Mark welcome to the pulse live from bloombergs European Headquarters in london. I am mark barton. Getting some raking manufacturing pmi data out of getting some breaking manufacturing pmi data. This is the final figure for markets pmi. The earliest estimate was 51. 8 still above 50. Still above the line that separates acceleration from contraction. Lets have a look at what is happening to European Equity markets. We are at the start of a new month. The august month ended on a high, on a monthly basis. We rose on the second consecutive month, best monthly run since may of this year. Best performers yesterday and for the month were banks. Banks in the month of august rose by 8. 5 , the best month since february 2015. Minors are rallying on the back of that china manufacturing data which show an increase. The bloomberg dollar spot index, a gauge of the dollar against 10 of its peers is rising. We approach the biggie on friday, the u. S. Jobs report which could tell us whether the fed is going to raise rates in the next couple of weeks p. M. We got a big show. Couple of weeks. Weve got a big show. John cryan called for consolidation in the sector. Later we speak to a man who manages 840 billion fund. He tells us what a trump residency means. Lets get the latest bloomberg first word with sebastian. Donald trump has reiterated his pledge to build a wall on the southern border of the United States and send mexico the bill. He plans to increase Border Control and would report any illegal immigrants. He met the mexican president and said there was a range of topics. Secondas become the brazilian president to become impeached in three decades of democracy. A charge she denies. She will be replaced by her deputy who has promised more business quality. This will and the worst recession in years. China is showing signs of stabilization with the factory gauge unexpected lee rising to its two is highs level since 2014. It came in at 60. 4. July data showed temporary weakness due to flooding. Spains caretaker Prime Minister has failed in his attempt to end the political gridlock that stress for more than eight months. He was defeated in the parliamentary confidence vote. That as the socialist joined the antiestablishment group to block his candidacy. The chamber will vote again tomorrow evening when a simple majority will side. Global news, 24 hours a day, powered by 2600 journalists and analysts in more than 120 countries. Selleck. Stian mark the dollar drifting is a weight direction. Bill gross holes for hikes in double the pace seen by the markets. Two by march. Less lets raise Interest Rates twice by march. Lets realize that capitalism cannot do well it can survive but he cannot do well with 0 Interest Rates or negative Interest Rates. Mark gross when i get what he wants by march. He made will get a hike in september and for more on the set more the fed, we are joined by jonathan bell. Jonathan helps manage 9. 5 million in assets. Thank you so much. Jonathan billion. Mark did i say million . By march. Y two hikes that is what bill gross is calling for. Two different things. Do you think september could be on the table . Jonathan i think it could be on the table as long as the data remains reasonable. Theres no reason you should not have a rate hike. Youve got close to full employment as Stanley Fischer calls it. That is been Janet Yellens main focus, what is happening to average earnings. Both looking the right number. Friday is a key day. Mark is very number that says yes, september is happening . 150,000, that is the number. That is all you need to meet the consensus and you should get a rate rise. Unless there is some bizarre action that happens between now and the first of september. The interesting thing will be is how the markets react. Mark a 36 probability. It is not being priced in. There needs to be a market shift. Jonathan there needs to be a market shift or there needs to be some news that people are expecting that happens now train that happens between now and september 21. If the data remains reasonable, we should see a rate hike. Then what happens to markets . If you get a tantrum that we have seen before, then you get perhaps a delay in when the next rate rises. Mark meaning the fed is a slave to the market . Jonathan anyway it is a slave to the markets. You look at what happened before. The problem is there is a selffulfilling nature of markets. That cuts investments, the economy starts looking worse. The fed mark five basis points. It is hardly 25 basis points. It is hardly a massive move. Jonathan we have seen how markets can react. ,n terms of bill grosss call if economics would allow two rate rises by march, the thing that might scamper it is if the markets upset mark lets say we get 180 on friday, the Interest Rate probability is clearly going to