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tv   Bloomberg Markets European Open  Bloomberg  August 21, 2017 2:30am-4:00am EDT

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♪ manus: welcome to bloomberg markets, it's the european open. we bring you the first traits of the day and await you i'm manus cranny ellen sign matt miller in berlin. here is what we are watching today. mountains, yellen and draghi are off to jackson hole for a summit in what will we learn from the heads of central banks as they cope with low inflation? trump's makes a primetime speech and edited to
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reset his presidency after controversial advisors after bannon's ouster. how much has changed at 1600 pennsylvania avenue? juncker martin schulz steps up his campaign to unseat her. -- challenger martin schulz steps up his campaign to unseat her. in the u.s., he saw the s&p and of dow futures starting to turn around. we have green arrows on european futures. if you take a look at the bond trade, we have a three-day chart of the german debt. you can see we have come down in a yield that we are now headed back up. this is the end of friday's trade into today. ,he yield heading back up investors starting to sell a little bit more of the debt and that twitches -- that pushes the
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yield higher. we will get some direction in about 28 minutes as we get the market open. what kind of direction do you see from that jim and screen? -- screen?creen -- gmm manus: these are the equity markets across asia. we have more risk coming in terms of political theater. we have a reset on afghanistan this evening and south korea having military droves. what risk does bannon post outside the white house? housese outside the white -- pose outside the white house? in terms of linguistic nuances from mario draghi, more from jackson hole a little bit later. steve, i note you like a little
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.it of steel 7% higher, commodities are up. get to singapore and a juliette saly is standing by with your first word news. juliette: u.s. president donald trump will make a primetime speech later about afghanistan and south asia that comes as he looked to get his presidency back on track after the departure of chief strategist stephen bannon. desk steve bannon. the president returns to washington after his working vacation spent at his golf resort in new jersey. he will speak at 2:00 a.m. u.k. time. 10 sailors are missing and five injured after a u.s. warship collided with a tanker. search efforts are underway after the uss john mccain collided with another ship. they are investigating the extent of damages. involthe second crash
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ving an american naval vessel in a matter of. -- matter of months. it follows weeks of hot intentions including kim jong-un's attempt to attack guam. watchter said he would washington's actions for deciding whether to act. u.s., mexico, and canada have --ed a first round of trucks round of talks on a trade agreement. the next round is scheduled for the start of next month and mexico. they moved to canada in september and back to the u.s. in october. additional rounds are planned for the reader of the year. is telling its banks to cap international investors to raise financing instead of relying on government funding is the impact of the saudi led boycott puts pressure on
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liquidity. the central bank is holding regular meetings with lenders to gauge how the standoff is affecting liquidity. it is encouraging banks to borrow internationally through bonds and loans to prevent credit rating downgrades. retail has returned to up provocative foster a week before brexit talks return. prime minister theresa may will publish five new position papers this week after declaring it is stepping up pressure on the block to shift negotiations await from separation. big ben will fall silent at noon u.k. time as parliament's tower is set to do major work. they will witness the bells gs after the tower goes silent.
