Take stock of what jackson hole will bring with janet yellen. Tom weve been doing this all week. Equities weaker yesterday. Not a shock, but just off the boredom, a very difficult afternoon for markets in the u. S. Janet yellen front and center. 10 00 a. M. Tomorrow, francine, eastern time. You wont hear her speak. It is in a closed room. Embargoedgets an speech and we will have all the headlines out at 10 00 a. M. Exactly. Francine that is what the markets are watching. Today we look at geopolitics with the deal in columbia between the government and the guerillas. Lets get to the bloomberg first word news. The death toll is rising in italy. The government says at least 257 people were killed when the quake rocked central italy. Three mountain towns were leveled. Rescue crews are trying to find survivors. Many of the buildings were built centuries ago. In kabul, Authorities Say at least 12 people were killed in an attack on the American University of afghanistan. The assault began with a suicide car bomb. Two attackers then opened fire. The siege lasted nine hours. No one has claimed responsibility but the talent and is expected. Turkeys incursion into syria may be a game changer in that countrys civil war. It is seen as a sign that turkey has shifted away from its steppedce that assad down. It wants to stop the advance of kurdish rebels in the region. Colombia has reached an agreement with marxist rebels in a war that has killed hundreds of thousands of people. The rebels will convert into a legal Political Party that will be guaranteed seats in both houses of Colombian Congress for a time. Voters will approve or reject a deal on october 2. Donald trump is welcoming the support of a backer who cant even vote. The former head of the Uk Independence Party, nigel farage, joined trump on stage. Onage said trump is right immigration and he wouldnt vote for Hillary Clinton. Global news 24 hours a day. Im taylor raikes. This is bloomberg. Tom thanks so much. Taylor my head is spinning because of that mr. Farage with mr. Trump. Printing, would you help us . What is the significance . Francine my head is spinning. When we were in brexit, barack obama shows up to london, nigel farage says, how dare a foreigner come to our country and tell us how we should vote . Showsight weeks later, he up in the u. S. And tells you how you should vote. Tom and the British Press goes mental. Mr. Farage is without a mustache. Is it august or what . What is the significance of his mustache . Francine not much. He just surprised everyone. Does that appeal more to u. S. Voters . Tom i dont know. Mr. Marty schenker will join us. With his Patient Perspective on the oddities of washington. Lets switch to data. It was boring until yesterday afternoon. We continue what we saw yesterday. Futures, dont want to overplay this, but a little excitement. Oil south of 47. Vix, 13. 78. The the dow, im really struggling at this, francine. The yen has done nothing. Francine the yen has done nothing, but because we had mark mobius saying they may do helicopter money in september, i also put it on my board. I have dollaryen at 137. I want to show you the asiapacific. I couldnt chart it. I want to show you the volumes, down 30 . Lets go back home and go to sleep. Tom it is a good time to think longer. Weve been thinking about the imf meetings coming up in october. Lets wander to the bloomberg right now. This is the state of american confidence as shary elven greets those assembled in wyoming. The yellow line is the average of the Bloomberg Consumer comfort index. I love the simple. The Bloomberg Consumer comfort index, the highfrequency weekly index. The gloom is the red line. There we are with the average. The diffusion is the 50 mark. Janet yellen would probably like that to be a little higher. But it is a good recovery. Not a great recovery, but a good recovery in american confidence. Francine we will take it. This is what i wanted to show you. I basically did the spread between the twoyear note and the 30year treasury notes. The 30year treasury notes are the cheapest relative to bonds into the start of 2008. The yield on the shorterterm maturity is more sensitive to the outlook from monetary policy. I decided to do that instead of expectations or odds of a fan move which is now 54 for the year. For more on all this, the perspective for the u. S. Economy, for more on jackson hole, we are joined by andrew sheets. Great to have you on the program. Quiet august, but all of that could change. The markets could be taken on a back foot depending on what janet yellen communicates tomorrow. Andrew good point. We had this big shock with brexit, then the response was to cause markets to go back into a lukll. As you look into autumn, you have a lot that is coming up. The market is pricing a more than 50 chance that they do hike. You have questions over chinas continued slowdown. Theres a number of things we could see that would realistically drive higher volatility. Francine a lot of people are saying the fed is missed communicating where they are not clear enough. Is the fed just becoming more like the mpc with the bank of england where we value difference of opinions . Andrew the fed has a really hard job. I feel uncomfortable criticizing them. If we think about what they are trying to achieve, they as your chart shows have successfully lowered term premiums and risk premiums further out, which i think in their view was the right response to this uncertain economic environment. Theyve been dealing with extremely choppy economic data. I think theres criticism that they should be looking through that. Theyve been dealing with a strong dollar, one of the strongest runs of Dollar Strength in the last 40 years. So far, the fed has allowed or certainly helped stocks go within a couple percent of all time highs in the u. S. I think it is hard to criticize. Tom andrew, Morgan Stanley has been way out front with the cautious view. Bankic from deutsche joined us yesterday and talked about the switch to financial instability. Where were are we on the sheets instability meter . Andrew it is interesting. I think a number of those measures of stability look really calm. Financial conditions are extremely easy. Credit spreads have come in, both realized and implied low, so i are very think you have a lot of stable factors. From an investor perspective, generally speaking, when financial conditions are easy, that has been a better time to sell risk than to buy it. When conditions are tight, risk premiums are high, fear is high, there are more opportunities. There are a lot of signs that Central Banks have successfully eased a lot of the uncertainty that came about after brexit. Does that mean it is a great investment environment with lots of good risk premiums . That looks much harder to say. Tom do you go into janet do you really see jump conditions at 10 01 tomorrow . Are we going to walk off to the weekend bored . I dont think were expecting major fireworks. I think theres a good chance the fed will acknowledge that conditions are better. I think the data in the markets suggests that. I think the market should certainly be looking for any signs that the fed talks about renewed credit markets or leverage markets. At the moment, i think it is more about guiding the market to keep a hike into 2016 in play. We dont think that happens ultimately, but i think that will be the main key. We dont expect major volatility tomorrow. Francine thank you so much, andrew sheets. Stay with bloomberg for special fed coverage tomorrow. We bring you interviews with fed officials. Live from jackson hole economic symposium. All that tomorrow beginning at 8 00 a. M. In new york. This is bloomberg. Francine it is bloomberg surveillance. Lets get straight to the Bloomberg Business flash. Lawmakers sayh Internet