Wti in a bear market. 40. 77. We will assess all these things, Monetary Policy, Global Banking buiter. Lem his call, a gdp growth of 2. 4 . But first, lets check in on the market. We have a selloff. Jonathan we will break it down. By. 5 . E up of dollaryen with a move up. The bank of japan disappointing the yen. This is bear flattening. The long and stays anchored. In japan, up 10 basis points there. We will be talking about the market a little bit later. But to wrap it up, it is brent and wti. A bear market at the close. A seven day losing streak. Down by 1 . We are trading at 40. 77. Back to the big news that the bank of japan is keeping monetary tools unchanged. Lay out we heard today . Well, you are right. Largely unchanged, that is the headline. Toolsin Monetary Policy were unchanged. There was some easing and more purchasing of funds and there was a doubling of the dollar lending program. Bush really interesting was the fact that there will be a review the policies that have been taken over the past three years. And they will do that at the september meeting. So this was a heavily watched meeting. There was a lot of expectations. It did seem in the press conference that mr. Kuroda play down the policy review. The are the expectations of market and what did he layout in the press conference . Jodi well, he had interesting things to say. He denies that the bank of japan is at the end of the policy limits at what they can do with policy. He also said that he wasnt pushed into doing things by the government. Two daysovernment, ago, laid out a plan for a stimulus program. An interesting announcement coming two days before this meeting. So there is a lot of expectation that has been laid out. Saying that they can do things and they will continue to ease as needed with the economy being so far from the inflation target. So there is already a lot of expectation. Unusual, iteview is has not been mentioned before. We will see what it means. But that is a new wrinkle in all of this. Alix exactly. Jodi schneider, thank you. So the end of september. And in between, you hope you find out what the policy looks like. From a continuing mystery japan. Jonathan joining us now is steven englander. This is more twosided and it was meant to sound by the bank of japan because the fact yesterday that they didnt increase the overall program, it suggests to me that they are a little bit concerned about how much more they can do. To how fasttion as , thatan hit their targets is something they will be focused on. They havelear that that much more room to ease. Alix when you take a look at the fx market coming up against potential stimulus from mr. Abe and the bank of japan not unleashing that, what do you do as a trader . Until i think you wait you see some signs of which way the review is going. And there is possibility that there is tension here. The headlineshat we were seeing in the run up suggested that they were trying to put stimulus on the table for the bank of japan to respond to. And the tepid program that the bank of japan put out says they want you to define exactly what you will do before they do something significant. Again, there was a high expectation of volatility. Going into september you will see the same situation. Positions were more cut in the meeting there the an increased. So traders will be cautious going into september. David take a look at the mechanics. They are buying 90 of the new issuance of gdps right now. Owned one third. So the government has to issue more bonds . Exactlyi think that is at the ball that the bank of japan is tossing into the court. , ¥7 trillionimulus over how many years, i dont think that was enough for the bank of japan to say look. I dont think we have enough liquidity to significantly ramp up purchases. So i think that will be what they are pushing the government to do. Jonathan just to wrap this up. How did the market get this so wrong . Quite clearly, the market has a huge amount of uncertainty. But given the move to the downside, does this tell us that the market expected something . Why do we keep getting it wrong with the bank of japan . They continue to surprise. What is the lesson from this particular occasion . Steven i think the reason that market gets it wrong although i have to say my tokyo colleagues got it right. The reason they keep getting it wrong is that the japanese economy is very weak. Thatou keep anticipating they will add additional expenses but they dont, which is why policy relevance debate is something that is important now. Englander, youn will be sticking with us. The market keeps getting it wrong. Alix the efficacy of Monetary Policy versus the efficacy of earnings and tech is killing it this season. It is all about google and amazon. Alphabet, the fastest growth rate in two years. Jump for 21 , a huge google in the premarket. And amazon, if the stock opens at this level, a new record high. The Third Straight quarter of record profits. You also had Revenue Growth of the fastest in four years and ,he cloud sales were up 58 delivering more and more of the operating income profits. One minor downside to amazon is that the Third Quarter operating income was lower as they make a lot of investments in warehouse and content. In the eu, a little bit different. Beating forclays the corridor. Profit did fall at 53 from last year. Of but thatme was better than estimates. The beardt up with deal. , 1 of sabmiller miller. Yesterday they said, no dice. Now, it looks like the deal could be back on. I feel like we need to drink every time we talk about this. Now, first word news. Shery ahn co. Hillary clinton is on aat america moment of reckoning at she is scoffing the donald trump claims that he is the only one who can fix it. She is the first female nominated by a major party. She accepted the nomination on the last night of the convention. Thineedled donald trump as skinned. Hillary clinton you didnt hear any of this from donald trump at his convention. 