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global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. manus: thanks very much for that. matt: the world top central banks gather in jackson hole. the economy could be tempered by a growing unease of stubbornly low inflation. janet yellen will be discussing the summit on friday. this is a moment for which we were getting revved up until we heard mario draghi was not going to drop policy bombs on us. is janet yellen going to tell us something special? >> probably not either. it's quite funny we are focused on jackson hole this week. markets are quite today and will probably quite for the rest of this week. the whole world waits from something from jackson hole, not because we expect something, but
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we have a history that is surprising. another janet yellen nor mario draghi will announce anything new. the markets might be priced in about the euro. that's where we will see the real price action. manus: cracking piece on the bloomberg this weekend. this is the language he used. volatility. we are a ways away. in talking about the euro? i doubt that very much. financial stability could be a bigger conversation that yellen puts to the marketplace. perhaps we are underpricing that. >> that is a fair point to make. the most recent bed mentioned they were pushing back against deregulation in the financial industry, which weighed on bank
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industries. now she says they will fight the administration's attempt to roll back the dodd-frank, etc.. most likely scenario is that she will reiterate what has been said before in terms of the fed supporting financial regulation. nothing to definitive either way. matt: what do you expect from trump's speech tonight? and that the market moving or are traitors trying to take politics out of their daily work? >> i don't know how anyone can know what to work out from chumps speech ever come up but it is making people nervous. the ministration's -- the administration's making markets nervous. there is not any specific expectation. it is holding people back from adding to risk and certainly the
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markets have a bearish bent. we are in risk-averse mode. sellers have more control than buyers at the moment. matt: what about the dollar right now? there is a lot of talk on mliv right now about how trade is short the dollar. we have been hearing that for a couple weeks. i see hedge funds are making fewer bets on getting along in the euro. where do you see that? the euro has had an incredible run, the dollar is shorted. what is going to happen? >> the euro dollar having its best start ever. it is interesting hedge funds have rolled back there positions on the euro. that is going into jackson hole and betting on the chance draghi might try to talk down the euro. people haven't looking for
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dollar banks for a couple of weeks. i think it risk aversion gets worse, you might see the other side of the dollar slide. the long-term structural dollar bearish trade probably remains in place. more get a bank, there are -- nothing more than a couple of percents. market is part of our and life team, doing a great job setting up the trading day of it -- trading day. if you are aer, bloomberg customer, not only do you get it on tv, you also get to join the conversation, follow the charts and functions and pop a message in that. -- in there. you have the qatar story that we will touch on later. matt? will talk about the hot
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new sheet in qatar. more to come on what is going on in germany. don't miss our 30 minute germany decides program. we bring you the latest clinical and market analysis and the runoff to the election. ♪
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♪ london, buta.m. in
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let's get to singapore with juliette saly. juliette: sempra energy is nearing an agreement to buy on court for $9.3 billion according to people another with the matter, it could be announced today. it could scoop up the texas utility being pursued like healthwaysett and energy unit to client to comment. fortescue metals has jumped in trade after the the fourth biggest iron or trade. it returns further as it is rewarding investors with higher payouts. a new ceo of uber.
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jordi of the right hailing company is coalescing around emails. t says a board of directors is likely to talk about it in the next few weeks. according to two people familiar with the matter, 600,000 gallons of oil was unloaded on saturday. a shell spokesperson declined to comment on the shipment. china's great wall motor is reportedly interested in buying chrysler's jeep division according to automotive news, setting in the mail from the general manager. it intend to buy cheap and want to begin negotiations with chrysler. that is your bloomberg business flash and you can find more stories on top . we are checking the asian markets as we near the close in shanghai. a lot of support coming in from energy players in hong kong and in china today. billion outcome sale has
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boosted economy in the regions. it was a different story, the yen playing into things on the nikkei, closing for the second consecutive session. we saw mixed earnings coming in there. in terms of what stocks are watching, sold off after the 9.5% drop after friday, after the ceo decided to skip aside. blue scale falling 22%, the most in six years after the earnings was a miss, but fortescue doing very well on the rebound we found in iron ore rices. we look at it on btv. industriesng china getting to record highs as we see a rebound in the contract. this is important because we are them repay investors because of this rebound you saw and iron ore. , analysts suggest the
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profit could have rebounded sixfold and there will be a lot of pressure to see whether or not the income has derived from assets including iron ore businesses, will be paid back in terms of hired dividend payments. matt, manus. matt: juliette saly in singapore. a search is underway for 10 american sailors missing off the coast of singapore, disappearing after their worship, the was is is john mccain collided with a patrol in -- the uss john mccain collided with a petroleum tanker. let's go to jason could sake who joins us from singapore. jason, what else do we know about what has happened so far? uss mccain is the docked in singapore. it was able to get here under its own steam and power and the
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intensive search involving three other countries, indonesia, singapore, and malaysia, is still underway to look those 10 missing sailors. that search and rescue is still ongoing that this is the second incident involving a u.s. navy in the area and that is why this is one of the most read stories on the agenda. what was the fallout on the very first incident? jason: two months ago, a navy ship collided with another merchant ship off the coast of japan in a tragic incident where seven u.s. sailors were drowned and april a very investigation by the u.s. navy has found fault with three of the commanders of the navy ship and they are being relieved of their command. we are awaiting a final report
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but certainly, the u.s. navy has found fault with its own commanders in that first incident off the coast of japan. hearing a lotbeen about the military exercises in the area. is that why the uss mccain is there or what is the worship doing there? jason: the uss mccain was on its way for a routine port visit to singapore, quite a long way from those drills in korea. that the mccain had been involved in routine freedom navigation operations in the south china sea. it was reported last week to be sailing off the coast of a these artificial islands the chinese have up.
