speech,: janet yellen but other retreats. the market awaits clues on the u.s. interest rates. investors increase the odds of a september rate hike to 32%. we've had hawkish hints from policymakers at jackson hole. gainsonsumer confidence the most in three years after a post brexit low. we will break it all down in this week's brexit show. welcome to "the pulse" live from bloomberg's european
headquarters in london. we have a great show lined up for you. at 9:30, we have our weekly show, bringing you all the news, analysis, and conversations around the u.k. vote to leave the eu. today we talked to yo sushi founder about what brexit means for business. first let's check on these markets. the markets are trying to get some kind of clue what janet yellen will do. the dollar paring some of the week's advances. european stocks practically flat. asian shares falling ahead of that speech by janet yellen that may or may not shed light on the u.s. interest rate outlook. this is gold, gaining 0.2%. overd see a retracement the last couple days. let's get to the bloomberg first word news with nejra cehic. nejra: the world's biggest pension fund posted a $52
billion loss last quarter. in the three 3.9% months to the end of june. stocks tumbled and the yen surged, wiping out all investment gains since it boosted shares and cut bonds. consumer prices have fallen for a fifth straight of -- straight month in japan. july city i excluding fresh so more than an estimated 0.5%. russian president vladimir putin has ordered military drills after german chancellor angela merkel accused him of breaking international law in ukraine. she also said nato states will defend members against attack. >> germany and france trying to
progress in fulfillment of the minsk treaties, but the security situation in eastern ukraine worsens during the summer. every day, people lose their ,ives on the contact line especially the ukrainian soldiers. you can imagine that in this situation, it is very difficult to lift sanctions. of course we are working on that. we spoke with the russian and ukrainian presidents. i hope we will be able to present some progress to the european council. nejra: volkswagens agreement to pay 652 u.s. auto dealerships will cost it about $1.2 billion. that is according to a person familiar with the matter. that will raise vw's settlements to $16.5 billion. the carmaker is still facing investor claims and possible criminal charges.
global news 24 hours a day powered by more than 2600 journalists and analysts. i'm nejra cehic. this is bloomberg. francine: janet yellen takes to the stage today for the much awaited remarks at jackson hole. september rate hike on you the one in three. odds jump to one in thre. >> i did express my view that i thought it was time to continue the process of normalization. when i look at where we are with the job market, inflation, i think it is time to move. >> we said rates should be raised patiently and gradually and cautiously. part of what i'm thinking is impact on the dollar, potentially destabilizing effects on the rest of the world. it doesn't mean we shouldn't raise rates when the time comes,
but it should be patient and gradual. francine: joining us now from his london office is mike amey, managing director at pimco investment management, which oversees about $1.5 trillion worldwide. always a pleasure to speak to you. what are you expecting? mike: i think what we would expect would be that she will talk possibly about the economy. the latest data has been better. athink the probability of september rate hike we still think is relatively low because of the comments. they've had the opportunity to take a more aggressive stance. we do think there's a decent chance they move before the end of the year. our sense is that she will talk the economy up but leave the door open for a hike this year. francine: do you think she will
try to maintain the possibility that they may go in september? mike: any good central banker should leave themselves the option. seems reasonable enough. where we would have a bigger thee with market pricing is way we are at the end of the year and next year. at the moment, the markets are priced for about a 50% probability of a hike by the end of the year. you've got a very flat euro-dollar curve. to us, we think that what janet yellen will try and do is leave herself the option, talk about a gradual path, but valuations look like they are flat to us. francine: so what are you buying? think thatill investment grade credit is a
better place to be than government bonds. around the world, you've got huge amounts of central bank activity in government bond markets. i think the simplest way for people to think about it is, you want to buy high quality assets in a world of still reasonably high uncertainty when the central bank is less active. the least active at the moment is the fed. u.s. assets, corporate assets, still offer some reasonable value. reasonableoks a place to be. the key thing is, just by the things that aren't skewed by the central bank. francine: i want to come back to something you said earlier on. you still believe the december rate hike is possible. we did have quite a lot of hawkish comments from federal reserve officials in jackson
hole in the last couple days. traders now see a one in three odds next month. are you surprised by the sudden shift in sentiment with a very big shift in sentiment in terms of future expectations for rate hikes? mike: i think what we've seen so far is the challenge the fed has. you've got a number of committee members who take a more hawkish stance then janet yellen. you've had some reasonably hawkish comments, but i think 30% seems reasonable. it doesn't look like a likely one to us. what she's trying to do is trend this slightly tricky path. the fed wants to hike rates, but everybody else is in the opposite direction. what you have to do is recognize the fact that if you strike too hawkish tone, you are likely to see the dollar appreciate what quickly.
