♪ guy: good morning, you are watching "bloomberg: its, the european open." cash opens in 20 minutes time. first trade in the day coming up. i'm guy johnson in london, matt miller is in berlin. unwind and relax, to dovish -- two dovish fed presidents want to continue the shrinking of the balance sheet. what does that mean about the possibility of a rate hike in december? that is an open question. demand rallies, right -- markets react positively to news that

the zune the ballot will be held secret. china's trade gap widens for a fifth month. is there anything president trump can do about it? matt: i want to answer that question, but will value we are less than half an hour from the european open. futures trading down this morning after a mixed close yesterday. not much direction in markets the last couple of days and not a lot of direction, meaning futures are already, but not really significant drops. the asian pack down, as well. booms -- three-day chart a little, -- in bunds, gain in yields and today it looks like we are coming up from the open here just a little bit. 0.462. we have been in this rage with

bunds a quarter percent to half a percent. we will see if we can get change in direction. what are you seeing on the gmm. guy: we have got the german trade surplus widening, but the chinese trade surplus widening out. that is something to pay attention to. in terms of markets this morning, solid session yesterday for emerging markets, today's selloff. india under pressure. the chinese ramon be, the story of the day as we see the trade surplus. with the u.s., but fairly static. what will bomb trump do about that. the markets need to sit up and pay attention to this story. you have also got the german trade surplus that out this morning. let's show you what else is going on around the world. the dollar a little off this morning, but not much. , a big under pressure

trade on the upside of late. barclays saying it will go back to 50. pay attention to that trade. watch what is happening with south africa today. that is a story to pay attention to. what's going on in these markets. incremental stories, interesting stories, we aren't getting -- it is august, after all. the big shifts at the moment, but wait for that to happen. sophie kamaruddin. trade surplus widening for a fifth month in july as exports remain solid while imports moderated. 7.2% in u.s. dollar terms and imports increased 11%. both falling short of economists suggestions in a bloomberg survey that meant the bloomberg widened.s japan has recorded a 36 consecutive current-account surplus coming in at 8.44

billion dollars in june. that was supported by global investment firms and the trade balance that returned to positive territory. north korea has condemned the latest round of human sanctions and reiterated that it will not negotiate over its nuclear programs until america ceases hostile policies. kim jong-un's we seem said there would -- they would pay dearly for the sanctions. they said the nuclear program was necessary to avoid a u.s. invasion. south africa's parliament holds onh -- vote by secret ballot a vote of no-confidence in jacob zuma. a secret vote increases odds of being ousted because members can vote him out without risking jobs. asob zuma is due to set down leader of the anc in september and as president in 2019, has defeated previous tests to oust him. in kenya, pulling is underway in

the presidential election. the president is pitted against nga, more than 180,000 police have been deployed amid concerns there could be a repeat of the 2007 vote, which led to violence, fueled by division that killed more than 1000 people. global news 24 hours a day, powered by more than 2600 journalists and analysts in more .han 120 countries this is bloomberg. guy? matt: i'll take it there, thank you. federal reserve president james oler neel kashkari have reiterated that inflation is a problem. they said the fed should press on the shrinking its balance sheet. here are the comments from two of the more dovish policy makers in separate statements yesterday. >> the plan is to allow it to roll off gradually over the course of several years. we don't think it will be

disruptive to the markets. the markets expect it and it will be very orderly and should be a low-cost way of shrinking the balance sheet between more normal size. to behink we are going elegant going on this process, it is going to be very slow. there won't be a lot of impact on markets, but it will be the right thing to do and i would support getting going on this process. matt: let's bring in mark cudmore, mliv strategist. are they right that the unwind won't disrupt markets or does that have something to do with that kind of talk with why it is hard for them to hit their target? mark: there was a large part of the market that does believe that this has been telegraphed for so far in advance, we have enabled to for so long, we knew the tapering was going to come, markets should take it in their stride. i am not in a camp. part of the reason we have seen global equity market in

recent years, we have seen risk assets rally is the fact there is excess liquidity, excess capital, too few returns. that has been provided by many global central banks, major central banks pumping extra liquidity. -- fed hasn't been reducing the balance sheet. i am concerned by how the market takes this initially. it is true the central banks are pumping in enough liquidity. but i still think the markets might struggle a little bit. guy: interesting to see if they do, whether the december hike comes through and that is delivered at the back end of this year. i have the chart up on the screen -- big reaction in the chinese currency as a result of the trade data we saw coming through. what are the implications of that for the european session? much it was impressive how dollar reaction to the data.