Companies have failed when it comes to blocking extremism. Parliament urges the companies to employ more people to police content. The Committee Says british Law Enforcement agencies should have extra resources to block dangerous posts and users. July was the biggest month for Hedge Fund Redemptions in more than seven years. Investors withdrew more than 25 billion from hedge funds last month. Investors have been critical of hedge funds for their fees, plus performance has been lackluster. That is your Bloomberg Business flash. Francine thank you so much. U. S. Vice President Joe Biden said a visit to turkey was called a waste of time. Animosity grew before the failed cool off month. The countrys prime minister, we asked what the future holds for relations with the west. Tom the u. S. The u. S. Has strongly supported full eu membership of turkey and defended us against eu Member States. Some eu Member States have slightly shifted their attitudes toward turkey after the failed coup attempt and started to make different statements. Finally they realized the truth. Today they see it better. Francine joining us now is Richard Whitman, the Chatham House senior fellow of the european program. Andrew sheets from Morgan Stanley. Richard, when you look at how joe biden was received, it seemed extremely uncomfortable in the press conference. He was also greeted by lowlevel officials at the airport. Do we care about things like that . Richard they are important and they are intended to send a signal. I think it really was a bit of humiliation in terms of the meet and greet at the airport. It also shows you how angry turkey still is in terms of the and the u. S. Response to the coup, but the u. S. And turkey need to Work Together on syria. It is a difficult relationship. Francine richard, there are so many layers on this. The u. S. Did work on some of the airstrikes on syria yesterday. But the u. S. Should be or could be very different in their approach. Can they also turn a blind eye to the purges being carried out by president erdogan . January, we focused a lot on turkish democracy, human rights, and so on. Clearly the u. S. Is putting the issue of stability of the relationship insecurity terms right at the top. European union is a bit wobbly. What the European Union has done his focus more in this disconnected way with this government expressing different views about the political situation. Still playing into the idea that the relationship is important, particularly on migration issues. Tom i dont know where the air force base is on the map. I just discovered it is northeast of cyprus, tucked into the Little Corner of the mediterranean by syria and turkey. That airbase goes back to 1955. His Vice President biden talking about a u. S. Relationship back that far or are we talking about the new new . Richard i think we are talking about both. The longstanding relationship has been a very important relationship for the u. S. And for other europeans. Turkey has major scale armed forces with significant capabilities. To lose them from the western lines would be a major blow. I think what were seeing on the u. S. Side is a recalibration and a bit of catch up. Tom i like the idea of recalibration. How sacred r the borders of turkey and northern iraq, Northern Syria . Are those borders locked into place according to Chatham House or are there going to be new borders . Richard the border situation is a fascinating one. Weve got a contest in terms of who should exercise power where. The kurds are the challengers of the existing borders and one of the most Capable Military formations on the ground. Is border question constantly being tested. Where it will be really test it is once we look at some kind of settlement on syria. Francine andrew, when you look at places like turkey where politics is 90 or 80 of the story, what doesnt mean for investors . Andrew it is a reminder that the emerging market story remains idiosyncratic. Issues are very different around emerging markets. It is easy at times to generalize that it is an easy fed environment that has to be good or bad for all e. M. They can become located by the political situation on the ground. This is one of many examples. Tom no doubt a story to continue. Get out a map and look at turkey sometimes. We are all ignorant of it. We think it ends in easterns or Something Like that. Coming up, equity markets and the linkage to jackson hole. Howard ward, we will speak to mr. Ward about his love for tim clark and apple. This is bloomberg. Francine it is bloomberg surveillance. Tom, lets go to south africa. The finance minister says he wont obey a police order to present himself for questioning. He was summoned in allegations over the special investigative unit. He has denied any wrongdoing. Lets get more with our south africa reporter. We are getting some headlines from the president saying hes expressing his full confidence in the finance minister and he does not have the power to stop the investigations. These investigations need to go forward, dont they . Analysts have said that if the police unit has a case and has enough evidence to put charges to the finance minister and other officials that are implicated in the probe, then they should do that and let the courts take their course. That is what president jacob zuma has said this morning just a few minutes ago, saying that he cant intervene and he has full confidence in the finance minister. Francine how is it being played out in the street . If the finance minister says, i will not be questioned, does it automatically mean the population turns against him . What weve seen is that business came out really in support of the finance minister, stating that he holds a critical position in the economy that is already struggling. The south African Reserve bank said it anticipates zero growth for this year. A man who is very important for the benefit of this economy, a man who spearheaded the a campaign to stave off a potential Credit Rating downgrade. Analysts are saying that it does seem difficult not to enter this interpret this as political interference, but it seems the finance minister has a lot of backing. Tom this may have gotten lost in translation. I want to try. Is this a spot or is this going to bring the downfall of the government . Analysts are saying that it does seem to be a bit of a spat between the president and finance minister. Earlier this week, confident announced that president jacob zuma will be chairing a committee that will oversee state owned entities. Analysts are saying that there may be a spat in terms of who can control what. The economy of this country is the biggest thing at stake. O, thank you so much for the update. That is also having a huge impact on bonds and the rand. Andrew sheets and Richard Whitman stay with us. The dollar rallies today, definitely running out of steam. Generally, theres not a lot of volume. Generally, Financial Markets have been very quiet. It is all to do with tomorrows speech by the Federal Reserve chair, janet yellen. That may or may not shed light on the timing of u. S. Rate increases. This is bloomberg. It is a beautiful new york. The weather has been absolutely late summer spectacular. The leaves beginning to just 18 just change across central park. It is the gorgeousity of new york. If the baseball teams would do better, that would be great. Im tom keene in new york. A lot this hour on International Relations area relations. First, on italy, and update, taylor riggs. Taylor it is now a battle against time. Rescue crews are digging through rubble, looking for survivors from that earthquake. At least 247 were killed. The quake flattened three towns. Many buildings were built centuries ago and hadnt been reinforced. A newspaper in turkey called vice President Joe Bidens trip