Transcripts For BLOOMBERG Bloomberg Go 20160819

How we get there and the speed and trajectory, that is where the confusion is now. Officials are talking about the possibility of a rate hike. Richard clarida will be here to help us break it all down. After a dramatic week, the dollar index is still slightly higher but a threeweek low. Own, and nomc job one knows what they are talking about, futures negative the dax is down 6 10 of 1 . The ftse 100 down one third of 1 . The bloomberg dollar index up about one half of 1 . You are seeing this more acutely against the commodity commodities currencies. Far, week for crude so potentially on wti the biggest and smart as we reenter a bull market. On the back of dollar strength, some crude weakness, the dollar index down by 6 10 of 1 . Yields creeping higher on the belly of the curve of treasuries , up 2 10 of 1 . A lot to discuss so far this week, a Big Conversation over the fomc pivoting forward to the speech that friday. Alix who is going to want to take big positions ahead of Janet Yellens speech . Matt boesler is in new york on the fed calling for another rate hike sooner rather than later. Guy johnson is wrapping up a busy week, and javier blas is back. John williams joining us and a slew of other president s commenting on the Central Banks next move. What are the one of the concerns that you have is that we found ourselves behind the curve and having to raise rates more rapidly. That is going to have an impact on the u. S. Economy. Alix for more, we go to matt boesler. We need to raise now to give us more option already later for when things get that again, that seemed to be the same yesterday. Matt this is the key debate unfolding on the fomc and you can see where the battle lines are being drawn. You have people like president williams saying, we need to get going with this so we do not need to raise rates quicker later and you have on the other side Charlie Evans and some of the governors on the board in d. C. Who are saying, we can afford to wait for inflation to pick up before we raise rates, even if we have to raise rates a little faster later on. It will still be much slower than anything historically so what should not be a problem. To hear fromgoing janet yellen next friday at jackson hole, who is speaking for yellen . Matt i do not think we know because she always tries to strike a careful balance and speak for the entire committee. When we heard from her in june she sounded pretty optimistic but not necessarily in any sort of hurry, so i think people are interested to hear what she has to say because there has been a lot of debate playing out in the public sphere since we heard from her publicly. If she is looking for a rate increase soon, people think she is probably going to need to come out clearly and signal that because the markets are not buying it. Thankyou so much alix you so much. No doubt there is going to be this tension between what she can say to prop the markets up and what they will say. Jonathan if the market does not believe it, you will have a pretty violent move in september. In london, we were talking about ugly data potentially after a brexit decision, a referendum and decision to leave the european union. City, what from the is the take away from the post brexit data . You this week i can tell more about what is happening in terms of the positioning in the market, whether or not we will have some disaster related to the brexit. Positioning was so short, the market was so short on the pound that any inkling even on the days it was ok, that it was going to pop, and that is what we have seen. Maybe the labor market is holding up. Most of that data was prebrexit. Most companies are saying, we do not know yet so that means they are not going to be laying people off yet. It tells you more about the market than the british economy. In the telegraph this morning, five charts that will show britain has escaped and economic apocalypse. I think we are a little bit early to me making conclusions like that. Jonathan the market a little short. The other thing that could be squeezed is the budget. We got some figures on the deficit, no deficit and surplus. Well below the expectations for the budget. What do we expect . Chancellor hammond called it a fiscal reset. Means guy i think that he will not be pursuing the quasiausterity that his predecessor was going after, and it was not really that austere. It is signaling we are not going to go with some of the fiscal targets that George Osborne went for but we are going to water those down. I think most people are anticipating that from the u. K. The governor has done a lot and probably will do a little more when it comes to market consensus, but increasingly we will be handing over the reins to the fiscal policy. People around the world will be watching. Jonathan guy johnson from the city of london. Looking forward to the conversation we are going to have with geoffrey yu of ubs. Ubs coming out and saying sterling is still a safe haven. David we have to a little patient on the brexit. We are not going to know right away, we have to wait for data to come back. Oil is back in a bull market, trading over 50. We are going to bring in javier blas. Go through this with us. We were in a bear market just three weeks ago. What has brought us to where we are . , there maydi arabia be some conversations going on in september for a potential freeze of production. So far, this is about talk and not about action. If you look at the different market we have today from what we were in february, the last time a cap talking about freezing production, one of the differences is that opec is talking about another Million Barrels a day extra. The talk could be moving the market but it is going to be interesting whether now that we are above 50 a barrel, the rally can continue. David if talk is what is driving the market up, what happens in september if nothing comes out of any opec discussions . We saw last time that opec talk to the market, it was a big disappointment with that failed meeting in doha. I think we can see exactly the same thing happening in september, around the 25th when opec countries are going to be gathering in algiers. One joke going on in the oil market is that opec is talking about freezing production but in reality what it means is freeing production, everyone is free to produce as much as they want. David and oil company joke, thank you very much. Alex is going to take us into stocks, big news on viacom. Alix up premarket about 1 , to leap dont man is out. Out ippe dont man is dauman is out. It has been a big selloff over the past few years. It was not able to transform into the digital market like its other competitors. The new successor, does he wind up turning around viacom or make it ready for a sale to cbs perhaps . That is the question threatening viacom. Take a look at deere, a really interesting quarter. They upgraded their profit and earnings guidance. Part of that is cost cuts, they are doing a good job on that, and sales over the Third Quarter came in light even though their earnings blew away estimates. Applied materials is another earnings story. This makes machines in order to make semis so it is a good front raid on the entire semi industry. They got almost 4 billion in orders for the Fourth Quarter that held them for the overall industry. In terms of Fourth Quarter industry, Fourth Quarter profit, they see lets get a look on what is making headlines outside of the business world. Emma the Clinton Foundation will stop accepting donations from corporations and foreign governments if Hillary Clinton is elected president. Bill clinton outlining that and other changes yesterday. Critics have expressed ethical concerns about the foundations fundraising practices. Donald trump making his first beach since reorganizing his president ial campaign. Speaking at a rally yesterday, the gop nominee told supporters he has regrets for some of the rhetoric he has used. Mr. Trump sometimes in the heat of debate and speaking on a multitude of issues, you do not choose the right words. Or you say the wrong thing. I have done that, and believe it or not, i regret it. Emma meanwhile, in another shift, the campaign purchased 4. 9 million in paid television as set to begin today. A firsttime acknowledgment from the u. S. State department, admitting the 400 million cash payment to iran was withheld as leverage to an sure they would release american prisoners as promised. They are facing criticism by the republicans that it was essentially a ransom. Global news 24 hours a day, powered by our 2600 journalists and analysts in more than 120 countries. Chandra. This is bloomberg. Jonathan coming up, fighting the fed. Fed officials talk up the potential for a rate hike and the market is not lying it. Richard clarida is with us next. This is bloomberg. Jonathan from new york city, this is bloomberg. The will they, wont they fed rate hike speech. We do not think we are in a recession today nor do we think that we are likely to be in a recession over the forecast horizon, but you never know. One of the concerns that we have is we found ourselves getting behind the curve and having to raise rates more rapidly. That had an impact on the u. S. Economy and contributed to the recession. If we only moved once per year it would take on the order of 12 to 14 years to get to the normal formulation so that seems like a disconnect. Jonathan we have got to do this for over a decade . Lets bring in Richard Clarida of pimco. What on earth has been going on . Richard you have 17 people around the table and i think you have at least 16 opinions. I think the chair has not come forward to convey where she wants to take the committee and as a result we have a next message. I think the fed we have a mixed message. Agothan a couple of weeks they came out and said yellen needs to schedule more speeches. Had a Fund Managers say to me this morning that the fed was facing an intellectual crisis and they were being far too honest, and that is what has happened over the past week. Do you agree . Richard i think the fed is that a fundamental junction. They have to understand how they will react to data and communicate to markets. I think they are divided. I think they are not sure what is the reaction function and they are giving a mixed message. David i wonder if this is not divergence within the fomc. Is that potentially a healthy thing . Are they recognizing the plan they had is not working and they have to rethink at . Richard it could be a healthy thing and i wouldve said that a few months ago but i think we are at the point now where it is starting to be a negative thing for the fed and its credibility. Good,ock market looks everything looks decent, and you may say there is no price to pay but John Williams saying, or could be repercussions if you height rapidly. They should admit they were wrong in terms of hikes and go forward, what do you think of that . Richard i think i am more in the camp of williams. Williams has the most coherent and consistent view, calling for gradual, slow normalization but more than zero per year. Jonathan a couple of years ago it was even more division at the fed. Hawks at ther dallas fed, and that was a fragmented said in a different way. I think so far this week it has been an intellectual fragmentation. Richard the fragmentation of the transparency works so long as the chair is very clear about where he wants to take the committee and the chair will get what he wants. I think the challenge is we do not know where janet yellen stands on the path for liftoff of the way the are thinking of liftoff. David will she be likely to use the jackson hole speech to give us a sense of where she is going . Richard that will be her opportunity and i hope she does. Find outwe think what she is going to say from dudley . Richard she is also very close to williams, so we can get some clues but i think the key point for chair yellens for hard to weigh in finally and minimize the impact of this noise. Jonathan the markets do not listen to any of these speeches and just say, look at our positioning, that is the best forecast over the past five years. Richard over the years of watching the fed i have heard weeksver the last six more than the last 30 years. Whenever there has been a disagreement between the fed in market, it is the fed moving to the market. Alix if we get any kind of hawkish speech, is it considered hawkish or just trying to get the market up just a little bit to press them for some hike sooner than march 2017 . Richard yes, i would not i would think so. If she said rate hike would be appropriate soon, that would essentially be a concession to the reality, which is what they intended. Jonathan september, a number of months, but ultimately could the take away from the meeting be a downgrade in the terminal rate . Richard that has been happening for the past three years. Here at pimco, we have been saying that. We think that number will continue to come down and so that will be part of the communication as well. Jonathan Richard Clarida, great to have you with us. David we are all looking forward to the janet yellen speech next week. Opportunity, why it may be time to shift focus on emerging markets. Crude oil enters a bull market, approaching 50 a barrel. How much gas is left in that tank. This is bloomberg. Alix what fed members can agree on is lower longterm rate, so where do you put your money when the fed does not know where the neutral Interest Rate is . Some are saying emerging markets. Richard clarida of pimco is back with us. How do you value assets and know that emerging markets are a good bet . Richard everything is relative. Emerging markets had a terrible last three years and what that means coming into 2016, prices were low and valuations were attractive. The big decline in Oil Prices Hit a lot of emerging markets hard. The slowdown in china hit emerging markets high hard. Oil has probably bottomed, china has probably bottomed or is in its new normal, and the fed is basically saying it is in no hurry to hike. The things the markets were worried about they are less worried about so it is a good entry point. Alix the yield value on 4. 