>> september falls as the rush to raise rates as fed governor says the rate hike fades further. china's factory output and sales beat as investment studies. is policy support working. and inflation expectations. we get the u.k. numbers for august and a half hour. hour.ust in half ♪ mark: hello, welcome to "the pulse." i am mark barton.
some breaking news from the iea, the surplus in global oil markets will last for longer than deviously thought. supplygrowth slumps and proves resilience so says the international energy agency. world oil stockpiles will continue to accumulate next year. consumption growth slumped to a two-year low as demand faltered in china and india while record members is opec gulf compounding the glut which last month the agency saw the market returning to equilibrium this year. that is the price of brent crude. that is the one week price. we're expecting key data tomorrow which could show supplies continue to increase.
the iea changing its view on the oversupply persisting into 2017. i want to tell you what is happening in the markets, a rebound in stocks from a three-day losing streak. by .25%. 600 is up we are awaiting the u.k. inflation data in 28 minutes time. it should show inflation continuing to rise because of a weak pound, oil factors. the 10 year yields down by three basis points today. yields falling for the first day in five. that is the type of selloff we have seen in global bond markets. by 1.7% today. let's get to bloomberg first word news with nejra cehic. nejra: the bank of japan is considering an abandonment of its guidance on the range of government bonds.
they said in a shift would reflect a desire by policymakers to give themselves great flux ability as they continue with the scale of debt purchases. the boj suggested the guide desk guidance of september -- to about seven to 12 years. china's economy has shown signs of rebounding after july's pickups. it beat the median estimates. investment in retail sales exceeded expectation. the numbers built on recent data which is help shore up confidence in the world's second-biggest economy. hillary clinton has said she is feeling so much better after being taken ill at a 9/11 commemoration. speaking to cnn, the nominee also said she did not disclose a recent diagnosis as she did not think it was a big deal. her, came that her comment came
as she saw to fend off accusations that she has not been honest about her health. >> she is doing fine. she was even better last night before she went to sleep. she just got dehydrated. is -- link and cofounder -- in timefounder is for the final presidential debate. hoffman said as trump shirks his obligation to the american people, you must show him that we do value transparency. -- we must show him that we do value transparency. global news, 24 hours a day, powered by 2600 journalists and analysts in more than 120 countries. mark: september is out. 'srkets took from fed governor comments yesterday.
>> this asymmetry in risk management is the new normal jumbles prudence in the removal of policy accommodation. this approach has served us well helping to support continued gains in employment and progress on inflation. i look forward to assessing the evolution of the data in a month ahead and signs of further progress toward our goals. mark: the rate debate between hawks and doves heats up. one man was unafraid to heat -- to weigh in. t-rex that has to maintain credibility and i think it is fed has tot >> the maintain credibility and i think it is time to raise rates -- the fed has to maintain credibility and i think it is time to raise rates. the rate gets much more psychological attention than economical risk of raising rates.
let's get to our guest nandini ramakrishnan. thank you for joining us. hike havevery rate -- comen to 30 -- 222% down to 22%. does it reflect the probability inside your brain? dovish. it was very he is a dovish member of the committee. this is not surprising aside from the fact that there was a lot of buzz around it mean the lasted for the blackout. the option out the of the august labor report a bit weaker than expected does give them a strong justification to say no for september and one for september -- one for december. mark: are you on her side? the risk of running an economy a bit hotter than the risk of
raising rates to quickly. she takes a cautious approach. nandini: the aspect of a dual mandate have been hit for a while. inflation -- she mentioned it is not taking too much but it is higher than it was a year ago. the low energy price dragging down inflation and now working its way out of the system. given that, the health of the labor market, a hike this year is probably necessary. -- my boss said a few minutes ago -- we have to be ready for a time when rates cut. it is something the fed should be aware of. mark: expect to me the financial endet and of calm -- market of calm.
many putting it down to central banks, the change in tone from various central bankers in the last week or two. doesn't that account for the end of -- does that account for the end of calm? nandini: volatility has been picking up. the fact that the european central bank did not do anything extra or push further on their support -- supportive monetary policy. the fed -- you could upset september was probable does mean that markets were and see -- angstsy. people were coming back ready to hit the desks. mark: the latest news we have heard from the boj is the boj considering either a tweak or an abandonment to its guidance on the range of government bonds. any shift would reflect desire by policymakers to give themselves great flux ability as
they continue -- great flexibility as they continue. nandini: i think that is a huge theme is they have weighed parameters and they are extremely aggressive banking policy. now when they're running out of things to buy, the boj owns 35% of jgb, they are going to have to start taking the parameters of their program and on to continue on those tracks of asset buying. the world are saying is perhaps it is time for stimulus and other ways, not just through central banks. on,: nandini ramakrishnan -- ramakrishnan from jpmorgan. plenty coming including opec forecasting the 2017. we'll see rival producers increase oil output. we'll break down today's iea report. what is next for crude?