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that is where the mccain was spotted just a week ago and it was coming into port here in singapore just for a routine visit. it is a long way from those operations in korea. the merchant ship that mccain allied with was also on its way to singapore. it is unclear how these two ships collided very early this morning here just off the coast of singapore. manus: jason, thank you very much. the q for joining us. minutes away from the start of the european trading day, just under 10 minutes. we will take a look at some of the potential movers. those details coming up. this is bloomberg. ♪
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♪ welcome him back to the european open, i'm matt miller here in berlin. manus cranny alongside me. filling in, thank you manus, for guy johnson in london. we are minutes away from the open, six and a half to be exact. red stickyg headline, maersk oil is being a 7'4" $5tal for
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billiondeal -- $7.4 deal. $2.5 will assume debt for billion, a total of $7.5 billion in what is turning out to be in m&a monday because we got the on court news as well, the battle between warren buffett and paul stinger looks to be won by a third party. manus: it has been rattling around europe between act and nobel, certainly an active participant. i think the miners could be in play. juliette has been telling you that. this is the commodity board deal seo if you want to understand -- this is the community board glco if you want to understand what
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is affecting the market. are up 1%.these flat, ray dalio basically saying, by gold. -- buy gold. you have copper, iron ore, upures are up 5.3%, real was 4.5% in australian trade. matt: i am watching gold to see if they can break through the 1300 level. and close above it, as well. i'm also watching bitcoin come down on little today, still above $4000 however. more to come on germany, don't miss our three-minute germany decide -- 30 minute germany decide show. we will bring you the latest political and market analysis
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and the run-up to the september 24 election, angela merkel leading by 15 points right now over her opponent. down, this isg bloomberg. ♪
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♪ 7:59 a.m. in london. get your boots on because these markets are inching lower in a post been in the as we wait for jackson hole. will it be an action less jackson hole on august 24 or 25th? matt, a very good morning to you. it's a pleasure to be on your show. matt: it's a pleasure to have you with us, manus. i want to point out something surely you have seen already.
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it's the great chart of the bloomberg. you can access it by typing in this #. it shows hedge fund positioning in the dollar at the beginning of the last 12 month. , they were long u.s. dollars, the most crowded trades that turned around and now it is short. the question is, will it bounce back? by the power of tv, we just flashed up on to the monitor equities slightly lower opening. michael's view on the fed was that there would not be another rate hike this year that sterling is not priced fully. it is not priced fully for a risk of a downside. these equity markets are lower. the markets are skittish because there are lots to play for in terms of, will donald trump stick to the street that -- stick to the script this morning
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. nejra cehic is standing by. nejra: we know the 10 year treasury yield was whipped forward with all the news out of the u.s. but it ended where it started around 2.2%. the 10-year gilt yield is pretty much unchanged, closing at 1.09% on friday and we are there now. very unchanged. equities meanwhile, we are seeing a shift to the downside, third day of losses for the stoxx 600, the overall bank up 3/10 of a percent. most of the industry groups are heading lower, financial, health care, and tech stocks are the biggest underperformers. energy getting out a tiny gain on energy stocks, but pretty much a flat gain. most industry groups are heading lower. to jackson hole, one question is whether mario draghi will push
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back on military strength at all. we will talking about positioning on the dollar, this is cftc data showing positioning on the euro. we turned it bullish on the euro for the first time this year since 2014, but those bullish that have been pulled back a little bit. if we head into bearish territory on that positioning, that could pose much bigger questions than sustainability of the euro rally. we are softer around the 117 handle. i'm looking at oil and gas stocks here, we have a technical meeting of opec in vienna happening today, so stoxx 600 oil and gas index is near its lowest since november. manus: let's check in on some of the moves we got on here. what matt and i were talking about. commodities are moving, iron ore
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is staying in the $70 range, that is a question for the market. the preview we have got. idc says iron ore will hold in bhp70's as we go in, expecting earnings, rebound, that is one of the messages coming through. the miners at the top of your screen, aluminium trading , zinc islevate prices trading up 1%. nickel is up 1.91%. glencore all pacing on the upside. it is land on the countryside is down by 1.2%. you have that skittishness overall in regards to the value of any property. anybody got a bid for any property in london?