4 , thatrket debt, slowly will start to erode. Right, and that is what we talk to clients about , relevant to value. There has been a huge move in brazil, equities in decline and yields so once you make money, you need to rotate exposure. David and you have to think of Foreign Exchange as a practical matter. Richard we would always recommend that if investors like a stock or bond and find the currency risk eliminates a lot of the kerry. If you would like to make a currency that, do that separately. Alix there is just not enough debt to buy in certain countries. David are we talking about debt investment or equities or longterm, shortterm . Richard i think we are talking about longterm. We have a big focus on the debt the factors that will be constructive for the debt markets will be constructive for the equity markets as well. Even though you have 20 or 30 individual countries, they tend to rise and fall in tandem so you need to be aware that you are not necessarily getting diversification when you buy a lot of diff countries. Different countries. Alix thank you so much, when i pleasure to have you. Jonathan coming up, sterling hitting a twoweek high after some strong post brexit data. Our next guest says the pound is still a haven despite brexit uncertainty. Down a quarter of 1 on the dow. Here is the action in the fx market, a stronger dollar story. Dollaryen back to 100. From new york, this is bloomberg. Alix this is bloomberg , im alix steel. It is 7 30 a. M. On wall street. Here is what you need to know. The Federal Reserve bank of San Francisco president of the u. S. Economy is Strong Enough to warrant an Interest Rate hike, warning that waiting too long may cause problems. Tax surplusernment was lower than estimated in typically a strong month. People say the board of viacom approved an agreement ending a months long legal dispute between the ceo and owner, paving the way for the ceo to leave the company. The drama continues to unfold. Did you ever watch vh1 or mtv . Jonathan of course i did. I did not just Read Economic textbooks. Alix the point is that anyone younger than you probably did not, and that is why viacom is in a rough space. Jonathan lets get back to the markets, and much more quiet and to the week end to the week. We are looking forward to the rig count, crude and focus. A little bit of a soft market in the equity market. Futures negative. The big driver seems to be the dollar, up, down, strong, weak. 1 and you see this more pronounced against the commodity currencies, the morose the moves are more acute with a weaker aussie dollar. The bloomberg Commodity Index coming in 6 10 of 1 , wti marginally negative after reentering the ball market three months after entering a bear market. At the front end of the yield curve, 2year note up two basis points. I have to say the take away so far this week, do not fight the fed used to be the old message. The market is fighting the fed. Federal reserve officials trying to put a rate hike on the table and the market is not pricing it in. , Aid Deutsche Bank whistleblower is turning down over 8 million in reward money. Our must read comes from his own piece in the financial times. I just got word from the sec that i am to receive half of a reward but i refused to take my share. To talke will come over about this remarkable turn of events. It raises some larger issues. Is a wonderful primals green. Primal scream. They always get the wrong bad guy, and in this case the reason he is pushing this 8 million back is because he feels that Deutsche Bank is being punished and the rank and file employees are being punished, and ultimately the shareholders are being punished. To me, it is one big echo of the angst over lehman. David this comes from part of a find that Deutsche Bank had to pay which is ultimately paid by the shareholders. This is the shareholders money. It should come out of the pockets of people who had to leave. For it is a required read anyone on global wall street, particularly those who have gone through the crisis. Lots of points people disagree or agree with within the letter, but within the nuances is a very cogent mathematician. He worked at Goldman Sachs and Deutsche Bank. This guy is a smart i, and that letter has real concision to it about who is to blame. David he was a risk officer at Deutsche Bank and he discovered he thought there was misrepresentation about the value of derivatives. He went to the lawyers and they said, this is all privileged. He got in trouble. Tom what this really is about is whether you believe the revolving door of lawyers at any wall street firm, is appropriate. I do not know what the alternative is. The banks want to hire sec lawyers and the sec wants to hire qualified financial lawyers. I do not understand how we can break that. David there is a lot of benefit that comes out of that. There is an appearance problem when it looks like the inhouse lawyers where from the sec or on their way there, and he is questioning whether they had the best interest of the shareholders of Deutsche Bank and the United States of america. Tom we are nine years into the crisis. Who gets taken, not to jail within the felony conviction, but who is punished . He compares and contrasts a too big to fail bank with a much Smaller Institution where the executives got nailed. That is an ancient american tradition which is the big guys can always talk their way out. David there is always two sides. They had to pay big fines and some of them are still in litigation. Tom this is not some loudmouth, smart alec young kid. This is a guy with some real concision and acuity writing this letter. David you can catch tom keene radioday on surveillance from 7 00 to 10 00. Jonathan a bid for sterling, the pound higher. Our next guest says it is still brexit. Even amid lets bring in geoffrey yu joining us from london. Still a haven. Geoffrey if we go through the last few years, some currencies became havens. I think scandinavian currencies were super aaa and no one wants them anymore. Sterling provides enough liquidity so if you need liquidity now, sterling will provide it. It is an optimal internal currency. And not sense, i would not worry about the pound and i think the post brexit environment shows that. Jonathan i want to pick up on something that you guys have been saying, wealth investors will continue to be happy to finance the current account deficit. That is not a consensus view in london. What tells you that . Geoffrey you want to finance the current account deficit for what reason, and if you want access to the eu, you do not want to be in the u. K. Most sovereign wealth funds are not here because of the u. K. But because of the sovereignty. Sterling is already adjusted. Relative to many emerging market currencies, it has not fallen aggressively against the dollar and is looking quite cheap. Financingments and and the correction of the currency, and yields are falling and i think the income balance can stabilize and turnaround. Really face ad we situation where the bank of england emmy less becomes sterling stimulus become sterling positive . Geoffrey absolutely, and if you see it complemented by the pound in a fiscal recess, if growth begins to surprised by the upside next year and beyond, then that could be conducive to the currency and also other u. K. Assets as well. We often talk about how footsie is a beneficiary of the weaker sterling although that correlation is not constant. If we see the u. K. As i have positioned, growth surprises to the upside and growth will come in this direction. Foreign flow more coming in as sterling rises. Does that increase the pressure . Geoffrey i think the boe will be a bit more careful because we do believe that inflation is going to spike in the coming quarter due to the currency effect, but if the currency is strong in the next few quarters or so, over a two to threeyear horizon inflation begins to under shoot the boes assumptions. Jonathan we are sort of spinning forward to the autumn statement on fiscal policy. Chancellor hammond has called for what he calls a fiscal reset. What is that when the budget deficit is already 4 of gdp and what does the stimulus look like . Geoffrey a lot of the governments are being paid to borrow money so it is not an issue. Unless the size of the fiscal package is going to require an outright monetary financing, which we doubt at this point, then i do not think that deficit issue is going to come into play. We want to see the right mix when it comes to fiscal packages, a combination of tax cuts and spending increases. It is the demand element at the end of the day. Centralbank policy has shown you can keep funding rate since zero but if there is no demand at the end of it, it is useless. The government must generate something which generates spending. Too much spending, there could be a problem as well. Too little spending, do not want to see that. Stimulus,most fiscal are an ejection of fiscal stimulus. I assume you would call that sterling positive. I want to think about what that means for the current account deficit at this time. Can they address both things at the same time . Geoffrey i would say you need to see how much sterling will rise by. Relative to set value, that is a five to 10 year story. If the package is so perfect that we get back to 1. 40 within the next 12 to 18 months, i think the boe will have a problem a bit like the ecb. That is something that they will have to push back against. I do not think the u. K. Will be like germany or holland anytime soon, so i do not think that element will be as much of a pressure on sterling, but they do need to be careful not to overdo it. Currency stimulus is a benefit to any economy. Productivity is the Biggest Issue but a slightly weaker currency helps, so they have to get it right. I think carney has shown they know how to design things on an adequate that are which the market will like and now must speak to the treasury to get this comprehensive package in an optimal as well. Parody, in part because they say you need a weaker sterling, in order to convince investors investors to fund the current account deficit. What do you see that is currently different . Geoffrey sterling is not immaterial. They have eurodollar assumptions of 1. 14. If you are sterling goes to sectors, german and eurozone manufacturers will start to worry. Do we really need that much of an adjustment within the u. K. . Is the current account deficit which is ernie starting to fade somewhat, already starting to fade somewhat, do we need another 15 to 20 . It is about the income bounce and that is more sensitive to rate differentials. The u. K. Is paying less than the rest of the world. That gap has narrowed so i think parity is too much to ask for. Jonathan thank you so much for joining us. Refreshing to get the other side of the trade. Alix totally out of consensus. Thank you so much. Oil extends and longest advance in more than a year entering a bull market. Our guest reveals how much energy is left in the rally. This is bloomberg. David this is bloomberg , i am david westin. Takes us, kate more through her strategy with markets at record highs. Emma here is your Bloomberg Business flash. Deere and Company Posted earnings above analyst estimates. Share,ome was 1. 