Transcripts For BLOOMBERG Bloomberg Surveillance 20240622

Devaluing chinas currency should make it easier for exporters to sell overseas. Last month, exports fell 8 . China is in the midst of its biggest economic slowdown since 1990. Google wants to become the Berkshire Hathaway of the tech world. Goal is reorganizing into a Holding Company called alphabet. The companys search and advertising units will be separated from new businesses such as self driving cars and health technologies. Each alphabet subsidiary would have its own ceo. That is a structure similar to Warren Buffetts Berkshire Hathaway. Larry page will be the ceo of alphabet. Negotiators have agreed on a deal for another greek bailout. Says only avernment few details need to be worked up or the agreement will give the greek 94 in loans. That moneys some of in the next week it has a payment due on august 20. It is being called a new front in cybercrime. Louvered news reporting that u. S. Authorities have broken up and Insider Trading ring that relied in computer hackers. Nine people are expected to be charged today in new york and new jersey. The hackers are thought to be in the u cane and possibly in the ukraine and russia. Their broken into pr newswire and business wire. The worlds top ranked golfer says he is recovered from his ankle injury and will defend his title. Rory mcilroy practiced yesterday. At the wisconsin course where the pga will be played. He injured his ankle while playing soccer. Last month. In a lot of pro contract spirit youre not allowed to play another game offseason. Julie even for fun . Brandon particularly soccer, which is a nightmare for your acl. All sorts of bad things can happen. Tom the data check. So much to talk about. A terrific lineup to make you smarter on the news. Futures and negative 14. You see the market reaction. Yields in. Michael hansen joining us and moments from merrill lynch. The eurodollar, 1. 1023. Stronger euro. I want to get through this quickly and go to the big change in asia. There is the dollarrenminbi 6. 32 with a 1. 9 move. Weaker swissie. Dxy. Lets go to the bloomberg terminal. This was the first thing i thought of the Chinese Renminbi in 2005, they give up the ghost and joined the system. Appreciation. Lets wait. Managed. Another appreciation, and heres the move. It is nothing compared to what we saw with the eyn. The yen. Abenomics. One story that killed their exports. Brandon this morning at times about the plaza accords and you talked about how brazil called for the u. S. Is doing with the dollar currency war. Currency is power. China has the reserves to manage its own currency. They are doing this in theory a market from the move but they are doing it because they have the power. Tom it is the 1 million question. How far along do they need to go to some form of normalization . They want to know that in singapore and washington. Brandon once it is normalized, is it going to go both directions in the future . That is real market reform. Tom an historic day. Glad you are with us worldwide. We go to beijing. A Seismic Shift that reverberates across all of asia. China throws in the reserve currency towel. It appears they were moved to a managed flow. We need to go to hong kong and our chief asia economics correspondent. Will this boost chinese exports . Look, good morning. They seem to be killing two birds with one stone. On the one hand, it has a reform process. They want the currency to be more international. On the other hand, there exporters are creaking under the pressure of weakening currency like the euro zone. This will not be a game changer for exporters but it will help. Tom our skyscraper in hong kong is in the shadow of hsbcs bank. Is the ramifications this morning in hong kong that this is a new bout of a currency war . At the very least it is a currency skirmish. We will do not know if it is a fullblown war for a few more days. We need to. Move is not going to be a game changer. Whether that will follow through, then we know more. Earlier. Nailed it this is the heart of the men appeared what happens tomorrow is more important. They arewe know willing to let depreciate. What sense do we have politically from the Chinese Government they will let it float, move up and down this market demands . They have not given a firm signal but there is one counterpart. China has a problem with capital outflow now. If they weaken the currency, it may trigger the money to leave the country at a time when they do not need that to happen. So, they have got be very careful. Tom thank you. Curran joining us from hong kong. We will have them on in the coming days. Wasdon briefly, nomura with us yesterday and wrote a long note about this. Capital flight so far from china is very limited. We are looking at foreign banks that have pulled assets out. We talked about capital flight, but not a current reality. Tom 10 years on from july 2005 when china unpegged their currency and went to a very managed movement. The chinese devaluation, ramifications to london and washington. Michael hansen is senior u. S. Bank of America Merrill lynch and joins us. Never boring. What does this mean for janet yellen . Fisher would say we are only looking at the United States is a public official. He has got to say this. But this has washington revocations. Michael there are political ramifications. For the fed, the question is what does it mean for chinese growth . That is one of the big downside risks. Tom will they import will they export deflation to us . I guess, they could say will they take us to less inflation . Michael it is a risk. I would argue you seeing a lot of global this Inflationary Forces and china will only exacerbate that. Brandon we are going to hear from commerce the next month about this. Are we also going to hear about small factory owners . Is this going to have a longterm effect on production in the u. S. . Michael it is hard to say because a lot of the reshoring, which has been small, has been for reasons independent of the currency. I think it remains to be seen, but politically it is going to be a challenge. Julie Something Else i was looking at this morning is what it is going to mean for suppliers that are based in china, speaking to the factory question. A lot of the contracts are priced in dollars anyway. Wont that mean the impact is muted . Michael a lot of pricing to market for final goods and the u. S. That is why the u. S. Has seen much lower paths. That is going to be the impact but that will not be the impact on washington. Tom now we need to go to a China Authority from london this morning. Jonathan his must read this morning is will china dominate the 21st century . Writing on france and china across many decades. John, wonderful to have you with us this morning. On this historic note. What was your reaction when you saw the chinese blank . John the first reaction was they have gone the wrong way. They are trying to weaken the currency to boost up growth. And actually the affects of a 2 , such as we have seen on overall growth is pretty small and china for all kinds of reason. My second reaction was maybe the reformers are playing a clever game. And they are using the economic weakness of china and the perceived advantage which would not be all that great from currency weakening to actually theetise the yuan, to give market and the 35 banks which ingl be doing thelate day fix much more say over where the currency fixes. If that happens, we are in for interesting period as to whether the reformers stick with it or whether they are pushed back into the old controls. Tom what you are so good at within your literature is the distances between shanghai, hong kong, and beijing. How will this change the domestic calculus of chinas Financial System . Jonathan i think the Financial Systems and is under strain because of the stock market commotions we have seen recently. And financial reform is going to go slowly. But there are certainly a lot of people in beijing, planners, who see a more flexible currency as a way of bringing pressure to bear on the domestic Financial System in these shape of reform. Governmente chinese has been struggling with three priorities. One is to let the economy rebalance toward consumption. Two stimulate the economy and three is to bringto to gain greater acceptance for their financial reforms. Which of these do you see out front this morning . Jonathan the third. We have got to see what the reaction is. What the reaction is some other asian countries, do the japanese devalue further and what the reaction is from the fed . This will further strengthen the dollar. Julie and what do you make of the timing of this, im curious. We are about a month and a half out from the next