this trade imbalance with the u.s., important to note that while exports and imports disappointed expectations, they are still both high you run your growth numbers and that is a positive sign for the trade pickup. maybe not accelerating as quickly as hoped, but it is still a positive sign. overall, it appears chinese imports are still doing well and china may want to let you one sorease -- yuan increase purchasers have more power. a -- that is a positive sign for global risk assets. matt: let's talk about the rand a moment. what do you expect the currency to do in reaction to this kind of sick vote -- secret vote? mark: short-term will be binary. if a motion is passed the rand initially.violently

i'm suspicious of how much that rally will last a how long. there are worries about whether president zuma will go easily. he might challenge the decision and refuse to resign. there is a real chance this will be smooth, even if the motion passes. most likely, the motion will still fail. votes, people could abstain and make it more difficult. even though the ballot is secret and it is the first secret one on him, he has survived six that haven't been secret, i still think he survives this one and the brand is in trouble later today. definitely a thing to watch. anyway,goes in december so i guessed you want to cause trouble at this point is something many will be thinking about. mark cudmore, mliv macro strategist. ,ou can join the team easily smart analysis through the day

on what is happening in markets. if you are a bloomberg customer, you want another function. tv . can followtream, you charts, functions, message us directly. i spun it back this morning to yousef's show and you have a great sidebar here that gives you all the functionality in charting we can use. you can also ask a question. press the blue button, opens up a channel at bloomberg. matt? matt: coming up, a huge day for south african democracy as the parliament prepares a secret no confidence vote on president jacob zuma. what will this mean for the brand? we will have the latest on the market implications. we will talk about kenya, as well, holding an election today. you are looking at live shots from nairobi. there is the vote taking place. this is bloomberg. ♪

♪ matt: welcome back. this is the european open. i am matt miller in berlin and guy johnson is in london. but skip the bloomberg business flash. sophie? sophie: lifting returns at mega hedge funds including bison and renaissance. according to persons with knowledge of the matter and an investor document, viking and an

equity focused find and renaissance are up more than 9% this year through the july. bill ackman took the next step to shakeup automatic data processing i nominating three directors to the company's board, including himself. capital management said it owned 8% of gdp, also nominated two others. google has fired an employee that wrote a memo blasting diversity policy. wrote the noteo confirmed his dismissal saying he had been fired for " perpetuating gender stereotypes." dismissal, ahe representative referred to in email from the ceo that said portions of the memo violated the company's code of con duct. at 10:30 p.m. u.k. time on bloomberg technology, facebook's

in an exclusive interview to discuss closer and global -- culture and global impact. that is your business flash. said to bempanies pulling for and staff in venezuela amid political crisis. total has removed a small number. but stopped a little bit about what is happening here -- let's talk a little bit out what is happening here. justin carrigan from dubai on what is happening. much is this related to sanctions? how much is this related to employee safety and how temporary could it all be? justin: it could be a temporary situation if venezuela resolves itself quickly. that doesn't look likely.

these are the measures you would expect from multinational oil companies in a situation like this. attempt to have been an at triggering some kind of takeover quickly squashed yesterday by maduro's military apparatus. so companies will react this way. i think the question is, how much the withdrawal of these types of personnel will impact oil production within venezuela and of course oil is its life led -- lifeblood. matt: how significant a move for oil companies? this is the kind of decision to take likely -- lightly. repsol isat's right, one of the companies that has withdrawn most if not all of its foreign workers within venezuela. chevron, companies, have only withdrawn a handful of personnel and are advised to go