55 a . 65 that are than expectations. They also raised their fullyear earnings forecast. At forgen protection german factories is at risk of disruption due to a payment dispute. The automaker has so far kept quiet about the severity of the slowdown. They are struggling to eliminate to deal with their cheating scandal for image ands. Citron research does not understand its business. Took exception with several statements. That is the Bloomberg Business flash, i am emma chandra. Has gonenald trump through some big changes of campaign this week and we may have seen the first result in a speech yesterday in North Carolina where he expressed some regret for some of the things he has said recently. Joining us is megan murphy. This is the question i had can he move to be a kinder and gentler donald trump reaching out the on his base without losing his base . Megan you took the words out of my mouth, this is the kinder and gentler donald trump. When we saw that big shakeup this week, there is a lot of speculation he would move to more bombastic rhetoric, double down on appealing to his base. What we saw last night was a very surprising shift in town. Taking responsibility for some of the rhetoric that has inflamed problems on the trail for him. Whether or not this is going to be a shift that last, which has always been the issue with trump, whether this will be presenting himself as a new kind of candidate, that is what we will be watching for, and how successful this brand will be. David do you remember a time when a president ial candidate has tried to reintroduce themselves this late in the process . Megan barely more than 80 days to go and we have someone who is shaking shaking off up his campaign for trying to completely rebrand hymns elf. We have Hillary Clinton who remains kind of an enigma to voters. They have their mind made up about her but do not feel they know who she is. We are setting ourselves up for what could be a fascinating personal battle between these two people. With someone trying to invent themselves, we do not have much time. David one of the things they eliminated on the clinton side of the ledger is what they will do about donations if she wins the election. Does that put that to rest . Megan a very important development, they are going to scale back the foundation and limit what it does. And has hung over its campaign forever since it began, and they want to prevent further scandals from coming out. We will see if there is any more juice left into what people are reporting. Chief inoomberg bureau washington, megan murphy. Oil is officially in a bull market but what has led to this rally . Alix this is what has happened to oil in the past year, and unbelievable journey. A 47 decline in november. June,ped out in early down another 20 in a bear market. In three weeks, oil has risen to another bull market. Talkarted with opec freeze early august. Saudis came out and said, they will talk about some kind of freeze. What happens to oil . That leads us to a critical point, positioning and the market. , the yellow is long and the white a short. They have not yet been reduced. Is, did we see a lot of Short Covering in the past week or was this a lot of long continuing to be added . Does that propel oil even higher. The on repositioning in the market . The other key factor that we saw for oil was the dock their dollar. This is the correlation between the dollar and the wti index. They move inversely. We are far away from one at about. 2 but you have seen this correlation, anticorrelation, diverges really pick up. If the dollar is able to move up that might pull back the oil rally. If the dollar continues to be soft, oil could get pushed higher. Jonathan the bull market three weeks after a bear market, i do not get it. The conversation continues from new york city for our viewers worldwide. This is bloomberg. Alix this is bloomberg , i am alix steel. Oil swinging back into a bear market bull market. , coversus is james west the Oil Services Companies for us. Freeze, not get an opec what is the Downside Potential to oil prices . Anyone iso not think expecting a freeze from opec and it is unlikely that would have an impact on the market. Alix still there were able to jawbone the oil market higher just on rhetoric. What kind of speculation might be wiped out . James maybe you lose a dollar or two on the oil price that day but i doubt the supply demand fundamentals that are diversion and coming into balance will be changing that much. David you think this is driven by fundamentals . James absolutely. We have seen a little bit of dollar weakness and everybody in their mother became a refining analyst. They were talking about the products glut would Impact Oil Prices for the foreseeable future. Oil prices drives product prices so were back to a rational market. Alix we are looking at 43 growth next year. 25, that is a huge percent growth for 2018. To those estimates accurately reflect a 50 or 55 oil price Going Forward . James they reflect a Higher Oil Price than that. We are looking for two and next year above 60 we are looking for oil to end next year above 60. Alix james they are undervalued. Most stocks are undervalued. Alix how about for oil services . They have had a hard time raising their prices. James you just heard halliburton put the industry on notice that prices are going to go higher. Fracking and service technologies, probably 5 to 7 . Alix oil services are going to be able to raise their prices and big oil is undervalued. You to thee take bond market as italian yields, and the spread between them and spanish yields widen for the most in a year. In david o n and Vincent Reinhart are coming up. David deciding the fed come Central Bank Officials go out of their way to stress the market is underestimating odds of rate hikes but the market will not budge. Alix verbal intervention. The talk of the production freeze in oil as it climbs more than 20 to enter a bull market. Jonathan one week a strong data set in the pound higher. David sends the pound higher. David welcome to the second hour of bloomberg. David rustin with Jonathan Ferro and alix steel. We have had a big week on the fed and next week even bigger because of janet yellen. Jonathan the fx market has been tricky. Today, very much stronger dollar story, but we want to know what yellen things. That is the bottom line. We want to hear from the chair. They aret is why starting to lay the groundwork for yellen to come out and try to job of the markets higher on an Interest Rate increase sooner rather than later. David we would like to believe there that chlorinated. [laughter] alix that is what i keep saying. Up a big week of data in the u. S. And u. K. , a roundtable on the global economy, as well as centralbank action. Reinhart. And vincent jon, you said it was volatility in the dollar. Ending the week stronger but front and center. Jonathan front and center has been the fx market all week. In todays session, a stronger bloomberg dollar index capturing the story for you. More acutely, that strength is against the commodity currency. About. 9 of 1 . The equity market with the soft finish to the way, with the dax down. 6 of 1 and the ftse off by. 33. Stronger dollar and softer commodity stories with todays session with index coming in about. 7 of 1 . Week,as had a massive potentially the biggest of gains in one week off the back of an opec job on. Interesting one. In the fx market, one story and in the bull market, up two basis points to 0. 722 . Giving up some of the gains from previous sessions but the debate continues. Janet yellen one week away. Alix who of want to take on the divisions and of that speech . Lets check in with their Bloomberg Team with indepth coverage of our top stories. Michael mckee in new york on the fed official calling for rate hike sooner rather than later and guy johnson in london wrapping up post brexit data and back again in a bull market with oil. We start with the fed, john fediams joining other president s, commenting on the Central Banks next move before jackson hole next week. One of the concerns i do have is that we found ourselves getting behind the curve and having to raise rates more rapidly. That kind of negative impact could be on the u. S. Economy and could contribute to a recession. Alix very divergent. Michael mckee, of his longerterm view, williams is looking at longer for longer. Michael you do not like the fed but it is like shadowboxing these days. What are you punching at . We had a number of fed speakers out this week. You mentioned bill dudley, alive with John Williams on the shortterm aspect. Maybe you have to raise rates and you have rob kaplan of dallas saying last night that he did not have a position but he is concerned about the direction of things. And then you had jim bullard earlier and Dennis Lockhart on opposite sides with jim bullard say no rate increase for one year or two and lockhart same september should be live, so it does that leave the markets . Williams told us that you should raise rates. He also went on to say that the lesson of history is if you leave the punch bowl out too long, usually, the police come and pick up the party. Are they going to do that . Be police in this case it the bond market vigilantes. If you take a look at the prospects for rate increase by the end of the year, this is a fed that came in suggesting we would have for rate increases in 2016 and what did you get . Yes, no, yes, no, yes, nah. The market does not know what will happen. If we talk about biting the fed, muhammad ali float like a butterfly, sting like a becoming cannot hit what you cannot see. [laughter] alix fair enough, you will be talking to everyone out there. What is the first question you need answered . Michael what basis do you raise rates . Which is white janet yellen made dish which is why janet yellen may not say subdivided because you have the job support one week later. If she is not certain, widely the markets in a direction where we could get a big change of expectations from jobs numbers . Alix fair points. Michael mckee, bloombergs editor, but either way, ec any kind of pockets chills and the market will have a big response. Jonathan i hope she is as poetic as michael mckee. [laughter] alix never. Jonathan lets cross over to guy johnson, one week of weekbrexit data and a big end tough on sterling. Guy it relates to the story mike was talking about, positioning on sterling has been incredibly short. Data has not been terrible, but the data doesnt really tell us very much. We have had a retail number that probably has more to do with the weather, Employment Data that is probably prebrexit, so it is not a lot telling about what is happening but the market has gone short sterling. If you think about it, what did we see this week . A short position on sterling. People watching what is happening with the dollar. It has come down, so that is the other side that makes it a little ponderable, so maybe some of the extreme shorts are coming out a little bit makes it a little bit [indiscernible] , so maybe some of the extreme shorts are coming up a little bit. It has been more but extreme short positioning rather than at the british economy will get away with brexit and not have the apocalypse scenario that some jonathan painted beforehand. It is interesting. Very premature, but in the fx market, a new market emerges. Fiscal stimulus will that ld be sterling positive and ubs management was on 30 minutes ago saying that sterling is still a haven. Do think some of those theres claws come out in the market a little bit in the months ahead bearish claws come out in the market a little bit in the months ahead . By i think they will. As they experiment with fiscal policy to deliver, that is something people Pay Attention to and i think this statement will be weather gets going. Jonathan maybe we will get it in order. Traditionally, we get it and [indiscernible] thank you. David another thing we look at is oil today. Throughout the program, we have said that oil is on a turned up and in the bull market after it was a bear market six weeks ago. Stewart wallace, executive director energy commodities, here to join us. We have had two different viewpoints about oil and the bull market and that is because hobbies talk about freezes and others are fundamentalist, what are your reports indicating . Stewart the market was short, we were in a bad market their weeks ago, and since then, we had this complete turnaround. Lots of people, including the saudis, had come out and started talking about the production freeze. That shows the degree of unit of unity with opec and when they are unified, they can move the oil market. A lot of people got out of those positions and we had this incredible rapid rise up and back in the bull market. That is after three weeks, but we have had Something Like a trillion dollars with the trades and features and the wci. Lots ofite serious, but people appointed out that we are around 50 a barrel, nowhere near previously. David going back to fundamentals, where are inventories . I will be a large determinant of price. Glut in terms of database supplies will be between one Million Barrels to two main barrels a day over where we should a relative to demand, which is back to being good, but what the ark it worries about is the overhang, inventory overhang. We have and all the barrels etiquette related over the last years and they will be taken out of inventory in use before we can see existing rally in oil. David thank you so much. Toll go over to alix moving stocks and tractors moving today. Alix sort of, kind of, yes and no. On one hand, you had deer glory there forecast by about 10 , however, it did raise their now year forecast and they expect to make 1. 