potential fed decision. So, why now . What do you make of that timing . Jonathan i think it is because of, we go back to the domestic issue here. It is because of the weakening of the economy which i think is clearly, has taken on much more downward push than the leadership had expected. This is a small move. This is not going to have a huge effect. And i think the chinese think they can get away with this, basically. Tom thank you so much. I cannot say enough about fenbys will china dominate the 21st century . Brandon when i takeaways that he sees not trade out front but international acceptance. He thinks this is a fdr play. A longterm move to let the tom to act like adults. Again, we will speak with Stephen Roche in our next hour. Jeffrey rosenberg with us as well. Our twitter question which a deficit adjust to what we have seen this morning. Will chinas devaluation help its economy . We need your answers to that. Stay with us. Julie hyman, Brendan Greeley, and tom keene. This is surveillance tom good morning, everyone. Top headlines. R sitting in for vonnie quinn, julie hyman pit julie in ferguson, missouri, there was a fourth night of protests. Demonstrators marking the oneyear anniversary of the shooting of Michael Brown p Police Arrested more than a dozen people on sunday night. They shot and wounded a black man who fired at them. Stock buybacks are turning out to be a bad bet for viacom, pl u sharesney back into its cost the company 3. 5 billion dollars of the media giant is controlled by sumner redstone. The ceo suspended buybacks that says they will resume in october. Brazilian lake team. Ed the american the Associated Press found viruses in the water at many sports venues. This does not bode well for the games there. Brandan i mean, they have tried to put so many different Sewage Treatment facilities online. That was part of the bid. It is not working person of them are not even connected t. Unwieldy. New model of google. They announced they have become a Holding Company called alphabet. The Companies Search ad business will become google and what we called google moon shots look at their own pnl statements. Figure outouses media and the internet. Im not even sure where to begin. But lets start with this. Is this a move to hold onto talent . With each new Company Getting its own ceo . I think it is. They are creating this holding copy for a couple reasons. One, to provide Greater Transparency about where they are spending their money outside the core Google Business because that is becoming a bigger number and investors want to see where that money is going. I think for some of the Smaller Health caresome initiatives or self driving cars, it is a way to attract and retain talent. You could presumably give them equity in some of these subsidiaries that might have the ability to give them moonshot returns. Brandan i want to talk about pichai. Can you bring up that fullscreen about the browsers . He was responsible, he basically suggested they start chrome. Chrome is close to half of all browser hits worldwide. He could easily be the ceo of almost any other company in Silicon Valley on his own. Was this designed to keep him . Larry have been giving him more responsibility over the last 18 months, stepping it up. He gets a lot of credit on the street for a really managing the companies from a desktop environment to a mobile environment. I think the signals that google fullyues to be committed to all things mobile around all of their businesses, and again, he is one of the most notably associated with it. Report inember your 2000 through in the wastebasket at the time. 16. 6 annual return on this juggernaut. In 2004. This is the anti ballmer move. Everybody writing about the ghost of microsoft. Is that a valid analysis . Paul it is a lesson that larry and sergei and a lot of people of this generation have taken to heart. Sundar, he made a good comment last not you either continue to change and iterator youre at risk in the valley. Sergei have and said they admired Warren Buffett in what he does with berkshire. This is their small way to create that kind of environment. Tom when you talk to your team, ruth checkbook is that Search Engine. That is the money. It is still an oligopoly. Brandan are they protecting shareholders from moonshots. Paul i think the structure signals to the street that you should continue to expect to see significant investments by this company on their moonshots. All they are doing is in exchange for giving us that ability to make significant beestments in which may speculative, we give you a better Corporate Structure in return. When a lot was made google split into two classes and cemented the founders control. Are there any governance implications of this latest move . Paul i do not think so. Sure if google will be exchanged for one share of alphabet. Theink by and large, across technology world, we see it with facebook, the super voting stock is well established. Investors have the ability to invest or not invest. Continue toompanies deliver returns, they can get away with super voting stock, and that clearly is the case here. Sweeney, thank you so much with Bloomberg Intelligence this morning. We will continue our discussion on the market shaking moves on greece and china. Jeffrey rosenberg will join us in our next hour, blackrocks chief investment strategist. A Seismic Shift. China devalue spirit stay with us worldwide. Bloomberg surveillance tom good morning, everyone had how about the morning mustread . Lets move away from china and greece and look at iran. This is from michael bloomberg. Overstating the case for the agreement belies the gravity of the issue. To breed distrust. Smearing critic is less effective. This debate is far bigger than partisan politics and personal political consideration should play no role in deciding a. I wonder if our esteemed owner should tell that to the senior senator from new york. Brandan the senior senator from new york is where to go with that. Washington,in politics is behavior you do not like. On this, i was surprised to see the white house after senator schumer made his decision to come out against the deal that they did not just talk about their opposition to their disappointment with him, but they talked about his future. Im reading from the Washington Post article. He suggested lawmakers should question whether Charles Schumer is fit to become the partys leader in the senate. Members might want to consider the voting record. Broadening it out into the early warfare of this campaign. Talking about politics. A have been fascinated how this was a foreignpolicy decision and has become for the 60 day examination period a political campaign. Julie also reading mikes words, i was reminded. This is been a fraught debate in the u. S. Jewish community. You look at schumer and mike bloomberg, a lot of leaders in the community and they are struggling with it. Many of them have come out with Benjamin Netanyahu in his stance against the agreement but there are a lot of people trying that is basically what mike is saying. This is not something taken lightly and the white house is dismissing any critics. Tom is the deal at risk . Brandan the popular interpretation of senator schumer saying im against the deal is based on the assumption that he would not come out against the deal unless he knew the president had the necessary support. Again, that is reading the shadows in platos cave. R. Bloomberg,ael the founder and owner of Bloomberg Radio and television. Our tutor question our twitter question. On china, of course, will the devaluation help us economy . Tom good morning, everyone. Bloomberg surveillance our top headlines. Isie a sign that china concern that Economic Growth will fall short of its target. Byay china devalue the yuan the most in two decades. It will make it easier for exporters to sell goods overseas and boost the role of Market Pricing in the worlds secondlargest economy. Chinas stock and it steepest economic slowdown since 1990. Last month, exports fell 8 . Google has unveiled a reorganization that turns it into a Holding Company. The new name of the conglomerate will be alphabet. Andgoogles earcsearch advertising will be separated from Health Technology in self driving cars. Each unit will have its own ceo. Page will be the ceo of alphabet. Earlier this year, pichai spoke about his relationship with page. Larry and i worked together for many years. And we share a lot of goals. It was a way to divide and conquer. I spent a lot of time on our core area thinking about the next area of innovation there. Larry works with me on that. Julie page will be the ceo of for investors, the new structure will give greater clarity on how google invest and it