tv Bloomberg Markets European Open Bloomberg August 28, 2017 2:30am-4:00am EDT
manus: you are watching bloomberg markets, this is the european open. first-rate of the day and the first type of the week. but it is closed for a national holiday but i'm still here. i am guy johnson in london. matt miller is in berlin. tropical storm harvey continues to batter texas. sounds like a lot of money. could the damage and a helping u.s. gdp growth? longer-term, it could be a bonus.
kuroda feeling cautious. they tell bloomberg the nations cannot keep up its current growth rate, but how long can it continue this a comet is monetary policy -- accommodating monetary policy? it is looking to promote expedia ceo to run the global firm. he was not on the list apparently, but it looks like he could be the man. we are less than a half hour away from the european market open. what are we looking at? couldthe question is, not get anybody else to come in and run the business? uses it a lot of the time, but it has come under fire lately for other issues, scandal , issues of the like. we are not showing the ftse futures because it is a bank and hopefully
everybody in great britain is still asleep. we do see euro stocks, futures down, dax futures down, cap futures down. a littleresting after bit of weakness today. take a look at bunds. it looks like investors have been selling one's, driving yields up. if i just show you the one-day chart, you can see there has not then a lot of movement. this morning, there was a spike in the trade. in the slick summative put in us order, put in a sell pushing the yield up. now we are down at 0.38. i have broadened the gmm as far as it can go in terms of encompassing everything. this is the global setting up here. you can pull it up from your bloomberg. what i want to focus on is what
is going on here in the commodities section. gasoline, this is the effect of harvey. the effect is fairly substantial. it is trading up a bike 4.67% -- by 4.67%. we will see more of that as we figure out what the effect will be on texas with the flooding we have seen. what impact will it have on an industrial point of view? that is the effect we can see at large. you are seeing it into the rest of the complex, as well, but very clearly on your gmm this morning. click on the global setting and you can see it coming up that. let's get a bloomberg for sport update with juliette saly. tropical storm harvey continues to inundate southeastern texas. america's fourth-largest city has seen unprecedented levels of rainfall which crippled the
gasoline industry. it has a surge the highest for two years. the bank of japan's governor has pledged to forge on with very accommodating monetary policy. corona warned inflation target remains distant and the current pace of growth in the world's third-largest economy looks unsustainable. growth is excellent. growth cant think 4% be sustained. likely and the amount of growth inflationary look gradually climb up to 2%. with four weeks left
in the election, the leader of the social democratic party in germany has leveled his harshest criticism at angela merkel. of comments offer a taste next sunday's only tv debate between the candidates. with thelks resume , the opposition labor party has tried to leeward critics to their side. it wants written to stay in the eu single market and customs union four years after it leaves the block, a proposal that will delight business leaders. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. matt and guy. president has urged her colleagues to look past the inflation data to stick to the gradual pace of lifting interest rates. speaking on the sideline for the retreat, we expect
one more increase in rates for the end of this year. >> monetary policy is still accommodative, so the gradual path of normalization is really a gradual pass. my argument for why we want to stay on it is because we are in normal economy. inflation is not to percent, but we have to move policy before we get to goals otherwise we will be behind. guy: let's bring in mark cranfield, who joins us from the mliv team, one of the strategists on the blog. good morning. i'm looking at the opportunity -- probability of a rate hike in december, we are some 40%. do you think the data will start to change the story around? we have the payroll coming through at the back end of the week. is the data going to tell us any
story? it guest: if the data tells us something, it will be the qe. if that would take up, it would help with the argument that the inflation drop will be a temporary one. from the investors point of view, i don't the data in the next couple weeks, it is the september fed meeting and what they will say about balance sheet normalization. this is what we have been waiting for. the fed it looks as though they want to continue with signal on that and how the market reacts to balance sheet tapering is really very important for everybody and it will have a lot to say about whether the fed has the confidence to go for another rate hike later in the year. matt: it doesn't look like the market believes one is coming soon, mark. we are looking at a 10 year yield of 2.16 right now.