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that is the question you ask yourself. the stock is down this morning, the readership is spiked on that, british has downgraded by hsbc to 678 pounds. matt miller. base very much. chief white house strategist steve bannon was ousted in the white house friday. he had been on shaky ground for weeks amid the fallout of the violence in virginia. what next for trump in the post been an era? era?st bannon he looks to get his presidency back on track but he does not always stick to the script and has definitely the ability to move markets. with us is the senior investment manager at asset management. let me first ask you what you
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think traders do in reaction to donald trump. thatu try to take completely out of the decisions you make because it is so incalculable? definitely from our perspective, that is what we try to do with the political side of things. trump has been heavy on rhetoric and that has been volatile throughout the campaign and since the campaign we have seen his tone at and flow and it really does speak to different audiences with different tones and content. i think we can observe for markets the trade certainly does not ignore trump but we are certainly looking for a medium-term horizon and trying to filter out the signal from the noise. and that respect, a lot of the things are distractions at the moment. what we care about is his agenda and the economic agenda specifically. tax reform still is probably the
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most important aspect of the agenda, not just because of the impact on the economy but because it is one of the more achievable. not necessarily achievable in the magnitude we were expecting potentially at the start of his term, but certainly because it is possible -- popular with the electorate. manus: we have an open ivy chat from here and frankfurt. some spectacular distinction between traders and investors. but investors turned to traders quickly when the bottom falls out of the market. let's talk about the bond market. trump is blaming both sides in charles phil, a significant moment in a geopolitical --spective -- charles phil charlottesville, a significant moment in a geopolitical perspective. these bond markets started at 2.2% and ended at 2.2%.
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what made the bond market die? is it the discussion from janet yellen today? is it more important than we are pricing in the bond? >> i'd rather talk about that than trump because trump is so difficult to price. it is an adjusting russian you raise. we were told last week, i'm not sure if it has been confirmed, but janet yellen space to financial stability. talking about financial stability. there was a paragraph where it seems to be highlighted. they seemed to be trying to make a point that one member was talking in detail about financial stability. manus: do you think that was dudley or rosengren? i heard a piece that said it was yellen herself, which would make it interesting. if it turns out to be on that subject of financial stability, it can fall one of two ways. janet yellen will either
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reintroduced the motion that the fed has a direct responsible the for financial responsibility or potentially reiterating a point that it is not our job, which would be a concern to me if that were the case. matt: why is that the concern to you? you think that they are responsible as a regulator? regulator,just as a that as a mandate. there is price stability for employment and it would be a rather naive of somebody to believe they could achieve either or both of those things in a world that is not stable within the financial system. we have seen basically within 2007, 2 thousand eight, and 2009, how the damage of the financial system could cause huge shock to the economy. personally speaking to try and ,eparate the two is difficult
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not only impossible. i would like to see central bankers trading their mandates in a more holistic fashion rather than focusing on today. worrying about whether things will be on the horizon and beyond. the economic cycle is far too long for them to like specific sort of decisions when looking into very short spaces of time and data. manus: i really quite like an opinion hold. poll.nion this is what we have got here. will janet yellen be nominated for a second term? no, 67%. here we go. who is going to be the most favored? we have covered, taylor, walsh. gary: solidifies his position in thepolling as potentially next head of the federal
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reserve. what would wall street do at the fed? guest: that is the good question. the market friendly. ould it?hat guest: i generally don't know. i don't know how gary cohen would be in that position. we have heard the regulatory agenda for trump is, some rolling back of the regulation. we have heard from the fed in the opposite direction but i believe we have gone too far. it needs to be effective regulation not regulation for regulations sake. like fed chairs much judges turn out differently at the end of the terms than you thought going into it. maybe janet yellen is the exception.