3 5 billion, up from the forecast in may. Stock. Lps boost deere another earning, Applied Materials making equipment that this out to the semiguys who make semiconductor chips, and they are seen stronger sales, particularly demand from companies that produce the flat panel screen. They see fourthquarter revenue rising by 19 to as much as three point 6 billion 3. 6 playing dollars to be estimates. Gap in a different story. 2016 Profit Guidance missed, even at the low end of its range. They did come out with Second Quarter, sales earlier, saying 2 , overall, they were down but for Banana Republic, down 9 . Full retail done boostt it is hard to for traffic. Here is, with first word news. Emma with first word news. Almostmericans will pay 11,000 today following the alleged robbery scandal involving the u. S. Swim team. An agreement reached with the brazilian judge ,feigan will make a donation to an unspecified institution. Two americans are back in the u. S. After being pulled off of their plane for questions. Lobbying operations on behalf of ukraine [indiscernible] that is according to the associated press, which says email messages obtained say that they try to sway American Opinion in the favor of prorussian government. The two men never disclosed their work. Is a gripping images generated Global Reaction this morning. Fiveyearold pulled from the rubble of a building yesterday of an airstrike in the syrian city of aleppo. Eight people, including five children, or killed. The Russian Military says theyre ready to back the United Nations copper weekly ceasefires and aleppo. Global news 24 hours a day, powered by journalists and analysts in more than 120 countries. This is bloomberg. Jonathan thanks. Coming up, u. S. Equities may be near record highs but is it time to divest your portfolio . The importance of global exposure, next. Alix this is bloomberg. I and alix steel. Global bond yields around zero and stocks and bonds rallied together, warning of an asset bubble, so how much cash should you be in . We spoke earlier this week. What is the cost of having cash today . The answer is it has never been lower, so if the cost of option holiday is very cheap, i want all the option out of the i can have. Cheap investment officers join us now. 2. 5option holiday is about billion dollars in cash. Do you want to be in that much cash right now . Katie i would take issue with one of the premises there that expensivet an insurance policy. We think it is. Just in the last year, we have had so many examples of times when the market acted in a nonintuitive way, the huge thece back from brexit, bounce back in the Second Quarter and risk asset markets, so people who have been sitting in cash, worrying and wondering when the market would correct, have been proved wrong again and again and it has been expensive to sit down with 0 in cash yields. Alix what everyone can agree with is that at some point, cyclicals will outperform defenses and at some point, the bond rally will burst. What they cant agree on is when it will happen and how to prepare. Katie what would cause the bond rally to burst . Offender is in rates . Sleep the bed raising rates . Fed raising rates . We do not think that will happen. We do not think the federal undermine the bond rally. Do a degree will have a growth spurt in the u. S. . No. We think the u. S. Is stuck in this trend channel of growth, saidar to what bullard earlier this week, where we are in this area of various, no secular growth and we cannot seem to get out of it, so the growth spurt will not undermine the bond rally either. We do not see what is going to pot it. P it. Jonathan you talk about cash and they have access to cheap cash and not doing anything with it. Rightporting in the ft now says they will charge corporate customers to hold cash on deposit for monday. We have not confirmed that a bloomberg, but if that were to be true, are the corporates to go out and spend or take the hit . It depends on what the cash is for. If it is aligned against a certain goal or certain liability, it will have to take the hit and that is the cost of insurance, but it that cash is waiting for investment, sitting idle, they will have to push out the risk asset. Alix do you take on more risky debt, but on the scale or takeout the risk . That seems to be the question facing investors. Katie what we are seeing with investors is they are trading one risk or another. They say they are afraid of Duration Risk so they want to go into slow rate bonds, but they do not realize that accessibility credit risk, that exacerbates credit risk, so you have to decide. We are not afraid of Duration Risk because we do not think the federal be on a tightening cycle anytime soon, so we would be fine with Duration Risk our think investors are being paid for credit risk right now, right around the average spread. David you are a fan of diversifying your portfolio. Are so many assets are correlated, how do you make sure some are not correlated . Katie that is the 64,000 question. Time and time again, risk assets, regardless of where they are domiciled, pack the same during periods of market stress, which is when you need to have diversification. We preach to our clients seeking not assets that behave and act differently, noncorrelated assets, and they are hard to find that there seems Systematic Risk premium strategies are found in hedge funds and frankly, traditional bonds provide good differs petition against the risk asset portfolio. It is important to look under the hood to recognize what you are buying and then assess, is that given the diverse the kitchen or giving me stuff i already owned in my portfolio . We saw a lot of guys like logos call for moving into real estate assets. Yesterday, he said he wants to go into real estate and once the liquid assets because it will give him the yield and he will be holding it for a few decades or years so he is ok with that Duration Risk and is that the right strategy . Katie you just pointed out how we think about diversification, illiquidity. The underlying asset, real estate, will act and behave similar to other things in your portfolio, so the diversification you get from that exposure is they liquidity premium and not necessarily the illiquidity premium and not necessarily buying. David does that take you to emerging markets . We are neutral on the tactical basis right now. Because back to the premise that the fed will be on hold. There is a strong correlation between the dollar in emerging markets and we think emerging markets are going to get back growth tail end and they are not going to be heard by extreme we started dollars. Alix that is the theme, emerging markets on the table. Thanks, katie nexen, Northern Trust Corporation Management chief investment officer, sticking with us. David coming up, from the u. S. To u. K. Roundtable with david owen and Vincent Reinhart. This is numbered. This is bloomberg. David this is bloomberg. I am david westin. Paul tudor jones demand top traders take on more risk in the hedge fund shakeup. Is still with us. Her firm has more than 230 billion dollars in assets under management and she thinks some belong with hedge funds. Why hedge funds . Katie we believe they can give you two important things and when we talked about, deborahs vacation. To can get exposure to areas of the market and that is exposure. You can get exposure to areas of the market that you did not even alpha,f and outperformance, off of the ultimate holy grail of diversification. It is not correlated to anything else in your portfolio so if you can find hedge funds that can provide shrew alpha to office or skill, which reducing the and prevalent hedge funds, or if you can get exposure to other risk factors you do not have in your portfolio, they make a lot of sense, especially in this time of low returns. Jonathan the other issue is transparency. Take a listen to this. That is the main issue that we have with hedge funds, there hard toally it is have full transparency and what is important is i want to make sure theres no correlation between what those managers are doing. I want them to stay true to the Asset Classes i want them to do and make sure there is no overlap with my balance sheet. That is most important to me. When you invest in hedge funds, it is difficult to know what is going on inside. Jonathan im sure you have the same issues as, and to his point, he went into an Equity Long Short Fund and ended up with weaker bonds. How would you go about circumventing the issue . Katie you have to be vigilant when dealing with this capital, but i think as large investors, you can demand full transparency and that is what we demand. We also look at what drives the returns. Not necessarily looking at the list of assets but looking at how the assets behave to determine what part of the return was driven by credit . What part was driven by global data . What part was driven by another risk factor . So we can make sure from a factor perspective, we are well diversified. Her lack of transparency has been a big issue with hedge funds. Aboutan he is talking going into stuff that he does not do and do talk about finding alpha. How do you find the right managers and what Asset Classes to you look at the that . Katie outfit is idiosyncratic so does not tend to be more affluent in one asset class more than another, but when you find it and in hedge Fund Managers, there seems to be persistent telephone. We try to do it at northern where we take a hedge Fund Managers return and peeled back what part of the return was conventional in nature and what was earned by conventional market factors that you may already own and try to isolate the two alpha. If you can find it an isolated and invested that manager, that makes a lot of sense in a portfolio. David there are a lot of hedge funds at this point. D at the number you are doing with today as opposed to two years ago . Has it gone down or are you becoming more selective . Katie the total number has gone down and the number we look at has gone down. Alpha isat universe, rare, so you will find a small sliver of the Hedge Fund Universe that can deliver some sustainable alpha overtime, so it is a small subset of the smaller subset. David do you see there is a track record to rely upon or is it that you are better off with the hedge fund that did not do better last two but they will this year . As seene look at scale something that can work in all environments. We also look for consistency and have that skill was manifested. Is it because the manager has a certain point of view around the global macro, for instance . So it would for managers to have a consistent philosophy and better able to really deliver alpha after you adjust for the exposures you have in your portfolio. David thanks so much for being here. , trading Political Risk. Jonathan Government Bonds outperforming after political fortunes diverge, next. This is bloomberg. Hey hows it going, hotcakes . Hotcakes. This place has hotcakes. So why arent they selling like hotcakes . With comcast Business Internet and wifi pro, they could be. Just add a customized message to your wifi pro splash page and youll reach your customers where their eyes are already on their devices. Order up. Its more than just wifi, it can help grow your business. You dont see that every day. Introducing wifi pro, wifi that helps grow your business. Comcast business. Built for business. Alix this is bloomberg. I and alix steel. 