i wonder, how much of that is the reaction to jackson hole and how much of that is an incredibly solo -- incredibly slow august? guest: a bit of both and obviously concerns that the discussions so far on the u.s. government budget and possibility of a government shutdown don't appear to be going well. people are cautious about that and treasuries of the first line of defense if you are worried about that sort of thing. all of those factors together are playing into it. do say something about tapering, it does not get a good reaction from the market, you can see volatility in treasury in the coming weeks. guy: how do i price in? how do i figure out what is going on in texas right now? it is clearly having an impact on the energy complex. the cleanup effort required is going to be close to a shovel ready infrastructure project as it is going to get.
it has to happen and the federal government is going to have to spend huge amounts of money. walk me through how i figure that is going to impact markets. is it going to the inflationary? is he going to have an impact on the labor market? is it wrong to live in gdp? more medium to long-term than short-term? potentially it is. we keep being told there is no slack in the labor market, that it is a tight situation. if they do takeaway workers that could be in other fields, it could drive wait cost of weather is set in demand. pushed up which the fed would not be to unhappy about. they have been complaining about low wages for some time. it will have a boost to certain sectors of the economy and show up and construction related things and the equity market, so possibly more initially, and equity market story than anything else. the size of the infrastructure is big enough that it plays into
other areas. it has implications for the yield curve, as well. equities first followed by the yield curve. matt: thank you for joining us, mark. like marketow insights on the bloomberg at any time, just type in mliv to get those insights. floodwaters have been rising across houston as tropical storm harvey continues to inundate texas, pounding america's fourth-largest city with rainfall. two deaths have been confirmed from the storm and dollar terms tended to stretch into tens of billions, including the core of the u.s. energy industry. let's focus on the impact of the energy sector. dan murtaugh.
why is this so vital to the global industry? guest: the gulf coast has america's half of the refining capacity. the gulf of mexico is a major producer of oil and gas. the u.s. shall boom is centered around texas and the eagle for shell plate is in south texas right next to houston where tropical storm harvey is loitering and spewing out untold amounts of rain everywhere. all the stuff is producing oil and gas, refining it, there is huge changes to global demand and supply flows going on right now because of the storm. guy: just give me a sense of when will get an understanding of how big an impact we will see? weather carrythe on as green as it is right now? guest: unfortunately, we still have a couple more days of grim weather. the national weather service is saying the storm is inching its way he's across houston toward
the gulf of mexico, where it might actually re-strengthen and come back and hit again. we have had two feet of rain, possibly to more feet coming. it will be a while before we find out what the actual extent of damage an impact is. thanks very much indeed. up next, what can we learn about uber? they have not confirmed who the new boss will be. get thisbe done to company out of the trouble it found itself in? we will have the latest on who can be in the driver's seat here. don't miss our 30 minute germany decides special which starts today at 8:30 a.m. u.k. time. we will read the latest run-up. that's coming up. this is bloomberg. ♪
♪ guy: 14 minutes until the cash open in europe. here is a bloomberg is flush with juliette saly. juliette: 40% growth in first half profit. the profit rose to $4.2 billion. that is than it that are earnings from its chemical business as well as a narrower loss from producing oil and gas and lower financing costs. cbs has agreed to buy and network, beating out a rival bid
by lachlan murdoch. the network will collapse after pledged financial support to keep it open. forcost of buying programs the u.s. as advertising revenue plunged. he was sentenced to five years in prison, according to the news that did not cite the source for the information. he was jailed on friday for investment and perjury, accused of calling millions of dollars to a friend for favors. it is the harshest sentence ever given to a prominent korean figure. that is your bloomberg business flash. matt: the bank of japan's on buying program has left the central bank owning 4% -- 40% of japanese sovereign debt. governor kuroda told kathleen hays it will ultimately make yield curve control easier.