makes it easier to make further acquisitions. Democratic president ial candidate Bernie Sanders has gotten his first big union endorsement. The National Nurses united will back the vermont senator. The union says it is the biggest Nurses Organization in the u. S. Meanwhile, republican president ial candidate rick perry has stopped paying his Campaign Staff in South Carolina pretty former Texas Governor is far behind in the polls and his fundraising has been sluggish. Kraft sales were down 5 . Thez down for percent or food company is controlled by Berkshire Hathaway. They are expected to keep cutting cost to improve profits. A new etiquette dilemma for diners. Should you tip the waiter at mcdonalds . The company is testing table service. A server will not take your order. You have to ask for what you want at a kiosk. Your top headlines. A believe we have another one. Tom breaking news what an international day. This is the opec announcement on oil. You see it on bloomberg hd. Iran pumps most since 2012. I wanted to go to the bloomberg terminal. We give up all the game we have seen the last few days in a matter of moments. Back near those loza few days ago. We will talk to vince piazza about this. Brandan saudi arabia tells opec it cut crude output by 230,000 theyre also in july. That is a sign that perhaps we are willing to consider talking about cartel pricing again. Nowhere near it. Tom i am seeing a shift in and lower Interest Rates as well. Lets move on to greece. Brandan big day, big world to europe. Greeces next payment is due on august 20. Nine days ahead of time, the European Commission and the e. U. s rescue funds have agreed on what greece needs to do to get a 94 billion bailout. We have a deal, kind of, maybe. Hans nichols is with us in the studio. This is got to go to europes parliaments where the power lies. Can this get to the bundestag . Hans the optics out of berlin overnight, seems willing to sign off. There is a phone call between Jeanclaude Juncker and Angela Merkel later today. Then we will have an answer. Brandan we are learning all sorts of new terminology. One thing weve been talking about over the last months prior actions. Do we know what they are, how many there are . Is reportingress 35 prior actions. Pension reforms, a lot of things, 35 individual votes in the parliament. We will do our best kevin spacey house of cards and do a whip count. We want to see if they get above 40 no votes. 39 no votes. The second ones, 36 no votes. The question is, will this lead to a collapse of the Party Conference . That is why will be county votes. Julie we continue to talk about the leaders making these decisions. Now now that we have seen the banks open again. Now that we have seen the stock market open again. What is the situation for the common greek at this point . Open. Bansks are fully they are still under some restrictions. Theyre talking about another 10 billion immediate recapitalization. The economy starting to go again. All these numbers, they rely on depressed economic outlook. We will get gdp figures tomorrow. Thursday coming out of greece. That will take how much the economys growing. Tom i want to bring this back to the american economy. Michael hansen with us with bank of America Merrill lynch. Greece, china. Arent these all deflation or impulses that have to affect london and washington . Hans the fed has been looking through the for quite some time. Tom when did they stop looking through them . Michael all of this temporary inflation has been persistent for quite some time. Brandan hans, you have been tracking this deal from riga to berlin to brussels. It feels like this happened quietly. What shifted in the negotiations . Big picture level, the finance minister is new. He is in some ways more amenable. Brandan it is about personality. Hans you hear that a lot and brussels. This is from a greek government officials were creditors gave an additional 20 billion in the primary Budget Surplus over the next three years. Greece got another 20 billion to juice their economy. Again, the lender side, there were going to be some difficult prior action votes. We want to see what the whip count is. Brandan michael hansen, that surpluses over the shortterm, they are expected to get up to 3. 5 . That is hard to pull off. Michael over the medium to longer run, is greece in a position where debt sustainability is no longer an issue . Brandan you get two different answers in berlin and one in washington. The imf will contain to say that you will need to do something. Halpert onve a dan twitter. He had been talking about china devaluation. What is the china devaluation equivalent for greece . What is the movable force, well never, never, but . Hans im so glad that i get to airy reform. Reek d their dairy laws, that is one of the big things. Tom hes better looking remote. Dairy reform . Hans those are the big ones. We all like our greek yogurt. These are trench communities, local. An archaic system. Think of every time there is a tax increase in this country, what we talk about . The Small Business owner. Analog in greece could be dairy farmers. Tom should we set our calendar for when nichols goes to santorini . Brandan if this works out, we may be out of a job. Trips inne santorini. Brandan norway is approaching an uh oh moment. This is bloomberg surveillance good morning. Tom good morning. Tom futures negative 13. Our single best chart. Brendan norway runs the World Biggest sovereign wealth fund. 5 billion. It owns one pointer percent of the worlds equities. I did not know that until yesterday yesterdays the Prime Minister told bloomberg she was prepared to let that fund get a little smaller. The reason why the subject of todays single best chart. Norway treats oil revenue separately in his budget. This is what they make ever you. In white. They can do two things. They can paid into their annual budget, the blue line. Or they can paid into the sovereign wealth fund. Tom the yellow line is going down, the blue line is going down. Brendan when all those lines converge, they have to pull out of the sovereign wealth fund. Michael hansen is with is on the desk from bank of America Merrill lynch. When we talk about that sovereign wealth fund, it is the elephant in the room in the equities markets. With the numbers he pointed out. It looks like the budget contribution has been rising steadily. It suggest maybe some longer structural issues. Brendan the longer run structural issues of an economy based completely not completely, largely on oil. Nonoil revenues are higher than oil. I had not expected that, but it is such a huge part of the economy. They treat oil and nonoil completely separately in their budget. Tom that is one example. Ley fisher happen to say off event when one we translate deflation inflation. Do you think there is a permanence which will change how we live . Concept of u. S. Up just in time shorter cycle inventory, and it is a concept that operators with on convention drilling un conventional drilling have tom they have new technology. Vince in 2008, the u. S. Was producing 5 Million Barrels a day. Fastforward to 2015, we are now producing 9. 6 Million Barrels. So, in the drilling productivity report, we do have a decline in it is rather modest when you consider it had a 50 decline in price, a 50 decline in rig count. Down 50 ad capex throughout the u. S. Industry, but yet, youre still up yearoveryear almost one Million Barrels a day. Julie it sounds like your as her is n your answer is no. This is not a temporary situation. Vince in the u. S. What used to be a major importer is now becoming more selfreliant. We are relying on our own technology to not only bring down the input level but also bring down the cost of supply. Brendan lets talk about the opec headlines. Again, saudi arabia says that 203,000rude out by barrels a day in july. Is that diplomacy, them sending a flare, saying we are willing to consider cutting production . Vince you could think of the quota as a low point. A low end threshold. No incentive for them to cut back. Opec overall will likely see iranian barrels coming on over the next 1218 months. You have a country that at one point was producing roughly 3. 8 Million Barrels for day. Now somewhere around 2. 8. They can get on back to that 3. 