8 00 on wall street, a 30 p. M. In london. In london. The u. S. Economy is Strong Enough to warrant an increase in Interest Rates soon, warning that waiting too long whisks high inflation or asset bubbles to cripple growth. The u. K. Posted a surplus in july at the government tax pick ellis boosted by the first payments under a surcharge on banks. However, the surplus was lower than estimated when it is typically strong during the month. The board of viacom approved an agreement ending the monthlong legal dispute. For them to way leave the company. Fascinating story that continues to unfold at viacom. Can they compete in the digital age or do they need to sell themselves . Bigthan this would be a topic of conversation later in the program. Futures marginally negative, the backs down about. 5 of 1 and the ftse up by about. 1 of 8 . Stronger,. 6dex is of 1 . Stronger across all of it and what acutely on commodity with the dollar getting whacked and the canadian loonie as well. That is the topic of conversation in the fx market. In commodity markets, stronger dollar, softer session for commodity complex in the Bloomberg Index coming at one full percentage point and goes down by 1 in crude awaiting a massively good games so far, potentially the biggest since march, down. 4 on the session. All week about the fed and yields creeping higher as a aboutout the we come up two basis points from the end of the Treasury Curve and 0. 726 . That wraps up the market moves. Thats get to the headlines. Emma the first time announcement from the u. S. State department, the 400 million cash payment iran was withheld thatverage to ensure tehran would release the market prisoners as promised. It feels criticism by republicans that it was effectively a ransom. Donald trump making his first speech since reorganizing this president ial campaign and trying to show his softer side. Speaking yesterday in charlotte, North Carolina, the gop nominee did not cite specifics but he has regret for some rhetoric he has used three of he has used. Sometimes in the heated debate and speaking on a multitude of issues, you do not choose the right words or you say the wrong things. I have done that, and believe it or not, i regret it. Ma meanwhile, terms campaign purchased 4. 9 million in paid benefit television ads, set to begin today in ohio, pennsylvania, North Carolina and florida. Bolt will run his final race today. He will be back in rio as a member of the four by 100 relay team, one day after becoming the first athlete in history to win the 100 and 200 meter gold medals in three straight games. Meanwhile, checking the scoreboard, the u. S. Leads with 100 and 35 are gold. China is second with 58 in Great Britain has 56. Day, news 24 hours a powered by journalists and analysts in one 120 countries. Jonathan thank you. A big week for Global Economic data, surprising numbers out of europe and the fed indicated that the last fed meeting indicated raising rates. Here are what some of the fed officials have said this week. Htink we are in a recess think we are in a recession today or that we will be no a session over the forecast horizon but you never know. Find ourselves getting behind her and having to raise rates more rapidly in the context. That can have negative impacts on the u. S. Economy, it could contribute to having a recession. If we only move once per year, it would take on the order of 12 to 14 years, so that seems like [indiscernible] jonathan joining us now is the chief economist from boston and jefferies to economist in london. Vince, the week so far, lets call it the fed noise. What is the takeaway . Vincent i would defer to two people inside the room to interpret the minutes, both president s williams and dudley, spoke after the minutes were published and said, gee, we can imagine reasons to take monitor policy sometime soon, and they were protesting that market disciplines think it is under 50 chance that they will pay this year. There was a hawkish court to the fomc minutes. They got the past two big risk events but they had payroll , theys from may, brexit see the world as a safer place and outlook is about where they were in june. They envision tightening Monetary Policy and they think they will tighten it sometime soon. Jonathan the markets in the fed , the market is not buying it, why not . Vincent one, there is a lot of noise from the fed. There is a dovish coding to some of the minutes you have to admit. There were two fomc participants who did not think the case for tightening was made and that want to see pin placement take up more into link perhaps the u. S. Economy is a little less prone,and preowned so they will have to be convinced and we do not know what janet yellen is, between Doctors Center and that dovish plank, and she will have to move her committee along. Second is inflation is not debt established. Last week it was on the softer side. We are getting good jobs growth, no doubt, but we are not getting much productivity. It is going to be hard for the fomc to tighten into relatively rapid income performance. I think if they do it, they will tighten by december. This leads me to the chart of the weekend it was when williams said the mutual Interest Rate was lower than everybody thinks, the purple line. The red line is with the Overall Committee thinks that rate will be. The blue is with the market thinks. If you trust williams, there is not that much room to tighten and policy is not that accommodate up right now. And the u. S. Or other countries . Was hopings the ecb this year that the fed would raise rates and did the job for us, and honestly, help to maybe get a raise rates in december and the fed continues normalizing rates in 2017 and that will enable the euro to falling on Foreign Exchanges. All Central Banks have this huge issue about where is the neutral weight of interest . This puts more owners adjustment on areas like fiscal policy. The bank of england has embarked on qe and taken rates lower. In the case of the ecb, they have negative rates and still do qe. There is much more focus on fiscal response. We should see this in the u. K. First and then in november, will it be much more focused on Infrastructure Spending . I hope to see some reaction by the European Finance ministers in 2017. Jonathan you mentioned shortterm disability in the u k and it has been the brexit affect. Data has not been that bad, but we will have another Political Risk and that is italy. This is captured by the bond market. Not dramatic, but we can take the spread to spain and italian about trade over spain the most in over one year. Is that the Political Risk spread and do see getting more dramatic in the months ahead . David o. the referendum is one of the key concerns, overcoming weeks and months, and it, status to be said it almost has to be said that it has been growing, but around 3. 5 and pretty stable for quite some time. There is a huge issue with nonperforming loans on the italian banking site to balance sheet. Having said that, the ecb continues to buy paper in scale. We think theyll have to extend the Program Beyond next march and moreover in september. Banks tonable central buy more outstanding paper in the markets. That is keeping spreads generally tight, but the italian referendum is one risk outlier for us in europe. Alix big risk that market wise, different than 2011. When the fed look set stocks like this outside of the u. S. , is that now their data dependencies . Datant when they say dependent, dimming the real macro side and indicators of financial conditions. The recognize their providing important support to u. S. Equity market. That is part of the way the monetary transmission mechanism works, but time and time again, when fed officials are talking about financial stability, you hear them basically insist on the separation principle. I. E. , they have got enough supervisory and regulatory tools to deal with concerns about financials and stability so they can let their macro decisions be somewhat independent of it. Not completely independent. One reason some of them want to raise rates as they are uncomfortable with rates been this low. They worry that perhaps they are inflating asset prices here and maybe abroad. Alix that goes to that lower for longer neutral rate. If you get an extra session, you get shock out of europe and what do you do . Jonathan they can control their own markets with the United States, but they cannot control what is happening in portugal. Portuguese yields have been creeping up recently, up 10 basis points on the session and 34 Percentage Points and it is a chapter again and they might lose investment credit rating. How important is that . Syriza important because if they lose the rating, in principle, the ecb cannot buy the paper. Rate issince the flexible and out imagined they would change the rules of engagement and that may came up may come up on september 8 press conference. I dont imagine they will let portugal go for one moment. Remember that when the irish and , theybanks ran out provided emergency liquidity, which in theory, they were not supposed to be doing, but they did it and that will be true with portugal. Portugal generally has been doing very well in context. They will obviously be key to keep it afloat. Wrapping it out, my highlight of the leak was really that move in oil price. We talk about inflation, have ecb and fed cannot meet inflation target, but then you have a moving oil. But does that mean . Vincent we will see a low point in the cpi inflation in the United States. Gasoline prices were set to rise considerably over the next weeks. That means the fed will be seeing inflation on the rise. Limited. Through is we think that oil prices will be range bound between 40 and 50. When they are on the high side of that, that will provide important support for use shale oiln terms of extraction. It would just make the fed a little bit more comfortable that inflation will move up to 2 . Jonathan Vincent Reinhart, thank you for joining us. Alongside david owen, the eurozone and u. S. And publications collide. Alix unbelievable. Coming up, the tale of two tech smartphone demand rising. A big week for that stock and apple hitting a roadblock, attempting to make their launch more attractive. We will put the companys headtohead, next. This is bloomberg. Lix this is bloomberg i am alix steel in the killer enterprise packard greenroom. Coming up, equity strategist joins us and why she sees volatility in stocks. Emma here is your Bloomberg Business flash. Deere earnings topping analyst estimates, driving cost cuts that have demanded [indiscernible] better thannts expectations. The largest Agricultural Equipment maker earned four year earnings forecast. The sec is looking into whether San Francisco tech Startup Group broke the law by not disclosing it was buying its own products from stores. It made them appear more successful than it was, according to people familiar with the matter. They say the agency is trying to Hampton Creek improperly recognized revenue from purchases made at company money. Reporting to a saints agendas not understand its interest. They took the number of issues, including the claimant had not had [indiscernible] cyber dan will seek to respond firmly to comments in the market. That is your Bloomberg Business flash. This is bloomberg. David thanks. Hats the worlds most Viable Company hit a roadblock question mark apples request to make the watch less dependent on the iphone is proving more difficult. This according to people with knowledge of the matter. However, the Company Plans to announce a new model this fall. Joinsnior Vice President us now. Explain to us what the problem and whythe apple watch is it so important for apple . Dan it has been statements out of the gates. The goal was that this of the the Silver Bullet of growth. If you look at the smartphone side, the watch was really going to be the next paradigm from the consumer. If you look, it is trying to detach it from the actual iphone and it seems like it has hit more speed bumps. David is that detachment critical to the growth pattern they need for the apple watch . Dan it is like can you get out of the system . Markets about the opportunity when you look at this outside the smartphone side and on the watch. God is really where it would be that this could be that next leg of growth. It seems like that is not happening, but it does point to smartphone headwinds