carefully been watching the markets. hase market liquidity .educed or not the spread and so and so. always we are carefully monitoring market conditions. there are some indications of that show markets on the whole, the market is functioning quite well. bank of japan has acquired 40% of gdp outstanding. is still out%
there. and come control also is not connected to the amount of purchase. it's targeted at two point interest rate. since gdb is remaining in the -- withing to be one unit of purchase, the impact on the interest rate could be bigger. in the coming months, there will be less and less need to purchase gdp's in order to maintain income. so at this stage, markets is functioning. ,e have already acquired 40% but 60% is still remaining in
the market and third, thanks to the control, we are not required ourselves to purchase this amount of gps irrespective of the impact on the market. speaking to kathleen hays exclusively at jackson hole. fantastic interview. let's change gears to excuse the pun. uber is recording a new ceo. according to people familiar ofh the matter, the x ceo expedia will take the top job. he will replace the pound -- the founder who was forced to resign. let's get to bloomberg tech reporter that joins us out of tokyo. questions jumpck straight to mind. what does this mean for uber? i haven't even heard this name
on the list. ay are we now talking about person that nobody expected? process we have seen, how did this happen? in terms of what this means in terms of timing, this really is the end of a certain phase for uber. the end of a period of hyper aggressive growth at all costs, massive fund-raising. now we are looking at this as a sort of a transition into a period where they will consolidate and stabilize things , but prepare for uber as a big mature company. dara, he is not unknown within the tech circles. the first thing to note is, he is coming from the travel industry. and uber is trying to disrupt the transportation industry and
so, there is a lot of probably skills there that are transferable. he also has a background with idc interactive. he has been in this industry for a while. he may not have been the obvious choice given the caliber of other candidates such as meg whitman and jeffrey immelt out there. but on several levels, this makes a lot of sense to the uber board, especially when they are looking for stability. he also runs a public company and that is very important. matt: that is a key point, as well. read, thank you so much for your time. reed stevenson joining us in tokyo on this uber story. minutes away from the castrating on the comment it is of course the holiday in the u.k.. next, harvey hammerson
controlled shutdown as it looks to limit the damage caused by the storm, hurricane harvey of course in the u.s. in houston. location, deer park, has a refinery capacity of 316,000 barrels a day. and you are really seeing the results of that shutdown in the tech -- in the gas price, which is up 6% to an all-time high. a big come up jump in gas as hurricane harvey basically shut down refining desk refinery operations in america's fourth biggest city. guy: petrel, gasoline, call it what you will. you can find that chart 417 on your bloomberg. you can see this jumping up. you can also find it, funny enough, let's go to gmm. you can find it quickly here. it has come up a little bit from an earlier height of the .74, where they are trading currently.
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guy: let's talk about where we think european markets will be trading today. london is closed. let's go to bloomberg and talk about what we are looking at here. london will not be trading, but look at the rest of europe and down half of 1% this morning, a softer open. keep an eye on what is happening with some of these energy stocks . that is something to be paying attention to. what impact will harvey have on all of this when it comes to what is going on? gasoline prices are shooting higher or it matt: absolutely. i want to show you something. a lot of people were let down the mayweather fight and also by
jackson hole. nonetheless, i will focus not on boxing or mma, but currencies here. chart. a euro you can see the strength here in blue. this shows you the number of contracts net long are the highest they have been since 2011. guy: european markets are opening. we changed the screen a little bit. the ftse end, that is the ftse mid there are that is what you will be seeing opening up very shortly. here is the first trait of the date coming through. the stoxx 600 down by 2/10 of 1%. the rest of europe we think will be down about 1%. 2/10 of 1%. looks like we will see a slow open. there is the ibex coming through. a little bit of a softer open, down as you can see, half of 1%. what's find out what is going on with nejra cehic. nejra: at this point, i usually
do the gilt market, but the gilt market are closed because of the holiday. let's start with equities. the stoxx 600 overall down by about 2/10 or 3/10 of a percent. it is red across the board as we look at various industry groups. tech is down come up followed by utilities, but every industry group there is in red. energy not one of the worst performers despite we are seeing wti crude and gasoline prices surging to a two-year high. ime interesting commentary had on radio with one of our guests about why we are seeing the divergence between cpi and brent. it is about shell, those inland producers producing the oil for the company on the shore. that is why we are seeing cpi falling and brent tracking the gasoline price.