who are already overseas to not return, they are cutting short contract and so forth. yes, it could impact the company's production doubles. he would expect that, but overall, i don't think we will see a major impact. this is very much the standard procedure in situations where countries are going to this kind of turmoil. guy: let's turn our attention to east africa. you have people in line to vote for the kenyan elections, people stockpiling food because they are concerned about what is happening. voter fraud a big issue going into this election. that ified should we be the result is contentious, we see violence in kenya? is the key question because the history is not terribly good in kenya in past elections. there has been an outbreak of

violence following the result. the key here is how close it will be. thehe moment, polls suggest are prettyndidates a. if it is the close, we could see brought claims the vote wasn't for a recount and so forth. we did see a couple of elections ago, this spilled into violence that started to break out in a rather ethnic divide in kenya that resulted in some thousand or so people losing their lives. that is a very serious prospect if this were to unfold in that way. at the moment, voting is very peaceful. from what werisk are hearing and hopefully it will stay that way. matt: justin carrigan, bloomberg's managing editor for

emerging markets, covering a lot of stories for us. africa'say, south parliament will vote in a secret ballot on a motion of no-confidence in president jacob zuma. the anc leader has survived previous confidence votes and the news boosted overnight volatility in the ranch to the highest since early may. we are joined now from johannes berg. what can we expect today as lawmakers -- lawmakers vote on zuma. vote -- do they typically vote secretly? in himrevious motions have not been done in secret, this is unprecedented. voting in secret. the speaker of the national assembly did say that the fact that some lawmakers have in intimidated in how they will vote in this motion is significant enough for it to be in secret. what can we expect from this afternoon's development is we will see opposition parties, as

well as members marching ahead of the vote. we will also expect to see the next few hours being very crucial when it comes to how lawmakers will vote. we know opposition leaders say they will continue to lobby anc members to vote for no confidence in jacob zuma. guy: given he is going later on this year, is there a sense may be within the party that they don't want to rock the boat and ande problems for the anc potentially problems out on the streets, as well? what is the situation within the party, what is the mood in the country? the anc recently came from a policy conference in july, just a month ago and it was there at this policy conference at the anc is a divided party. there are various factions there fighting within the anc itself

and what is significant about this motion of no-confidence is president jacob zuma has faced two bids within the party to unseat him as the party president. they will be voting for a leader in december. ancs unclear whether the caucus can rally together to defend president jacob zuma as they have in the past, seeing it is very torn and as the succession battle rages ahead of them, electing a new leader in december. matt: thanks very much. morell surely be hearing from her in the coming days. boost itsome, uniper dividend target. first, your stocks to watch. up next, this is bloomberg. the open is eight minutes away. ♪

♪ matt: welcome back to the european open. we are minutes from the start of trading here. i want to get you stocks to watch. niper's want to watch, not just because we will speak to the ceo in a half hour, but because the company is boosting its dividend target to 25% growth for 2017. we looking at a boosted dividend in a company in the news, especially as we follow what goes on with these u.s. sanctions. uniper operates in energy

network in america and -- europe and russia. interesting company and in a geopolitical time. i guess it always wins, but especially for them. guy: that's talk about the coming underore pressure. it has been elevated as of late, but barclays calling it down to the 50's level. a pretty solid time of his yesterday. the chinese trade data, interesting as well. the german trade data showing a big surplus. another company you don't often talk about, pandora, a jewelry company is denmark. 8% of the free float is out in terms of the short interest on the stock. they are talking about a

challenging environment in the united dates and -- united states and they missed on revenue. that short position fascinating right now. a slightly gray day in london. a soft open expected.

volatility -- and that is just a backdrop for your. here your gilt market and .utures we are higher this morning. gilt yield is unchanging at 1.14%. your gilt futures are up and running, we are a little higher this morning. everything is a shade lower. the gilt yield at the bottom of your screen is unchanged at 1.14%.

there are a few big auctions in the u.s. that might shift the tone in terms of how we look at the overall bond markets as the week progresses. i am off to digital radio. guy: let me switch this over to index points and what you will see is that there is rio, in the mix.p we have seen iron ore prices softer this morning. on the upside, the oil company seems to be faring better this morning. you have shell and bp. we are going to speak with the cfo in just a moment. we are going to talk about what theappening in the u.s. and

central bank starts to shrink its balancing. joining us now to discuss this, the global head of fx strategy. first your take on what we heard the two federal reserve today or overnight. they don't want to see a hike and are confirming will not see that in september. our eye ons to keep the balance sheet or continue shrinking the balance sheet even as inflation fails to meet if goal. are those two things congruently possible? >> i would say they are. i focused on your description of the speakers. they are doves.