go through 50 and even higher. What is the reaction . Jonathan that is the main question my concern is we have seen a low volatility that you could see a setback in markets based on expectations of the next rate rise. That is not my central case. Ifwill have the rate rise the markets can run with it. My concern is you end up with the Market Selling off, and so you get one rate rise. Another long wait until the next one. Mark the longer we have is low yield of volatility, do you get more nervous . This is the longest. Thethe longest period longest period. Jonathan if you look at the return from assets, start at cash and bonds. They are at multisensory lows here it equities are not as bad they are at multisensory lows. Equities are not as bad. Your concern has to be at what point something breaks. Mark jonathan, stay there. Much more. The pulse. Plenty coming up today including the k hits the first redline negotiations with the eu. We will bring you those breaking pmi numbers for august. This is manufacturing data. Plus, as a donald trump talks about walls, we will talk about hedging it one of europes biggest investors will tell us how to manage the risk. Is china back on track . Will focus on the outlook for the worlds secondbiggest economy. This is bloomberg. Mark i am mark barton lets get Bloomberg Business flash. Sebastian the ceo at the end of next year. [indiscernible] is to retire f at the end of this year. He is the Company Executive Vice President and head of corporate development. Outgoing novo nordisk ceo will be the first on bloomberg. Costs aftercut sales of absolut vodka climbed amid weakness in asia. That is the worlds secondlargest stiller the sales of its two biggest branches on a organic basis. Will be live on you live on bloomberg. U. K. Banking industry helps a lot of people from lower income backgrounds. That is according to a report. The social Mobility Commission says half of londons Top Investment anchors are indicated are educated at Public Schools here it seven in 10 new hires went to nonstate. Mark sebastian, the last minutes we have had an update on the state of any factoring in the eurozone. 51. 7. Ming in at in about 20 minutes, we are going to get the same reading for the u. K. Economists forecast 49. That would indicate a contraction. 49 will compare with the prior month. Still below 50. Theresa may has been setting out the first of her brexit redline following a Cabinet Meeting yesterday could she wants to end the Free Movement of people from the eu, even if that risks the uks access to the signal market. Lets get the thoughts of jonathan bell. Jonathan, the pmi manufacturing that show an improvement. The confidence report certainly bouncing back from the poor performance in july good youre saying dont read too much into the competent surveys confidence surveys. Jonathan theres a big difference in europe when you look at one country. We have seen the numbers come out of france. France is still really struggling, whereas germany is going to come up around 53. 5. It is doing quite well. Theres a big difference where you look in europe, what soda growth youre saying and worthy confidences. Mark the confidence in the u. K. , how is your postbrexit confidence indicator faring . Jonathan we were all told straight afterwards that collapse in pmi in u. K. To 48. 2. I think everything you seem to say is this should bounce. You mentioned 49, it could be even stronger. I would say the confidence in the u. K. Is much better today than it was a month ago. That may be a full storm did we may be about to see. We may be about to see a negotiation start getting, looking as though they will start. At the moment, the u. K. Is not as bad as people thought. I think well have a good number. Mark i want to bring up a g function, jonathan that i made a week or so ago. My screen is taking a while. It is a performer of u. K. Assets since brexit. Fingers crossed. Look at that. This is an ugly chart. This shows that since june 24, how all of our key indicators guilt up. Look at the ftse, yes it is a sterling play. 7 . A small cap up by 7 . Ftse 250 up by 2 . You know the sterling index has plunged. To be fair, have we been surprised by the performance of u. K. Assets since the brexit result . Jonathan i have been. You can put that into euros or dollars and it would change. What you have seen is there has not been that much difference between u. K. Assets and European Assets and constant currencies did this currencies. Coming to but, i would say this will be about the pound, not about what happens you will see the pound fall and that will lead to other assets not needing to fall. What i didnt expect is do with the other assets rise by virtually the same amount that we so the pound fall. The strength has surprised me that it has been is far as it has. Mark