i have the same chart here met just showed you. this is about long euro positions climbing the highest since 2011. this is after the euro hit a fresh to your height with mario draghi saying nothing about a stronger currency. ite say it took nothing for to move higher and it could take nothing for it to move lower. on the other hand, people are saying it can go right through 21 25 before we get pushback. i'm taking a look at peripheral stocks here. great to show you looking at the ratios. athens in purple, portugal in yellow, spain in white, perhaps some of these piigs looking attractive broader stoxxe 600, maybe not so much for athens. guy: thank you amit very much indeed. let's figure out what -- thank nejra.y much indeed,
let's figure out what is going on. down 1.23. the any in the financial sector is the league gainer. is trading up by 1%. up by 1%.rading we are seeing a few losses coming through. a clear sense of direction coming out of your seems to be lacking and that is an interesting story to figure out exactly what this weekend will bring. jackson hole in the rearview mirror, a lot of data out this week. matt: we will be watching very ,losely as well because although we have not seen such big moves, we are in interesting positions and a lot of these assets. jackson hole discussions offered little insight into central bank
policy and the limited comments made have hardly touched the needle. jockey reiterated the ecb will go slowly when it starts removing monetary stimulus with a decision expected in the autumn. europe, letow from me ask you about the levels of where we are, frederick. 0.38 on the bund. at suchoing to state incredibly low levels for a prolonged. of time? guest: difficult question in terms of this gap that remains german and between under yields. what matters is the spreads and the periphery. as long as it keeps this very gentle trend in bund yields for time, it, at the same
and i think itg is all good news for the ecb. what i am saying is not to buy technicalt by concerns that the ecb will decide to change in the future or to have at least constrained in the policy outlook. on the other hand, inflation growth is unlikely to boost the level of german yields much higher. it will be a matter of politics, risk, and the ecb qe program. does inflation look like it is on the right track? we keep getting the message from the fed, don't worry, we are going to make it there. we don't seem to be getting that from the ecb and yet, it seems as though they will continue
along with their plan to eventually announce a taper. guest: yes, it is. they are starting to look at books central banks at the moment. on the one hand, you set the long-term target for inflation remains close to the respective target and they should not be worried about the recent slide in co-inflation in the u.s. or co-infection in europe. in the end we will reach our mandate. but in the past month, the differences between the fed and ecb has been striking. annualized at the pace of co-inflation in the u.s. in theope, it is going opposite direction, down sharply in the u.s. in the areaevel which prevents the ecb from tapering. we are edging higher and that will be the idea behind the exit strategy of the ecb that will be
debated in september and announced in october of this year. guy: how fragile is this whole process? i look at europe and i kind of absorb the incredible goodwill there is toward it at the moment. then i start to question whether that will change and flipped very quickly. sentiment is incredibly low in europe and the financial markets and you can see that in the data. how easy would it be to change that sentiment, you think? guest: in terms of currency, he said at the beginning the positioning was starting to look stretched, but at the end, there was nothing from draghi or janet yellen at jackson hole to prevent markets from pushing the euro dollar exchange rates higher. outlook,of the broader which actually helps to explain the moving in the currency in the past few weeks now, has been this huge shift in terms of
large investors, real money investors toward europe. that date goes back to macron's victory in france. the abduction points, the reality check for big investors thought yes, indeed, some of them were wrong in europe and the euro area would not break up. that is where the shift has happened. for that to change, i think something has to happen in terms of u.s. politics or in terms of chinese growth, something big that would be a game changer for investors to go back to. guy: how hard is the next couple months will be for the man who has been pivotal for europe? you think the french president can deliver on the words? it starts to become important. protest the first union having into the autumn.
how are we going to be looking at christmas on the french story? to be honest for a start, i think the market focus will be on german elections for the lowest -- for the rest of september until the 24th, then there will be negotiation talks in germany. that will be the investor focus for the next few weeks. in france, a new era is beginning now where it will be much more difficult for president macron and the government to deliver on their promises. , big has been progress progress over the summer in terms of the first low labor market low initiatives that will shape the next few years in france. but now, the hard work begins with the union. unions in france, some of them have plants to protest in the next few weeks. in the next few days, actually. what the exact details are.
depending on this, i think there could be some friction and eventually, reform will be implemented during the next few months. matt: you are going to stay with us here on bloomberg. the senior economist for europe at pigot wealth management. bloomberg customer, you can watch the show using tv . here we see the one screen and i like to click onto the radio tab as well as the tv tab. a lot of times, you will get a different take. it is also a different way of observing information, i feel. , ashave event coverage cap well, so you can watch anything and the jackson hole fight not the mayweather fight, believe me, it was a long one. still to come, our weekly 30 minute germany decides program at 8:30 a.m. u.k. time.