if you look at the breakdown on i, some are doing ok. that is good news if they can keep inflation reasonably stable and get towards the target of 2%. the last you want is a big rise in the dollar in a short space of time. is the chancewhat that she actually delays because she's concerned about this dynamic and has to hike too quickly were very quickly year? mike: i think the chance of a quick sort of rate hike is still very low because of the dynamics with the dollar. time that for a long it would be a gradual rate cycle. truth be told, not many of us would have thought they gradual rate cycle is one hike a year.
think an aggressive rate cycle is just not on the cards. there's a question as to the speed of rate hikes for next year. if you look at what is priced in, you've got nearly one priced in for next year. you've got to remember that the fed is going in one direction and everybody else is going in the other. to raises it hard rates quickly. you've got to talk the economy into being in good shape, and we think it is, but don't risk an aggressive move because markets are sensitive to this. volatility is not what the fed wants to see. they want to see consistency of message. when they do get a rate hike through, maybe the markets won't get spooked too much. francine: thanks so much for all of that insight, mike amey at
pimco. we also have plenty more from jackson hole economic symposium. bloomberg tv speaks to fed officials. we will also hear from jerome powell, member of the board of governors. stay with "the pulse." plenty coming up. we will continue the conversation with mike amey and discuss the limits of global monetary policy, japan, and is russia hacking the u.s. elections? a russian lawmakers son is convicted of one of the most lithic schemes in history. plus, where does europe go from here? we will be joined by serial entrepreneur simon woodruff for our weekly special show as we ask, brexit, what's next? this is bloomberg. ♪
francine: i'm francine lacqua in london. this is "the pulse." let's get to the bloomberg business flash with nejra cehic. nejra: ab inbev expects to cut its workforce after its takeover of sab miller as it seeks to maximize savings from the combination of the world's largest brewers. person with a knowledge of the matter, about 5000 positions are likely to be eliminated.
vivendi has posted second-quarter earnings that missed analyst estimates. the media company saw adjusted 187income fall 3.1% to million euros. vivendi said it plans to cut costs by 300 million euros. carson block has taken a short position in subdued medical, denouncing the security of its cardiac advice -- cardiac devices. the renowned short seller and founder of research firm muddy waters spoke to bloomberg about the move. >> this appears to be a company that for years has put profits before patients when it comes to cyber security. we think it is important to make sure that users are notified of the risks and to hold them publicly accountable. we think there's a very good chance that it is about to lose
close to half of its revenue for two years or longer. this would be due to device recalls. nejra: the chief technology officer said, the allegations are absolutely untrue. that is the bloomberg business flash. francine: thank you so much. let's get more from mike amey at pimco which oversees about $1.5 trillion worldwide. thank you for rejoining us. we talking about janet yellen, the speech from jackson hole. what is the most significant development that you would like to in terms of global growth or not growth in the last month? apart from brexit, do we have to look at japan? mike: the two most important things, the u.s. employment data bouncing back was very important , put the fed back on track, and the japanese data has been on the weaker side. we had the cpi numbers which
were weaker than expected. you've got the bank of japan meeting in a couple weeks time. they are supposedly going to go for a full review of policy. in terms of the most important data point, i think the u.s. employment stats have been the most important. in terms of monetary policy, i think what the bank of japan does is also very interesting. they already buy so much of the jgb market. pretty close to the lower bound on rates. what we will look for is any acknowledgment as to whether they are getting toward the end of the limits of monetary policy. francine: governor kuroda is showing up in jackson hole and we haven't really seen him do that in the past. the boj meeting is in the morning of september 21. in the afternoon, we have the fed. the timing is almost quite
unlikely for the boj. mike: it is. the challenge the bank of japan has is the yen. it has been strengthening and that is one of the reasons the cpi numbers have been under pressure. you've got central banks with negative interest rates, 30% of the government bond markets, are we getting to the point where some of these policies are becoming less clear? the fact that governor kuroda has gone to jackson hole i think is quite an interesting statement. obviously they will be looking for guidance from other central bankers as to alternative things they can do. that is probably why he's gone. the 20th and 21st are going to be all about central banks going in different directions. francine: what can boj do to try to keep the handle on yen?