the world's second-biggest economy rebounds after a july pick up. our increase in china's property price is unsustainable. the u.k. budget czar says the countries eu exit could take as little as two years. we will discuss that and bring you the latest inflation numbers as they break in 21 minutes. this is bloomberg. ♪
mark: i am mark barton in london. let's get to bloomberg business flash with nejra cehic. nejra: abn amro has announced its ceo with stuffed down -- will step down next year. the dutch bank supervisory board has begun a succession process. the announcement comes a day after the bank said it plans to cut as many as 1375 jobs as it begins to implement 200 million euros of cost cuts. ford intends to sell driverless cars by 2025. the ceo says the goal now is to bring costs down enough to make autonomy cars affordable. the plan is to start with robot taxis are right hailing services by 2021 and then move to the wider public are the middle of the decade. investors have not reacted favorably to forge new drive. -- two ford's new drive it amazon is going face-to-face
musk's spacex. they are building a more powerful rocket called after john glenn, the first american to orbit the earth. it is expected to make its first launch by the end of the decade. surplus in global markets will last longer than previously thought. nandini ramakrishnan on his with -- ramakrishnan is still with us. let's talk to ryan chilcote who has been sifting through the report. what have you uncovered? ryan: they said they expect oil market to balance this year. now they are saying it is going to take nine months for supply and demand to come into sink. -- into synch.
on the supply side, this a opec is producing too much at record --els it non-opec, they levels. non-opec, they blame the -- they blame the norwegians. on the demand side, we are getting slightly weaker demand than they forecast. they are blaming india, china, saying this year demand is going to grow by 100,000 barrels less. next year by $200,000 -- 200,000 barrels less. in 2017.n get bigger markowitz sets us live -- mark: which sets us up nicely. ryan: if i was a minister i would look at the data. you've got the chart right there showing the white line being brent crude and the fundamentals we have learned from the report in orange. we got the iea report.
yesterday we got a report from opec. oil ministersopec saying our rivals are going to produce more oil next year than we thought. that is not good. if they produce at last month's levels, they will continue to do that next year, they will be overproducing. on friday we learned the u.s. continues -- shale producers continue to deploy risks -- deploy rigs every week. in this oil environment, shale producers continued to deploy rigs and produce. it is going to put a ceiling on oil prices. mark: tomorrow's government is going to be even more -- ometer. call it the glut you see the relationship between inventories and brent crude. the expectation according to bloomberg survey is we are going
to see an increase of 4 million barrels a day. tonight we are going to get the api, the industry data for inventories from last week. every: 30 p.m. london time, we are going to get the government -- at 3:30 p.m. london time, we are going to get the government data. there are about a hundred million barrels over the average in the united states, there is nowhere for the price to go but down. stuff.im -- grim stuff. nandini: definitely a change of tune. now there is a bit of questioning the demand needs of china. overall from an investment in perspective, this is not a huge part of global growth and earnings story unless you are looking at energy companies, because in the u.s. earnings have been positive if you strip out the energy-based company's. focusing on the aspects of the
indices as a negative investor that are not related to energy or if they are related have been fundamentals are -- and are in the right -- tankers or storage facilities, then you've got a good investment strategy going forward. .ark: inflation information lower pound, star industry prices. it will seep through into the cpi. this is ryan's third chart. he is trying to blow us away today. ryan: what the chart here shows you is the blue line is brent. it has been falling could we saw you kate cpi decline on the back of that. -- falling. we saw uk's cpi decline on the back of that. all of the pass-through from lower oil prices into cpi, that is now gone. do you think this is going to be
meaningful in terms of inflation going forward? nandini: i think so. i think we have hit the lowest point of oil. $28 a barrel in february. we are not going to be seen that again. -- going to be seeing that again. once that supply and demand gets hit in a few years time, that is working out of the inflation equation. it is a pound based issue, although we have not seen big valuations were stabilization at the lowest point. the fact that it is a much more a part of the basket, the fuel, the food prices, that is going to be a bigger stain where watching for you kate cpi. -- we are watching for u.k. cpi. next, china beats the world's second-biggest economy rebounds after july pick up. -- our increases unsustainably high?