brexit conversations to be had. the european negotiators are pushing theresa may to reveal her hand. member the news -- remember the news over the weekend, the labour party has made its bid to critics to look at its side. they want written to stay in the customs union for four years after it leaves the block. a proposal that will delight british businesses. from ther economist token is still here today. the seniored -- economist for pigot is still here today. is it looking like this will be the outcome? it's the hope actually. what we see on the ground, the developments are shifting in a direction where there will be at
least a dialogue. that is what's missing. speaking the same language and talking about the same things. even if it's for those two does a great. i think those steps we are going through are necessary. side.n the u.k. there is an acceptance that some red lines will not be crossed by the eu and there will be concessions to be made. that mostly relates last week to the concession on the european justice. the u.k. will exit the jurisdiction of the ecj, but there will not be a compromise. it will result in other compromises, both about the sequencing and the substance. in terms of sequencing, the u.k. needs to realize that cannot be any discussion about the period ofal yield a
time before the settlement has been agreed and before a broad partnership has been designed. and on substance, in terms of the divorce bill, there has to legacy ambiguity about issues and what will be discussed as the future. nothing in the negotiation this the i expect, will address question of the future partnership. realistic is a expectation for a timeline here? will brexit negotiations trade deals be done march 19? will be have the divorce settlement by then and maybe a three-year transition. have you see it playing outperiod? ? the best we can hope for is that there is an agreement by
march 19. in my opinion, it has to be longer than three years. look at the services sector that has not been addressed at all. even on the borders and the customs partnership, it will be difficult enough for the agreement to be made by march 19 and a traditional period to be agreed upon. that will be the best case. brexitst case is a hard before that. thank you so much for your time there. the senior economist at pigot wealth and management. tropical storm harvey entities to inundate texas. we will bring you the latest on the rescue efforts and assess the damage to the u.s. energy industry expected to be in the tens of billions of dollars. this is bloomberg. ♪
is so far below target he has no choice but to carry on. rate is.s. inflationary very close to 2%. ecb inflation rate might be somewhat far away from 2%, but we are about 1%. situationnomic crisis -- price situation in the u.s. is much better than the situation in japan. making balance adjustments or so it is said. , they are somewhat behind. they have not yet started any tapering. course, after the has not beentment
considered at all. behind theeen eurozone, the prices are rising 0.5%. >> better than negative, better than deflation. able to havee been positive inflation in past years, but it's small and far away from 2% targets. i think for some time, we have to continue this extremely accommodative monetary policy. watchingre carefully how the ecb is doing, but our monetary policy is full of japanese economy. since our inflation rate is still far below the target, they do ecb the result
in the coming months, we have to address the situation by our monetary policy. matt: there we have an exclusive interview with kuroda with our very own kathleen hays. we want to go from jackson hole to houston. floodwaters rising across houston as tropical storm harvey inundate southeast texas, pounding america's fourth-largest city with unprecedented levels of rainfall. two deaths have been confirmed so far with the dollar cost of the storm likely to stretch into the tens of billions. including extensive damage to the core of the u.s. energy industry. it is not just the u.s. energy industry that gets the impact. let's talk to bloomberg's dan urtaugh itright now.
? guest:, matt. what is happening right now is that u.s. refineries are shutting down, which is doing a couple different things. capacity,. refining reducing demand for american oil, which is lowering rices while at the same time, reducing the supply of gasoline, making gas prices shoot up. all of a sudden, you have refineries export gas to places like mexico and africa. those exports are no longer there. people in new york are trying to get imported gasoline from europe. you are having oil tankers ship guess all over the world. it is changing energy flows globally right now. guy: can i ask you a question about why hasn't the infrastructure been put in this position? why are we in this situation? why was texas so vulnerable for
this event given the amazing infrastructure for the oil and gas industries that exist there? guest: it's a great question. been the traditionally heart of the u.s. energy industry. the louisiana gulf coast as well. ,ll these production platforms for instance in the gulf of mexico, or shall oil wells down in -- shell oil wells down in the refinery. they are basically shutting down not because they are damaged yet, we don't know about the damage, but they are shutting down because there are a lot of hotel chemicals going through these things and they don't want to risk a mishap that causes an explosion or leak or anything like that. they are shutting down for safety. once the storm passes, they will see what kind of damage there is an see if they can quickly restart or if it will be longer. matt: how long is this weather expected to last?