mike: they can do a number of things. they could demonstrate a closer degree of coordination with the fiscal authority. there are various things you can do. you can debate as to whether the bank of japan is already engaging in forms of debt financing. i think they probably are, really. think what you could do is you could demonstrate greater cohesion between the two. the challenge is that the bank of japan is an independent entity. that is what they will try and do, to put the pressure back on the fiscal end and see if they agents toage fiscal do more of the heavy lifting. central bankers around the world have been saying, we've been doing everything for the last eight years. can we get a bit of help?
the bank of japan and japanese authorities are in that situation. francine: what is your take on brexit? we talked about it a couple weeks ago. on the political front, things seem to have gone quiet. we had some pretty encouraging figures in terms of inflation and retail sales last week. what do you make of those? mike: the fact that there doesn't seem to be a great deal of pressure from either side to really accelerate the negotiations, we thought for a while it would be a long process, and that seems to be the way things are going on the political side. on the data, the data is pretty interesting. there are two worries. the first is whether you get the initial shock of the brexit vote that hits consumer and business confidence, which doesn't appear to have been the case. retail sales probably the most extreme example of that. there is a longer-term effect.
so far, the data is holding up pretty well. part of that i'm sure is this aggressive monetary policy action by the bank of england. they've indicated they will potentially do more. they may well stick with what they've done for the time being and let a few months go by. francine: like, great to speak to you as always. mike amey, managing director at and go. could russia be hacking the u.s. elections? the son of a russian lawmaker convicted of massive data theft. that is next. this is bloomberg. ♪
francine: the son of a russian lawmaker has been convicted of orchestrating what a u.s. prosecutor called one of the most prolific credit card tracking schemes in history. let's with ryan chilcote. this is a pretty sizable fraud. damages,9 million of that is what the prosecutors say he was guilty of. when they now in two years ago in the maldives, they say he had 1.7 million credit card numbers on his laptop and off his laptop he had another one million. this is pretty big.
on the damage pretty much borne by the bank because if you get money stolen off your credit card, you call the credit card agency. this was a big deal. he basically took the credit card information, prosecutors say, and sold it on sites where you can easily put out numbers and sell them to people who use them to privately buy stuff. francine: we think of russia hacking, then you think of u.s. elections. is there a linkage? ryan: it doesn't appear to be the case here. despite the fact that he is a russian lawmaker, -- the son of a russian lawmaker, this was freelancing. easy to make that leap because we know the fbi is investigating hacks at the new york times. they say there's a possibility that russians were behind that as well. you mentioned the dnc.
the fbi says it has a high level of confidence that the kremlin was behind those attacks and the lease of that information just before the convention. the russians say they are perceived by the west as predators in these cyber crimes. if you look at china hacks of russian industry in particular, one of the security firms there says those have risen threefold in the first seven months of this year compared with last year. the number of chinese attacks against u.s. firms has declined. obama made a promise with a chinese leader. they agreed they would not hack one another. the russians did the same kind of deal. however, the chinese, if you believe the cyber firms, are not as effective in keeping that agreement. francine: it is those kind of things.