does it continue . What is your overview of u. K. Assets, whether it is an sterling or other currencies . Jonathan lets talk about sterling first good sterling at 130 against the dollar sterling first. Sterling at 130 against the dollar, what are we looking at . Are we going into a recession . If we are going to avoid a recession, bounce to 135 is quite a reasonable expectation. There is the potential for sterling to carry on bouncing, if the data carries on improving as it has more recently. We will see with the pmi number today, whether that is a continuation. Mark we will be here. Jonathan, thank you for joining us. Next, german banks feeling the pain of the ecbs negative rates. We are going to speak to the German Cooperative Bank Association president. This is bloomberg. Mark lets get to frankfurt where axel weber is making headlines. Negative rates do more harm than good he said and the world cannot accept that Monetary Policy is not working. Is the ecbs negative rate policy putting pressure on germanys Banking Sector back up for the conversation lets check with the president of germanys Cooperative Bank association, who way for lakes. Ua for lish is Monetary Policy broken . Sure it good morning mark. Of course, the ecb Monetary Policy puts lots of pressure on the banking and insurance sector, especially in germany could we try to manage the big challenges here in our organization as well. A bit of aryan, made stir yesterday in his comments at this gathering, especially when he said we need more mergers at a national level. Isnt that the truth . How quickly and how many mergers . How much m a do we need among the Cooperative Banks. In germany we have three pillars of banking, the savings bank, the commercial and big private banks like deutsche. The Cooperative Banking sector, we are about what the 5 market share in terms of deficit. Our organization did excellent job because we have had consolidated by example our central institutions to a very Strong Central Bank for our sector. We have merged our i. T. Centers to one very competitive one in germany. Outave a consolation face from about 2000 to 3000 Cooperative Banks to about 1000 at the moment. We expect to have 50 mergers in this year. We do all of this in managing this situation and we have three challenges very big challenges. One is regulation, the heavier burden of regulation for the small banks in germany. On the other side, the impact of the Monetary Policy of the ecb. The challenges of as we try to manage this very well. As you can see, we have had earnings last year, 2015, 9. 7 billion euros before tax alone in our organization. Maybe mr. Cryan would be happy to have this. Mark mr. Cryan also said that Deutsche Bank needs to get smaller. Were hearing that Deutsche Bank considered a merger with commerzbank. Do you think such a merger could actually happen . What would shareholders think . What would Banking Industry insiders think, like yourself . Uwe i think everybody has to do their own homework in the moment. More efficiency and reorganize the Business Model of torture by example. This is a job for mr. Cryan. What we do is follow our path and increasing market share and winning new customers in convincing more german citizens to be a member of a Cooperative Bank. This is a Business Model which is very successful. I am proud to work for our organization. I do not want to change the problems of Deutsche Bank against mine. Mark how much more of a realization of the Deutsche Banks model is necessary . We are hearing reports that the board is going to meet, that these suggestions from the wall street journal that which a bank is considering selling off half of its Asset Management is this. Management Business People thought of measures do you think Deutsche Bank needs to take management business. What sort of measures do you think Deutsche Bank needs to take . Uwe Investment Banking news to be lower than it is here today. This is john cryans job and not mine. He will see all of these things and he will act properly so that the board will be satisfied. Lets talk about the challenges for our organization, please. Mark and 20 seconds, what is the biggest challenge your organization faces . Is the0 seconds, what biggest challenge organization faces . Uwe we try to stay with our Business Model which is based on the dependence on the Cooperative Banks and the local region. We are in a global war with global regulatory which forces our small banks to change their model at the customer side. They have to fulfill relatively strong Regulatory Burden and in their small houses. We should convince the european commission, the european banking authorities to act more proportional to the needs of small banks, because it just because from my point of view, it would be horrible if the result of all of this