how much longer will it rain in houston? guest: that is the worst part of the story. we have seen more than two feet of rain in some parts of he's an already and it is not going anywhere anytime soon. the storm is just loitering above houston, spitting out rain this way and that. two or more feet of rain will be coming in some parts. the highways have been turned into rivers and the national hurricane center says the storm is moving eastward and it's possible it could go over the gulf of mexico, slightly re-strengthen, then slapping southeast texas again. that is something we are looking forward to not happening. guy: absolutely. dan, thank you very much indeed. up next, what are we going to be talking about? the german election. our weekly 30 minute germany decides show. in the run-up to this crucial vote that will take place on september 24.
♪ matt: welcome to our weekly 30 minute journey to sites. i'm matt miller live from berlin. guy johnson is live from london. german social democratic chancellor martin schulz says angela merkel is out of touch. we will have more from that interview. emmanueltion meeting, macron post-up merkel and leaders from spain and italy as they speak to policy. we will go to paris for the latest. choosethe voters would merkel over schulz is given the
option of a direct vote today. guy: let's go back to that first issue. martin schulz hasn't leveled his harshest chrysostom of angela merkel speaking and an interview with public broadcaster arb. soft on the turkish president well, out of touch with voters. take a listen. >> more people recognized you see in the media as well help out of touch merkel is. she uses the federal infrastructure for a ridiculously low price to fight to her election appearances. matt: let's take a look at the lowest -- latest polls we have here. you can see them on the bloomberg as well. you have the election polls here mnid.gether from
30% for merkel, 23% for schulz. when readers were asked who they would vote for in a direct chancellor election today, 51% chose merkel, only 22% were for schulz and morph interesting, -- more interesting, 38% of voters said they would rather have merkel as the chancellor. let's bring in patrick donahue here in berlin. why is merkel winning this so overwhelmingly? back in january, they were neck and neck in this same poll. has a chilled just dropped the drop -- has schulz just ball? the guest: i think the element of freshness helped him and there was a moment where german voters were in the mood for change, but that fell apart with these estate election -- these estate
collections that happened in the spring. merkel's party trounced the social democratic party in all three. unexpected andf he has been the underdog ever since. guy: we have tb -- tv debates coming up. do they matter in germany? what does schulz half to do to change the narrative we have been talking about? guest: he has to be doing something and tv debates can only help him. observing german elections in the last three or four cycles, the tv debate has not been a game changer. it might happen now since german voters who have been on vacation this month will be tuning in. they will see martin schulz. he was on the campaign trail become a and he has lot more aggressive as you saw in the tv interview yesterday in attacking the chancellor. he was soft on that front when
he started out in the beginning of the year but now he is presently going after her. matt: is the offering of clear differentiation? do voters know what they will get that is completely different than what they have with the fairly successful cdu? prettyi think voters much know what they are getting with the social democrats. play ishis only card to that she has run for 12 years and i am summary else, somebody new. one thing i would pay attention respondents% of were undecided. that is a huge number that has been common and a lot of european elections we have seen this year. .our weeks to go if it goes one way or the other, it could be a bull for schulz, free democrats for example, or it could go back to
merkel's corner. guy: let's talk about the other parties for a moment. i see in the polling, the sep ticking up a little bit. i see the other parties gaining at the margins, particularly in fda, which is interesting. what is the story looking like further down the tree? these parties will be critical in shaping what the next government look like. a lot of people are taking a close look at the free christian the fd, democrats coalition partner. for yearsbounce out ago and failed to make the 5% threshold, but now they are back. when theyall, 2009, were polling fairly well, right at the end, there was a huge prust of support for the fd and nobody was protecting that. if there were be enough of a
majority government between merkel and the fdp, then you would have policy connection. matt: if there were to be a they areoalition, demanding a complete diesel ban i-20 30. -- diesel ban by 2030. much has this become an election issue? or is the spd so deeply involved they cannot mount an attack? guest: the diesel issue has become a huge election issue and officials were telling us last week, unofficial surveys door-to-door are telling them it is resonating with german voters.