-- let's get the thoughts of nandini ramakrishnan. nandini: the data that was causing nervousness this year seems to stabilize somewhat and confirm some of that rebalancing story that we have been seeing in china. retail sales growing, industrial production lower but still at 5% year on year. that does confirm that consumption, that new china story is coming into fruition. mark: how much of a challenge is the property market with the state rise increases may be unsustainably high? nandini: when you have the government hoping out so much liquidity making sure markets are functioning properly, offering low credit for consumers and corporate, then you're going to have some asset price inflation. the housing market in china is one of those that most gets directly affected by that. the thing we are looking at is the differentiation between the peers, in terms -- between the
tears. some of them are less frothy than others. being aware of that as an investor is important. mark: when it comes to emerging been an assethas classlooks like an asset with reasonable valuations. is there upside in the emerging asset space? nandini: in a medium to long-term, certainly. you got some high-growth projections in terms of gdp in india in china. that comes with that adjustment in china and policy in political reform that needs to come through in india. valuations around 1.5 times in that index. countries that have good macro potential. it is time to rethink the underway.
we are thinking about moving that up. mark: what are we now? 31 weeks, seven months of outflows from funds by asset managers. when is the love going to return to the european stock market? nandini: because of the market is a funny one in terms of exposure to certain industries, a lot more than you would expect in terms of industrials or s.ternational until we get more comfortable in the next 12 to 18 months about global growth, i think european stocks will get to use the benefit that the very accommodated ecb and some other forces we have been seeing might actually come through and attract a vet -- attract investors back. the biggest risk is logical risks. the italian bank story did not help sentiment for investors. some headlines and political issues that need to be worked
out before close should start coming in. mark: that period where we did not see moves. what is the significance of that? nandini: the sensitivity. when headlines of fed speakers or political elections are coming up, everything moves markets a lot more than when people are complacent and growth looks really good and you've got a rally ahead of you. we have come a long wait since the trough in 2009 at everything is just 2009. everything is just high percent -- 2009. everything is just hypersensitive. that is what we are seeing already. mark: 19 a, great to see you. -- mangini, great to see you. the --. brexit star says we will talk u.k. politics and
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you don't see that every day. introducing wifi pro, wifi that helps grow your business. comcast business. built for business. pulse."lcome to "the live from bloomberg european headquarters in london. i am mark barton. u.k.,ion data out of the unexpectedly changed in august so more signs emerging of import price pressures. .6%, less than .7% forecast. the rate is still the highest since 2014. both import and factory import cost searched the most since
2011 -- surged the most since 2011. prioritized supporting the economy. they meet on thursday with their latest decision in month after cutting rates for the first time in seven years. sterling has dropped 11% against the dollar since the referendum and the impact of that is showing through in the latest data. that is the latest data, .6%. expecting a .7% increase. let's get the bloomberg first word news. and the global oil markets will last for longer than previously thought, that is the view of the energy agency. they predict it will persist into next year. that is if the iea says the production firm opec rose slightly last month as they pumped at or near record level
and iraq pushed out book -- output higher. according to people familiar with the discussion, they said any shift could reflect a desire by policy makers to give them greater flexibility as they continue with the unprecedented scale of debt purchases. they extended the average remaining maturity of jgb's from seven to 12 years. china's economy has shown signs of rebounding after july's take up. -- pickup. factory output rose. investment and retail sales also exceeded expectations. the member's on other recent data that have helped shore up. tod hoffman is offering donate as much as $5 million to veterans if donald trump releases his tax returns in time
for the final presidential debate. in a blog post, hoffman said as he skirts his obligation we need to show him we do value transparency. global news 24 hours a day, powered by our 2600 journalists and analysts in more than 120 countries. i am nejra cehic. this is bloomberg. mark: david davis, the brexit minister told lawmakers that negotiations with the eu can be completed within the two-year time limit set out in the lisbon treaty but he says the u.k. would have to be fast and nimble. hearings your previous , it may have been your last, you have evidence in at least one of your witnesses call into question whether we could complete it in two years. what we are trying to do. i think we can. is that weple truth are going to have to be nimble and fast and responsive and
which wouldanything tie our shoelaces together in these terms. mark: joining us now is rob wood, chief u.k. economist at bank of america merrill lynch. pickup of .6, slightly below estimates. does it change your view of how quickly inflation is going to rise from here because of the weaker pound? rob: what we are also seeing as fromacross a bunch of data the ppi data and pmi that the sterling depreciation is feeding through into the inflationary point line and it is a question of, month-to-month figures are volatile but we know there is a change in prices. most -- itll the moved the most since december 2011. the bank of england will overlook it, does that seem to be the strategy?
