The busiest days we have had in a while. Extending declines at the end of the week, said to be dominated by the central bankers. We are seeing persistent, low inflation. The dollaryen and gold are train lets get straight to the bloomberg first word news. Reporter off the coast of singapore, 10 sailors have been injured and search and rescue efforts are underway after the uss john mccain collided with a cargo ship. Significant damage to the hull triggered this. South korea begin their military drills today, actions that could lead to war. This follows weeks of heightened tensions, including kim jong guam. Hreat to attack the u. S. , mexico and canada have ended the first run of talks on the north american trade agreement, saying commitment to wrapping up the negotiations with a farreaching deal. The next out of talks is scheduled for the start of next month in mexico. A then moved to canada later in september and back to the u. S. In october. Additional rounds are being planned for the remainder of the year. Qatar is telling its banks to lave internationa capital. To raise the central bank is Holding Regular Meetings with monitor. They are encouraging banks to bu , resulting in a further depreciation of foreignowned entities. Talks resume in a big pivot discussion towards the trade deal. Willsa mays government publish five new position papers this week. Yesterday they declared they were stepping up pressure on the block to shift the terms of the association away from the t alks. Global news 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries around the world. Im nejra cehic. This is bloomberg. Francine we are getting less take shares of, i believe, beginning to gather some steam. And believe that is the interviewer. We should see the chancellor there, there she is, starting with her first or second question. We will monitor that is a lot of breaking News Headlines will probably be crossing the bloomberg terminal. President donald trump will make a primetime speech about what asia later southeast as he looks to get his presidency back on track. The directs all department of steve bannon and a week of upheaval over his response to White Nationalist violence. For more, lets bring in jodi schneider. Will be the focus of Donald Trumps speedch, and what is his strategy in delivering it . Reporter he is going to talk about afghanistan and a southeast asia, but more important is the strategy. He is trying to get back conta n track during a 17 day working vacation, at which point many things happened. Response to the charlottesville incident, which furyd a lot of his record, his Approval Ratings are at record lows. He really wants to reset the conversation by talking about the military and Foreign Affairs and trying to be more statesmanlike. Thatl really rule will be the goal here. Can we expect to hear on afghanistan . It will be interesting. The speech is apparently written and they are still looking at which themes they want to hit. We do know that steve, his fire that just left, really was against more, increasing the levels in afghanistan and other advisors met up with cabinet members and put the defense secretary and secretary of state at risk, who want to see a continuing practice at trips. It will probably be a task, the cabinethow members were able to convince him. For him, it almost just as important to settle. He will be at fort myer and it settling. We are trying to look more like a statesman, rather than the impetuous reactor. Francine thank you, jimmy schneider, talking to us from asia. Nowing is now joining us is luca paolini. J the gamesoings that we saw thanks for joining us here. My is it not taking home. We see a reversal today. Equity you look at the market, what has been a key feature of the last few days is a reassessment in terms of, i think, the Global Economy, but in a sense what life can do. Are being more cautious, but we also see from the last few months that every time you are kind there is a correction that is almost found out. Some threats are probably changing in the Global Economy and especially in the us. S. Francine what did you make of the week in u. S. Politics . There were a lot of departures, key tenants, of the pressure of the economic white house. Flavor asctionist flav this is, when do you actually see a more interventionist, white house, regarding industrial policy . Aways are, we have the strategy for the first six to nine months. These troops trigger a change in behavior. Francine what is priced in at the moment . If the president today favored on message he has a primetime address if he focuses and does not go off piece, distracts rally . Oven. It a bacon of the nobody. I think a few months ago everybody was pricing this in. Now it has been really priced out. Any kind of indication that the administration will have a difficult time will be revelation for the market. What is quite interesting about that is will the department see steve bannon lead to a more multilateral cross yed approach from the same area. Thus far, it has been a confrontational stance. It has been going well for tax reform, health care reform, some of the recalibration of trading relationships. With steve bannon not there, will there be a sensitive . Reporter i imagine you need to look at stress points, or points where you then make an education whether or not tax form will go through. With a reward disturbances over the next couple weeks . There is the potential for a Government Shutdown later in the year. What will fall out of that turbulence over capitol hill. He will either bring the republicans together or split not see the midterm to time. Ahead of think, in terms of equities, we are supporting our earnings. I think the key feature has been strong unemployment in the u. S. Risk premium. And i software asian, think it is too political. It is there difficult to assess. It will still be inflation and a special earnings. Those earnings were going to tell us if you could join me. Francine simon and luca, both stay with us. Stay with surveillance. As Mario Draghis head to pressure from the public as the nation prepares for this election. Car she says that the industry are not just to blame for the scandal. This is bloomberg. Francine this is bloomberg surveillance and im Francine Lacqua in london. Reporter total rated purchase the oil and gas unit of ap miller. The French Company will assume 2. 