. Will we see it go further . What is the volatility . Well, the real problem with the rand is that the market has pressed up Political Risk after the local elections. People constructed this bizarre nirvana outlook, that everything was rosie, that we would move on , andowth and opposition that is completely rubbish. This gave this quote is acting very damaging and has the potential to cause a lot more damaged in the market. The problem is that the market is being caught long and wrong and people are being calling long bonds. Its the prisoners dilemma we need a proper shot his you the big moves the dollarrent. I think the endgame will approach quickly. And if that means that it is shuffled out, then that is when the actual shot comes and i think it will hit Something Like 17 or even higher. Manus lets talk about brazil, another political shocker. Nine months of exhaustive pain, the brazilian rail has reacted brilliantly. Does that continue . Are we at the end game of the impeachment . What does that mean for the currency because it has been one of the star performers this year. Exactly, the markets may be constructed to the political , and there is hope coming from Asset Managers trying to pick a winner, and maybe we are toward the end point of that now and could see some closure manus when you look at dollarrail, how much mileage is left . It hass the problem, moved so much without the fundamental turnaround in an interesting comparison is mexico, where you have a lot of structural reform and high potential we are seeing that in the short run in the markets are much more likely to reward yield and hence mexico has done so negatively. We have seen volatility diminish head of jackson hole. What does this bill for the dollar, for emerging markets . I think people are reading too much into jackson hole, we have only recently seen major policies come out of it and probably what we have seen if you look at the said pricing the fed pricing, the stakeholders move in with the fed is going to do, our expectations are pretty well and it shows you the ingrained nature of this risk on environment, the wall of money that has come into your. Ways, people will be focusing on jackson hole, but there is a broader stability. Hat is being at the moment people are saying to me p. M. Is still under owned on a relative basis. We have seen a flow of money coming to bonds are you seeing something similar . What can you tell us in terms of ownership p. M. . We have seen it do amazingly year, andso far this what we have seen is a degree of inflow at the start of the year and then we got into a tail through august, people chasing those returns after bad years in yen in the em. Everyone is sitting close to neutral and not pricing in the , and hence the volatility we can see in some countries but i think we need a behavioral shock manus turkey, south africa, brazil where do you think the shock will probably, . Brazil can be the positive shock, if that can see us through the current events. South africa negative. Turkey is more interesting with solid credit fundamentals, but equally some risks were down. I think the lesson here as an economist you want to see this behavioral shift to be further off benchmarks. Manus we will see what the shocks are. Thank you very much. Head of emerging markets at nomura international. Tech. Ne up next, we will post brexit will the post Brexit London lose its place as Technology Hub . This is bloomberg. Caroline direct is part zurich is playing catchup on the tech front; 25 Large Companies are backing one of the largest multicorporate International Technology accelerators that launches today. For more, we are joined in zurich by ubss head of innovation, veronica languor. Thank you for joining us. Why is zurich playing catchup . Why hasnt it invested in start ups thus far . Good morning. Its not so much that we have been lagging or are behind; i think you will see that we have been traditionally driven a lot by large banks. Whereas other communities in london have been more visibly focusing. We have here a very innovative environment. Cornerl find around the universities, research institutes, some of the bigger Digital Companies around here. Its a startup friendly environment. Location for a startup to rise in and that is why we wanted to launch this program and engage more startups out of the wreck out of zurich. Chroline digital zuri 2025, when they want to be the top players. What does that do to the Banking Sector . How many jobs could be at stake if we see a disruption, if we see blocked chain embraced . Our their jobs on the line . Its really we see this as a winwin. Its cooperation with the does is itso what it helps us to find talent, to find interesting ideas, but also to help the startups with their ideas, to try them out. Accelerator,arter may have concepts on their ideas. What it does is they can do whatever it takes to bring it lies and to implement it with a Large Corporation like ubs, and it also enables us to see if thats a Good Opportunity what we want to see is these businesses stay on and help us to be a more Efficient Financial Services offering bank. Manus hold that thought another guest will be brought in , Richard Howell sack, listening. Obviously, everyone is racing to grab a