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he will stick with us. more still to come, don't miss our weekly 30 minute germany decides show, 930 -- 9:30 a.m. german time. it is the latest in political and market analysis in the run-up to september 24 vote. germany decides at 9:30. this is bloomberg. ♪
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matt: welcome back to bloomberg markets, the european open. i'm alongside manus cranny today in london. quick check in the markets, we are down across the board 14 minutes into the session. .e do see a drop in the cac let's cross over to nejra cehic with a round out -- roundup of your movers. hearing rathbone is an exclusive talks to merge with williamson group to create u.k. asset manager that oversees 55 billion pounds or $71 billion. the proposed merger is the latest in a wave of consolidation in the industry, traditional stock pickers getting squeezed going to 30 of cheaper index tracking or passive funds. also firms being pressured by potential costs associated with
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regulations. rathbone gaining 1%. recordtill heading for a close if we do get some of the gains that were called at the open. on the downside, metals and seeing it for years slightly lower than the previous year, pushing the stock lower. this company works in the appliances, wires, and cable sector. , ao on the downside is x-fab foundry for semiconductors hitting the lower end. down 5.2%. manus: the u.k. has set a theative tone a week before exit talks resume with the eu. theresa may's government will publish five new position papers this week after declaring yesterday it is stepping up the
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pressure on the block to shift the negotiations away from the terms of separation. still with us, the senior investment manager at aberdeen asset management. here we go. five more papers laying out the position of the u.k.. it would seem to me these papers come, but do you believe they set a clear agenda or that they carry and pander to the british media rather than a substantial negotiation position for brexit? jame i definitelys think it: is the latter and to be honest, i think it's the right thing. if the u.k. detailed its negotiating position, it would be giving the opposing side too much information. the whole point is that neither side wants to reveal its red lines because once you reveal them you have weakened your negotiating positions. this is a question of preventing
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abuse and speculation in the media just to allow the noernment to within itself its negotiating position. manus: therein lies the issue. never he doesn't seem to understand the uk's negotiating position. that should worry markets more, or is that me being, i suppose, they must buy british media? should worry more that i do not have a clear decisive direction or decision-making. should that not worry me? degree, it is not so much what the government once that what they can get. we sit with the eu and find out where their position can be foxhole and where they are rigid, we know the big picture regions, the four freedoms for example, but when you get into detailed discussion, you don't isw quite exactly what it
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prepared to forgo to achieve what. they want to achieve everything they want but that is not a credible position. to state publicly this is our negotiating position would be publicly derided i have sympathy because i don't think they could when and it wouldn't be good for anybody if there to negotiate in position was revealed. whether they can do it or it's achievable will depend on how firmly the eu is. matt: we talked about the fact that you don't know what will happen with donald trump see you try to take that out of the equation and look at everything else. do you do the same thing in regards to brexit and forecast for the pounds or gilts? how does that way in on your decision-making? ames: it's not always a question of stripping things outcome of that in both cases what we want to do is look at
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the various scenarios that can play out. we analyze the world and the future on macro things. we set up various scenarios and things we think will be achievable, upside, downside, attaching probabilities and get a probability distribution for future outcomes. in the case of brexit, if we found everything was a several -- a terrible downside, that would be a struggle for our position. we need to compare our productions with the market and what we think is being priced there. that is where it becomes interesting. orhave inflation which is 2% 3%, depending on which measured you look at. we have tenure gilt yields at 1.09%. the marketling you is pricing for a pretty negative outcome. that is instructive to us in terms of the decisions we are likely to take. us,s: james stays with
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coming up on this show, as trump tries to get his presidency back on track following the departure of his chief strategist, we take a look at the market reaction. james will give us his top call for the markets. ♪
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♪ welcome back, it is the
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market opened with matt miller in berlin and it me manus cranny in london. let's get a business flash. french company will assume $2.5 billion of maersk's debt. there is another find in the energy sector accelerating after a long downturn. maersk shares rose the highest this year. temper energy is eyeing oncor electric deliveries at $9.45 billion topping the bid warren buffett's berkshire hathaway which owns 80% of oncor. that is your bloomberg business flash. matt? geopolitical tensions and
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instability in the u.s. has led to increased volatility in the markets. where should investors be looking? still with us is the senior him as at aberdeen asset management. james, what are your top calls here? where do you think volatility will help make money? james: it's a lovely time to answer that question coming back on what we have seen recently with liquidity exacerbating these moves. volatility spiked a few times but we can describe it as shocking markets as opposed to violent or sinister. top calls are a tough one because part of the reason is things we have talked about. politics is playing an increasing role which is notoriously difficult to forecast. looking further down the line as we try to do, six months potentially into the future, i think the federal reserve is underpriced. i think the narrow focus on inflation has gone too far and
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ultimately the fed is still over the medium-term looking to normalize policy and what we have seen in terms of communication is more about the september balance sheet announcement and making sure there is not great volatility around that time coming from expectations or rate rises. treasury is still expensive and the dollar is oversold. they struck this story of a structural decline in the dollar for geopolitical reasons. we have talked about the fact that in some places, you cannot figure out what the political situation is going to do to situations in the u.s. in britain, you can take a harder look at it and make bigger forecast into how it will affect the economy. on the continental, i know you think the realities of macron's
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presidency are underappreciated and underpriced. how do you mean that? wass: first i thought it interesting the dichotomy, the history of both the u.s. congress and the french president tells you both of them were attempting to do things that are historically driven to be difficult. the market is skeptical. with trump, it embraced the macron agenda without questioning it. i think those implementation risk. he has a large parliamentary majority of the party is already a coalition, so there is a left and right within that. the types of things he is trying to do is disruptive and they involved fiscal retrenchment and there will be pressure on the economy at the market. it's the wrongan thing. manus: let's see the represses at the end of jackson hole.