5 billion of net debt. The transaction is another part of the find of the pace and deals in the Energy Sector. Though shares rose on that news and we will be speaking to the coe at 10 00 a. M. U. K. Time. Sempra energy has agreed to purchase control of texas power distributor Oncor Electric Delivery for 9. 45 billion. The deal for Energy Future holdings, which owns 80 of at 8. 8is valued billion, including death. The company also said it could lift returns further as top miners reward investors with higher payouts amid a revival. The frontrunner to become the next ceo of uber. According to Technology Websites , citing identified sources of knowledge of the situation, a majority of the Ride Hailing Companys board is coalescing. They also said a vote is likely to happen within the next couple weeks. Will be interested in purchasing fiat chryslers jeep division. Jeep and wantsuy to begin negotiations with fiat chrysler. That is the Bloomberg Business flash. Thank you. Angela merkel is facing questions on refugee crises and google emissions scandals at a televised event in berlin. Stopn schulz begins 40 tour to catch up with the frontrunner. Joining us now from berlin is Alan Crawford. What a great time to have you on the program. He wrote a chance on her chancellorship. What development were there over the weekend . Reporter as you said, these issues of the refugee crisis and the diesel scandal. Loose,t shake these but there was a town hall yesterday evening and she was repeatedly asked about these two issues. She was expressing anger over the diesel crisis. Know at least she is asked what more she could and should be doing. At the same time, the leader of the bavarian sister party, he was saying we cant indulge ni any kind of rich hunt. D. Ese two issues are relate these three issues were ones that came up during the weekend. Francine any Poll Movement . Reporter none really. It is all just small movements, 1 or 2 . Merkel is still about 15 points socialf Martin Schulzs democrats, but at this point, there is no obvious coalition. Own about 47 total, which you can just squeeze a collision, but it will not be very comfortable. We are looking at some form of relatively unusual coalition, potentially out the likes of ore, or a repeat of the grand coalition of the two parties. Francine how could that change the dynamic, if anything . Since he pointed it out, he is embarking on his Campaign Rallies red across the country. Merkel started a month ago. It is hard to see whether these actually change the voter outlook. The polls. It is more visible at the grassroots level. Writeery reluctant to anybody off. He has an opportunity to at least call back some of that momentum this week. Francine Alan Crawford there anin berlin. Us, the chief economist at panmure gordon. On telling me, jordan, he is different. What if something happens between now and september 24 . Seems unlikely, but we have said that in the last 18 months. At the German Economy, it is still performing very strongly. Unemployment is ill falling. An of women is unemployment is still falling. You can track that quite nicely with where Martin Schulz was able to connect as german households become more comfortable with their finances. Statems unlikely at this of the cycle. Francine do you agree, or do you have to hedge somehow . All the honest, almost major parties have the same kind of money fest. The on the result that could shock markets. We cannot say it is impossible. Any other result is pretty much irrelevant. The German Economy is doing well and the German Market is influenced by the Global Economy. Francine do german. Looking expensive. Do germans look expensive here . No, they are extremely correlated with economic momentum, accelerating or not. The dax is down. Demand, call for the we think we are not going to get a consideration and we are meeting new requirements. What is interesting on the campaign trail, i picked up on some of the themes thus far that have been quite domestic. Matt miller mentioned it. The key element for the market, key, willrly for the be the degree to which he wanted to talk about europe and egypt and the things that are on the macroeconomic gent and things that center around policy. What degree does it she tried to play that theme into domestic politics . Shes been very quiet and i onspect that is purpose. International investors, looking what he does bring to bat will be a key indicator moving forward. Francine we have the net dollar positions. Ecb enters a the crucial part of the battle. Mario draghi six this week if with the main event in jackson hole, wyoming. Three years ago, he laid the groundwork for the bond buying program. What will he get this time around . There seems to be almost a one way movement, the dollar was going down and the movement was going up. The ecb said, we need to start worrying. Comments those, about concern. I think it is overbought. I actually think we will see some entrenchment. There has been a lot of momentum on stuff that the tapering of constant easing, which has not yet been added. The very quiet i think in jackson hole around the huge policy trajectory into 2018 with the qe program. Francine im also looking at the u. S. Bund two year spread. You have the eurodollar in white. Here is the divergent trend accelerating. Continue . Sothe main reason europe is strong is because six months ago, most people were expecting the u. S. Economy to outperform. Now the situation is