ofwould expect that type rhetoric coming through. having said that, we do have cpi this friday coming out in the u.s.. a decentoking at number of 1.8% year on year. we would not see inflation is dead. we have seen a couple of months tick down.wn -- it is particularly important for the bond market and for the long end of the bond market. you can see 10 year yields rise. this is quite important for the market. we would highlight there has been a strong correlation recently between u.s. tenure and dollar-yen. in the foreign exchange market, the best behind that is probably

wonderfully. the centralsn't bank been able to get inflation to target. any of the other regions were central banks are really sort of trading for it. -- praying for us. >> i would take a controversial way of answering that. we have all been focused on the u.s. this year and we have seen disappointment, particularly as we have all best talked about -- aboutabout you -- talks -- talked about. the point i would make here is they are seeing deflationary risk diminished. this is key.

we would suggest this link between the labor market and inflation is not actually dead. we may have seen three months of moderation and the rising tried that trend -- trend. the relationship seems to be alive and we are actually seeing hawkish surprises from those institutions. guy: have a quick look at the implied probabilities of interest rates hikes in the u.s.. the market is pricing that, or is market pricing it correctly? wait and see how the balance sheet goes down and wait and see. >> the reason i would say that is growth. we had a big disappointment in the u.s.. we did see a rebound of sorts in q2. the key point is q3 and q4. i would argue the market is actually pricing rate hikes

based on that growth. we do see a rebound. i would argue that probability is wise. this is a good point. i will answer that i looking at positioning. we have our positioning indicator at the bank and currently the market is short on for currencies. the swiss and the end -- yen, third is the pound and forth is the dollar. key here that is very is the market is going into the second half of the year with a low probability of a rate hike in the u.s. this year. a very large short dollar position. very vulnerable to a rebound if has a low probability

of a rate hike. matt: i heavy chart that shows that at 110.58 also shows the 10 year yield, you can see they're 2.5%.e at will these to continue to track each other closely? >> we seeg back -- going back to 1.15. -- 115. remember, with extreme dollar positioning and a low in senior yields it makes a risk reward for yen. we think we can go back to 115. guy: let's put this all

together. market is overstretched. former officials take?day, what will it you talk about the fact that the data will improve the back end of the year. give us a sense of when that starts to click. >> it is a good question. we spoke about the biggest shorts in the market and our positioning survey. no surprise the biggest is europe. not only have we cut those extremist but the magnitude -- got those strains but the magnitude is out here as long as the survey has been going on. that creates a lot of risk in the market and we talk a lot -- what would happen with accommodation of u.s. growth, inflation, and yield.

, we have jackson hole at the end of august and mario draghi will be speaking there. euro-dollar is at 118. he will not like that. if it continues to rise which is what the market is expecting, that could really have an impact on the expected monetary types of the market is anticipating from mario draghi. he could easily use that speech, whattime to try to correct we have seen. it has not been easy over the past few months because from every metric we look at the euro-dollar looks overvalued. if mario draghi looks at those same factors we think it is a strong chance you start to get

nervous about the elevated level of the euro against the dollar. matt: a lot to discuss in turn sees today. cfo afterned by the the company posted a second-quarter profit that beats estimates. stay with us, this is bloomberg.