francine: the top of theresa may's agenda as she returns from holiday, that is coming up. first of all, we have a little bit of economic news. the u.k. economy growing 0.6% in the first quarter, matching the initial estimates. welcome to our new friday show, where we wrap up the news and conversation that will make you smarter about what is next for britain. this is "brexit: what's next." overall forpicture the markets. gdp falling in line with estimates. last week we had a much better than expected figure in retail sales. first i want to see if there's been some kind of fluctuation or
not one-pound. we will get you that analysis. not much of a change. let's round up some of the brexit stories that mattered this week. let's get to nejra cehic. nejra: angela merkel says the european union needs to work hard to overcome the shock of britain's vote to leave. the chancellor is touring europe. estonia,in tallinn, merkel said that britain needs to decide what ties it once with the block. >> as long as britain hasn't submitted its application as we have previously said, we can't answer the question of what kind of relationship we envision with great britain. do i think we have enough to among us 27, dealing with questions about the future, so we can allow britain the time it
wants to take. named nicola sturgeon has michael russell to represent her government in talks with britain to withdraw from the eu. yesterday, sturgeon said, disappointment is an indication of the importance i am placing on these negotiations. u.k.-based banks hoping to keep passporting rights in the eu after brexit may end up with a status more like their swiss counterparts. said the future for british banks in the block will be dependent on the model of relationships that the u.k. intends to keep with the eu. prime minister theresa may said she will fight for the city to retain passporting rights. nigel farage appeared on stage at a rally with republican presidential nominee donald trump in mississippi. britain'ske of
decision to leave the european union as a positive example and urged trump supporters to get out and vote against the establishment. >> if you want change in this country, you better get your walking boots on. you better get out there, campaigning. anything is possible if enough people are prepared to stand up against the establishment. thank you very much indeed. sentimentman business unexpectedly split in august. the weakness in the ifo institute is a sign that companies are still weighing the consequences of brexit. with the u.k. acting as germany's third-largest export market, weaker demand has the potential to damp output. u.k. consumer confidence rebounded from a three-year low as the initial shock from britain's decision to leave the eu faded. of an center for
economic and business research gauge is still below the level it was a year ago. that is your brexit roundup. francine: thank you so much. my next guest is well-known serial entrepreneur, whose first foray of business didn't come until 40 when he founded euro sushi. we thank you. the company's rapid success allowed him to invest in a series of further ventures. simon, welcome to "the pulse." we're also joined by robert litan. welcome to the show. was it the end of the world as expected after brexit? simon: i said, whichever way it goes, it is going to be fine. we are a nation that has been so successful that we will make a success of it either way. francine: are you concerned that it will get uglier before it
gets better? in the short to medium term, are you concerned about entrepreneurship? simon: certainly not concerned about entrepreneurship. i think we have a fantastic cradle of entrepreneurship in this country and have for hundreds of years. it is stronger than it has ever been. we are very determined and that is where i see the hope, not through the negotiation of what happened in brexit. we arehat we have got -- very, very popular in the world. francine: as long as people can come and live here. simon: i don't think so. i think people simply like the its because they stand for civility and manners and all that. i think we are in a very good position wherever we go. francine: we always invite rob just because of his good manners.
he's a true gentleman. simon: always useful. francine: talking about politics, what is the next step? rob: theresa may has just got back to britain switzerland, also not in the eu. now we sort of see what happens next. if you think back to july, when we were all running around in a frenzy, trying to work out what was going to happen, there's been a pause. there's been a chance for ministers to catch their breath a bit. the really interesting question is, there's so many moving pieces in this. you've got to get what britain wants lined up. you've got to get what 27 other countries want lined up. you want to move everything at once. nobody quite knows how to do it. the government has been setting up its brexit department. over the coming months, they are
going to start to set out what brexit looks like. the caveat i would offer on that is that theresa may has wanted to be prime minister for at least 40 years. in almost all of those years, she did not want to deal with brexit. we know that brexit is going to be the beginning and end and everything she does, but she's got a whole plan that doesn't involve spending all her time in brussels negotiating. francine: let's go through the timeline. who are we going to hear talk about brexit, the brexit minister, boris johnson, the chancellor, the prime minister? rob: all of them. francine: will they be on message? will it be one message or can we have different views? rob: i think theresa may is going to want firmly to have one message. that is her style.