the opposite. Now, we have only one hike for the next 12 months. You said that. You look at them. I think they will get out of bounds, but still out of bounds for the rest of the euro. Your positioning is also great. Do you worry about italy . This is the one thing investors are worried about, something ugly happening after march or april of next year . How does the ecb deal with this . We are worried, yes, but not for the next three months. We not panicking about the italian force. Italy yes, is an issue. It is a country where the companies have the strongest base, but it is too early to worry about it. Francine do you worry about it . I worry about the nonperforming loan book. Been the case. O it continues to be a drag on Italian Economic performance. But the lead indicators in europe have been trending upwards. That will spill over into the italian area and therefore, the margins should really move the ability of the populace to garnish economic discontent. Francine let me show you a chart we do not show very often. It is a nice set up for jackson hole. I have the swissyen. Do you like that cross . Bank in jackson hole has a very difficult task in hand. Lets talk about the key protagonistss. Janet yellen risks being a little bit of a sideshow amongst debates over who takes over, if shes done with her term. Could bring us a surprise. Nobody is expecting him to talk about future policy. And luca simon french paolini. Both stay with us we are talking a jackson hole mind. Thank you,. Cohen could be thank you, gary cohn could be the next two had the fed. Track your pack. Set a curfew, or two. Make dinnertime device free. [ music stops ] [ music plays again ] a smarter way to wifi is awesome. Introducing xfinity xfi. Amazing speed, coverage and control. Change the way you wifi. Xfinity. The future of awesome. Surveillance and im Francine Lacqua in london. Reporter u. S. President donald trump will make a prime time speech later about afghanistan and south asia. That comes as he looks to get his presidency back on track after the departure of chief strategist even been chief strategist steve bennett. The president has returned to washington after his 17 day working vacation, spent largely at his golf resort in new jersey. He will speak at 2 00 a. M. U. K. Time. Sailors arepore ,10 missing and five have been injured. Search and rescue efforts are underway as the uss john mccain collided with the machinery ship. There was significant damage to the hull, which resulted in a flooding of compartments. If the second crash that is the second crash involving American Naval ship in asia in two months. This follows weeks of heightened tensions, including kim jong u ns threat to attack guam. President trump warned of fire and fury. Kim said he would watch washingtons actors before deciding to attack. Britain has returned to a provocative posture with the pivotan union in a bid to discussion towards a trade deal. Theresa may has five new position papers this weekend that is after declaring yesterday it is stepping up pressure on the block to shift the negotiations away from the terms. Global news 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries around the world. Im nejra cehic. S kickne the central bank off this year. There is a possible replacement this year of janet yellen. Is emerging as a clear front runner for the nomination to succeed yellen. Yellen would be secnd term. How do you look at this . First of all, is it too soon to talk about who could replace janet yellen . We are only five to six months away. I dont think it is too soon. We are already looking up what 18. D policy might be in 20 like we said before the break, just one rate hike put in. Can anybody who comes within gary cohn the more dovish . Ill think it is so much the dovishness or hawkishness. Gary cohn, you think of a very dovish. The announcement will come as a surprise. , think from our point of view i think the fed, whoever will be the chair will be driven by data. In that sense, i think we have a big impact on the markets, but we dont know when it is going to be, so it is difficult to assess. Reporter i hate to disagree, isk ise r there. You look at some of the people on that list, look more to and theyn that list, have a more mechanical approach. They might will choose Financial Stability or other factors within the economic infrastructure with which to guide rates. That is the risk for the market. Francine but is it more or less confusing than what we had before. Five weeks ago the fed was saying two rate hike this year and last time the fed met, they realized themselves for the market. Has been bullish because they were exciting strong growth. When you look at the u. S. , 2 , not 3 . Nothing has actually changed. What has changed, inflation continues to fall, even if growth accelerates. This is a problem we all have. Matt that brings us to the title of this symposium. Francine and yet. Matt and yet. Growth, not 3 or 4 . They are trying to discuss the structural issues that are holding back. Francine they argued that the data we looked at is broken. You need a completely new set of things. Francine you have got a series of issues the Central Banks are comfortable talking about, how you define that structural reform and effectively model which are the most effective. The other titles are the symposium and how it could look. All of our models are broken. In a scenario where you have Monetary Policy, tightly markets, inflation is nowhere to be seen. None of the central bank models actually predict that as an outcome. As what we do here, we predict the outcome. It is difficult to say the fed is not data dependent. I am not so sure that the fed can continue. Francine luca, when you look at the breakdown of the Balance Sheet for the fed securities, what kind ofls market would be affected the most . Reporter i think probably the nbs will be most affected. It is not just the feder