♪ cast15 minutes into the session, let's take a look at how the space is developing. we have a soft tone out of azor as well. that was generated by the chinese traded data. we saw a big move in the currency, in terms of what that means for european stocks this morning, we are seeing a weakness in the minors. iron ore has come off and berkeley crawling down to 50. will it come off just as quickly as well and what could that mean for the mining stocks? they areof commodities worth paying attention to at the moment. i am just looking at the

screen which is interesting. you willpe in glc go see a list of the commodities. the energy names are all gaining right now. you mentioned crude of, gas oil is up. the metals are mixed picture today. fresh metals down, the base metals up. a mixture across the board and acts are basically up. screen ofe a bigger these things and you can also look at the column and see what they have done. those pigs are getting expensive. let's turn to germany. profitsmp in operating as the operator saw express liberties boosted by e-commerce. will that be enough to help the company achieve its goal? let's go to the former capital of germany were melanie price

joins us. take you so much for joining us this morning. are you confident in your 2020 target? >> we just established are second-quarter numbers very good growth on the top line. proportionally stronger on the net profits. we are very confident for our forecast. achieveto a tree -- 3.75 million euros and that will be an important step to our 2020 goals. you have a lot of competition into the markets. amazon is making big moves in germany, working on logistic operations. what is the leading edge for deutsche post? strongest growth

stri -- striver is e-commerce. starting with our german operations where everyone actually has been a very important customer for us for many many years. amazon and germany for several years. introducing the prime product here in germany. they are an important customer for us and a very important logistics partner for them. e-commerce goes beyond germany. we can see the impact in our path of operations. we see it in our express network. a hectic second quarter. we just posted a market of 12.5%. continue to be so in the coming years. guy: good morning. joining you from london. i am curious to know when you

think wages will be turning up. german unemployment is incredibly low. what we are not seeing is a big pickup in wages. when you expect that to happen and what will that mean for your e-commerce business do you think? >> we are one of the largest employers here in germany. more than 200,000 people working for us. one in 400 germans actually works for our company. the majority of those people still work in our main entity. we will have terror coming out in january. we will have a regular wage increase coming in on the first of october. clearly the german market is doing extremely well. you can see that in the unemployment rate. interesting discussions here next year. guy: how many of those people

you employ are truck drivers? i will rescue a question about the foreign distance feature. how much money do you spend on thinking about ai and the impact that that will have on your business? both in terms of the model that you use in terms of distribution and how you actually end up districting product. how whata truck driver i be thinking about my future? >> we actually don't have that many truck drivers. if you look at where most of our people work it is actually on the last delivery both on the letter and parcel side. we are one of the armor examples of the challenge side. our volumes have been coming down for years. structural decline

about 2-3% per year. growth thanksrong to the e-commerce boom. we really have is missed challenge and opportunity to make sure that our people are able to work ideally until retirement. the support digital technology can get us. worktunities for humans to side-by-side with robots, we can help them to deliver heavy parcels. we see that is a fantastic opportunity. will there be changes? it is up to us to make sure that those are positive changes as we turn it into an opportunity. matt: you're any great position to look at the german economy. we have a couple of disappointing numbers for the month. industrial production was a big disappointment yesterday.

today, imports and exports are especially disappointing. ?s it due to the strong euro how is the german currency looking? ,> overall we have seen numbers when you look at the reporting of many of the german companies over the likes of the last weeks, overall it is a very stable picture so i am not too concerned about flow. when we look at the overall flow dynamic in the first six months of 2017 it was a good start into the year. you can also see that in our numbers. in the second quarter we had organically almost twice the percent of topline growth. 6% growth, almost 9% growth on our cross-border shipments.

the growth rates have been subdued in the last year. i am more on the positive and optimistic side. matt: let's get back to your business. you talked about the profit and the strong numbers that you have. what about the forwarding unit where we saw profit all a little bit -- fall a little bit? you have new management, what are they doing to get that back on track and what do you think about location -- consolidation? have seen an adjusting dynamic vote on the air and ocean side. i just mentioned we had stronger -- strong growth. ultimately that will also drive profitability. for us as a broker there is a time delay between the increase

on the client-side in us being able to pass that on to our customers. also are second numbers -- our second numbers are in line. they are clearly not where the want to be and it is really great to have a new colleague covering the forwarding the first of june. i think he is working on exactly the right thing. guy: these cfo of deutsche post. thank you very much for your time. let's get a business flash area reporter: -- flash. the copenhagen-based