regulation over the last 10 years would generate a situation in which small banks would leave the significanthe very banks would emerge, and so the Banking Sector would be more concentrated than it was before the crisis. This would be the wrong solution. Mark thank you sir for joining us. Uwe froehlich joining us live from frank for it. Stay with us here on bloomberg. More from the banking conference today. We will speak to the barclays president. Fun is veryfinished worried about trump. Find out why. That is next. This is bloomberg here it a mark welcome to the pulse. Live from bloombergs European Headquarters. Reactions to the u. K. Pmi. Jonathan went wow. Check out this number could factory activity rebounding record, jumping by a 53. 3. That is unexpected. The economists were expecting to pmi manufacturing to come up from 48. 2 to 49. We shut up to 53. 3. The reason why is the weaker pound helping manufacturing bounce back from the postbrexit slump. Pmi which drop low the 50 level in july, jumping by 53. 3, far better than most of the missing forecasts. Thear better than most of optimistic forecasts. For the improvement in exports look at that people look at sterling. How does that change the dynamics . The suggestion was we might see rates come down even further. Does that change the dynamics . Postbrexit but sterling is up by. 6 after a record rebound in manufacturing. Lets get the bloomberg first word news. Donald trump has reiterated his pledge to build a wall on the southern wall of the dense southern border of the United States and send max go the bill. He plans to increase Border Patrol and report illegal immigrants. Process has become the second brazilian president to become in petes in three decades of democracy. The senate found her guilty. A charge she denies she will be replaced by her deputy who has promised more business friendly policy and end brazils worst recession in years. Chinas stabilization with the factory gauge rising in august. It came in at 50. 4. The improved reading suggests data reading july spains caretaker Prime Minister has failed in his attempt to end political gridlock. Was defeated by 180 votes to 170 and that as the socialist. Oined the antitalisman group the chamber will vote again tomorrow evening. Global news, 24 hours a day, powered by 2600 journalists and analysts in more than 120 countries. I am sebastian. Mark how do you hedge against one of the most of particular assumptions of Monetary Policy, the budget deficit and geopolitical landscape go out of the window if donald trump wins . He joins us on the phone from finland. Good morning, sir. Thank you for joining us today. Thanks for having me. Why wide receiver word are you so worried about the Trump Presidency . I think we havent seen anything like him in u. S. Politics. He is outsider. He doesnt have a track record in Political Office at all. Execute. Ks fund has more than 30 in north american assets. How would you alter your asset makes if the Trump Presidency comes a reality . It is a big . A big question mark. [indiscernible] the biggest impact from mr. Trump presidency is in the Foreign Policy and trade policy. Bigger thanan be some other countries than u. S. [indiscernible] mark what sort of Market Reaction then you go the big impact will be on Monetary Policy, the deficit. You say loose fiscal policy could be restricted Monetary Policy. What sort of Market Reaction might we see if trump wins . Risto is he able to execute the policy target . I get the feeling from the markets that nobody is really valueing that at face we proceed. The policy proposals at the face magnitude of what the greeks had. Policy at the moment the market is not really discounting that. Mark risto murto joining us today. Apologies for the poor quality of the line. This get final thoughts from jonathan bell. Lets get final thoughts from jonathan bell. Put the camera on my plasma. This is sterling dollar. What if i said to you what is all that . If you do not know, you would think something had happened. Something has happened which brings me to my second shot, this is manufacturing pmi. Below 49, 53. 3. A record jump could we are higher than we were all the way through the year. What does this tell us . Jonathan we are higher than we were during the brexit concern period. The 48. 2 was anomalous, everybody panicking. We better bounce in the consensus could i wasnt expecting it to be as strong as this ounce. This will calm down again. The good news is the economy with a pmi number like this, there is an indication of confidence. Concerns about u. K. Going into quarter, the fourth mark the current quarter. We were suggesting a 1 contraction. Jonathan you can put a small. 