piece of the london. Are they affirm what they position is. What are the risks here over the next two years . I dont think theres any chance of text fading. Everything that is going on in the market, Financial Services is probably the one that likes behind. The reason why we set up slabs is so everything businesses can be focused on coming up with financial solutions, recognizing that we have to adopt technology and all we are seeing now is that Financial Services are catching up with all the other consumer goods, adopting core technologies. Caroline richard, help me there is already a Ventures Fund piling into startups. Why do you need a lab . Why do you need to build your own companies . What is it that you cant get your hands on that you have to build your own . Theyis much bigger are one of the leading houses in inope and they have a record investing into startups across the scene. Its actually a big Financial Services group and we have been focused on creating services in productive financial environments. We have been making the complex and that is something we august on, recognizing that technology is a core part of it. In order to help our Financial Advisors and customers, we need technology to be the core of our business. Rather than being a Financial Services company you realize that we need a company that is good with Financial Services. Manus veronica, obviously you are the cto. Locks changed is an integral part of what you are trying to promote. From a business point of view and from the ubs point of view, what level of efficiency without bring to the institution . What kind of headcount might the spring, or where with the efficiencies be most obvious . Ahead of innovation what we are doing is looking at what. An you Technology Offer for us we are also looking at robotic automation, artificial intelligence, and other technologies. Both are creating dental Services Better services. Block chain is in its early days, and it is yet to be seen when and how we will speak through impact on the banking industry. Having s why we are that is why we want to engage in advanceso that we can and be early on when opportunities arise to become more efficient that we can implement them. Caroline richard, we are hearing that they want to be one of the leading tech by 2025. Theyow that here in berlin have been sending out there head of innovation to london, some of the investors trying to lure in them what is the risk of going to london post brexit . I think it is important that we respect why london has become the capital of the world not because it is part of the eu. The main reason is that britain has an amazing environment that encourages entrepreneurs. Successive governments in the u. K. Have really promoted Financial Services and innovation. Prices lots of funding and its really important to emphasize that the environment in the u. K. Is incredibly consumer friendly and brexit will put a slight risk on whether we can ask for people across from the u. K. In terms of employment, but fundamentally london is somewhere people want to work. I truly believe london will be the capital of the world regardless. Incirlik isnt in the and zurich isnt in the eu either. Manus thank you so much for joining us. Innovation andof group cdo at ubs. Time. You both for your up next, on the move. The fed chair surprises the market. Which three currencies would you want to go for . Goldman sachs has a rollcall. Stay with on the move to find out which ones. Caroline welcome back to on the move. Goldman sachs, the pound, the yen, the new Zealand Dollar the most vulnerable to a surprise at jackson hole. Lets dig into the potential move with none other than richard jones. A key chart onot my bloomberg. This is looking at the yen, the two year yield on japanese debt. See, whatas we can happens if we have a hawkish janet yellen. Richard the problem with the japanese policymakers is that the yen has strengthened even when you yields were declining. Now they are off their lows and the yen keeps strengthening. I think what japanese officials will be looking for is a hawkish message from janet yellen in order to get the dollar to list. They have been fighting a losing battle all this year, and dollar yields have fallen more than yet yields, which is kind of hard to believe. Zero, but are below dollar yields have fallen 29 basis points. Manus lets talk about the kiwi. This is also where we will get a bang for our buck. Richard a similar story. Dollar yield fell 29 basis points in a twoyear sector, kiwi fell 28, and yet the kiwi has been strengthening all this year. A conundrum; they will be looking manus its just yields . Richard even with that sharper magnitude full, you are still picking at it. Manus thank you very much. Richard jones. Caroline . Caroline manus, things will be sticking with bloomberg television. We will talk more about jackson hole, francine will be talking tech. This is bloomberg. Francine fed up. That speaks centralbank medications fall short. Fed is speaks. Centralbank medic centralbank medications fall short. On the horizon, helicopter money will be japans next big experiment says mark mobius. Could it come as early as september . Welcome to the false, live from bloombergs european headquarters. I am francine lacq