company says that second-quarter revenue from the americas increased 1% while in the u.s. local currency revenue fell 2%. the company's market value has plunged 17% this year and has become a target for hedge funds. stock markets are helping with returns at mega hedge funds. google has fired employee who wrote a memo blasting the diversity. the engineer confirmed his dismissal saying he has been fired for perpetuating gender stereotypes. a google representative referred to the email from the ceo that said portions of the memo violence or the companies code of conduct but does not say of

action was being taken against the employee. chaton't want to miss the on bloomberg technology. for ank coo joins exclusive interview to discuss company culture, leadership and the global impact in many parts. the global head of epic strategy with us. a quick read here. this is the move we saw on the back of the trade day on the offshore yuan. if the trade surpluses continued, due in turn -- the chinese just a little more? >> i use this when i am traveling. i overlay this with yield differentials. they surprisingly match each other nicely. we all tend to think there is a black box going on out here and

it is very hard to determine. these interest rate differentials drive things. the key point is lower u.s. yields. guy: plenty more still to come. this is bloomberg. ♪

matt: unwind and relax. two dumbest presidents say they with strikingon the balance sheet despite low inflation and insists the process will not disrupt the markets. what about a rate hike in december markets react positively to noon's that -- news that a no-confidence ballots will be held in secret. live and johannesburg to discuss. trying -- china's trade gap widens. is there anything president trump can do about it? allmatt miller in berlin us -- alongside guy johnson at the european orders in london --

headquarters in london. guy: i am not sure you can deduce anything from a graphic that is on the screen in front of you at this point in time. , not reallykets taking us in any clear direction. individual names are interesting, more interesting than the headline numbers. we are waiting. we need the big set piece to move back. maybe movies markets in a different direction. at the moment we are waiting, watching, getting an idea of what the news is you i am not sure that equity markets will give you a sense of direction. politics will be another factor. we definitely have a clear sense here. gearing up for a final six-week election campaign push with a wide lead in the polls. the german chancellor party, the christian democrat union has warned against writing off her

opponents just yet. her -- they have held steady sunday while the main challenger, the social democrats declined to 23% ahead of the september. polls show miracle ahead. the party warning against taking a win for granted. that is nothing new. >> both parties will tell you that in germany voters do not decide until last two weeks. vacationers are coming back in germany. they are just starting to see campaign signs. macron has a huge lead. everybody is wondering what begin show has. what could change this, i can't see anything right now. i thought possibly the diesel scandal could work in the social

democrats favor. they seem to have really hurt themselves with that at the end of last week over the weekend. yeah, i don't see an angle there. back in february, a came into the game with a huge boost and nearly tied. we're wondering if there is any kind of atmosphere of change. that kind of faded through the year so that could return in the weeks before the election but it will be tough for sure. i'm curious with the coalitions. what ultimately we're are going to see in germany and what that will mean for the rest of the eurozone. the free democratic party, the pro-business party, they did not even get into the parliaments last time around. it is looking better for them that they will get in but if the

coalition gets close to 40% that could be enough to form a coalition. thee've been talking about possibility of a jamaica coalition besides the fact that it is so much fun to say that area the reason would be the colors. their colors are traditionally green obviously, their color is clear. is it possible the three could work together? yes cap fisher -- fisher said no way back in the day. >> it is not a huge secret, that would be pathbreaking. the problem is it is a very divided party. certain leaders in the green party would do it. the big bases further to the left. that will be more difficult.

she tried to do it last time and it did not work area this time around it could be just as tough. and writers who could be the next finance minister? speculation, if the cdu has it again there would be a big question in terms of whether he stays or not. he is a close ally but at the same time it is a difficult relationship. the social democrats could try to claim the coalition talks. that what all unwind in the weeks and months after the election into the fall. matt: patrick donahue covers all things politics in germany. we will be hearing a lot of him over the next 6, 7, 8 weeks. the global head of fx strategies. question is probably one of

the most important in this election here. what happens to wolfgang schaeuble everyone is talking about -- schaeuble? everyone is talking about angela merkel, but how important is it to the markets that schaeuble will keep a steady hand on the tiller? >> i don't think it is something that the markets really focus on. if you brought in this discussion out and look at european political risk, we have had quite a few events. we had the dutch election, the french election, now we have got the german election. not to mention italy in the wings here as well. discussing here that the market is not paying enough attention to the german election and it could be more of a risk here for the coalition perspective. i think that is a rest. the point we would get is the