1 growth or contraction. That is why sterling has risen. I was saying earlier if we managed to avoid recession, 135 would be very achievable. That is what the market is looking at today. Mark the ftse 100 will be interesting because it is falling against the pound. The ftse, just quickly bring that up. The ftse 250 of course, the fall and sterling has not what led to the rise and sterling. This is chance for the ftse 250 to catch up. It is focused on the u. K. Economy wears the ftse 100 is 80 outside of the u. K. Mark u. S. Matters now. Trump trump, trump, trump. We just spoke to mr. Murto. Policy, thebout the fiscal policy, the geopolitical landscape. Are you starting to price that in . When could it affect your investment . Expect trumpont to be elected in the u. S. As time goes by, looks more safe than it was a few months ago. With the brexit, it looks it looked like we would remain but is get closer with trump, i dont think he will be elected. There is this issue of what he is actually able to do. What will congress allow . Mark the checks and balances. Ihan i suspect that think you would be bad president in terms of economic outlook. I dont think is as bad as we expecting. The other way around. If we see clinton getting elected, that is a bit of relief. Both of them probably are looking at fiscal loosening as it is. Neither are looking at tightening. Reliefuld certainly be to come to know that trump next line mark jonathan, great. Great to have you on. Stay with bloomberg. Plenty coming up. U. K. Factory rebound from the shock of brexit. Sterling boost exports. China hits the 2014 high. We are talking manufacturing today. How sustainable is the rebound . We break it down. Novo nordisk has a new man at the helm. He joins us for an interview at 11 10 u. K. Time on surveillance. This is bloomberg. Mark market high today. Lets head over to bloomberg with sebastien. Sebastien im clicking here, up about 1 . Getting the rally coming in from the miners following that good and effecting pmi out of china. What i want to focus on are the banks. This is the ftse 350, Bank Valuation charting the stoxx 600. 50 banks having a good time recently. Had their best month in august. They are close to the highest level. The valuation spread widening their. Close to a fouryear high. This is because of brexit. You can see where that spread started to happen at the end of june. A weaker pound putting up the ftse pushing up the ftse, a boost of 7. 5 . The euro stoxx 600 banks have dropped off by about 5 and we are sing stocks ike hsbc close to a oneyear high pick we need to check in on our currency. This the dollar. The rally halting a little bit. It has been going up for five days. Investors are looking ahead to the jobs data tomorrow. Forecasting of 180,000 jobs according to economists. That comes from 255,000 last july. A bit of a drop off their. That is as we look ahead to the possibility of a rate hike this year. Stanley fischer saying september is still on the table in his comments last week. The dollar struggling a little bit today but still rising against the yen. The longest string of gains since last march. Irk wanted to reiterate this want to really rate the big news out of the u. K. , we had factory activity reach a 10 month high in august, the weaker pound helping manufacturers. This is the chart that i made up for you. This is u. K. Manufacturing pmi, 2013 to 2016 could look at that bounceback. 2016. Look at that bounceback. Sterling dropped for the improvement in exports. Companies reporting network had been postponed during july. They have now we started. Manufacturers going to regain a sense of returning to business as usual. That sterling against the dollar. 1 . Come back to my plasma. I want to bring up the w crs function which shows sterling up against all 30 of its major peers. This tells us that every single major currency is falling against the pound today. Every single major currency is falling against the pound today and just before we get on to china, yes that is amazing. Look at what happened to sterling against all of those currencies since the referendum. Every single one of them rising. The worst performer, the krone up by 6. 9 , the best performer, the brazilian real up by 6 . A reading you need to know by the u. K. Economy everything you need to know about the u. K. Economy in just six seconds. Lets get more from miranda carr. Miranda, thank you for joining us. Has it stabilized . Intact as weation said in the introduction . Have seen a stabilization pretty much since q2. Having been plummeting pretty much for two years, the fact that it stabilize from their, youre seeing that benefiting activity levels. The question mark is does it continue . Mark august is the peak of the manufacturing season, the beginning of the peak. Doesnt that suggest that the official pmi will progress from here or not . Miranda there are a few headwinds and the key problems that china is