and you see it across the board, a lot of them are going after different products, one being wearables as the next frontier. David lets talk about the headwinds. Compare apple with samsung right now because samsung seems to be in a good place. We have a comparison of the stocks of the last year. Samsung is up 50 , the white line, and apple is down about 2 . What is going on in the smartphone battle between samsung and apple . Dan the tale of two cities, full at first was really to with smart phones and out samsung, from innovation perspective, has done a great job trying to gain that chair. You have seen headwinds across the board, growth, innovation on some of the newer product areas, and you have also seen another thing that has happened is the hardware refresh cycle that extends to two years, potentially three years and can be an opportunity for samsung to gain share. We see in as synchronize, so how do innovations of the software and services and that is something samsung has done a good job with great david why is it that samsung great job with. Isid why is it that samsung [indiscernible] at thert of it is based gold standard. It is all about stimulating that smartphone demand with consumers, but smart but samsung means to shorten that up. When they come out with a new product, they talk about the switching cost, giving the hardware some commoditization and that is where they have benefited and gone after that. The it is Battle Royale in smartphone markets, but you have seen apple talk about it. The focus is on the cloud, where we are in terms of Software Services, and now i think september is going to be a big focus as you see new releases. David is it all innovation and product cycle or price because samsung can undercut them on price . This key, even one we focus on areas like china, a green field of opportunity, elasticity, price is key, it changes to your automatic up rates, and that is something where the initiative is changing and it is about where it is going and that is why there is a lot of focus in terms of this samsung versus apple battle. Ultimately, it is about can we see more growth on the smartphone side and does come from the Software Services inside or does it come from actual children on the hardware . David thank you for being here. Synchronized senior Vice President of corporate development. Jonathan coming up, which major currencies undervalued. The answer might surprise you. We show you in battle of the charts,. This is bloomberg. , this is from new york bloomberg go. Im Jonathan Ferro and time for battle up the charts. Today, it is my tb good versus my radio coanchor, alix steel versus guy johnson from london and new york. This could be competitive. Alix it is like your [indiscernible] i am taking a look at what is going on with opec talk. Oil marketsrted the i wanted to dig deeper into the production estimate of the big opec countries. The white line is saudi arabia producing under record, with numbers higher right now around 10 point six 7 Million Barrels a day. The blue line is iranian oil production. Back to where it was presanctions. But we really have not seen these levels since the 1970s, a similar story when it comes to iraq. This is record production from iraq, point being, if you freeze here, no big deal. You are pumping at record highs. Energy aspect out with a note saying that they do not freeze, that might incentivize saudi arabia to keep production even higher and that could actually cap prices at around 50, 55 because it would prevent that drawdown and inventory that the oil market desperately needs. Be aware when you have opec talking about freezing, you have to look at the level they are freezing up. Record highs not much of a breeze. Freeze. As is, you will take me down, i know it. Guide i am trying guy basically what you have is alix playing the game. We will come back to that in a minute. I was digging about the cover response but it did not come. Good efforts. Lets talk about the undervalue perhaps on risk teen off this you discussed, and that is the pound may come back. It looks cheap on a basis, but you could go to the big mac hasx on bloomberg, but this got a straight up and down, purchasing power is basically what we are talking about. I like to call this the way not gogo on holiday or where to on holiday charts, so we have a good thing working. He purple line is switzerland very expensive, Pay Attention. This is the pound. It has dropped down, got to the red line and now effectively cheap. As a result of which, we see an influx of tourists in london. You can see that in retail Sales Numbers earlier this week. We are bouncing around the bottom, so interesting to see the idea of the pound bouncing back, and the other thing to point out is that the euro is a little bit cheap but coming up. For americans thinking about where they should holiday and vacation, i suggesting not such a length or the eurozone but london looks lovely right now. Back to you. Has not they vacation next week, so this chart is probably guy in the u. K. K i am going with jonathan im going with gy. David of course. Im going with alix because i did not know iraq was above iran, so you taught me something. Jonathan i am up every morning m. Eastern on bloomberg radio. This is bloomberg. Alix we are 30 minutes away from the opening bell. In new york, happy friday. This is bloomberg. I am alix steel with Jonathan Ferro and david westin. The Janet Yellen Jackson hole speech next friday. Jonathan noise or signal . We have not heard from fed chair janet yellen since june. Some might say this is a risk about next friday. David one thing i know is it is in the most beautiful place that you can have a fed speak. It is gorgeous day the grantee terms the grand tetons behind you. Alix and what the dollar will do a header that will be key. David coming up, kate moore of blackrock, it chief equity strategist. She said is that she sees opportunity. Regardless of when the fed hikes rates, are they still a little good longterm bet . First, the markets. Jonathan about 30 minutes away from the cash open. Equity stocks in europe down. The dax down by about half of 1 . Despite what features are trading, we could close out on a Third Straight week of gains. Despite the stronger dollar. It is stronger against every major currency in the g 10. You see it more acutely on some of these commodity currencies. The stronger dollar story, softer commodity story. Gold putting it back. Interesting what is happening in core Government Bond markets. Yields up for basis points on the gilt 10 year. 0. 73 . The story has been the fed noise this week. Who is to say what we will get from fed chair janet yellen . But it is critical, because we have not heard from her to, three months now. Alix and what is the effect on the dollar, as well as commodities. The good and the bad. The good is full year net income will be higher than projected in may, coming in out 1. 35 billion. But the fullyear clement sales are down 10 for deere. They have high inventory in u. S. Tractors. If they cut costs enough and manage expenses, they will be able to boost overall profits. That is moving the stock higher. Taking a look at more retail names. Foot locker, sales, comp beating estimates. It is coming up 1 above estimates. Sales were almost 2 billion. Another story of the have and havenots in retail. On the havenots, gap. Missing estimates at the low end of their estimate. Comp sales for the Second Quarter came in a while ago. It was Banana Republic off 9 that wait on the stock. We continue to see weakness in the gap. For more what is happening, Abigail Doolittle is that the nasdaq. In europe, nejra cehic joins us from london. The nasdaq looking at its eighth week of gains. Abigail impressive. We will see if that can hold. It looks like it should. But we never know until the very end at work on today. As for what is moving in the premarket, to earnings movers. Applied materials. Shares of the chip equipment maker are higher after they put what is called an impressive beatandraise quarter. The view well above the street by as much as 17. 5 . It looks like what is behind the strength is increased orders from chipmakers, and increased demand. A roll, set to open on the open today up more than 50 on the year. Also higher in the premarket, ross stores. The company put out a betterthanexpected secondquarter, reading earnings and called sales. Comp sales. Speaking of the house and havenots, this is another retail doing well. Ross up more than 50 in the year compared to the s p consumers questionnaire index. Alix thank you. Lets head to london with nejra cehic. Looking at euro stocks. Looking for the biggest weekly slide since midjune. Nejra it is not such a happy friday for european stocks play the stoxx 600 heading for a weekly drop. Down 7 10 of 1 . The rally we saw yesterday, the first day of gains in five days, shortlived. If we take a look at what is dragging it most, you have insurers and banks. Both down more than 1. 8 . Most Industry Groups posting losses, as you can see. Particularly italian banks. Dragging italys ftse to the biggest drop in europe. I wanted to show this yield spread chart. The we are seeing is italyspain 10 year yield spread at its widest. In 18 months. This is largely on political divergence. Spain moved closer towards forming a government, but and italy, we are facing increased and are on the banks referendum in the Fourth Quarter that may cost matteo renzi his job he is the premier. Important to keep an eye on. Show you sterling over five days. A little weaker on sterling. 130. 82. We do have a number of data points showing the u. K. Economy is showing a little resilience post exit postbrexit. Jonathan investors have been doubting the resilience of mobile equities for some time. This chart shows Short Interest following as investors feel more bullish. They are there are 23 more long contracts than short contracts. I want to bring in kate moore, blackrocks chief equity strategist. I think some of the move we have seen and equities this. Ear has been Short Covering some of it has been moving up closer to a neutral allocations in equities. I suggest many investors and most of us are multiasset class investors are looking at the relative opportunities between fixed income equities and are saying equities may not have a great fundamental story. It is just ok, i would suggest. But it is still a better picture and valuations are less demanding than other asset losses. Do youn at what point stop looking at the relative spread and look at the absolute dividend yields and say that is not that attractive, given the risk we may assume . Kate this is a good point. There are great there are a lot of ways to get different yields. Market,ixed income where there has been a lot of influence and crowding, some of the risks are not properly priced into those assets. When we think about investing equities, it cannot be just about investing dividend yields. It has to be fundamentally driven. We think dividend growth. Which companies have the ability to generate earnings and generate cash that will make them attractive investments. David the fact you elucidated to just these stocks are fully if not overvalued. I will not ask for individual stocks, but in general, where should i look for any bargains in the market that are left . Kate in an absolute level, it can be hard to say there is anything that looks exceptionally cheap. To be fair, some of the sect errors and industries that are trading at lower mark lower multiples have challenges. We want to caution investors cheaperating just into valuations, because some of those may be value traps. This is when we have to go back to the fundamentals. We are conscious of the low for longer policy stimulus. We are also conscious of fund flows and reallocation. But sustainable performance has to come from an improvement in earnings. And from companies that have the ability to generate growth and a lower growth environment. Alix it seems the market is starting to buy in a little to the growth asset. If you look at cyclicals versus defenses, cyclicals have started to outperform. Anything above the zero line the red line is when is it happen. There is a slight sector rotation. Do you expect that to continue . Kate that is a great point. In the last few weeks, we have seen a little rotation in the market. Issa just it is not far down at this point. There is a lot of room i suggest it is not far down at this point. There is a lot of room. It is easy to keep pinning this on utilities, but they are the poster child for trade at this point. We are looking at multiples 20 times