8 million barrel number in the next 1218 months. Tom michael hansen. Chinaan oil, plus devaluation is for the division at the fed over inflation. World,lation in vinces foreign exchange, has to be something that ends up at the desk of carney and yellen. Has the the fed standard of reasonable confidence in the inflation outlook. Means,ey said is that while deflation does not fall, we are ok with liftoff. The challenge will be the next step in the step after that. If Inflation Numbers not pick up, they will have to step to a transparentnd what fisher is saying is that oil prices cannot fall forever. The dynamic until seven years ago was oil was adding headline inflation. Now its adding nothing. That is where the delta is. Tom you cant use greek letters in august . Brendan i was going to use the word exogenous. Questionn exogenous mark. Tom great briefing on oil. We have photos. With julie hyman, which makes them special. Julie thank you. Firstamong them, the Nuclear Reactor coming back online and china. These are protesters rallying. Sendai tom this is not a fukushima. Far fromndai is not fukushima. This is the first Nuclear Reactor to be switched back on since the disaster. There has been major public opposition, but still, it was restarted earlier today in japan. More atomic get stations online in the near future. Brendan that reverberated around the world. Germanys Energy Policy is still reeling from the shift. Toms point at me with a special shock face. Tom let us move on to our next photo. Brendan you do not want to dwell . Tom let us move on. Brendan you do not want to dwell on germanys Energy Policy . Number two, the control room is telling me. Julie let us move on to the next one because we are talking about lettucce ine in space. Did you not get that . Astronauts will be dining farm is a plan toght eat the first festivals grown and space. Red lettuce. Veg 01. They grew for 33 days before being harvested. Almost there is an constant feed of scott kelly in the space station on a tv monitor over my shoulder in the newsroom. I feel like he is a part of my workday. Julie did you see him eating lettuce live . No dressing, nothing . Brendan it is amazing. Julie eating food out of tubes. White humpback whale was spotted off the coast of queensland australia yesterday. Scientists first believed it could be the white whale that has not been spotted in the year. Not a verywhite humpback majest. If you are too small it is now being called migolu junior. Only three confirmed albino humpback whales have been identified. Brendan a slightly less majestic name, junior. Julie maybe it is australian brendan im going to google that. Im going to awful that that. Julie brendan will be back with the breaking news humpback whale translation in a few moments. Broughtr photos today to you by julie hyman. I toured a question of the day. We go back to serious matters of the morning. What a surprise our twitter question of the day. Will chinas devaluation help the economy . As they depreciate their currencies, that benefits their exports. They hope to move stuff across the pacific. Stay with us. Worldwide. This is bloomberg surveillance tom breaking news, folks. This is symantec. Michael brown at symantec. This is something that has been in the works to split up symantec from veritas. They have been very visible. Carlyle group is to buy veritas for 8 billion large. We will have much more on that on bloomberg west. Brendan this is like what happened with amazon, which is that amazon realized it was doing so much work. It had Cloud Storage crate symantec did the same thing and s was big enough to be its own business. Tom some of the efficiencies we see out of the google announcement this morning. To our top headlines. Itse the epa and contractor may be liable for millions in damages from that colorado wastewater spilled. A cleanup crew mistakenly released toxic sludge from an abandoned gold mine. Andrivers have enclosed owners of wrenches and homes in the area will have to go elsewhere for water. Arees of shake shack gaining. They liked what they heard about the secondquarter revenue better than estimate, up to 70 5 . The company says higher prices and new locations boosted sales. In sports, nbc will keep the rights to show english soccer in the u. S. For six more years. No word on the terms of the deal, nbc is in the final season of a threeyear deal. The English Premier League is the richest Soccer League in the world. Is i brendans favoritet . Brendan im not really an epl guy. I am excited for the bundesliga. It is the most popular. Is amazing is that it has been extraordinarily successful nb theyc realize that there. Is there was before by playing european soccer games in the american morning. Tom they are all foxing fox in sports. Lets move back to economics. A great day for bloomberg surveillance yesterday. I spoke yesterday to the former irman of the heres Alan Greenspan on americas low productivity. Enspan it confronts not only the United States but the developed world especially. American productivity is not significantly different from ser zero growth in the last six or eight quarters. And the cause of that, if you the causeards through of chain, is Capital Investment has been inadequate to fund the amount of assets you need. Tom there we are in the mix of productivity. On labor capital and technological progress. Michael hands is with us with bank of America Merrill lynch. Michael hansen with us. I have to go to dollar dynamics because of the news out of china. Within the mix of productivity, we have this got feeling, the dollar is good to we can stand up straighter with a strong dollar, but there is that real but about too much of a strong dollar. Are we near that point . Michael it is a potential concern. You have that strong dollar. Of the year,ing fed officials used that to become more optimistic about being able to hike later. If we get another move on the dollar, from the growth reasons, that is the reason the fed seems to be much more concerned about it if you look back at the way they discussed at the last several months, that could slow the fed pit brendan Alan Greenspan blames lack of on the lack of productivity. We have a different theory from our chief u. S. Economist at bloomberg. He said it is very easy to figure out why businesses are not investing. We are working at other capacity. As soon as we get closer to capacity, you will see businesses interested and bringing new capacity online. Is there merit to that argument . Productivity is important that we have a hard time measuring. Ks cyclical print we think long, productivity should be a structural phenomena. China disentangled the cyclical from the structural is one of the big challenges. I would not be surprised if there are some short phenomena businesses being some mediumterm runs, credit markets are still tights. Longer term ones, the huge debate as to whether everything worth inventing has been invented or not. Brendan as capacity gets closer to 100, can we use that as indicated to predict new investment . Michael the relationship is not that type. Intuitively, yes, but the data suggest y you might think of it that wayy. The Business Community is not confident enough. For a while, it was everything going on in washington. If you grow 2. 5 tom thank you for coming in today. And adapting to the Huge International news. Let me do a four exit port pretty think that is interesting . The mexican peso stronger. Chineseex reporter renminbi 6. 33 a big deal. China devalues did in our next hour, Stephen Roach. This is bloomberg surveillance. Tom china capitulates. The values on the renminbi unhinge is the u. S. Dollar. Let the new currency wars began. Greece reaches agreement with germany and creditors. Alexis tsipras wants his greece to support him. And google restructures. Will google now by twitter . Good morning, everyone. This is bloomberg surveillance. We are live from our World Headquarters in new york. It is tuesday, august 11. I am tom keene. Joining us, he is not evil, Brendan Greeley. This was huge yesterday. I am assuming youre talking about nbcs moved to continue with the English Premier League tom no, i am not. Question wasbig paul sweeney in the last block, the last hour, which is it to take all of their moon shots and to protect them from investor interference, or is it to protect the investors from the moonshot . We do not know the answer from that question yet. Tom lets go to top headlines this morning. Here is julie hyman. Julie thank you, tom. China takes a surprise step to stop its deepest economic slowdown in 25 years. The central bank devalued chinas currency. Biggest oneday drop since 1994. The move should make it easier for x orders to sell overseas for exporters to sell overseas. Is praising union the move this morning, saying economic fundamentals should set the devalue. Google is selling out its future, and eight is called atbat, the name of the Holding Company google is forming. Companys heart and soul the Search Engine is being split off from other units. Googles cofounder larry page will be alphabets ceo. Pichai will stay at google. Sundar larry and i worked together for many, many