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thank you for giving us your time this morning. much more to come, you don't want to miss it, our new weekly special, 30 minutes of germany decides. matt miller and myself have that conversation right here. ♪
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♪ matt: merkel stands for schulz hits the road, her main challenger commences his campaign to our. erdogan ways in. the turkish president comes in and's is not to vote for merkel or enemies of turkey in this election. welcome to our weekly germany miller show, i'm matt live from berlin. manus cranny joins us from london. look at our asset classes pushed
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around by this campaign. manus: but of the things you will touch on his the fiscal asked beauty of what comes next in germany. decided martine schulz has a long way to catch up with angela merkel. you take us through the papers in just a moment or it from market perspective, -- just a moment. from a market perspective, they have faded. question is, will bond yields remain? the deutsche bank has run the transcript. they understand the secret code to understanding what mario draghi might need in terms of the use of his words, important. understanding the draghi the
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source is what will move markets. politics is front and center as they began their grand to her of germany. matt? matt: i want to get a roundup of this week's papers. , alsour government team merkel biographer. i have a copy of the build a site, the leading paper in germany, the widely certainly paper in the western world. list thesee erdogan top news. tony, this is across papers. the berlin site has pictures of erdogan with merkel here. important is this considering how made turks there are voting in german elections? guest: it is an uncertainty factor and it is not an issue that is on a lot of peoples radar in the sense of, there is a specific turkish ethnic group
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or minority that has a certain voting tendency. is, it's notng researched a lot and it doesn't enter into the picture that much in terms of a voting block. many come upre so millions of turks living here in germany, about 3 million, many also vote in turkish elections. what you are saying is, you don't know how much they are influenced in their budding practices here in germany by erdogan even though we do know they voted for him in this last turkish referenda. tony: it is a simple question of allegiance and whether they are influenced by this. this is not something a lot of pollsters pay attention to so it
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is a bit of a volatility factor is,- the flipside to this both of the main parties, angela merkel's christian democratic block and the social democrats, they have both been going after everyone because -- erdogan because he has been taking such a strong stance weighing in on the german election and it neither of these parties take kindly to that. manus: very good morning to you. in terms of the tenor and the tone with the start of this election campaign, merkel made her position clear. if i have to do it again in regards to immigrants in this country, i would not change my policy. schulz said he doesn't want to make immigration a core point of this discussion. folly by schulz and smart by merkel. where does the immigration thing, great or not in its agenda -- dominate or not in its
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agenda? trucethere is a tacit toween merkel and a schulz not downplay but sort of move on from this immigration issue. liberal,hem have quite for lack of a better word, stands on this, and there is not a lot of disagreement, so there is no way to drive a wedge between the two of them in a major way on this refugee issue. they are not going to campaign against each other on turkey or the refugee issue, the two main parties here. will they take each other on when it comes to diesel, the diesel issue? tony: possibly or it's happening already, but the pattern so far is that, and easy with this
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turkey issue, as well, the social democrats are not -- not even schulz, who is fairly low-key, the diplomatic candidate. thesocial democrats have harder rhetoric and they go out front. like attacking everyone. likemerkel says -- attacking erdogan. merkel is the chancellor of germany and has to deal with leaders like erdogan or trump. the paragons of german industry. so it is -- if you take that dynamic, it is hard for the social democrats to land a killer blow against merkel at this point. so far. matt: so far. bloomberg politics reporter joining us to talk about what is
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going on with six weeks to go. manus: it will be the sixth weeks in terms of coverage but that is what the people in germany are talking about over the weekend. how do they actually vote? take a listen. cast a dualters ballot with two votes to pick up total of 598 members into parliament for bundestag. the first vote alexa local representative, the second is for a party. out of the 598 members of parliament, to 99 our local roads and it is who automatically get a seat to the first vote. and to 99 seats are filled proportionally. if the parties share of the representative vote exceeds its percentage of the party vote, extra seats are added. these are known as overhang mandates. votersd distorting the choice of the party, other