rob: absolutely, i think it is the textbook strategy. if you have a rise in import prices that is not reflected in wages again expected to drop out against. the danger for central banks used to be you get a big drop and wage growth picks up. mark: real wages is the concern, with consumption being such an important part of the economy. how important is that going to not as real wages are strong as they were because of the pickup and the potential pickup in inflation? rob: it will be a big deal. i think this is a key part of the brexit shock that has not hit yet because it takes time. if you roll forward to next year it seems to me the average real wages are going to be falling again and we are going to move back from when we had rising real wages, and that'll be a deep debt a big deal for things
like retail sales. mark: we've heard a lot from carney in the past week or so. no change your forecasting this week, but how does the improving data changer expectations for november? in august when the bank implemented all of those measures the expectation was we would see a further cut in rates in november. has that changed was to mark -- has that changed? mark: i think november now looks unlikely. the data is a bit stronger than the bank of england expected and if you were sitting on that committee not sure about easing policy in august you will be not sure about november as well. the autumn statement on the 23rd of november, i think the bank of england is going to likely want to see that before deciding what to do with interest rate. i think that the shock we are seeing pre-brexit is actually less acute than i had expected, but i think there is still a shock.
if you look across the ride range of data it is still pretty soft and that means when you run into next year, i think the bank of england will look at it and say this is a bit weak and we need to ease policy more. mark: you say long-term the deterioration in trading terms will damage prosperity, will damage productivity, that remains the forecast. too many people can be focusing on the near-term nuances but the long-term economic case you say is very strong. rob: i think it is. we heard from the brexit minister yesterday who said he can conclude the negotiation in two years. what is it that is going to come out of that? it seems unlikely to me the u.k. can get as trading terms -- as as aftering terms leading -- leaving the eu.
i think that case is pretty strong. the exact size of the effect is very difficult to forecast. we saw the huge range of next miss -- estimates before the referendum that an awful lot of them were negative. forecastt are your gdp for the next six quarters? rob: minor pretty steady at .2. mark: in a recession? rob: no recession. ,he key thing that is happened i think it is quite sobering to think back when the conservative leadership election campaign was started. it was said it would conclude last week and it is quite sobering what the u.k. would look like if we had only just found out what our new prime minister -- who our new prime minister was. i think the bank of england can take a little bit of credit but by no sense of the imagination have they turn this around. mark: preemptive action was
wise? i know carney has been criticized. rob: i think it was wise and at the margin it has probably helped a bit, and talk of fiscal reset is also important. they do not change the long-term, they just smooth the adjustment. mark: fiscal reset, it seems as if massive projects will not be implemented on the 23rd of november. philip hammond has warned. what is the best we can expect on the autumn statement? statement,k the own we actually still know relatively little about how the economy is performing. we have no hard data on the service data which is nearly 4/5 of the service economy. if you look at the data today they're going to have to push up the deficit forecast. they are probably going to have to push up structural deficits because the kobe i will take into account this long-term outlook. they will probably be looking to
i think some of the emergency suggestions are unlikely. whichk what they could do is much easier to some sort of change to the investment profile, speed up some projects like road building and rail which is what philip hammond talked about. these huge infrastructure projects, you cannot just stand up and announce one. these take years and years to plan and implement so i do not think it is realistic to think about that as fiscal stimulus. i'm sure they would say, our ambition is to improve infrastructure over a long period. to see that being implemented i think will take quite a while. wood, chief economist at bank of america merrill lynch. european equities halting their three-day losing streak. , european investors
600, pretty much unchanged after initial gains at the open. investors reassessing these equities that sold off to their lowest level in almost three weeks yesterday. financial services leading the gains. you can see a pretty even split between gainers and losers. in his partners group that is leading financial services to the biggest gains. partners group hitting a record high after posting a jump in first half earnings. no surprise oil and gas companies are the laggards down 1.3% with a weaker crude price. i wanted to bring this up because a lot of what is happening in market is being driven by reaction to the dove's comments by the fed. -- dovish comments by the fed. -- 1.65% -- we are seen
yields move lower across europe. u.k. gilt, the 10 year bond yield still above zero. dollar ever so slightly higher, that is the blue line, after it posted losses yesterday. these are how major currencies are performing against the dollar. the commodity currencies are leading the losses. the mexican peso, canadian dollar, and it is down to crude. oil declining before weekly u.s. government data is forecast to show crude stockpiles rose. the iea changed its view on the global oversupply seen the glut existing into 2017. brent at 47.42. for ultray managers high net worth individuals
representing over half $1 trillion are gathering in zurich for the ubs family office summit. manus cranny is there. you spoke exclusively to the muddy waters founder. what did he say on his new short positions? manus: this story is an interesting one. waters,lock from muddy and all of them battling. he took a short position. the hacker gains money for the more that is injured goes down. we have a lawsuit from saint jude who maintains assertions in terms of the risk to the pacemakers that potentially could be hacked, they are claiming he's is not understand the video that he put out. the defense is clear and carson block is staying short. jude are still short think
as -- saint jude. as a general matter we have never commented on the sizing of our position. it is a meaningful position but we are still short. obviously, the next few weeks and months could see a number of interesting developments in that story. manus: the cyber community are split into a what you are presenting and what they are presenting. i'm curious to know that we are going to hear and other substantive piece of information, is that correct? is there more to come on the validation side? manus: if you asked me this question a week ago and my answer would be absolutely yes. now with the lawsuit that saint jude has filed recently, whether we release additional information now or do it as part of some court filings, that is all to be determined.