market and lead, your over the hump as far as political risk is concerned. i would argue in the fx space, it is not the euro-dollar, it is euro swiss. we have seen a strong rise in euro swiss over the last week and a lot of that is bound to removal of political risk. if that did come in -- come back in with some kind of surprise outcome in the german election, swiss appreciation is likely to be trade in the foreign exchange market. election with the ecb. speculation is growing up who could replace mario draghi. everybody will say it is too early end to get them on the record when they start actually talking about it. let's kind of think about who

could be a replacement and what it could mean going forward. what impact do you think that has four the euro? what would it mean? the finance minister, if he wasn't the next boss do you think he could be the next finance minister quits it is in listing because in his current role has been quite aggressively opposing qb from the ecb. that was for much his stance but i think the market has more or less dismissed his views because they assumed that the part of the power was with mario draghi which ultimately seemed to be correct and effectively the bank was throwing stones from the sidelines that mario draghi was setting policy. moreu did get a much change ecb, that could

market sentiment towards expectations and i think expectations for the euro. view is-term equilibrium for the euro-dollar is 133. we think every 4-5 years a currency goes back to that. believe that the euro is cheap on a long-term valuation basis, which the current level would suggest, it would probably mean we get back to that 133 level quicker under a hawkish leadership then we would enter a more dovish leader such as mario draghi. guy: we will talk about this later. a lot of expectations at the moment. kind of the project moving for. stephen is going to stick around. the global head of fx strategy.

we were going to carry on the conversation on bloomberg radio. stephen will be joining matt and i on bloomberg radio as not :00 a.m. london time. -- 9:00 a.m. london time. we are to be having that conversation very shortly. this is bloomberg. ♪

♪ matt: i am matt miller in

berlin. he on spin off universe plans to increase the dividend by more than forecast this year. the effort -- the upper end of the initial estimate. increased guidance on the shareholder payout by 25% from one year earlier compared to the 15% forecast previously. schaefer, is cloud cfo for his first interview of the day. let's talk first about earnings. why are you so confident for-profits the rest of the year and how do you come to this pay off target? side, outcome from my always an important in terms of your guidance. year, thanks to some good results in the european and russian generation business. we got some strong cash flows as cash conversion is 100%.

our funds of operation are significantly up area giving us the confidence to raise the lower bar of the guidance range. also has already talked about the conversion to raise the dividend target for this year 25% initially 15% to plus year on year in terms of dividends. >> you bring up the second topic i wanted to address which is pipelined the gas project. have you found a partner for that? is there possibility of funding or is is something you will be getting out of relatively soon? as wehink the pipeline consistently communicated is a tremendously important product -- project and at the same time it is a attractive participation -- attractive want to participate in. we are committed to the project

while looking at the sanction topic and make sure we behave in the correct way and don't expose ourselves to something we don't want to get exposed on. thatjust to pick up on point, to the new u.s. sanctions change the game when it comes to the risks you could be running? >> i think we need to look now theee all of us have seen enactment. for the comment that the u.s. president made on the announcement of the commencement and it will be now important to see what the administration will really do in terms of how this law and this bill will be taken up in reality. i think this is not what we need to see over the next weeks and months to see how we can comply with that and obviously continue our support. again, a really important project as well as for us to the

company. >> how important is it? june we had a key ally of the , i think heroderick is one of angela merkel's key people in parliament when it comes to foreign affairs. the pipeline is currently not necessary for my point of view. that thesey political circles are not in favor of this going forward? >> i think we are perfectly aware that on a project like that there are always different views. we are in the business -- energy business. we are one of the largest gas companies in europe. very confident that we can judge what is needed for the gas markets across europe both in terms of infrastructure as well as supply. obviously a lot of voices on