having is in the manufacturing side. Related to exports. The pmi the expert numbers were still fairly weak it also the question of emi which is the on a desk question of pmi which is the unofficial pmi. Real point of stress that we have seen in the chinese economy is in the manufacturing side. If that is still going down, weaker butexports investments in new factories. Yet seen a lot of Industrial Companies saying new factories are not being built. People are not investing in new facilities. Mark Large Enterprises reported improved conditions even small and medium sizes small and mediumsized facilities dissipated. Commodity prices of steel, coal, Minerals Metals are rising. Youve got more production coming in their. You would be much healthier to growth. that puts pressure on the expert markets because you are then given china exporting access. Mark where does this leave us when it comes to reforms . Cutbacks in overcapacity and firms such as steel. Where does this leave us, a number like this today . Miranda it means we got the stabilization for the boom in the economy and on to have the reform. It depends on how much pressure can be put on the companies. If you have been a Steel Company for the past three years, suddenly youre getting a bit of money in the door and someone tells you to stop production, you may not be so willing to do so. Mark what about the pboc . It has upped its indication upped its munication communication. Miranda the communication is good. Intensiveuite micromanagement of chinas Monetary Policy at the moment, because it doesnt want to cut its benchmark because of the effect. We are already sing the room be down. Is with the u. S. Dollar strengthening with the apostle rate hike, if they cut Interest Rates then you are going to see the pressure of capital outflows. Instead it is doing this micromanagement, this tweaking and trying to intervene in the open Market Operations rather than settle your end at the top level. The risk here is you end up with an Interest Rate which is too high for the economics for the Economic Performance. 4. 35. Y of ideally it would be lower to stay late growth. But they cannot do that. That is one of the key issues. Mark i read this morning that 6. 78. Is that about right . Miranda stabilizing at the moment there. Knowing can be accused of being manipulators or weakening the currency. Probably suggesting that you may not see it go down significantly, but while that has been defended the price is not a free ride. The price is you end up with a higher Interest Rate which you would have ideally for the Economic Performance. Mark the eye the outlook for the Economic Performance is . To the hit their target . Miranda they always hit their target. Expect in line with expectations you are going to see difficulties with expectations. You are going to see difficulties. All of the construction areanies developers sitting on record amounts of cash. Theyve got huge amounts of money in the bank. They are not spending it on reconstruction. Is whetherate for h2 they actually start investing in new construction or whether they start investing in other activities. Mark g20 this weekend. The significance of it . Miranda i think it is a big status. The fact that they can steer the statuse and achieve that is destiny. Mark miranda, thanks for joining us. Ecurities up next why subzero rates are not working for europe. We are going to bring down the headlines from the ubs chairman, axel weber. This is bloomberg. Where we are now, the rates path is blocked. Rates are at zero. They could sink a little bit more in negative but i was always skeptical about negative rates. I think they do more harm than good. Mark axel weber speaking at the black conference taking place in preferred. Day two of the frankfurt lender john cryan calling the consolidation in the Banking Sector. Lets move away from that and took about what is happening in negative markets. The new month has started sprightly. Today. Ver 1 banks are leading the advance. As they did in august. They had their best month since august 2015. Minas have been bullied by the night miners have been boyd by the negative. It has been up by the last week or so ahead of a jobs report tomorrow out of the United States. Of course ahead of the big fed meeting which takes place in three weeks good stay with bloomberg surveillance is next. Be keene in guy johnson will interviewing the outgoing novo nordisk ceo. This is bloomberg. It is september. Looking forward to the fourth quarter. The view forward to 2017. Chair yellen a central banker to the world Great Britain does better than good. The postbrexit balance, can it is sustained . After his trip to mexico to arizona, donald trump reaffirms the building of walls. This is from the World Headquarters in new york, thursday, september 1. Where