certainly we will be releasing more information on vulnerability but in terms of it is part of the litigation or outside of litigation, i cannot say at this moment. manus: there is more to come from block in terms of his assertions. i should say that saint jude recently released research from the university of michigan. block said that research finding greatly, it is very narrow in its focus. ultimately that research was focused on a minor part and missed the forest for the trees. we are in zurich and it is nearly 29 degrees. i am in the mountains and i'm frying. we are on the border of france. the other position he has short is raleigh casino -- casino. to rally, he is still short -- casino and
raleigh -- raleigh, he is still short. -- what is his overall assessment of europe right now? manus: i think it comes down to this, the investors here need to get under the skin of these european companies a little bit more aggressively. european investors are not doing the hard work. you have companies that have been borrowing extremely at extremely cheap rates. take a listen. short thestill raleigh casino complex. we are going to be releasing an update on casino and raleigh and companies in its orbit in the next one to two weeks. manus: have they made progress? can we assume the report will show progress in terms of their
debt reduction? more in theired asset sales than the market prices have been implying at the time we initially published but the thesis still remains. this company still has so much debt at the parent level -- parent level that the equity value is far lower than where it is trading right now. manus: anywhere near to closing the position on casino? >> no, we are hanging in there. it has been a challenging position, that is true. we have conviction that eventually gravity will catch up. mark: great job. manus cranny in zurich. we will bring you any loose of that an exclusive interview with france's energy mix -- minister. this is bloomberg. ♪
mark: i am mark barton. let's get the bloomberg business flash. nejra: abn amro has announced its ceo will step down after he said he does not wish to compete in turn. the dutch bank supervisory board has become a desk begun a secession process -- begun a secession process as it begins to implement cost cuts.
ford intends to sell driverless cars by 2025. the ceo says the goal is to bring costs down enough to make autonomous vehicles affordable. the plan is to start with robot taxis for ride hailing and then moved to the wider public eye the middle of the decade. investors have not reacted favorably and see more focused on the company's profit warning. mark: the french energy minister says she understands theresa may needs to take her time to understand whether the new hinkley point powerpoint should go ahead. -- power plant should go ahead. >> no decision has been taken down so the discussions are going on. >> when would we expect a decision, by the end of this year? >> it does not matter, it is not the time taken by this decision. what we need is a good decision
and we are seeing something right now very stabilize. >> are you difficult -- disappointed that theresa may has been very quiet about it? >> she has the right to take her time to define what is best for her country. the moste considered powerful woman in french politics at the moment. are you the only one able to save francois hollande? >> let me say that for each member of his government, it is to speak about the next election. >> does that mean that it does not matter who will be the candidate to the left? >> at this moment, no. next year. >> it does not bother you that much? >> it is not a question i am
asking now and i'm answering now. >> how is brexit playing in french politics? on the far right wing there's tiscussions about a frexi referendum. >> not at all. i'm not going to answer. >> do you think it will never happen in france? >> i do not think so. i think if the question is coming the answer will be yes, the french people is going to gather around europe. mark: more great interviews lined up for you today. erik schatzker will be speaking exclusively to the argentinian president. that is a big one coming up later. stay with bloomberg, "surveillance" is next. guy johnson takes over in london and tom keene joins him in new york.