her problem is going to be that she is trying to wrangle people like liam fox, boris johnson, david davis, technically the brexit secretary. these are not able it is easy to get moving together in the same direction. francine: simon, do you follow politics? the day after brexit, were you glued to the television? simon: i wasn't. i was calling my friends saying, let's get on with life. i was on part of the campaign to stay in, but i said my proviso was always that whatever happens, we will go forward. francine: the timetable is what, imf meetings, the budget, what is the next big day? rob: there's the united nations. the next big milestone in my calendar is theresa may's speech to the tory party conference in october. that his/her chance to really
set out what she's about and as i say, i think a lot of that will not be about brexit, but it is impossible for her not to start to draw the edges of the picture. parties, at dinner business meetings, how much do people ask you, foreigners, investors, friends, ask you about the political system in the u.k.? simon: i think it is the top agenda. the top agenda for my conversation is not just the political system and the brexit, but how do we reinvent ourselves in the next 10, 20, 30 years? how do we do what elon musk is doing to technology for politics in the world? we're going through enormous change in this world. you have people on these shows talking shop with a million different opinions.
what i'm interested in is the long-term future. leader, -- somebody like that who has a real vision of where we are going in the country in the world and can persuade all of us to be behind them. until we get the press on the side of trying to be affirmative about things as well as criticizing them, holding leaders accountable, until we get the people gunning to want to be successful, we are going to teeter a bit. francine: you want a businessman in charge of the country. simon: i think that is what will happen. francine: we will have to talk about donald trump. have a pause. we will take a couple minutes. simon woodruff, founder of yo company. stay with bloomberg.
20 coming up including merkel, has she been able to build consensus? and hiking on the agenda or is it? janet yellen's hotly anticipated speech in jackson hole. bloomberg tv speaks to fed officials. we will also hear from jerome powell. we will also talk about donald asmp and richard branson possible prime minister. this is bloomberg. ♪
francine: markets lower this morning. let's head to the bloomberg with mark barton. mark: the federal reserve monetary policy toolkit. the name of janet yellen's speech later. bank of america merrill lynch says jackson hole has only really moved the markets once in the last decade, 2010. ben bernanke then signaling more qe. stocks are down today, looking like they will finish the week higher. to is the biggest provider of high security mobile phone and bank card chips. it reported an increase in first-half profits. today.up 7% vivendi, the french media company, posted earnings in the second quarter that missed estimates. cost by 300reduce
million euros. shares down by 5%. big piece of macro data today, excluding u.k. gdp, japan inflation. consumer prices falling for a fifth consecutive, excluding fresh food. prices falling 0.5%. it is a long way away from the boj target. francine: thank you so much, mark barton. with me this morning for our weekly "brexit: what's next" special show, simon woodruff. thank you for staying with us. politics,lking about brexit, and you said something that struck me. maybe we should give a chance to entrepreneurs. i think you mentioned richard branson. also mentioned elon musk. what is wrong in politics today? we see it a little i guess with
the trump phenomenon and brexit here. simon: i think most people here would say, why can't we have richard branson or somebody like that running the country? i think there's a whole generation of younger entrepreneurs who would be very good at this, especially if parliament was in a google building like bloomberg here where things happen. management, not about the ideals of the 19th century. francine: making it happen -- to line simon: why would anybody go into politics when we don't support our politicians? francine: making it happen is great if you have a company because you can grow. but you also have to take tough decisions. in a place where there's income inequality and people are feeling left out, would an entrepreneur not make that worse? simon: i think the first thing an entrepreneur does is he
doesn't look at the top line. we look at the bottom line. to protect the bottom line, you have to make sure everybody in the organization is empowered and feels good. gone are the days of the stick and the carrot. mostly now it is carrots. what i think happened in brexit was there were some clever people wanted brexit and those arguments i could make, but there's an awful lot of people who were pissed off. francine: we apologize for any colorful language that we cannot possibly say on tv, simon. when can you make sure that everyone feels included in society? simon: i don't know what the solution is, but i think first of all you have to accept -- i was in what jack welsh would have called the bottom 10%.