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parties are compensated with extra seats. for example, in 2013, cd you received 45% in the individual vote more than from the party. so it gained 16 seats in the bundestag, 17 seats were added for the other arteries, bringing it to a total of 631 members. block that takes the most seats has a mandate to form a government. majority, talks of forming a coalition and sue and coalition building will be vital. germany has not seen a majority government elected since 1957. fascinating piece there and you can access that online on bloomberg.com. we have an advisor to merkel's finance ministry joining us next. we will discuss the economic challenges facing the next german government.
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this is bloomberg. ♪
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♪ manus: welcome back to our german election special store. -- special show. martin schulz remains unchanged at 24%.
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present erdogan called on turks not devote for the political party accused of verbally attacking turkey. germany's christian democrats and social democratic already, the two ruling parties, are all enemies of turkey erdogan said in his remarks. chances for angela merkel to handle the refugee truck crisis, she will serve a full four years if reelected as her opponent tries to unseat her. looking back, the situation would be identical to 2015. i think my decision was right. we have since done a lot to ensure that it will not be repeated in this way. >> that is your german election news around. this is bloomberg. matt: joining us in the berlin president of the
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european school of management and a member of the german finance industries board of external advisors. thank you so much for taking the time to come in. let me ask you first of all, what you think is the most divisive issue is. , theyissue we talk about are together and we have even heard every help come out and say, we would be willing to take the role of coalition partnership again. are there any real divisions? guest: not really. it's minimal. you can argue that the social democrats tried to come up with divisions that are not there in most of the major thanks. for example, commitment to europe and developing the economy further. they are similar and they converge on a lot of topics that you could save from an external perspective, it is mild boring election campaign. how do you think the
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refugee issue will play into this election or will it at all? i came here last summer and there was so much concern about ,rime and unchecked immigration but that seems to really have dwindled this year. guest: absolutely true. it is not a major concern at this point in time, but it can happen, though. the risk can come up at any point in time if there is another terror attack. it could mean there is a major battle about these ideas. at this point, it looks like the alternative to germany is the only party to work on this. manus: manus in london, it's interesting you talk about this because as we go through our german stories, the percentage supporting it has dropped in the latest polls. is that something that has gone into the background? int threat does amd pose
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this election in terms of changing the debate narrative? the narrative for afd rests on two points, one is the eurocrisis, which is not a major issue at this point in time, the second one is the refugee crisis, and this is not a big issue either. therefore, afd rests on two topics coming given none of these topics are at higher relevance at this point in time, it is not surprising there pulls keep dropping. matt: what about the third parties? there are so many is weird to call them third parties. but the amd had a voice in politics when i was a kid and now, i don't know what they stand for. they have this gq advertising campaign and they have nothing to say on the german political front. will that change? guest: it will change and the
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sfc has a good chance to get back into politics. economic policy has not been revisited well in the last four years we have a ruling government that has taken a couple of decisions promoting the welfare state. the opposition might promote it more. for parties toe show a more market-oriented force. matt: the liberal party, the lived in libertarian party in germany, although here it's mo re closer to center. the other party that was kind of french, but over the last 10 years coming closer to that middle is the greens. i have heard agreement minister speaking outost against automakers own behalf of
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the automakers. is there a possibility the greens could join a coalition with the liberals and the cdu? is that at all in the cards? it is.yes, it was in the cards before, there were consultation tops after the election. it never turned out to be a coalition than but it is a real option this time and this has to do with the fact that the cdu and greens are not too far away from each other in terms of ideas but there our differences and foreign policy. most of these politics can be resolved. one final question on this sector, we covered the shock of exit, the shock of -- trump,f brexit, shock of followed by the hubris of the british fast and furious election. the question to you is this.