years, the goals to divide and conquer, if you will, and i spent a lot of time thinking about the next phase of innovation, and larry works with me on that. Julie the restructures should give investors a better idea of how googles many endeavors are doing, and it could take the way for more spin off and or acquisitions. Greece finally strikes a deal to get the bailout money desperately needs. Way forement clears the 94 billion in loans. The government says a few details must be worked out with creditors. Greece needs that money soon. A payment from the European Central due nine days from now. It is called a new front in cybercrime. U. S. Authorities broke up an Insider Trading rain that used ring that used hackers to steal. It is believed the hackers are in ukraine or russia. Topranked golfer says he is ready to get back into swing. Rory mcilroys practice yesterday where the pga tournament will be played. He hurt his ankle playing soccer last month or those are your top headlines. Tom let me roll through the data check. With a wonderful show for you, particularly on the announcement from china. Futures 14, now negative nine. Basis point, and some Real Movement there this morning. Lets begin our coverage on china. It is a Seismic Shift. It reverberates from beijing across all of asia indeed into the eccles building in washington. Reserverows the currency towel out. It appears they will move to a managed flow. Wii bowl we begin with our beijing bureau chief nicholas watt. How will this affect the rest of china and particularly job formation that is so important to the government . Nicholas they talk about this being a real push for market reform, so if they are really allowing the market to play a greater role, that is certainly something that could boost jobs. They couch this whole thing in the language of market reform, but if everything time it is a onetime thing, and the Exchange Rate will remain basically stable, so a lot of time needs to pass before we can really understand what the governments true intentions are. Brendan is it managed, or is it floating . Do we know yet . Do have a, they still fixing each day, and they only trade withinn to 2 of that fixing rates, so they have not given of the fact that they are basically going to still keep a pretty close eye on this currency. I really would not expect to see any more depreciation after this. They did say in a statement when they announced the depreciation that this was a onetime thing, so i do not expect to see the yuan fluctuate too much after this. Julie nick, what is the signal to us about the current state of the chinese economy . Government regulators have are employed various measures. Does this give us a read on the desperation level there . I mean, when you look at the export numbers, we had exports on the weekend, and they were really that. Exports down more than 8 . You drill down to the some of those numbers, europe down 2 , youn down 10 here mentioned currency wars i mean, this is going to be great for chinese exports. When you talk about market reforms, you have to look at where the rubber meets the road. What action will they take when the move is not align with their interests so much . A marketsay it is reform, but it has been helping them out a lot in terms of brain down the price of exports. Tom from bloomberg news, nick wadhams in beijing. Ramifications and dynamics are many. Your first indication, mr. Rosenberg, this is a huge deal. What does it mean for american investors . Uest you look at the reaction in the bond market, and it is a riskoff move. To sometestament concern around the Global Growth picture that china coming after the x or data is making the move on the currency, a lot of ramifications, i think the initial concern is what this is the saying about Global Growth . Part of, and aa big part even before todays news, about a deflationary fear. Global commodity prices, you see it in something that happened last your with the slowdown in china, the collapse in iron ore prices. Oila contributes to the , but from the demandside overall, particularly in the month of july, we saw a big increase in to play shery fears. This will only in deflationary fears. This will only feed into it. Brendan can we get Jeffrey Rosenberg a victory lap . 2015,eading july 31, market shares from blackrock, chinas latest exports, deflation. Part of your job is to play armchair psychologist with the Chinese Government to figure out why they are doing what they are doing. When you look at various motivations for this move, do you see international respect for the redmond ds part of the motivating factor, or is it really the stimulus for the renminbi as part of the motivating factor, or is it really the stimulus . Jeffrey it is certainly linked to the value of the dollar, and what we have seen in the last year is a sickness in globals pending in the value of the dollar. For the u. S. Economy, that make makes sense. U. S. Economy, we can debate, and i should am sure we will debate china, it is going the other direction. Certainly it is not the level of growth, it is direction that it is slowing much faster than many people anticipated, than perhaps the Chinese Government would like, so the policy settings are misaligned between having tighter Monetary Policy visavis the linkage to the dollar versus whether domestic economy needs. What this morning is about is a recognition of that, really a recognition of something that had been priced in the currency, spot levels of the proposed as opposed to the fixing to the fixing level to match with the market has been saying for some time, that you needed a weaker level of currency given the economic fundamentals in china. Julie jeff, i am looking at my bloomberg terminal at the fed fund futures, 40 of a chance of a move in a september right now. Does this change the calculus in the fed at all . Jeffrey a little bit on the margin if you look at how the probabilities are adjusting this morning. Youre seeing a little lower level of an interest rat. Not so much in thee rate. Not so much in the decline of fedex rotations. Ofs much more of the the fed expectations. That is much more. Tom the curve is flattening outside. What does that signal to Stanley Fischer in janet yellen . Jeffrey they will talk about International Developments, and International Developments raise their concerns to such a degree, that it might reduce their odds. Tom are you saying september sale, or can i make some news with you this morning and go to december . September is still on the table. What stan fischer said to you yesterday is important. The u. S. Economy is less sensitive to the rest of the world and the rest of the role is to the u. S. Economy, so it has to be a bigger move for them. Certainly this will be on their radar. Off a bit off the opec news. It is like october this morning. Brendan there is a greece deal, and it is our third story. [laughter] tom how about our twitter question . Lets get to it right now. Will chinas devaluation help its economy . Good morning. Tom good morning, everyone. Bloomberg surveillance. Tom keene, Brendan Greeley, julie hyman in for vonnie quinn. My conversation with vice chairman Stanley Fischer here on inflation. The problem is not with the part that is unusual with the mandate, namely unemployment that is doing just fine it is with the inflation part. If we were just inflation target ers, we would be any same situation we are in now, we would have to do even more probably if that were possible. Tom addressing the challenges that the fed in the bank of england have as well. Jeffrey rosenberg with us a blackrock. That with the saw bank of england last week. What is the likelihood that Janet Yellens fed will blink on september 17 . Jeffrey we just talked about it in terms of the global and international the relevant, and those International Developers are having an effect on some of the signals that the fed might gauges. So Inflation Expectations and the market have been coming down because you have this concern on Global Growth. It is not just about china. You have many areas of the rest of the world outside of the u. S. And outside of europe where you have significant slowing. There is a major story going on in brazil, and i will maybe touch on that one today. Tom waiting for real to open to see how bad it is crushed. Jeffrey you are seeing signals in the market that are showing not big increases in inflation decline. We have to put it into context that you had a major recovery in those, but most of the are, and only in the last month, has this turned over on this china and emergingmarket. Brendan fischer talked about the inflation where we are trying to talk about to figure things out. I was struck by the fact that he said we do not yet know what the National Rate of unemployment is. That is such a basic fundamental it is such a fundamental principle i mean, do you know, this anybody know . Jeffrey no. Honest answer. The conceptual idea, the framework is very appealing, but the actual implementation is very uncertain because you do not know with those levels are, and those levels change cyclically, and a change structurally or secularly as well. That is one of the bigger debates. Tom Jeffrey Rosenberg with us a blackrock. Coming up, folks, this is important on this historic day, we are thrilled he ripped up the schedule Stephen Roach will join us. For years at Morgan Stanley, now at Yale University. One of the great china watchers. Stephen roach as china devalues 1. 