70ke for 70 minutes odd minutes and i do mean on [laughter] [applause] clinton and he offered zero solutions. Hillary clinton came with a big bang. Is wrong toton it take tax breaks with one hand pink slips with the other. And i believe that wall street can never be allowed to record main street again. And tim kainenton get back on the campaign trail today. A bus trip through the battleground states of pennsylvania and ohio. Global news, 24 hours a day. Powered by our more than 2600 journalists and analysts, in more than 120 countries. This is a bloomberg. Jonathan coming up, we will discuss how the fed and next weeks jobs report could affect the currency market. Alphabet report over 50 billion in revenue, combined. But which stock is the better investment . Dollaryen, a stronger yen the session as the bank of japan disappoints. This is bloomberg. Alix this is bloomberg. Inflation is it here . Alan greenspan speaking exclusively on bloomberg yesterday as what he sees are the early indicators. A pickup in wages. Beyond the rate of growth reported to me. That is usually the best indicator. But, just as importantly, is that since money is what causes inflation, have been seeing, since the beginning of the year, a significant pickup in the rate of money supply growth. Alix steven englander, he is still with us. So fiveyear fiveyear break evens. And you say yes, inflation is here . Steven i agree with the former chairman of the early signs of inflation are here but it doesnt mean that inflation is breaking out quickly or will become an issue for the fed any time soon. I think the fed is going on the basis that the phillips curve is flat. So they dont have to worry about the pickup in inflation. They will probably welcome it. David what did you take from the fed statement earlier this week about he subject of inflation . Steven they wanted to stay away from it. They wanted to stay away from any kind of comment or statement that would indicate that some they talked up the economy by saying the downside has reviews but the output numbers have recovered. Assiduousk they were in trying to avoid anything that would make the market think that september was live. Alix take a look at the dollar index by june. Up by 3 . What is responsible for moving it . Growth or fed policy . Steven we can is abroad. We have europe and the sterling, because that is what is driving the next wxy. Gross matter some. Since march we have taken fed policy out of the picture. A benefit when u. S. Growth looks ok. But call it a limping divergent trade. Not the kind we were talking about last year. David take us forward to the bank of england meeting. There willy expected be further stimulus or softening on the Monetary Policy. What will that do to the Exchange Rate . Will take itnk it down. I dont think that they have a model that 50 basis points will be enough to fix the kind of economic shock that the u. K. Is facing. We have already had soft initial indicators. Those surveys taken after the referendum suggested things were slowing down. So i think they will to 25. I think that they will have to at least address the issue of something with more qe in the u. K. Has far as you are concerned, is there a limit to what they can do on the rate side of things . Do you think stimulus from the bank of england could be positive . Steven you know, i dont think they would intend that but he bogeyed that they are facing is that they have to find a way to use capital flows. Directknow that investment is likely to flow because of the uncertainty. Howissue for them is cheap do you have to make theling in order for environment of wheat growth . Alix so cheaper sterling pushes the dollar up. Is there a level where the dollar winds up crimping any ability for the fed to act in september . Steven i think there is the election reality. And they will have Monetary Policy become an issue. Right now, they are calm about the dollar. , not is a damaged economy nearly as big as they were boring about a year ago. It ikeep referring to think these levels they are not really worried. David thank you so much for being with us. That was steven englander. Alix moving to banks. Profits, ubs and barclays are leading to the biggest monthly gains. This october we will dig deep into the result, next. This is bloomberg. Jonathan from new york city, this is bloomberg. Into the Bank Earnings be going in europe. They beat analyst estimates. Manus cranny as live with us with more. Thank you for joining us. Get to the scene of the earnings . A bit of a tough year for the wealth management. We are only halfway through. And for myself and the conversation that i had, we went volatility tog subdued volatility. It is a tough time for every bank out there. Cash is king. I am very pleased with the strong quarter, not in absolute , but 2015 with a decent quarter and we are up. Think we are building strong results across all businesses. The First Quarter, paralyzing volatility. Will 2016 be a year that everyone has to get used to subdued activity . I think so. Macroeconomics, geopolitical this is translated by risk aversion. We can measure it in terms of cash holdings. 28 . De the u. S. , in the u. S. , up to 22 . That is the highest level we have been seeing for some while. A challenging environment. Manus nice metrics in terms of cash holdings. Look at the stock this morning. ,esterday story was mopping today it is about cost cuts and that is my sense of where the market is going to focus on the back six months of this year. Fx andu saw there was the equity story. Jonathan with the Bank Operating in a low environment, what does it say about economic advising . Manus low rates have pushed the ceo to move his return on tangible equity. Isthis low rate environment an environment we saw last year we saw five or six rate hikes coming and that is not on the cards. That, a sticking with key issue. I thought it was fascinating when he said the social implications in terms of a fundamentally low rate environment. Jonathan manus cranny, live from stearic. Thet to have you with us on program. Today butas a miss what i thought was interesting was that a 25 basis point cut with the bank of england wont have an impact on us but zero will. You can already hear the calls from the leaders of the big banks in the u. K. With a message we dont like low Interest Rate policy. We dont like what we see in switzerland or japan. It has been a real problem, particularly in japan. Inclays did make out well the fx because of brexit. And different10 , than what we saw with deutsche bank, that was a decline. 