whatever the green party puts on the table now, it's a long way off from policy. it would probably have to fight with the right wing of the cdu. merkel herself has a lot of overlap with foreign policy. you can imagine her going in on something like this. she would have to carry it in the party, which is more difficult. in thethrow the fdp next, it becomes a lot more difficult. coalitions will be in there by the end of the year. matt: it could take months or months to get a coalition. patrick donahue is a bloomberg government reporter occasionally here in berlin. he is on the road with politicians. could german carmakers face like of lawsuits from customers over excessively polluting diesel engines? we will continue this discussion because it is so important for markets for volkswagen, bmw.
it gives you all of the candidates there. remember, six parties here, which makes it more difficult. it attracts each one of them individually if you click into the chart content here. you see the cdu at the top and white so far ahead. but you see where they came from, or how the spd had it tied up for a while in january, february, and march. anything can happen in politics. ironically, considering germany's debate around diesel, gasoline is a story for the financial markets. it is a surging on the back of what is happening in terms of the financial markets today, london is not trading. as a result, you have a big chunk of the market not showing up for work today. as a result of which, you can look at what is going on today and try to make a judgment on it. there is not a clear sense of
direction. they are a little softer, down about half of 1%. what trying to decipher anything from that in terms of what the story will look like back end of august into september, everybody back at their desks trying to figure out what they will do with their investment portfolios. i think today it might not be the date to make that judgment. let's talk about the judgment that does need to be made him a that's for the german people. angela merkel says she could not envision gritting legislation that creates lawsuits. it would allow to bundle lawsuits against companies that could be offered to carve made -- car owners to sue carmakers. legislation could be passed in principle if designed correctly. more on what this could mean for the auto industry, we are joined by the euro cheap, chad thomas. chad, what does this mean?
b,for german car owners and investors into german carmakers. it depends on what side of the fence you are sitting on. investors held $9 billion in losses against volkswagen, so in some sense, it could help them in terms of the lawsuits they have file. obviously, it is not good for them if the owners are able to file class action lawsuits. to this point, we have had hundreds, if not thousands of individual losses, but it's very different game if you have carmakers bundling their lawsuits together and working with law firms to fight against the carmakers as opposed to mom-and-pop having to go to court on their own and hiring a lawyer to do that. matt: i know of one lawyer in berlin here is representing 2000 individual clients. guest: it has artie started, right? they -- already started right?
matt: they are trying to find workarounds, you can't have lawsuit the same way you can in the u.s.. the german carmakers fighting back against this at all? or did they just work through their transport minister, who also works with the chancellor? guest: i think you'll see them doing this behind-the-scenes. they are under fire in germany. they know politicians have to take action here, in particular, forwards out from election, nobody was to be seen as soft after they have been caught cheating, essentially. i think it will happen behind the scenes, but surely it's something they will be talking to political leaders and saying, are we sure we want to go down this road? let's be clear, merkel did it yesterday, she promised she would do this. she said it was something we can
look at after the election. it neutralizes it a bit as a topic. matt: here in germany, carmakers , or 2000 euros that is, for diesel owners to turn their cars in. that is to regulation phases back. and the u.s., volkswagen had to pay $10,000 extra for every diesel car made. in the u.s., they have been hit harder than they have in germany. annoying people on this side of the atlantic. chad, from a political perspective, take a step back from this. angela merkel is very good at looking at policies that other parties are generating and kind of taking them in as her own and putting them on in making them work for her. how does she do that for diesel? how does she make diesel work for her?
schulz was attacking her about this over the weekend. she is good about looking over the pitch and saying, i will have that one. as patrick was telling us a couple minutes ago, her own diesel is anally topic resonating with voters and she does not want to be seen as being soft on this topic. that is part of white we saw her embracing this yesterday as a possibility. next week, she will have her own diesel summit and she is having that summit only with mayors from cities that are affected by high pollution levels in the way she has last onto this herself. she will not meet with audi makers, she will meet with people affected by it. in a way, she was not at the first diesel summit as you is considered -- she was criticized for that. now she isn't saying she will work with people affected by it.