9 or so, but the clear idea that they may devalue evermore. Bloomberg surveillance, Stephen Roach, good morning. Tom good morning, everyone. Bloomberg surveillance. Top headlines with julie hyman. To theprotesters took streets for a fourth straight night in ferguson, missouri. Nearly two dozen were arrested. Marking the anniversary of Michael Browns death, the unarmed black teenager who was fatally shot a year ago by a white police officer. Spent 850,000 on company stocks. Jack dorsey sent a tweet about his purchase. Since twitter went public in late 2013, he has sold more than 15 million of twitters shares, by the way, surged 9 yesterday. They are down about 1 in the premarket this morning. A polluted brazilian lake rowers. Sickened Rio De Janeiro well hosted the olympics less than a year from now. Those are your top headlines this morning. Dont be unwieldy. That if the new motto of google. They announced they will become a Holding Company called alphabet. The companys search at business will become a whollyowned Company Called google. All of googles moon shots will get their own p l statements here to call sweeney, as always, you will on table for this p l statements. Paul sweeney, as always, if you will untangle this for us. Paul i think with this move signals to the street is number one a survey and larry and google continue to want to make Big Investments in companies that are not core to google, like google maps, health care initiatives. They are signaling that will continue and maybe even accelerate, but the quick dash quid pro quo for shareholders as we will give you better transparency as to where the money is going and how the numbers look him up i think that is the structure, this Holding Company structure that they are putting in place here. Brendan the company we used to refer to as googles wheelhouse out sales is now just called ,oogle, run by Sundar Pichai the guy who ran android for them, basically came up with the chrome program, so obviously very important within the company. Who is this guy . Will we get a better sense of who he is . Paul i think we will. This is a guy who has been receiving a lot more response ability around google over the last 18 months, so as someone whose profile within the company with an wall street has been increased here one of the key issues that i talked to investors about is he gets a lot of credit for managing googles search business from the desktop world to the mobile world, and a lot of companies have not managed that religion to mobile very well, but google certainly has. He gets credit for that. Ser is for larry and gey to elevate another Senior Executive to a senior role. Julie this could soo ignal that google is going to spend more money on these moon shots, and it could be good in the longer term for investors. Would you agree with that . Paul that is the since im getting. Larry and sergey from day one we wills is how allocate our capital, and that 10 Capital Allocation is really for these moon shots, but now we are talking about serious numbers that google, so they are placing multibillion dollar bets all around the table, and investors are requiring more disclosure. Tom i am fascinated how ruth porat fits into this. You are an east coast cfo, you parachute in was this are doing . Hand i think she had her in this. She gets partial credit for this, but she also gets credit for that last Earnings Release where she said listen, were going to focus on our aches ends record. We know it is an issue, in my job here as cfo is to focus on that. Tom are they accounting for these moon shots . That they arers certainly, but i think what will happen here with this new structure is you are going to get to see much more clearly where the money is going from a Capital Allocation perspective and from a daytoday p l perspective. Brendan what is the right metaphor for what they are doing . Are they not the biggest venture capitalists fund in Silicon Valley, or so we think of them as a Warren Buffett type . Paul if you are larry and besty, you want to see the of everything first in Silicon Valley, and i think they generally do get that. As saidlarry and sergey they do admire Warren Buffett and how he has managed to manage all these disparate businesses as well with dedicated ceos, dedicated capital structures, and see if that works in the technology world. There are all sorts of coated jokes hidden in the press releases, links to a fake website from hbos Silicon Valley tv series. Is it significant although they either failed to secure the alphabet twitter handle or they dont care . Think this is something that this is a structure that i think they feel it is in the right interest of shareholders, but this also gives them the leeway to maybe even step up some of their investments and some of the is alative deals, so it quid pro quo between investors and management. We will give you use of our public capital, but we want the greater transfer fee in return. Julie what about spinoffs and acquisitions . Could it make it more likely that they would buy twitter, for example . Paul it is possible. That has certainly been speculation in the marketplace, but i think they can and could have bought twitter at any different time. What is new structure does is make it easier for them to facilitate their ability to attract and retain talent because now perhaps you can offer them equity in standalone, Smaller Companies and might 4x returnthe 3x, that a lot of people are looking for. Tom paul sweeney, thank you, with Bloomberg Intelligence. A long conversation with Jeffrey Rosenberg of black rock we need a conversation with you. Will chinas devaluation help its economy . Stay with us. Get excited for the 1989 world tour with exclusive behind the scenes footage, all of taylor swifts music videos, interviews, and more. Xfinity is the destination for all things taylor swift. Tom good morning, everyone. Bloomberg surveillance. Top headlines with julie hyman. Julie chinas government is signaling it is willing to loosen its grip on the economy to revive it. The central bank devalued chinas currency. se 1. 9 cut drop the yuan biggest drop since 1994. Shares fell more than 8 . It is not helping to ease chinas deepest economic slowdown and 25 years. The government had been propping frome yuan to keep capital flowing out of become weaker and we will be speaking to Yale Universitys Stephen Roach in just a few moments. Symantec is selling a set of doors to carlyle group. Inantec bought veritas 2005. Rick perrys staffers in South Carolina are no longer being paid. He does not have the cash. On the democratic side of the white house race, Bernie Sanders gets an early endorsement from a major nurses unit. Those are your top headlines. Brendan wow. 2015it is a historic july when china joined the National Economic system and appreciated its currency. That managed policy changes this morning as china struggle for Economic Growth amid shifting labor arbitrage of the global economy. A Stephen Roach at Morgan Stanley and now Yale University has watched china and out and joins us on this historic morning. Dr. Roche, want to give you to a research quote from london this morning, which full to your world. A time when several fomc members were considering a rate hike, chinas evaluation further highlights the importance of low inflation as an obstacle to fed tightening. Add to this the latest oil from iran and the disinflation will stay in the way of fat hog steered steve, does this chinese devaluation derail Janet Yellens best intentions . Stephen not directly, tom, but unexpectedre are destabilizing development in the world financial markets. Then of course the fed will refrain from moving in that context, but that is a highly conditional statement, and at this point completely unknown. Tom in china and to your book the next asia, you spoke about this government being different. How is this new regime different than the one you observed when you were at Morgan Stanley . Y are a well, there continuation of the prior to rebalancehen shal the chinese economy. In the prior administration, you know, that was more of a plan, a jinping, and under xi it has been more of an implementation objective, so they are taking a plan that was very much designed and developed under the socalled fourth generation of leaders and now bringing it to life with a series of comprehensive reforms. That is again a big difference. Brendan stephen, you talk about restructuring, rebalancing the economy toward more consumption and less production. Havegoal of the government of being part of international institutions, being included, opening up their markets to more foreign capital . Which of those is the most according goal right now . Brendan, that is lenge for china. They have a lot of balls in the air cured they wanted her structure, lead globally, shape and reshape international institutions, reform their capital markets. Thatere is always a risk they chewed off too much and they have to be more selective in identifying their priorities. Tom quickly, the bases this morning, is this a one off to valuation, or will this set up a managed flow that will work the currency lower . They have had a managed flow since 2005. They can take this currency wherever they want. They claim is a one off i doubt it. It is not a coincidence this was taken off the heels of sharply defining exports and continued downward pressure in chinese growth. Tom Stephen Roach, thank you so much, with Yale University today, as china devaluates and not really shocks the market but adjusts the tone as we go into the autumn. Lets work to the data check. As we look at some of these numbers, without question, eurodollar stronger, and crude oil oil is a litmus paper. Brendan when you look at the eurou. S. Dollar, which is more important right now does greece or china . Next screen right now, with the dollar renminbi, that is a new price, we are looking at 6. 21, a weaker chinese yuan this morning, but no Dollar Strength yet. Equity futures 11. Brendan this is bloomberg surveillance. I am Brendan Greeley with tom keene. We have discovered a new drift. Bloomberg is announcing that hackers stole press announcements and then quietly traded on them. Us from washington. Im trying to figure out the mechanics of this. Is this what they call a zeroday hack, or was this a really clever idea . We do not actually know how they hacked the servers, but we do know it is a real clever idea. What they did is targeting the companies, the fortune 100 companies that Companies Use to release numbers including earning financials and other numbers. They got in the servers, they watched, they waited to see what kind of breaking news was about to come, they traded on the news, and over a period of four years, five years, made about 30 million. It was a good idea. Brendan how do you roll up an organization like this . You know so much about the forensics of this. Lets say we noted a suspicious moments in these equities where you go from there to figure out who is doing what . Mike the interesting thing about this is in securities fraud hacking, although this has some advantages to the hackers, you do not have to have a network of contacts, you do not people in wallep street, you do not have to pay millions of dollars in bribes. Advantagessent for law enforcement, you have to not only hack, which in be a very hard thing to track, but you also trade, and essentially that creates markers that the sec and others can watch. That is exact what happened here. They traded in a relatively short period of time to make money on these announcements, so these numbers are loaded up less than 24 hours in advance. Powerful oureally rhythm sphere to use those algorithms to spot a pattern of suspicious trades. They start with the guys making betrayed and work backwards. There were five arrests in georgia and pennsylvania this morning. Julie mike, what is the sophistication level like of the authorities. . Ourmentioned the sec rhythms. We are seeing almost an unlimited ability on the part of hackers. How are the regulators at catching up to the hackers . Mike this will be a really hard marketolve from an sec Enforcement Point of view. Think about it, Insider Trading, you used to have to worry about a small set of actors who had a lot of contacts on the street and in companies. Now you can have the cfo of a company and his email address. Newswire, likepr these guys did. Whocan hack somebody collects information, a secretary, and put these things together. It offers you a huge range of targets, and it gives you exactly the information you need because the company itself is putting together these numbers before they are releasing them. Brendan mike, this is fascinating that they hacked prnewswire because there is so much focus on cyber theory for government contractors, they found a weak link, which is asked ordinary. This was not as hard and of a of his orsome their organizations to what links are out there that are not being publicly talked about . Mike that if the problem, as soon as you target one, you can go to the next one. These hackers operated for four years to five years. Think about that. Undetected. Clearly the ability of the realize that these hackers were in the system was pretty lowes these companies to realize that these hackers and the system were pretty low. S emails,t into cfo and box it will be real hard to shut it down. Hackers lets say the were in ukraine. The fbi only started working with russian authorities to identify hackers about a decade ago. How good is our ability right now to work with other countries to extradite and at least chase them down . In some countries, it is very good curate in Eastern Europe and russia, it is not very good at all. It depends on where ukraine they are. If they are in the russian side of ukraine, which is likely, they will have a very hard time getting hold of these guys. So they can identify them, but that is a whole different thing than arresting them. Brendan all right, mike riley, bloomberg nbc, thank you very much. T on coming up, fadel ghei Market Makers this morning. Stay with us. Jeff rosenberg on china. Stay with us. Tom good morning, everyone. Bloomberg surveillance. Blacky rosenberg rock with us. We will talk what china in a moment. Brendan we have got Stephanie Ruhle with us of Market Makers. Formerlylking to with barack obama. Tephanie we have to talk about this toms interview. Brendan you call him tom tom . Stephanie i do. I do not know about your relationship with him. Alan greenspan, thank you, Jeff Rosenberg. My former colleague helping me out to will get reaction to the jobs report, i know austin has been paying attention to the debate. He is pretty outspoken in the twittersphere. Jeffrey can you please ask him about the 4 manifesto . Brendan lets ask Jeff Rosenberg about this. Is this possible, not reasonable, about the future . Jeffrey this is really an important policy debate, and austan certainly represent a side of that debate about what can fiscal policy do here, so much debate, but really the politics is about policy and fiscal policy changes. It be nice todnt find out what fiscal policy can do so we can at least tested . If you could have a wish list for the fall session, what is one change you would be asking for . Number one brly fundamental tax or form. That is the big opportunity to unleash fiscal policy and create some growth on the economy. Julie can we back up for a second . What is the 4 . I mean, most of the other people watching brendan absolutely. [laughter] lastush in the debate spurs and i said i do not expect the new normal, and when he said the words new normal, somewhere at a bar in manhattan, tom keene got really excited. Stephanie do you really think he was in a bar . Brendan yes. Stephanie i think he was in a restaurant that had a bar. Is a crucial distinction. He said he did not accept 2 of a normal growth rate. 4 here in the problem is not capable of a 4 growth during tom Jeff Rosenberg, this is the heart of the matter, a lot of people want the growth we used to know. It aint there, is it . Jeffrey it certainly is not there, the big debate is why is it not there . Are we resigned to 2 growth because of proximity, or are there policy changes you can implement that will affect demographics and productivity . Stephanie inflation and unemployment, if you look at those together, you will get a big shot of productivity or die will be speaking to him today at 8 00 a. M. Tomtom, i hope youre watching. Brendan this is bloomberg surveillance. Good morning. Tom good morning, everyone. Bloomberg surveillance. Top headlines with julie hyman. Julie colorado and new mexico are declaring disaster areas