there a waste of time. Biden hoped to smooth relations. Instead, his visit showcased acrimony with president erdogan. North korea says u. S. Mainland is now within range of its missiles. Uns regime says the test proves the viability of north korean technology. In brazil, the Senate Begins a historic impeachment trial today. The president is accused of illegally financing government spending. She will take the stand next monday but shes not expected to have enough votes to save her job. State legislature in california has made the nations toughest Carbon Emissions rules even tougher, to cut 45 less than current levels. Businesses have until 2030 to comply. Industries called the new rules job killers. Global news 24 hours a day powered by more than 2600 journalists. Im taylor riggs. This is bloomberg. Francine thank you so much. Nigel farage appeared at a rally with republican president ial nominee donald trump in jackson, mississippi. Mr. Farage spoke about britains decision to leave the eu. He urged Trump Supporters to get out and vote against the establishment. Heres what trump had to say in response. The issues we face in america are similar to the issues faced in britain during their referendum on membership in the European Union. Francine with us is Richard Whitman, senior fellow of the Europe Program at Chatham House, and andrew sheets, strategist at Morgan Stanley. Richard, im so confused on so many levels. First of all, what they have in common, trump and brexit, is project fear. We have a prime minister. We still have conservatives in charge. Is it just an easy firing of of the troops . Farage definitely, but was also the head of a movement, a Popular Movement to take on the establishment. Francine that most terribly in the elections. Richard absolutely. He was actually francine had to take a step back otherwise it may have gone the other way. Richard absolutely. He turns people off. It is interesting that he travels across the atlantic and gets better reception there then he arguably does in the u. K. Francine richard, talk about the overlapping, what donald trump is doing and what certain factions of the Brexit Movement was. Richard it is the fear of the foreigner, but also the idea that the public have been duped by an establishment which is kind of fixated on things which are good for them in terms of globalization. Things that arent necessarily good for the public. The idea of banging on about the establishment, the elite, it doesnt really connect to the public. Battleere are we in the of the chosen elite versus the establishment, if you will, versus the rest of the populace . Is it growing or are they coming together . Richard i think what is clear, not just in the u. K. , but across europe, is that we are in a areation where the parties really facing a significant challenge. It is the case in france, italy, even germany. Phenomenon part of a not just in europe, but beyond. Tom andrew sheets, im so confused on so many levels. When i am like francine, i migrate to the litmus test, the currency markets. The currency markets arent confused. Tol it be a move out eurosterling parity . Andrew i think this is a dynamic when we think longerterm, we think that sterling will weaken further in the euro will strengthen further. That is a combination of factors. With a. Is still running severe, account deficit and trade deficit. That seems like a very reasonable place for adjustment. The euro is a very cheap currency. It has that going for it. Fed, ie talked about the think the ecb also has a bit of a challenge. Its dovishness was in part predicated on the large expected shock or uncertainty coming out of the brexit vote. I think it might be a little harder for the ecb to deliver as dovish a message as the markets expected. Tom what does that currency mean for manufacturing . What does it mean for bmw and mercedes and what does it mean for francine when she picks up the bentley this summer . Andrew it is one reason we like u. S. Over european stocks. Currency moves in both regions work to help that pair. In our view, european equities have to contend with a stronger euro. U. S. Companies on the other hand are facing increasingly easier comparisons. If you think about the third and Fourth Quarter of u. S. Earnings season, it was terrible last year. The dollar is going to be weaker. Francine tom surveillance correction. Francine, was it a bentley or a rollsroyce . Francine obviously a surveillance mini. You cant fit in it, but it is the coolest thing around. What will brexit look like . Richard that really is unknown. One of the things we still dont know is what the British Government wants. That is the missing piece of the jigsaw. You cant really move with the negotiations until we get a strong sense as to what the future relationship will look like. That if the problem is the u. K. Wants to limit immigration, it is almost clear that is the red line for the eu and they say you wont have access to the Single Market. What kind of access and how long can they think that kind of trade relationship would be like . Richard everything hangs on the nature of the free move and of labor issue. That is the killer issue for negotiations. It is politically difficult in the u. K. Because the voters interpret it as a desire for the British Government to have more control over labor migration. Also from the eu side, absolutely nonnegotiable in terms of what the Single Market means. Is there any space to negotiate in a way that keeps the u. K. In the Single Market but allows the political problem in the u. K. To be addressed . Tom im glad you bring this up. Where does mr. Junker fit into this . Is he a sideshow or is his federalism of europe front and center into the autumn months . Richard i think what we are seeing over yesterday, today, and tomorrow is mrs. Merkel doing a tour of europe talking to political leaders, and she is the most important figure in working out with the eu is willing to contemplate. Cker will play his part, but this is a head of state to head of government type issue to be worked through. Cker is going to do the rest. Tom i cant say enough about Chatham House. It is really, really quite valuable as a reading source on International Relations. Coming up later today on bloomberg radio, Michael Mckee has stopped fishing long enough for a conversation with the hostess of the jackson hole meetings. Francine tom keene is in new york. Im Francine Lacqua in london. Im all confused today. Time for todays morning movers. Lets talk about crude. When crude hits 50 to 55 a barrel, it is time to short. That is according to a commodities firm, one of the most important calls weve seen. Sheets wallace, andrew still with us as well, thank you. Stewart, when you look at this call, or they just talking their k or is there some kind of does it make sense because of the oil . Presumably they are talking their book and it would be odd if they werent, but in terms of the underlying points they are making, i think it is a valid point of view. What is your time frame on this . If you are thinking a couple months, it makes perfect sense. You start getting into the territory where shale plays become viable again. Youve got increasing production from iraq, nigeria, that is in environment where this is probably the moment to go short. If you have a slightly longer term point of view, which is what the former boss has, he sees oil continuing to go up. Hes thinking about years, not weeks or months. Francine what can opec do . We are waiting for this meeting in november. What are we actually expecting . I think we are expecting mostly diplomacy. Soothing words about opec unity. They sort of imploded earlier this year. It might be argued they imploded from the november 2014 meetings when this started. What the new Saudi Oil Minister has done is