that topic. i think i find it quite encouraging that the government is very clearly addressing the sanctions and opposing the sanctions. the president of the commission is against the sanctions and i think us is just not the right way that the u.s. is now trying to essentially do energy policy in europe. i think that is a topic for europeans to do that and i hope that we get back into that. let me ask about your jobs target. is it clear to you now how many jobs juniper needs to cut in order to bring cost in line? >> if this is a progressive topic, i think we launched our wager last year and progressively executing on that. there was never a target of how the people, that was not the issue that we look at. we look at the situation and indeed it also involves shortcuts. this is progressing. this is being run on a month by

month basis. delivering real cost savings. from 2015-18arget is a reduction of 400 million and this comes after years of our because -- cost-cutting programs in the past. that is really not the focus we should give us. matt: you said you see an upturn in the power market. is that what is behind the incredible share rise we see? your shares are up 4% today. give investors more information about their payout that makes a lot of sense. over the last year we are looking at and 83% gain. what is behind that? >> to topics. if you're a new company and a new kid on the block you have to earn the trust of the market.

you're not just making announcements but you also deliver. think the market has realized what we promise we also deliver. the second topic is transparency. markets,on the stock think the market has a far better view on the portfolio, on the people and what that can deliver in different environments. it is being rewarded by the market and i think it goes to key elements. the delivery results. that is what the market likes i think you used to be an m&a analyst at morgan stanley. i'm curious about what is happening in the landscape in front of you. you suggested that maybe would be interested in making acquisitions in the gas arena is that correct? >> my time is more than 20 years ago. that one.history on

we have been very clear that are focused on the company is to deliver on the promises we made last year. delivery making the investments. the big one we announced earlier confident thatre we close to that in the second half of that year. really to deleverage the balance sheet and not bring about any other topics. matt: i wonder as we prepare for , do youan elections think the study hand of angela merkel will be helpful or is it time to see a new face? >> that is obviously not for me to judge but the vote of germany. our current chancellor will also continue into the next government and obviously given the insecure world out there, they may not that -- that may

not be the worst thing that can happen. it will be interesting how the government will be structured going forward. whether there will be a change in coalition partners and whether that change in partnering may also bring the energy policy. my focus thanre the spec edition on the chancellor. there's not a lot of speculation and i think that seems like a done deal. >> diwali answer there. -- juniper,niverse analysts shares are up 4% in frank for trading. hedge funds may have had it tough in recent years but there is one area still reaping returns and they are decent. where they are doing well. we also want to show you live pictures from nairobi where the polls are open in the presidential election.

kenya is voting. this is bloomberg.

guy: let's take you to the hedge fund community. hedge funds may be getting pounded in many corners of the world, suffering outflows to their clients. there is one place their turning a profit. emerging markets. developing nations are on track

to be the best since 2009. tracy alloway has the story. things have certainly turned around. >> it has been a stunning turnaround. if you remember this time last year, emerging market were supposed to be the biggest loser. we had the federal reserve which was getting ready to height -- hike rates in december. we had the presidential win of donald trump. said he wanted to impose trade barriers which would have been a negative for emerging markets. then we had the trump trade which also kicked off the win. the simultaneous upwards move in both the u.s. dollar, u.s. treasury yields, and u.s. stocks. has --hen, that trade fall apart. the u.s. dollar is weakening, treasury yields are low. it almost means that mental conditions remain militantly lose -- relatively loose. setting that aside, you can't

discount the amount of liquidity that still remains in the financial system that led to this big search for yield. is place you can get yield emerging markets. week sevenhat's last times oversubscribed. you mentioned hedge funds, doing relatively well. i just want to make one point. this does not say much about the and essential problems that are facing hedge funds at the moment. if you look at the msci index, od was up 24% in the same peri versus the 14% the hedge funds reported. this is something more about the outperformance of assets than the hedge funds themselves. matt: many thanks to tracy alloway. unfortunately we are out of time because diana died i are off to radio right now. up next, you can catch surveillance with francine

lacqua. check us out on the digital radio or on radio go on your bloomberg terminal. this is bloomberg. ♪

francine: time to unwind. fed officials press a case for reducing the balance sheet, despite the low inflation that is challenging to central bank's credibility. >> it does not matter if the investors believe the fed can achieve its goals. francine: south africa's parliament holds a secret no-confidence vote. where are the workers? they are finding it harder and