on the luhansk, she cannot get attacked too much. the opposition can't use this because the stp is heavily involved in the management of an ownership for volkswagen and even the green need to rely on daimler for jobs. every party in germany is relying on the audi industry and they know that. you are not going to see a radical shift in policy here because nobody wants to be the one who is a job killer. it is the number one industry and so, there will be tweeting around the edges, but nobody will call for radical shifts here. matt: thanks very much. chad thomas is our hero chief in germany and follows the auto industry for us. . merkel meets macron speaking of the chancellor, the french president is hosting
macron will host the leaders of germany, italy, and spain in for side to work on a policy for migration. angela merkel reiterated she would change nothing in her approach to the refugee crisis in 2015. meanwhile, her finance minister germane future of budgets will be largely determined by spending needs for the stabilization of africa. it is a large statement to make. let's go to paris where we are joined by the cofounder of article analysis from open city. thank you for joining us. let me ask you about statement. that is a pretty giant thing to say, that the future of germany's audit will be determined by the stabilization of africa. what exactly is meant by this? guest: that is definitely a big thing to say, that's correct.
what he is trying to do these days is attract attention to the merkel, ande cdu, these people responsible for aware ofare very much the importance of this migration problem and how it affects the german population. they are really taking this seriously, investing a lot of money in order to address maybe the fear is this has provoked at home and with only four weeks to go until the election, it has become a really crucial issue. crisis was agee very problematic in 2015 and really in 2016, as well, and appeaserkel seems to the csu perfection of her party by saying, i would not do this again. although she is doing this by saying, i would not change it then. how is the picture in germany now?
is integration working? is it no longer really a problem? guest: i think it's definitely way too early to make an assessment of whether integration is working. it will take years, even decades to really assess the success of integration into germany given the demand -- given the amount of people that have arrived. not all of them have been processed yet. it will be a huge issue this year, next year, and over the years to come. that is also what trump is addressing what he says a lot of money to be spent on this issue. guy: to the german people see this as a european problem or a german problem? guest: both. i think that is one of the reasons merkel and her government has been interesting on the fact that there should be a real european effort to distribute the immigrants that have arrived in europe that
countries like greece and italy and also germany cannot read the burden alone and that is why merkel has also not refrain from putting pressure on the eastern european countries to have their support in distribute the micros equally. guy: it basically said they are done with this. it will not be our problem. have the german people, do they look for, do they look to france and feel and italy they are in the same grouping as that? sort of a confederation of countries? or do they look and feel more akin to what is happening in central and eastern europe? those are two very different approaches taken in the eu right now. guest: that is definitely right. i would think the germans and the german population are often feeling a lot because they are the country that has by far
received the most migrants and asylum-seekers in the last two years. france has received a lot, but definitely not as many as germany and the public debate is not as heated here as it is in germany. i think the overall problem is national domestic little debates are heated and really callede repeatedly for an upper limit to migrants arriving in germany. matt: regardless of the issues, when we talk to german business leaders, they are counting on merkel to win this fourth term. is it the same in france with the french -- with a have a problem if schulz came from won or what it make no difference? ? i will think anybody is
expecting schulz to win this election so it would mainly be a huge surprise. maybe a discussion of the effectiveness of polls again. macron, we have seen he is a tog time starting incorporate with merkel. he is definitely counting on her reelection. and on future cooperation with her as the leader of germany. guy: keep an eye on what is happening with the liberals in germany. famke, thank you very much indeed. stay with us. on bloomberg television, it is francine lacqua, bloomberg surveillance up next. for matt miller and i, we are off to the radio studios where we will join the daybreak team for the next hour. you can catch us live on london at dab digital and get us on the bloomberg itself. go to tv , click on the radio feed and you can find what
francine: counting the cost of harvey. one expert puts the figure at $24 billion. gasoline spikes as rain hits refining centers across texas. the boj boss warns japan's current growth rate can't continue and says he won't the following the fed or the ecb anytime soon. uber's new driver. the giant is said to pick expedia's ceo to steer it out of crisis. good morning and happy bank holiday monday. this is bloomberg surveillance.