spend time talking to other producers, trying to get the sense that opec will act together. Garver wrote up a onutiful article overnight the libor rate in saudi arabia and riyadh. It is not called libor, it is called saibor. Heres the chart. It gives me pause. I would assume it is about the breakeven for saudi on oil. Do you know where that breakeven is . The imf has a number and we are talking probably around 100. Tom 100 . Probably something around there. If you think about opec as a whole, theres only a couple members that can survive around 50. Tom this is brilliant. Back to john nichols waits interview with the crown prince or whatever, what is the level of sweat in saudi arabia this august . It is going to be pretty bad. Think about the bigger context in terms of what the crown prince is trying to do. Hes been talking about doing a small ipo on aramco, an initiative to industrialize the country and decrease the dependency on energy. The reality is at the moment that the vast majority of revenue is coming from energy. The longerterm, theyve got to move away from it. Francine how important is it that saudi remains intact for the stability of the region . Andrew incredibly important. How do the question is, these producers respond . Theres one school of thought that because the break evens are so much higher, the oil price has to move higher faster. I think you have a problem that is replicated at the smaller producer level where it is the tragedy of commons. Everybodys incentive is to produce as much as they can to try to lose less or get as close to those budget deficits as possible. Even though the countries are in deficits, they are still incentivized to produce. One of the issues weve seen in oil any reason why we think oil in the year lower than it is today, because supply disruptions have come off and we can production is going to come up. Tom if you talk about the tragedy of the commons and the paradox of oil, youve got to go russian. Putin is the wildcard. What do people expect out of russia and their need for revenue from oil . How do they play into the argument . Andrew i think that fits into some of that broader theme that while collectively theres a strong incentive to cut back production and everybody enjoy a higher price, coordinating that on an individual country level is really hard. It is especially hard saudi is the one that benefits the most from a higher oil price, but it is easier for other countries to look at them and say, you are in a special place. We are not as advantageous as you are. I think russia fits into that broader pattern. Tom stewart, one final question, then breaking news. Kuroda saudi talk to the most, who does saudi talk to the uwait, nonopec . There is this block, kuwait, the emirates, saudi arabia, they tend to operate together. There is a degree of tension with iran. And beyond that, you have another block within ecuador and venezuela operating independently. The new secretarygeneral, this is the task hes got, to unify all these parties and get them to show unity. Tom stewart wallace, always smart, thank you so much. Francine, you need to translate this. Who is itv and what does this breaking news mean . Francine itv is withdrawing the proposal to buy entertainment one. Itv is a huge network in the u. K. They are shopping around for content. Content is king. Entertainment one has one star. Peppa pig. The foreigners use it to learn english. The toddlers watch it. Great babysitter if you are a young parent. It is basically a cash cow. They have spinoffs, the pig, the brother george. Itv said they were going to buy entertainment one. There you go, peppa pig. Let me bring you over to the bloomberg terminal. The share price went up. It is now down some 7. 4 . This is a big deal especially for entertainment one. They have a couple other things but it is really peppa pig. Tom of the cartoon back on. Are you sleeping on the couch saturday morning, watching this . Francine right, im sleeping. The kids are watching it. I think i kid you not, people gome and because peppa pi speaks such good english, they say, im going to watch peppa pig and learn english that way. Tom this is why i tuned into surveillance. I get a clinic from francine on United Kingdom kids stuff. Francine that actually makes money, tom. Tom this beats red sox baseball. Francine there you go, entertainment one, shares halted after they fell 8 . Itv withdrawing the proposal to buy entertainment one. This is bloomberg. Tom good morning. Francine lacqua in london. Im tom keene in new york. International relations and peppa pig. Also george. Right now we need to go to our Bloomberg Business flash. Taylor the former ceo of Comverse Technology has admitted to fraud after hiding in africa. Jacob alexander returned from namibia to plead guilty. He was denied bail. Alexander will be in a maximum Security Federal jail. Duke university is making a claim on the estate of the late oil baron mcclendon. Almostaims it is owed half of 90 million he recently pledged. One is lawyers told the wall street journal that his value depends on commodity prices. That is your Bloomberg Business flash. Francine thank you, taylor raikes. Mark mobius says helicopter money will be japans next big experiment. Heres what he told us. Mark they will engage in helicopter money with great care and great reluctance. If they do it too carefully, it wont have the desired effect, is the dilemma they are facing. They are going to be much more circumspect and they probably will wait until the yen reaches 90 before taking action. Andrew, it seems, depending on your definition of helicopter money, are we going to see money put through the letterbox or is this going to be much more nuanced . Andrew we still not expecting helicopter money from the bank of japan. If anything, i think they first have to get through this issue where negative rate policy does not seem to have worked in the way it was intended. The yen has been stronger since then. I think the bank of japan first has to get through, how do we backpedal potentially from this idea that we continue to cut rates given that it has been somewhat counterproductive . The bank of japan has to get through that first, which remains a difficult issue, before we think the helicopter money donate reemerges. Tom andrew, forget about a 10 move, if we get a 6 or 7 move, do you take that directly over to equivalency in the u. S. Dollar . Andrew i think that those moves are likely i think certainly it is the case of the yen, it is likely to come against the dollar. That would have to absorb the brunt of it. I think the euro would also absorb quite a bit of that. If i think about some of our fx teams, they quite like on a longterm basis the euro against the pound and the yen. I think you have the situation where the yen has been absorbing a lot of that issue. But i think, we think the euro will strengthen more. Tom andrew, thank you so much. Andrew sheets with Morgan Stanley, smart. Andur next hour, on apple your courage to be in the equity markets, howard ward. Stay with us, worldwide. This is bloomberg. Tom oil and gold weaker am a tremor in the stock market this morning. All awake the yellens speech at jackson hole. Brexit, is it more about brussels . Challenge the European Union. Mustard trump, he is climbing the ultimate flipflop wall. Marty schenker will join us in a bit. Good morning, this is bloomberg surveillance. From new york and from london. This is a great shot. The citigroup tower is white and the Chrysler Building and in the distance, the Freedom Tower downtown. The Chrysler Building, national raceark built in 1930 in a to build the tallest skyscraper in the world. They did four floors a week. Francine, you can see just below the beautiful art deco top where the cloud club was. Someday they will bring it back so you and i can have a beverage of our choice in the Chrysler Building. It is that spectacular. Francine my favorite building. We have a heat wave in the u. K. That is the only thing i can say. I like days like this. It is quite on the markets, not much volume, so we can really try to focus on some of the geopolitics things going on around the world. Tom and the courage to build into the depression was something. Right now im difficult news on italy, here is taylor riggs. Taylor an update, the death toll is rising. The government now says at least 247 people were killed when the magnitude 6. 