life, itain point in my was not doing well at the company, and the best thing would have been for me to be kicked out. we have to be tough, but we also have to be kind. not everybody can be striving successes. we've created this very complex world and we have to look after people at the bottom. i personally have an instinct that we should give everybody a minimum wage which says, you are allowed to have this wage just by didn't of living in this very difficult and complex place to live in. explain: how do you income inequality? there's an argument that it is because of all the cheap money out there that the rich keep getting richer. how do you stop that while at the same time creating growth? simon: sensible people who are making lots of money want to share it out. otherwise, somebody is going to
come and slap them in the face. francine: do you think that donald trump has a real chance of getting elected? he is seen as a businessman, but may not if he becomes president have the best interest of all the country at heart. anon: i think it is absolutely obvious thing, comparable to brexit -- i francine: because it feeds on fear? simon: and it is the people saying, enough of this. it is a protest vote. francine: it is, although nigel farage was quite mad when barack obama told his country how to vote. then he shows up in the u.s. simon: imagine somebody doing what trump was doing. imagine you could take somebody out of business who really was a businessman. trump isn't a businessman in my humble opinion.
not a good one anyway. somebody who really was good that we all loved, somebody having a vision they could sell to the world. then you could get change. brexit willat what look back and say -- we had a three-month period where we campaigned and it took weeks -- i think we will vote on the internet. francine: what will it take for a good entrepreneur to run for office? simon: i think the people get what they deserve. right now we get what we deserve because we continually tell them how they could do better. i think the press need to lead the way in being not only holding people accountable, but being encouraging. francine: encouraging by what, by putting positive news? if you take not
just encouraging news, but getting behind -- if we ran a business where we got a chief executive and as soon as we put him into power, we tried to trip him up, we wouldn't get very far. it is the same in politics. francine: simon, thank you very much. europe, merkel's tour of is coming to an end. as she forged a continental consensus on how to handle brexit? this is bloomberg. ♪
francine: german chancellor angela merkel is in warsaw today, traveling through europe ahead of the brexit summit. germanyus from berlin, government editor for bloomberg news. who does she need today and tomorrow and what kind of reception did she get on her first two stops? >> today, merkel is meeting with four eastern european leaders, including the polish prime minister. then she heads back to berlin and meets eight more eu counterparts. you can see this kind of intense diplomacy building up to the bratislava summit. period supposed to be a of reflection, i think the eu
has called it, but the differences are coming out. yesterday she was received by anti-immigration protesters in prague. h prime minister said, we are not going to change our stands on immigration. she will probably get more euro skepticism from the europeans she's meeting today. francine: there's a state election in just over a week, then a special post brexit eu summit. >> the state election in merkel's political homeland near the baltic sea in eastern germany isn't looking great for her. the anti-immigration party called alternative for germany is surging in the polls. it might overtake her christian democratic in in the state. this is only a state election, but it does send a signal that merkel is under pressure at home. that means the presumed leader of europe will be going to the
summit in about three weeks time and in not the strongest position. she's been stronger in the past. her approval ratings are down. francine: thank you so much, tony, bloomberg editor in berlin. also one of the writers in merkel's, one of her biographies. this is a picture for the markets overall. all of the focus will be on janet yellen's speech. dollar retreating before the jackson hole speech. european stocks are pretty much unchanged. asian shares falling ahead of that speech which may or may not shed light on the interest rate outlook. pound strengthening a touch after a report showing u.k. consumer confidence is picking up. tom keene will join me from new york. we have a conversation with rick loki from state street global
francine: janet yellen speech. dollar tree. the markets -- the dollar retreats. from zero to one and three, investors increase the odds of a september rate hike. we have had hawkish hence from policymakers. merkel continues her european tour today in warsaw. she talks about a post-brexit block. this is bloomberg surveillance. i'm francine lacqua. the markets have been waiting for janet yellen speech. tom: finally it is