downstream from the abandoned mine where millions of gallons of waste filled, flowing toward a lake in youtah. Shares of shake shack are gaining in the premarket. Thanue is better estimated, up 75 . The company set higher prices and new locations boosted sales. Air european soccer in the u. S. For the next few years. Nbc is in the final season of a threeyear, 250 million yod deal. Those are your top headlines. Brendan market liquidity is likely weather, everybody talks about it, nobody does anything about it. As Jeffrey Rosenberg is with us from black rock era and we are noting a shift. From blackrock. We are approaching a shift. There is news from greece we are not really touched on it all, that a lot of this means a shift in trades, it means increased volatility. You sent me a note a couple of weeks ago that basically said, and i am going to read directly from this, while we do not believe that the principlebased market that is intermediated by brokerdealers will disappear, we think this form of liquidity needs to be supplemented with ylike trading venues. That is a huge shift in the way debt is traded. Lets talk about the mechanics of that. How is that going to happen . Jeffrey thats correct, and lets unpack that so people can understand. Bonds are different than equity historically, and bond markets s operated as principal markets, which means the intermediaries operated with their own capital at risk as they were providing equity. Oppose financial crisis, this becomes much more problematic because we want to take the Financial Systemic risk out of the brokerdealers. We do not want them to have proprietary trading. Sometimes there is a fuzzy line between principal trading and proprietary trading. Comment is at that that agencylike models, more equitylike models where the intermediary is matching buyer and seller rather than putting their own capital at risk is more of the way of the future, more of a balanced approach between agency and principal trading for having liquidity in the bond market. Brendan from your perspective, you can say that, but that is such a huge shift. To that for the equity market, decades of regulations, concerned by market actors how does this come about, this change . Jeffrey it is really about the structure of the bond market. One thing we talk about in the piece is what is the impediment toward moving toward more of an agencylike model . Why can you have an agency model in equities more than in bonds . One of the biggest issues is that bonds were always issued in a very scattershop matter. You have a bond over here, a bond over here, and overtime you blew up the capital structure so that all of the bonds were different or think about stocks, one share stock is the same as 10 shares of stock. One media step is to try to rationalize the issuing side of bonds so you can greater fungibility that will be a pathway toward greater agency trading. As we are seeing, it is not a wholesale shift, but there are some meaningful iterations here that could improve market liquidity with market structural changes. Tom jeff, i spoke with Alan Greenspan yesterday, and he is incredibly vital at 89 years old, 90 in march. He made moves by saying there is a bond bubble. You are in the trenches of this. Do you agree with dr. Greenspan . Jeffrey we had this debate years ago when people were first experimenting with zero Interest Rates, and i get the question all the time about the bubble. I called it the antibubble. A bubble is about excessive exuberance, to quote the man himself. It is about the expectation of higher prices tom but will we see turbulence here . Jeffrey that is a different question. Turbulence and bubble is not necessarily the same thing, and the expectation of turbulence should be very clear because what a zero Interest Rate policy and quantitative easing globally interestrate volatility. He removed the blanket of a zero Interest Rates and quantitative easing, and you see the volatility rise. We have artie seen this this year, and we will see more of that going forward, so the expectation of higher volatility in financial markets, higher volatility on a bond market, it should clearly be on investors minds. Tom will we go under 2 again with the 10year yield with this inflationary and close deflationary impulse we see out of china . Jeffrey the movement of Interest Rates can go both ways, that is what volatility means, so the year and forecast on the 2. 50, the higher volatility means you can swing both directions and certainly develop in a much more negative fashion. Staying below to percent is a possibility. 2 is a staying below possibility. Julie lets go to our twitter question of the day. Will chinas devaluation help its economy . Chinast answer if devaluation help boost their exports, we had achieved oil, now we will have cheap chinese goods. That is what we have been talking about, exporting devaluation. You neil dutta, mentioned, pushing against this. Julie he said we have seen a decrease in chinese prices, but they have to feed through core inflation here in the u. S. Our next answer yes, if it introduces economic reform to encourage is there a liberalization in china to bring money in . Jeffrey funny we have had this whole conversation and no one has made the connection between what just happened in their equity market and what is going on tom yeah jeffrey it is a bit of careful what you wish for purity want financial liberalization, you want marketdetermine prices might yet when it starts to do things that markets do, perhaps you have a little less comfort with that. There is a reasonable degree of skepticism here around the market reform movements and how realistic china is going to be. Brendan this is the old Saint Augustine quotes, lord give me market transparency, but not yet. Julie lets end with our last one, it is likely to set up a another round of devaluations globally and delay the fed. Brendan call from somebody. Tom let me get to the agenda quick because we want to get to an important discussion on greece. Overcome by events. There is a lot going on in china. Thanks to Stephen Roach made it clear this is not a one off the valuation. Julie Hillary Clinton making to stop today, both of them in new hampshire. Two stops today, both in new hampshire. She will be holding a town hall regarding college affordability. We will see if she can match the numbers of Bernie Sanders, who drew 15,000 on the west coast earlier in the week, and donald trump is making his first stop and michigan since announcing his candidacy. He is charging folks to come to his event, 25 or 125 for the vip ticket. [laughter] he will not take money from other billionaires, but he will take it for people willing to come see him. I do not even know where to begin. I will move on to my agenda, it is great, we have an announcement from a bunch of different negotiators, negotiating partners, of a possible deal coming out of greece today. 90 billion. Hans nichols is with us. Is this the deal deal. Have got some bad news to impart to tom keene they will be a meeting in brussels on friday. Eating a National Correspondent is basically a glorified travel agent. Tom have you ever been to brussels . Hans are you kidding me . Chips on the street. The former finnish Prime Minister is very positive on the deal. He is also hinting that the imf is on ward that is important. We need an agreement from madame merkel. Tom those are ugly charts, arent they . The projection we will get data out on thursday, i suspect it will be worse. We saw how much they clamped down in germany. Brendan what is the one voice we are looking for to weigh in on this . Hans were waiting for Wolfgang Schaeuble to get back from vacation. Tom hans nichols, thank you for , mr. Jeffrey rosenberg, your immediate expert is china, with blackrock. Ex ordinary day. You go to bed and have no clue brendan i think when we look even the common factor in greece, when you look at their economy and what it has done to the rest of the eurozone, deflation, deflation, deflation. Next move is in the eccles building. Tom next move is sitomer 17, particularly with what the bank of england accurately continue with surveillance on radio. Next. T makers is good morning. Live from bloomberg headquarters in new york, this is Market Makers. Stephanie good rainy tuesday morning. It is august 11. Youre watching Market Makers. I am erik schatzker. If you do not think this feels like august, you are not alone. The news got are smiling today. Google reorganizing its business. Stephanie we will talk with one goolsbee. Ustamnn he may have an opinion or two about donald trump. Erik we get we begin with a big step by china to boost the economy and perhaps get its currency rated. Chinaoples bank of