2 quake rocked central italy. Three mountain towns were leveled. Rescue crews are trying to find survivors. Many of the buildings were built centuries ago and had not been rebuilt twisted earthquake. In kabul, at least 12 People Killed in an attack on the mechanism for said he of afghanistan. Three dozen were wounded. It began with a suicide car bombing. Two attackers and opened fire. The scene lasted several hours before the two were killed. No one has claimed system responsibility, but the taliban is suspected. A game changer the civil war, the operation is seen as a sign that turkey is shifted away from its insistence that bazaar outside machar alassad step down. Advance of stop the kurdish rebels in the region. Columbia has reached an warement with rebels in a that it killed hundreds of thousands of people. Indeed seats in both houses of the Colombian Congress for a time. The voters will approve or reject the deal on october 2. Donald trump is welcoming the support of a backer who cannot even vote in the election. The former head of Uk Independence Party joints trump on stage in mississippi. He said trump is right on immigration and said he would not vote for Hillary Clinton if you paid me. , more news 24 hours a day than 120 countries, i am taylor riggs. This is bloomberg. Tom the data check before we get to howard ward and the courage needed in the markets. Futures off the negatives. Oil is a little soggy. The next screen, please. Go to cash. Francine . Francine an important these of germany, came out, in businesses seem to fear theyre going to get fewer orders. It may be linked to brexit. I wanted to mention it. I reversal in european stocks a reversal in european stocks. Asia pacific index did not do much. Volumes are down one third. That is interesting. Take it with a tinge of salt. Tom very good. The bloomberg comfort index. Weekly. Confidence out it is not that bad. The yellow is the average light back three decades. The regression down. The headline is given all the gloom were really, really come back to that average level nicely. We are not where we were, the enthusiasm of the late 90s 90s 1990s. But not all that bad. Francine if you look at the spread between 30 and to your treasuries, this is my chart. Basically, it shows you the maturity which is more sensitive to what the fed can do, is bigger than the longer data. The spread has not been at the level since the start of 2008. It is all about hawkish comments from the fed. Tom howard ward joins us from game go. A resilient bowl through thick and thin. He looks like the smartest guy on the block right now. What is your cash level right now . Not in thene who is habit of ever trying to time the market, the cash level is very well. Low single digits. Of go tos the summer cash. It starts on thursday. They are writing them right now. They will be published for the week and consumption. Friday night, saturday morning, in this article from good and less good people. The world is coming to an end. How do you as an investor respond to the near hysteria of these go to Cash Research pieces . When i look around the world, what i see is continued global growth. 70 of the countries with rising pmis above 50. I see roughly 2 growth in the u. S. 1. 5 in europe. Sub 1 in japan. Emerging markets schreiber than that. I do not see a recession problems in any major market. I see growing earnings in 2017 and 2018. What i do see is the world has become more comfortable with the notion of a new normal, lower level of growth and lower Interest Rates. What has begun to emerge is the new normal for Interest Rate is even lower than we had previously thought. Trillions of dollars of sovereign debt now around the world that is trading and negative yield. The fact that when yellen raised rates last december, our tenyear yield was two pointer percent and now is 1. 5 . 2. 3 and is now 1. 5 . Tom combined decades of experience, extraordinary, the money question is, our Corporate Officers and corporate behavior removed from the greater economics the greater distortion of the era . I would suggest evidence would show in many cases they are removed from the greater Macro Economic mumbojumbo. I think it is a very complicated question. Right now, corporations in the u. S. Need Corporate Tax reform to encourage them to invest, to encourage them to do what we need to increase our productivity. Our gdp growth is really being held down by the lack of productivity growth right now. The only thing that will solve that is more work for investment, and it is not happening. We have trillions of dollars parked overseas that is not coming back because of the tax issue. We have to get behind Corporate Tax rates down and get Companies Investing again. Tomfrancine that is probably wt any western corporation would want right now. At the moment, theres nothing pointing to the future being brighter. The big issue is the policy uncertainty, especially surrounding the upcoming election, not knowing who the next president is going to be, who is going to control congress i think this is a bit of a problem for corporate confidence. I would say this, the hysteria over brexit, which was not too long ago, and the aftermath of the vote on june 23, a lot of companies i think see suite executives holding back because they did not know how the evidence so far is that things are ok in the u. K. And europe, not much has changed. Confidence factor is important. I think we need some clarity on policy around the world. That is slow to come. Francine we talked about confidence, and i agree maybe the hysteria was overdone, it is the Central Banks. See normalizing, you dont actually know the strength of the economy because there is so much cheap money out there. It is just not reality. Then we get into the discussion of monetary policy. I would argue i think janet yellen tends to talk about the tools she has left in her toolbox tomorrow. I would argue, and im not the first person to say this, we are running up against the laws of diminishing returns. Bys, growth is limited population growth, productivity growth, and i dont care what janet yellen does with her toolbox, were not going to get tom you are not invited to jackson hole. I wasnt. Tom i want to go back to the Corporate Tax issue. Our guest yesterday, the distinction to me is if we do this, democrat, republican, whatever, do we do in undirected Corporate Tax were they just get the billions and we trust them to invest or should we affect a policy of directed Corporate Investment in the United States . Is that part of the mix . Say apple has to put some of the money in the u. S. . I am more of a free market tom i know that. I would like to give companies the freedom to put that money wherever they want. Tom malaysia . Wherever. The best ultimate outcome is to have capital flow freely across borders with Floating Exchange rates. Tom francine, we will speak later in the hour to mr. Ward about a small stock from cupertino. Francine we certainly will. Stays ward of game go with us. We will also be talking about the fed more. Watch out with the or the special fed coverage. We will bring you many interviews live from the jackson hole economics symposium beginning at 8 00 a. M. In new york tomorrow, 1 00 p. M. In london. Francine this is bloomberg surveillance. Tom, lets get more Corporate News straight to the Bloomberg Business flash. Taylor the biggest operator of the boeing 787 train line or will hold twice because of engine issues. Problemll outline the later today. All 50 of the airlines 70 787s use rollsroyce engines. They were grounded for three month after lithiumion batteries melted down. Personal computer and printer maker hp is coming up short. Hp is forecasting fiscal fourthquarter profits that missed estimates will stop the company is investing in higher in products to help improve earnings. The Company Split last year from hewlettpackard which focuses on corporate customers. In the u. K. , itv has dropped its 1. 