earnings. Valuations that were multiple standard deviations from the longterm average. And look and said his is a strong, fundamental story . Where is the quality, where is the earnings generation . Jonathan lets talk about earnings generation. Potentially, we have a sixth quarter of declining profits. The one thing that has almost been in touch from analyst downgrades is i. T. Opportunity do you see a violation opportunity . Kate this is a good question, because we have had a disappointing earnings backdrop in many parts of the world. I think it is very important to dig below the surface and not just say we have had four or five quarters of contraction in earnings. Lookhat will the comps like in the back half of the year . Tech has an interesting story. It is a longterm secular trade and sector that should continue to garner attention. It falls into the strong ucket,entals pocket b but you have to be discerning within that. There are winners and losers. Down would not get bogged with the number of quarters we have had profits decline. It is possible that we see a pickup in the back half of this year. We are cautiously optimistic. Kate moore. Rocks please they with us. We want to go to an update. Emma chandra is here with bloombergs first word news. Emma the Clinton Foundation says it will stop excepting contributions from companies and foreign entities if Hillary Clinton is elected resident. Former president bill clinton outlined that yesterday. Critics have expressed ethical concerns about the foundations fundraising practices. Donald trump making his first speech since realizing his president ial campaign and trying to show voters a softer side. Speaking at a rally in china, north korea county yesterday, the gop nominee told supporters he has speaking at a rally in charlotte, North Carolina yesterday, the gop know me told supporters he has some regrets. Sometimes you do not choose the right words. Or you say the wrong thing. I have done that. Believe it or not, i regret it. Emma in another shift, Trumps Campaign purchased more than 4 million of television ads. And coming to the london underground, longawaited weekend night service. It starts today, almost one year later than planned after competency unions. Six trains will run overnight on the central and victoria lines. The expanded service is expected to boost londons economy and support more than 2000 permanent jobs. Global news 24 hours a day, powered by our 2600 journalists and analysts in more than 120 countries. I am emma charger chandra. This is bloomberg. Jonathan finally, 24 hour service. How sensitive our markets to a potential rate hike . Later, the ship that shakeup of ofcom later, the shakeup viacom. This is bloomberg. David this is bloomberg. I am david westin. Emerging market stocks are poised for a weekly gain. Investors cautious ahead of chair yellen statement next week. The msci emerging markets index slid one year slid to a oneyear high. Kate moore, blackrock chief u. S. Strategist is optimistic. The transformation we have had since the beginning of the year and especially in tone from policymakers last few part of ourkey constructive view on emerging markets at this point. We are squarely in the cap that rates stay low for longer, even if the fed signals they will move in the second half of that year. December is still on the table for us. But this is about the policyterm path for rates and the invocation it has for the dollar, or not. Our expectation is bps of appreciation in the dollar will be much slower our expectation is the pace of appreciation in the dollar will be much slower. That will relieve pressure on emerging markets. To allow emerging markets continue to cut rates in their own economies. To inc. About their policy to think about their policy differently. Jonathan one of the stories we heard about the yen has been diversification, given how correlated bond markets are in that space. He bloomberg correlation 88 were positively correlated. How do you make sure you do not get that positive correlation with developed markets, like the s p 500 . Kate major markets have moved. There were political challenges in europe. Show actual challenges and parts of emerging markets. I suggest correlation in the longer term of the period may be high. There is an opportunity for divergence in terms of market performance, if we are no longer facing the same headwinds. Which for em is centered around the dollar and u. S. Monetary policy. We should also include oil and commodity prices. Story. Well, the demand to reach to a lower growth rate. If these are not the same kinds of headwinds and pressures the last couple of years, there is the possibility of significant divergence and performance. David a relatively weak dollar may be necessary, but it is not sufficient. You also need fundamentals in the emerging markets. Are you seeing fundamentals come around . Kate we are seeing good improvement on the politics side. Several Major Economies india and brazil are in great transition. We have seen smaller policies in countries like china, around their financial system, and financial reform that are encouraging. At the same time, we start this incorporates focus more on profitability. It seems like some of the Major Companies in emerging markets were focused on gaining market share over the last five or six years. There has been a little change in tone in terms of guidance and their profitability over the last few months. This is something we find encouraging. We think the earnings story is looking good, particularly without the dollar had went. David kate moore of blackrock. Chief equity strategist. Please stay with us a little longer. Aix coming up, oil entering bull market but Energy Stocks lagging. What does that say about the future of Energy Equities . This is bloomberg. Alix this is bloomberg. Oil charging into a bull market among speculation that may freeze out there. What does this mean for Energy Stocks . This shows oil stock versus the twoyear energy for more, lets bring in fadel gheit. Still with us as kate moore. Do you see a rally in Energy Stocks now . It is heading to the lowest in 26 and heading to 50. I think 26 was unsustainable. And then we have 50 oil now. I believe we have a Downside Risk in the next couple of years. Alix that implies Energy Equities should rise along the back of that . Fadel correct. A lot of people that talk about it it is more or less the impact of Higher Oil Prices reflected in the stocks. But a good evaluation almost follows the direction of the oil prices. Prices go, the stocks will go higher . World,urning to your next year we are looking at 43 growth. Do you think earnings estimates are right for Energy Stocks . Contracted is a consensus out, not just for 2017 but the last part of 2016, in terms of earnings acceleration in the sector. For analysts to be right, but we have to temper expectations. We know the path of expectations is always down through the start of the next year. Isdoes feel like consensus extremely optimistic. A story of hasbe and has not have knots. And have not. Alix so would you touch the Energy Sector now . Kate i think these have to be very specific traits and search for the stories that can perform. Alix the most interesting discussion now in the Energy Companies and what happens to drilling costs pay we have seen them come down so much. We have halliburton saying will raise prices. Who is right . Youl a couple of things have to understand. It is the food chain. Companies will do what the industry will do. The power of the purse. Who is getting contracts . Service companies are on the receiving end of what Oil Companies dish out. I would be more biased to the oilproducing companies, because these are the ones who will control the tempo and keep spending Going Forward. Fully the impact of cost saving. It is huge. People do not realize that the oil industry today can break even at 40 or 50. It was at 70 a few years ago. Efficiency will continue to bring down that break even point. They are putting where theyre they are putting their money where their mouth is. Alix so big oil has three upper hand. Fadel gheit, oppenheimer Senior Energy study just to thank you. Jonathan breaking news. The u. K. Is set to see brexit triggered by april, 2017. This is the socalled article 50. Prime minister may did not want to trigger it before french and german elections. The french elections spring of next year and german elections summer or fall. We pivoted towards the cash open in new york. From new york city, this is bloomberg. [ clock ticking ] time. You only have so much. Thats why we want to make sure you wont have to wait on hold. And you wont have to guess when well turn up. Because after all we should fit into your life. Not the other way around. Everything is cool when youre watching a screen everything is awesome, when youre sharing a meme a voice remote, show me angry kings you know whats awesome . Everything apps that please, more selfies, endless hours of the best tvs brand new apps, shows to go, awesome internet thats super whoa. Everything is awesome xfinity. The future of awesome. Jonathan from new york city, this is bloomberg. We are about 30 seconds away from the cash open in new york. The s p futures negative one quarter of 1 . In europe, a potential day of losses. Bell ringthe opening in new york city, we switch up the board. Here is the other Asset Classes. Strong are across the g 10. A weaker pound kicking in again. On back of headlines that the u. K. Is said to see brexit triggered by april of next year. I will be before french and german elections. About 20 seconds into the open, yields a little higher on treasuries. Up three basis points. Lets head to alix steel. Alix seeing some softness in the equity markets. However, the nasdaq is on track for an eight week game. For the nasdaqn in six years p. M. The dow and s p having the longest winning streak on a weekly basis in one month. Lower today, but sentiment still bullish. It couple movers we want to highlight. Eight private prison operated as we go to retail verse. And foot locker. Estimates on the low end. Banana republic comp sales down 9 . Foot locker, sales and comp beating estimates. The whole week, it was the haves and havenots of retail. We also want to look at square. Reporting as. 72 passive state. Remember, Tiger Global Management reduced their stake in the 13 filings we got earlier in the week. Another retail name restoration hardware. Getting an upgrade from neutral at Goldman Sachs. The company saying they are in a unique decision to return growth. Goldman had a strong track record. I want to end on geo, the private prison operator. Their opening is delayed. The headline is at the doj could extend a contract with the private prison operator. It was up around 10 premarket. It got hit hard yesterday on the news that the doj is ending phasing out private prison contractors paid it could be a different story for geo. Moving is john deere. It cut costs and raised the fullyear profit forecasts after unexpectedly reporting gains this morning. For more, mario parker is joining us from chicago. What is confusing is they said that sales would be down. Equipment would be down 10 . Yet stocks are up. How does this square . Mario deere has done a good job of cutting costs since we have hit the downturn in the commodity market, particularly this farm recession. , found new ways to improve efficiency at the plants, and have made gains in materials procurement. Things like keeping steel costs in line. Alix costcutting only gets you so far. At the end of the day, they need farmers to want to buy equipment. Did they give any sense of when that cycle would turn . Inventory is high and credit tight for them. Mario absolutely. The main focus the Earnings Call is here in the next hour or so. Investors will be focused on how much more fat deere can cut. There are a few signs of relief. Were looking at record corn crop. Farming, dropping one third. Credit has tightened, making it newher to get a loan for a tractor. It will be tough sledding ahead. Alix indeed. Thank you. Is upld point out deere 4 . David have you ever been in one of their big tractors . Alix no. David some of them have television sets. And if youre watching television, you could be watching mtv pay which takes you to viacom. Allegedly reached an agreement that paved the way for the belmonts exit. Gerry smith four Philippe Daumans exit. Gerry smith is with us now. Take us forward. What does this mean in terms of who is running the company, who was calling the shots, and where they will want to go . Ceo isnow, the interim tom dooley, who is the