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is this her election to lose? there is nobody really that has the ability in the polls to challenge her at this juncture. guest: it is at this point in time a rather calm election campaign. there are not really controversial issues as we have seen the. in the brexit campaign and the presidential campaign, and also the french presidential election, the german election is far away from that, it is a calm and quite campaign and it would be surprising to come up until september 24 with topics that could get people engaged. matt: we will continue to talk about this. there are issues that get people emotionally engaged, like erdogan. the president of european school and management will stay with us and talk about the fact that this morning, is no one is safe from erdogan? that is because they arrested
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one of germany's most famous writers and journalists in spain. it is a big issue that we will talk about. turkey trying to interfere with the german election. stay with us for more. this is bloomberg. ♪
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♪ our germanme back to
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election special. turkish president erdogan called on turks living in germany not to vote on political parties that verbally attacked turkey. socialan democrats and democratic parties, the two ruling parties, as well as the greens are all enemies of turkey according to erdogan in a televised interview. still with us is the president of the european school of management. mean?oes this is it possible for turkey to interfere in a german election without getting too much of a rebuke just because he has so much power in pulling back millions of refugees from the european borders? guest: this is certainly the argument he uses and he uses this argument. having targeted provocation into the german election campaign, given that there is a huge
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number of turkish origin voters that might be influenced by what he's saying. matt: about 3 million turkish voters living in germany. aest: there might be potential to get influence of the election but it has to be seen in a broader context with the german government. matt: is this going to be an election issue? is this a campaign issue or is this something angela merkel works on as chancellor of germany? guest: i don't see this as an election campaign issue in germany because there are so much consensus between the social democrats and the christian to democrats. in fact it was the foreign minister that started saying, it is london coming. it is something that needs to be dealt with in foreign policy but
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it will not affect in my view, the election campaign. manus: let's talk about the reality of the markets, the world, and financing. negative interest rates in y, but still the clamor is for fiscal g. that shocks me as an irishman living in london limiting -- listening to the german mantra. where are these coming from in terms of fiscal latitude in germany? guest: deficit spending is the debatable topic. that mightsomething form one of the issues to be discussed in the election campaign. i don't expect this to change. i don't expect them to change on this because germany faces substantial risk going forward when you think of the social systems, social security systems that need to be financed. i was so expect germany to continue with rather conservative stances on fiscal
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policy. manus: and france, mr. macron's agenda was to bend the rules a little bit. he was hoping to spend a little bit more. is that going to feature at all in terms of the debate in the german election, the french and what they might do and how angela merkel might handle the incumbent? guest: absolutely it will become a topic as we see from remarks from the french side but also the german side of it most likely, these debates will take place after the election and it will be a two-step procedure. macron said he needs to get his own house in order so he needs to take those of structural reforms that have not been taken in recent years. the next step will be to raise higher expectations for germany and for germany to put its power into play. it will be interesting debates over the fall. matt: we have seen wolfgang
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asaeuble speak over these well as a deeper fiscal union in europe. he is a huge statesman for germany. is he going to remain in his position after the election as finance minister? guest: obviously i don't know and it also depends on how the government comes together. matt: if the government comes together and someone else picks the finance minister, will he work as foreign minister? guest: it is hard for me to see but at the same time, he enjoys a great reputation in the country, a great visibility. guarantee fors a german voters that he takes care of the money he spent so it would be a major shift if it happens. much, thek you so president of the european school of management. with us because up next is
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bloomberg surveillance. they will be speaking to maersk ceo at 10:00 a.m. u.k. time after a $7.5 billion sale of the maersk oil. this is bloomberg. ♪
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francine: the president will give a primetime speech later today. will the white house look any different? no inflation days. central bankers go to the annual summit in jackson hole. merkel's message. the german chancellor takes messages live on gilts right now. this is "bloomberg surveillance" and im'francine lacqua in london. we did have quite the weekend.

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