3 billion offer for interchange at one. The Canadian Company owns the ular events friend priors franchise peppa pig. They rejected the bid two weeks ago but suggested it would be open to a higher one. That is your Bloomberg Business flash. Francine this is significant. First of all, peppa pig is probably one of the bestknown franchises in kids entertainment. Show downtonhey abbey but itv is looking for content and a lot of people thought this would be a great fit as long as they did not overpay for it. The fact that they now said theyre not interested is putting huge pressure on entertainment one. I think the share price is down. Tom i am speechless. We have become the competent network. Francine it is very popular. Tom who is that . Papa pig. Top of marty schenker. I want to go back to 1992, bush, clinton, perot and it was about montana in the stunning victory of bill clinton in georgia. Are we looking for a redux again . It is possible after a couple of decades of losses for the democrats in georgia, the clinton folks think they have a shot. Theyre porting money into georgia because of trumps weakness there. Tom is it about a change in atlanta or is there a bigger georgia story . There are a lot of transplanted northerners plowing into georgia over the last decade. Minority vote has become stronger and turnout has been better. As we know, hillary is dominating the minority vote in the young vote. There is a real shot for her in georgia. Tom marty, i want to go to francine. Just you and me and the american question of the morning, who is the guy on stage with mr. Trump . Francine, explain this. Francine this is nigel farage. Of the antieuropean party. Too rightwinged for even that party. He had to step down. He shows up on stage with donald trump. Have a listen. If i was an american citizen, i would not vote for Hillary Clinton if you paid me. In fact, i would not vote for Hillary Clinton if she paid me. Francine here in the u. K. , of a smalle is crowd. He really isnt the one that voted or won brexit for the brexitiers. What is Donald Trumps message in this . I am confused at what the point of that was. I am a little confused as well. I would venture to guess that 99 of that audience did not know who he was. The fact that he is there in the u. S. Trying to influence voters is rather extraordinary. I dont quite get what the Trump Organization things they got from this. Very and i guess quickly, is this all about antiimmigration . This is how nigel farage is perceived here. At the end of the day even worse for donald trump . I do think that is part of the picture and it is odd because trump is trying to reposition himself on immigration. If he is tried to get that message across, he is not the right guy. Tom use and like you live in washington. It is a massive flipflop for mr. Trump. We go to howard ward of gamco. Does the market like flipflop of any magnitude, in particular, this immigration flipflop were in right now . I dont think the market is focused on this election. This market has made the judgment were going to have a divided government and not much is going to change. I have to tell you, talking about clintons in georgia, wasnt there an old classic song , the devil goes back to georgia in the 1970s . Dont you remember that . Tom was attorney was it Charlie Daniels . It was. Where is trumps traction in georgia to pull in, lets call them reagan democrats . I think that is where the new Trump Campaign staff is trying to moderate his message on mexicotion, on taxes, on to try and draw those democrats who are a little concerned about Donald Trumps positions in those areas. Women, andttract theyre going to try to do that. Tom we like to talk about georgia. Next time with marty schenker, we will bring up Gladys Knight and. And the pips. Tomorrow, a most interesting conversation, jill stein of the green party, a president ial candidate with some strong opinions tomorrow. This is bloomberg. This is bloomberg surveillance. We are seeing a heat wave. Tom come on. We have the Chrysler Building. Look what you have for architecture. Francine i am not even going to respond because i completely disagree with you. It is different. We are original. Remember, we brought you the beatles. Tom this is a clinic from the great lords can built ski. You got to read this essay, folks, if youre in economics. Tom francine, a great essay host of agree or disagree, from lord skidelsky. Francine it is easy to talk about spending, but we have to make sure you have the right projects, which is why if you were to argue against that, and that why maybe it has been seven is in the making, we have not seen anything yet. Tom to the stock standpoint, talking about the cumulative an additive private and local debt. Are you worried, howard ward, were building up our private corporate debt because money is free . Im not worried about corporate debt at all. A much more worried about the offbalancesheet liabilities on entitlements with the government down the road. Short term, regardless of what to say,nd ken have were going to get a new round of fiscal policy expansion i think globally. Monetary policy is not really adding an extra oomph to Economic Growth. Spend more money. We will see what happens. Francine no matter what happens, it will take time. You dont just turn on the tap. You dont essay, lets build a road and suddenly it comes up. , letsdont just say build a road and selena comes up. Fiscal spending is five to 10 news at least. They will try it. We will see over the next couple of years, if there is inc. Rental in criminal growth. Tom what will you listen for from chair yellen tomorrow . I think i dont think theres going to be any huge announcements. I think she really reserves those. Tom we move on to the weekend. I say she is going to talk about her toolbox, what they can do other than lower rates. Like i said before, i dont think there is any game changer in a that will do a lot. I think we are up against the limit. Tom howard ward suggesting Michael Mckee will get back to fishing on saturday. We will show some of the output later. Later today, the hostess of jackson hole ,esther george. Francine this is bloomberg surveillance. Tom, lets get to the news. Morning earthquake. Battle against time, rescue teams are digging through the rubble in the central part of the country looking for survivors from the earthquake. At least 247 were killed, hundreds were injured. The quake flattened three towns. Many of the buildings had not been reinforced to survive a quake. A governmentbacked newspaper in a wastealled joe biden of time. By the hope to smooth relations in the wake of last month attempted coup. Instead, his visit showcases the acrimony with resident erdogan. In brazil, historic impeachment trial today. It is expected to result in the ouster of demo rousseff. Illegally accused of financing government spending. She is down expected to sway enough votes to save her job. War decadelong rebel killing hundreds of thousands of people, the farc will convert into a legal Political Party, guaranteed space and both houses of the Colombian Congress. Voters will approve or reject a delon october 2. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries, im taylor ricks. Down in florida, scott brown, always with a really interesting perspective from Raymond James joining us today from think it is for, scott brown. Jackson hole is this block give us the key distinction you will listen for from chair yellen tomorrow. I think investors are going to be looking for clues about whether the fed might move in september. If it is not september, more likely to be december. We saw with the previous fed policy statement when they jettison the line about downside risk, that seem to pave the way for tightening. We know a lot of the fed district banks want to raise rates. Eight of the 12 Federal Reserve district has requested the discount rate. That really defines the top end of the federal funds rate target. There is a lot of pressure building for them to raise rates. Tom lets bring up the chart. This is the most unknown chart about jackson hole. We show this on monday or tuesday. That is volcker on the left with skyhigh rates. Whichoderation, 94 was nothing to prepare for the zero bound that we have been in for a year. When i look at this, if i get a September December increase, is it a one and done or do we go back to a greenspanian measure . I think there is been a change in the thinking of the fed. We started with most officials looking for four rate increases this year and now were likely to get one, maybe two. That pace is certainly a lot slower. Instead of maybe once a quarter, once a year. Maybe once every six months. But the fed does not seem to be in any particular hurry. Markets to mycial left. Howard ward, when you look at investments and the rate increase, does that mean you need to get out front and own the big banks and financials . I would not be into much of a rush to do that because i think the upside down just Interest Rates rates have declined since the feds last tightening. Growth is not robust. Overall, it is not robust. There are signs right now that Consumer Spending is cooling a little bit. 70 of the economy. I would not be rushing by the Interest Rates on the believe rates are going to really elevate. Francine scott, what are the muppets market so confused about . Are they not used to so much transparency or is it the fed has not been able to communicate as a group . The transparency has been both positive and negative. The negative side is youre getting a wide range of views. Theyre not all singing from the same page of the hymnal. The district banks we know are a lot or tend to be more hawkish than the fed governors. You look at the data, and there is still a wide range. We know the job market is getting tighter. That seems to be the major concern expressed by a lot of the officials. At the same time, youre seeing weakness in business fixed investment. It is difficult to tighten in that environment as well. A lot of next messages from data and fed officials. There are going to be a wide range of opinions here. Francine do you think it is the concern or the danger that the fed hike without the market fully pricing it in . There may be some adjustments. We saw last her with the first rate increase there did not seem to be a whole lot of reaction initially. By the time we rolled into the early part of the year, that is when a lot of the Market Action really gets going again. We saw credit spreads widen. I think a lot of that was a right pricing than a repricing of risk. Since then, the spreads have narrowed again. That is one of the concerns for the fed. With great so low, youre still getting a lot of funds, whatever, reaching for yield, taking undue risks, which could unwind in a bad way at some point in the future. Tom scott brown, what is your statistic twelvemonth forward on Economic Growth . Well, i think youre probably going to see a pop in the Third Quarter related to an inventory adjustment. But you are still looking right around 2 , hopefully a little bit more than that, and i think that maybe the best we can do in this type of environment. We do know the population growth is slowing down, labor input is not going to be there. We are puzzled by the mistress lowdown in productivity growth mistry slowdown in productivity growth. Tom the preparation as they go toward yellens speech. Michael mckee is up in montana. Lets go to the preparation right now. There it is. The photo was lengthened by three inches on my phone. Rumored the program, Michael Mckee will speak with bullard of st. Louis, lockhart of atlanta, and Jerome Powell all from jackson hole. This is bloomberg. Francine bloomberg surveillance. With tomcine lacqua keene. John, money market dysfunction, probably how you would quantify this week . The Federal Reserve would be two words to sum things up. Mike mckee Appreciation Society really gets the momentum in about 15 minutes time when new we bring you that interview. The Federal Reserve a jackson hole kicks off. 1969, elton friedman, the optimum quantity of money. I hear the tom keene was the ghostwriter for that essay. Very important one. Helicopter money conversation will be discussed. Tom i am dazzled by your knowledge. Jonathan ferro, is rfid becoming like the bank of england . Is our fed becoming like the bank of england . Exactly. Under greenspan, what were we used to . Tom dissent, francine. Francine it is interesting the way the mpc was put in place. They always have one or two foreigners that sit on the board. Tom adam posen. Francine maybe the fed i know some efficient at the moment kind of the present the international voice, but maybe something they should think about. Tom jonathan ferro, thank you so much. Joining in a matter of 19 minutes. In washington, Clearview Energy partners. I look at oil and the dynamics right now and i see one big microeconomic ambiguity. What happens if price goes up five dollars, what happens if price goes down five dollars . Not really all that much. That is what we think were going to be in, a range. The key thing to focus on is the inventories. The inventories are really im. The inventories are really high and when are they going to go down. Tom come on, it is a hockey stick up. When does that reverse . You need demand to get ahead of supply. We dont see that happening until the back half of 2017. Francine we dont know what happens in september. Even cutfreeze or production, or is that completely fictional thinking from the market . We definitely dont think anything significant is going to happen. Think about saudi arabias situation. They have opted for market share. They are not going to reverse that trend because if they come off the market, then some higher cost producer like u. S. Shale takes their place. Why would they do that . The marketo what is think they will do that yeah, dont understand once again where we were two years ago with the market is pricing in and all this moving the price of oil by five dollars, six dollars, and the end of the day, nothing happens. It is talking the market. Take a look from the other perspective. Lets say they do announce a production freeze. What are they freezing . Freezing record levels. These record levels are enough to balance the oil market until the second half of 2017. Francine wheels at the legendary trader recommending crude at 60. Is that good or bad . Thee dont get into short long position in that sense, but i definitely agree i think oil is going to be rangebound. As i said, since 2011, Oil Inventories in Refined Products correlation with oil price. It gets back to the whole idea of what is going to make the Oil Inventories go down, that will make price go up. Tom lets bring up the chart. I want to go to howard ward of pimco. We talked about the banks moments ago. There is big oil. Is there value in the Financial