chief operating officer. Total victory for the red stones. Shari redstone and her father have control of viacom and cbs. One of the Big Questions for a lot of investors is what will happen with viacom and cbs, and could they could potentially and could they potentially realign . David tom dooley is closely aligned with Philippe Dauman. What are they looking for . Are they looking for someone to redo the company from the ground up, which it apparently needs . Or merge it with cbs . Is onea merger with cbs thing a lot of analysts talk about. Viacom is a company that faces real challenges, it in that the Television Industry is changing. If you look at their cable channels nickelodeon, mtv, calmly central these are geared toward a younger audience who are watching more content online. One thing they have to figure out is to find a viable digital strategy. And by owns paramount. Philippe dauman will still have the opportunity to sell his stake in paramount. David there were reports that mr. Redstone was not too smitten with the idea of selling a controlling interest in paramount. Does this put away those plans . Gerry as part of the agreement, Philippe Dauman will have the chance to sell. David so as the lawsuits go away, it does that challenge mr. Redstones confidence . Gerry correct. Ask part of the settlement, those cases would go away. David what about the board never should at the trust level. There was a tussle over who would sit on the board . Who wins . Gerry the red stones. They will be able to officially appoint their own Board Members. They have already amounts announced the Board Members they would like. Lehrer, who is medianown in digital circles. This is an opportunity for back, find new leadership, and revive their fortunes. David so Shari Redstone basically wins. Gerry you could say that, yes. This is a win for the redstones. David blood is thicker than water in the end. Thank you. Gerry smith. By 4 10 markets down of 1 . We take you to the brexit conversation that. Article 50 which lays down how a Company Country could believe that you. But when does a get triggered . Alix this is bloomberg. Bloomberglater on television, hugo barra will meet the Vice President of global operations. Jonathan from new york, this is bloomberg. I am Jonathan Ferro. A weaker pound story. I want to bring in bloombergs brexit editor. Asked been a while since we have talked about article 50. We are waiting the u. K. To trigger it. Do we have a sign we are moving closer to that event . Clarification from a weekend media report, which suggests it could be the end of next year for Prime Minister theresa may to trigger it. Officials now saying it could more likely be in the first part of next year by april, wanting to get ahead of french and german elections. The leaders will not be particularly grateful if there is more uncertainty in the economy as they tried to win votes. And leaders like nigel farage saying that theresa may will face criticism if she does not trigger it. Jonathan looking at the story in the market. A renewed sterling weakness story on the back of this headline. Theresa may is being sympathetic to germany and france . Simon you have to be some pathetic some degree. There is a point there is no point in antagonizing germany and france. She wants the deal with those leaders, not really the european commission. She wants to be able to go in a and merkelollande and appeal to their common interest. They ought to have an understanding that what works for britain and the future relationship with britain may work for them. Germany sells a lot of cars to britain. She has to be some pathetic to some extent. If she jotted out there next we nex if she drags it out until next year. We are not the most popular company in the european bloc at the moment. There has to be some sympathy to germany and france if we want a great deal. Jonathan the timing itself not a huge surprise, given we heard from david davis that he would prefer to wait until the turn of the year. The news the last week or so has been about a failure to put a Team Together to actually deal with the situation. Enough Civil Servants to formulate a plan and execute it. Is this enough time to put that Team Together . Simon we will have to say pay the British Civil Service rises up on its ability to turn things around quickly. Generalmember in the election, the Prime Minister and the government comes into office that day. Like in no months delay the u. S. President ial system. Certainly, when you create a new department of trade and for brexit, it will take a little time to find buildings and email addresses. I mentioned the market move. Andling was already weak the dollar stronger, but we have exacerbated that. I want to mention the renewed uncertainty, knowing we will get time eventually. Just like the situation with greece, it becomes incredibly volatile. For the city of london it self, fx market,er for the are we any clearer to knowing whether will push for military reasons, etc. . Simon reports suggest the city is giving up the hope of access to the single market. Instead, it may settle for a kind of swiss deal. Switzerland has a bespoke trade deal depending on the sectors it can strike a deal with. Times saying that is what the city is speaking. Jonathan simon kennedy, bloombergs brexit editor. On the news that theresa may would prefer to trigger article 50 ahead of french and german elections. Renewed sterling weakness in these markets. Stocks lower it seems. Alix yes, lower. Taking a touch to the downside. We were on pace for the dow and s p for the biggest weekly gain in a month, but we have now lost that pay the dow, s p, and nasdaq now that i the week. The ftse 100 also lower. A strongeras sterling throughout the week, but sterling turning slightly on the having an impact european markets. Looking at the individual sectors, the dividend guides leading the way down. Telecom and utilities. Telecom off over 1 . We have seen a little roll over in the 10 year yield. If we continue to see that, do we see more buying in utilities . For now, defense leading the way lower. Lets look at what happened on article 50, that it could be triggered in 2017. The 10 year yield a little lower. Still higher on the day, but off the highs of the session. Some buying comes into the treasury market on the long and short end of the curve. David big news in the thomas cars. Uber may have beaten google to the punch, announcing it will have Driverless Cars in pittsburgh this month. For more, we bring in mark mahaney. Welcome back. Tell us how important this is to google. We have heard a lot of stories about google and Autonomous Vehicles. How important is this initiative . Mark it is not near term important. It has no implications for the pnl in the next five years. But it is clearly one of the other big bets google has made. Things like google fiber, some medical advancements. But Autonomous Vehicles is one of the biggest longterm bets. This Company Google has invested in. It is one of the three front runners in the space. Uber is one of those. As is tesla. Maybe apple, longterm. We think google has support competency to help it be one of the top 10 winners. But this uber news is big news and is a win for them. We are watching some video of their cars on the road now. Googles. We have seen these before. How far away are they from commercializing it . Mark we do not have the answer. I am not sure google has the answer. There are two Core Competencies we think will be required to win the thomas vehicle game. One is a realtime mapping to win the Autonomous Vehicle game. One is realtime mapping. It is hard to see anyone else having that detailed realtime map of the world, thanks to google maps and the acquisition of waze. Google probably has the best realtime mapping capabilities. The other is raw miles. They have done over 1. 5 million miles of av driving. Teslas getting close to that. Uber has some number, but is probably nowhere close. They will Start Building that with their own mapping technology. And they have tons a large number of miles for av driving. Google has two of the best Core Competencies in this race. David another important piece of news was ubers acquisition of otto a self driving truck business. Is uber basically using google people to beat them . Mark if you are looking for really good talent in av, one of the few places you could find that is google. So you want to hire a way that talent, you would take that from google. We think about three companies are currently in pole position. It is uber, because they are ready have their ride serving right sharing service. Ride sharing service. Tesla. Then google. Those companies seem furthest along the way to commercializing this. That would be tesla and uber. But google does not have to directly commercialize this. Whoever has the realtime mapping and mileage, that is the company that will extract the tax from every car sold in the next five years. Mark, Rbc Capital Markets analyst. Alix coming up, all eyes on Janet Yellens speech next week. This is bloomberg. Alix this is bloomberg. Getng up, next week, we home sales data in july. And Residential Home sales tuesday. Existing home sales wednesday. Friday, the second reading of secondquarter gdp. David friday has another event. A speech janet yellen is giving out at jackson hole. The main event will be at the economic symposium. The events kickoff in wyoming thursday, the fridays when we hear from jenny ellen pao bloombergs matt boesler is here to let us know what we anticipate. Matt the question is will she tried to Say Something to put a rate hike more firmly on the table for this year or not. Right now, we do not really see it. It is around 5050 for a hike this year. And very little chance of a hike in september. Designinghe topic resilient Monetary Policy framework for the future. That is what everyone will discuss. It dovetails into the idea of how you target Monetary Policy Going Forward if neutral rates are low. Matt i find interesting. If her speech touches on the topic of the conference, you have to think it comes across dovish. All of these things we are talking about are lower neutral Interest Rates. They need to change the ways we do things next time. Maybe raise the inflation target. Get more cooperation from fiscal authorities for fiscal stimulus. It will be interesting to hear what she has to say. There has been a lot of discussion recently. Most noticeably with the letter John Williams put out this week. Jonathan there has been a vacuum, and it has been her voice. I wonder whether she has to display serious leadership next friday, given the fragmentation from the fed. Matt the interesting thing about the minutes we got wednesday was that there is more of an agreement been is agreement on inflation. In the sense that everyone agrees that inflation is not a big threat. To raisere is no need rates soon. Maybe John Williams is more than outlier in that sense. Clearly, the more hawkish voices in the minutes seem to be in a smaller camp than those who were like lets just wait. Comeo not expect she will out with the majority, but we will see. David she has some important Economic Data coming out before the meeting. There she not also have to be concerned about going to far out on a limb . Matt certainly. That is what got them in trouble in may. Because they came out with the foc meeting, and saying we were close to a hike. Then you have the bad may jobs report. It took the market probabilities right back down. I do not think they want to get burned. Again david thank you for that preview. That is liberty matt boesler that is bloombergs matt boesler. Jonathan fed chair janet yellen speech at jackson hole in wyoming friday. Lets get you up tos beat stocks marginally lower as we close out with a weaker dow. Potentially closing out for a Third Straight week of gains pay we have just trained that potentially closing at 43rd straight week of gains for a gains. Aight week fo we have just trimmed that. For myself, david westin, and alex and alex deal, this was bloomberg. York. Is 10 00 a. M. In new 3 00 p. M. In london. From new york, i am vonnie quinn. Live from london, i am nejra cehic. This is bloomberg marketson bloomberg television. Vonnie we take you from washington to london, then conquer stories from china and brazil. President serve bank John Williams saying that waiting too long to raise the rates would mean the opportunity for bubbles. Nejra new clarity on the timing of brexit. News reporting that Prime Minister theresa may is leading leaning towards the first part of 2016 to triggered talks. Vonnie oil slipping today but