9. 5 so that was better than you would have thought. There were some bright spots in there, to be sure. Coming up, we have u. S. Data. What will the results mean to janet yellen as we inch closer to september . This is bloomberg. Alix this is bloomberg. We have big moves in the market. Kicking it off is mighty kospi in italy. There are reports that ubs and italys former Development Minister are teaming up for a bailout of the bank. That news is lifting the entire italian banking sector. All of this is ahead of the stress test reports to out at 4 00 p. M. Eastern. Italy at the nonperforming loans will be front and center. Moving on ay surprise firstquarter net profit. That revenue was up 14. 5 . Sony was also helped by the angry birds movie. Loreal, coming that missedings estimates up by 4. 3 , and that is due to weakness in france. Jonathan angry birds is still a thing . Alix steel, thank you very much. Japan,markets, bank of if i am governor kuroda, i will never disappoint you. Look at the move of the dollaryen, a stronger japanese yen by 1. 88 . The yen is strong, strong. In the Government Bond market, expectations up her, this is where delivery was. Flattening with the front end of the yield curve coming up. The yield up 10 basis points to 27. Es,side the fx and bond mov you have wti south of a moving average. Market that a bear equity resilience. Ftse is softer but futures are stable. And that disconnect between what is happening between fx and commodities is what we want to talk about. Lets get the headlines outside the world of business. Shery ahn Hillary Clinton warns that when donald trump says he alone can solve americas alarm bells should ring. On the last night of the convention, she accepted the nomination for president. She said any man who can be beta and with a tweet cant be trusted with the Nations Nuclear weapons. And she says it will take more than one person to make america great. Hillary clinton lets be stronger together, my fellow americans. [applause] clinton lets look to the future with confidence. Lets build a better tomorrow for our beloved children and beloved country. And when we do, america will be greater than ever. Shery ahn clinton and tim kaine will hit the road today. They will come pain in the battleground states of pennsylvania and ohio. Federal regulators are putting pressure on wall street banks over risky wall street loans. Few guidelines were issued three years ago. Abouts are Big Questions the loans that her reading as acceptable. Agreed to spend 24 billion to build the First Nuclear power plant in u. K. In more than 20 years. The British Government is casting doubt on the future of the project. They are concerned that customers will pay too much in subsidies. The government will decide whether to go ahead in the fall. Global news, 24 hours a day. Powered by our more than 2600 journalists and analysts, in more than 120 countries. This is bloomberg. David thank you. Fromorning mustread comes Ruchir Sharma. , though Many Americans see the u. S. As deeply ad hoc to china, the fact is that china is more reliant on easy money for growth, putting the state in washingtons hands. Is tom keene, and this is a timely piece. You look at the bank of japan and what england is doing, it puts it in perspective. Tom using the phrase exorbitant privilege. Ruchir sharma is absolutely correct about exorbitant privilege. Not only the dollar but also the politics and economic that backs up the dollar. It is the strength of america, politics, as you saw last night, an original position of america that leads us to be the dominant force. David and he puts in his piece numbers that i didnt have in my head, two thirds of the world reserves are held in dollars and 90 of trade is dominated in dollars. I didnt realize it was that high. Tom very important within the media blast of the bombardment that we have of negativity about the u. S. And trade economics. Ish that said, the headline. Hat trade has been soggy david one of the things he points out in the peas is that it is great that the u. S. Is powerful but it limits what the fed can do because it has to worry about the World Economy. Tom absolutely. No question about this. Looking for temporary dollar weakness which is way opposite than the consensus. Most people are looking for a nonbrutal strengthening of the dollar. What is really important it is friday in july, we are all distracted and we cant be. We talked earlier about the italians. Isthe heart of the matter that everyone is struggling. And what the fed really wants is stability. They dont want to see a brutal, stronger dollar. That janettrikes me yellen has an incredibly powerful and difficult job. Anything she says or does could affect the World Economy. And she has an exquisitely difficult issue where she doesnt want to talk down the economy. But she cant come in with a price hike because it would strengthen the economy but it would have an effect. Tom it goes to the new theory that is out there. All of these good people are grappling with things that arent in the textbook and that sets us up for mystery. David exactly. Ruchir sharma will be here with of emerging markets. He will be joining us. And in the meantime, thank you to tom keene. Tune in to him for bloomberg radio. Jonathan did he get paid for that prompt russian mark [laughter] he gets paid in oh ties, which he doesnt wear. Jonathan lets stick with asia. Uncertainty of inflation. Anding us is sam sweeney note joining us is james sweeney. What was your takeaway as far as the review is concerned . James i think a review makes sense. They are closing in on 40 of the bond market owned by the boj and moving towards 50 and 60 . It hasnt worked so far and Market Expectations are swinging around. Themweek, people expected to come in and do helicopter money. The