Companies known as exxon and the others were you can wait and jacquesshop clearing of the market or do you have to stand aside . I would be careful about entering the oil trade at this stage after what we have seen. I say that because i focus a lot on the rate of change in china. I think the growth in china is going to be perceived as slowing over the months ahead, and i think that spells bad news for the conflicts including oil. Tom this perfectly goes into your marginal analysis here of inventories and of supply. At the margin, what will the animals beard of american oil be given at the minimum range bound that we have . Well, i mean, i think you see with oil price, you not going to get a big movement until you can demand. G push in and we have had a lot of gasoline consumption growth over the past couple of years, but that is really hitting a map. We dont see any big demand drive or to push oil price higher. Francine is saudi arabia still be producer . The swing producer is more of the u. S. Shale now. I think saudi arabia has decided they are backing off the market. What they have said is that they will really only take supply off the market in a situation of extreme circumstance, kind of like the financial crisis. Tom thank you so much. Greatly appreciate it. We have been looking at retail. David wilson on radio helping out. Guests as well. Tiffanys come on the surface, it is a beat. I do not know what to do with 84 versus 71. Their samestore sales have set ford are absolutely grim. No other way to put it. To see tiffanys 8 or 9 down across a number of metrics of samestore sales is remarkable. I know, francine, there is a real japanese component there. Francine there is. I think you are right to focus on comparable sales. That is probably the more accurate forecast of guidance. Would was looking back i tiffanys said. They are suffering from the strengthening dollar, curtailing purchases. I found a note by consumer edge research. Basically, saying tiffany needs to innovate to capture the customers interest and that is probably why were seeing weaker sales on a comparable basis outside currency. Tom i still go back to the extent of retail we have seen into the idea of where we will be in september and onto the end of the year with american consumption. Where are we on the spirit of consumption . Come on, howard, it is not a bear market in retail. It is a collapse. Obviously, the was consumer is allimportant. We had a spurt a better growth in retail earlier in the summer. That now seems to be cooling car rolling over a bit. I do not think the Current Quarter is going to be all that good for retail. Online is going great guns. Everything else is sort of difficult. Tom but is it a value trap in retail or do they have a different formula because they can clear and go out of business so easy . Look at macys. Macys stock goes up because they are closing stores. The new model is the market is Rewarding Companies for getting smaller, which is not typically what you want to see. Tom can you buy amazon . Yes, you can. Gaining market share every single quarter. How can you not own amazon for the next five years . Tom howard ward going the other way for brickandmortar. Tiffanys, we will have much more through the morning. We cant do much more because it is tiffanys. Equities, bonds, currencies and commodities data check. It difficult a yesterday afternoon. Yesterdaycult day afternoon. You wonder what the nervousness would be today. Onto jackson hole, Michael Mckee, kathleen in jackson hole. Good morning. A foreign report, we do that on bloomberg surveillance. Not much is moving. The pay so much better over the last months, stronger mexico over the last 30 days. Bloomberg business flash. Sears has posted another loss, 395 million in the second quarter. Samestore sales fell more than 5 . They have dropped every quarter but one since they merged with kmart in 2005. July the biggest month for Hedge Fund Redemptions in seven years. More than 25 million knows from hedge funds last month. That is after almost 24 billion was withdrawn in june. Investors critical of hedge funds for their fees plus the funds performance has been lackluster since the financial crisis. This week tim cook marked his fifth anniversary as apple ceo. He has received shares valued at 373 million during that time. He can roughly the same number of shares, about one million, over the next five years. Apple stock has doubled under his leadership. That is your Bloomberg Business flash. Tom i am staying on apple. 12c off of my iphone. There it is. There is the math on tim cook. Makesn, howard ward, he 337 million over five years. I was a just mr. Cook is underpaid. And that period, roughly, they increasedillion and ebit th. Youre willing to give the guy a nice piece of change on that . He deserves it. He is taken a lot of heat, but i think he is done a great job. Tom lets bring up the apple chart. There is mr. Cook waving to his private banker. Howard ward, acquired shares on all five of those blue circles. Investment 101. How do you suck it up and acquire shares when everybody is running for the fire exit . I think you have to tom yet another story. You have to take a longterm view. The best next big move in apple is not going to be based on an criminal an criminal changes. The real view is over the next five years, the Services Component of apple, which is outgrowing the iphone hands of business, is going to become a bigger percentage of the pie. You need to think theyre going to get rewarded with a little bit of a pe expansion because the market pays more for Software Services than it does for hardware. In the last three months, we have gone from five times ebit big play is to go to 10 or 12 times which is really getting you back to morgan market multiple. The move is think about apple more as service, software, less about hardware. It will take time, and it will be difficult. Francine i know tom was to ask about the new apple phone, but first, can you talk to me about the fact that the u. S. Was skating with brussels on the fact that brussels for the eu are demand billions of dollars from apple in unpaid tax . Where does this end . This is politics. Brussels has a history of attacking very successful u. S. Counties, or to girly Technology Companies particularly, Technology Companies. This is sort of what they do. This will play out over time. Will there be a settlement . I dont know. I hope apple fights it. I would be surprised if apple is doing anything or shouldnt be doing. You are qualified to answer this question. Toothpaste asate a proxy. 620 dividend growth. Percent dividend growth. It doesnt have to be double digit. They are allocating some of their free cash flow, which is mountainous, to share buybacks as well. It is not all going to the dividend. It is a common nation for shareholders, the return of capital is but share buybacks and dividends over time. Tom we will continue with howard ward. Apple. Discussion of francine, absolutely fascinating. Thank you for that discussion on mr. Farage. Francine you know what . I like todays show because it shows the interconnectedness of the global world that we live in. Tom the best part was Michael Mckees fish. George is the hostess with the kansas city bank. She is coming up. Good morning. Jon centralbank communications fall short of pimco and vanguard. Confidence lost. German Business Sentiment unexpectedly plunging the most since 2012. The brexit fallout continues to bite. Jon helicopter money will be japans next big experiment. It could come as early as next month. A warm welcome to bloomberg. Live from new york, the column before the speech. Calm before the speech. Alix i love the helicopter comments. Maybe september. Jon first of all, they have to change the law to make this happen. Alix the big question